Payton v. New Jersey Turnpike Authority

The opinion of the Court was delivered by

In this case, an employee is suing her employer and two of her supervisors for sexual harassment under the Law Against Discrimination. She contends that her supervisors harassed her and that her employer failed to respond adequately to her complaints. Although the employer subsequently disciplined the supervisors after determining that the employee’s claims were meritorious, the employee asserts that the employer’s allegedly inadequate response to her complaints contributed to the harm that she suffered and consequently entitles her to damages.

The general question that we must consider is the nature and extent of the pretrial discovery that an employee claiming to have been sexually harassed is entitled to obtain for the purpose of establishing the employer’s liability based on its alleged failure to respond to her complaints of sexual harassment. The more specific issues that must be addressed in this case relate to whether various documents and records pertaining to the employer’s handling and disposition of the employee’s complaints of sexual harassment, including its internal investigation, may be made available through discovery and the extent to which concerns based on confidentiality and privilege may preclude or limit the discovery of such materials.

I

Plaintiff Joanne Payton began working as a maintenance records clerk for defendant New Jersey Turnpike Authority in November 1990. Shortly after she started, two of her supervisors, Robert Geberth and Michael Stankowitz (the two highest ranking administrators in her unit), allegedly began to sexually harass her. According to plaintiffs complaint, they harassed her in the following manners:

(a) Defendant Geberth commented about Plaintiff’s clothing!,] grabbing the bottom of her skirt and pulling it down, stated her clothes look like she is “wearing pajamas,” put his hand around the Plaintiff, on her shoulder or on her knee and called Plaintiff into his office directing that she turn around so that he could look at her;

*533 (b) Defendant Stankowitz told Plaintiff on several occasions that he was “horny” and wanted “to get laid,” referred to Plaintiffs breasts and said to her “just one time,” tried to look down Plaintiffs blouse and, during lunch at a restaurant, took the Plaintiffs hand and put it between his legs;

(c) During the office holiday luncheon on or about December 1993, Defendants Geberth and Stankowitz gave Plaintiff a “baby doll” nightgown. Defendant Geberth insisted that she open the gift in front of her office co-workers who were attending the luncheon; and

(d) On or about July, 1993, Defendant Geberth slapped a female co-worker on the buttocks in the presence of several co-workers, including the Plaintiff.

For several years, plaintiff tolerated the harassment, but in September 1994, she filed an internal complaint with defendant.

During the approximately seven months following plaintiffs complaint, the alleged harassment continued, and defendant took no remedial action against the supervisors. On March 10, 1995, believing that defendant would not resolve the situation, plaintiff brought suit in the Superior Court, Law Division against defendant and the supervisors, alleging with regard to defendant that it was vicariously liable under the Law Against Discrimination (“LAD”), N.J.S.A 10:5-1 to -42, for the supervisors’ conduct.

On April 26, 1995, defendant announced that it had disciplined the two supervisors, having suspended them without pay, demoted them, and reduced their salaries. Five days later, in answer to plaintiffs complaint, defendant raised these actions as an affirmative defense to vicarious liability, claiming that, by its response to her complaint of sexual harassment, it had neither participated in nor acquiesced in the harassment. Defendant later represented, through a privileged document log, that its Equal Employment Opportunity Officer (“EEO Officer”) had made initial findings about the complaint on December 8, 1994 and (together with in-house counsel) had issued a final investigative report on March 14, 1995, four days after plaintiff had filed suit. It also asserted that, on April 13,1995, its Sexual Harassment Advisory Committee had completed a confidential review of the EEO Officer’s report, including remedial recommendations, and that, on April 25, 1995, defendant’s commissioners had convened an executive session *534 regarding the matter, during which they presumably had discussed the report and determined the appropriate sanctions.

In order to gauge the timeliness and thoroughness of defendant’s actions (and hence the validity of defendant’s affirmative defense that it had effectively remedied the harassment), plaintiff sought discovery of materials relating to the investigation and executive session. Specifically, she demanded “[a]ll documents relating to any investigation that was conducted by or for the defendant having to do with the plaintiff and her employment with the defendant[,] ... [a]ll documents relating to any investigation that was conducted by or for the defendant having to do with the plaintiff and her administrative complaint alleging sexual harassment[, and] ... [a]ny minutes, transcriptions, reports, supporting documents, agendas, [and] recordings related to [the Commissioners’ April 25,1995] meeting.”

Defendant moved for a protective order exempting all of the requested documents from discovery. It also asked the court to seal the record. Plaintiff opposed the motion and, in the alternative, moved to strike the affirmative defense if defendant were not required to produce the documents.

The Law Division, without examining any of the documents in camera, granted the protective order in its entirety, thus removing from the discovery process all documents relating to the investigation. In support of its broad order, the court cited the public policy of confidentiality embodied in the LAD. It also relied, to a lesser degree, on the attorney-client privilege and the so-called privilege of self-critical analysis.

Plaintiff then sought interlocutory relief in the Appellate Division, which granted leave to appeal and vacated the protective order. 292 N.J.Super. 36, 678 A.2d 279 (1996). Relying on our holding in Lehmann v. Toys ‘R’ Us, Inc., 132 N.J. 587, 626 A.2d 445 (1993), the court concluded that plaintiff was at least entitled to discover information relating to “the extent of the Authority’s investigation, the timing of the Authority’s investigation relative to the date of plaintiffs complaint to the department, the information *535 gleaned by the Authority from its investigation, the Authority’s evaluation of the information, and the action taken by the Authority.” 292 N.J.Super. at 46, 678 A.2d 279. The Appellate Division instructed the trial court to inspect the documents at issue in camera and to make appropriate redactions in order to accommodate concerns about confidentiality and privilege. Id. at 53-54, 678 A.2d 279.

We granted defendant’s motion for leave to appeal, 146 N.J. 495, 683 A.2d 198 (1996), and we now affirm.

II

New Jersey’s discovery rules are to be construed liberally in favor of broad pretrial discovery. Jenkins v. Rainner, 69 N.J. 50, 56, 350 A.2d 473 (1976) (“Our court system has long been committed to the view that essential justice is better achieved when there has been full disclosure so that the parties are conversant with all the available facts.”); Catalpa Investment Group, Inc. v. Zoning Bd. of Adjustment, 254 N.J.Super. 270, 273, 603 A.2d 178 (Law Div.1991); Martin v. Educ. Testing Serv., Inc., 179 N.J.Super. 317, 327, 431 A.2d 868 (Ch.Div.1981). Under the rules, “[pjarties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action____” R. 4:10-2(a). “Relevant evidence,” although not defined in the discovery rules, is defined elsewhere as “evidence having a tendency in reason to prove or disprove any fact of consequence to the determination of the action.” N.J.R.E. 401.

In determining whether materials relating to defendant’s internal investigation are discoverable, therefore, we must evaluate, as an initial matter, their relevance to the issues raised in this litigation. We look to Lehmann, supra, 132 N.J. 587, 626 A.2d 445, for guidance in this regard. In Lehmann, the plaintiff brought suit under the LAD, alleging hostile work environment arising from sexual harassment at the hands of her supervisor. Id. at 595-99, 626 A.2d 445. She did not simply sue the actual harassers, however, instead naming her employer and alleging *536 that it was vicariously liable; among her allegations was the employer’s supposedly deficient investigation of her internal complaints. Id. at 599, 626 A.2d 445.

We held in Lehmann that the LAD’s prohibition of sex discrimination created causes of action for sexual harassment and hostile work environment resulting from that harassment. Id. at 600-15, 626 A.2d 445. We then reached the difficult issue of employer liability under those circumstances and concluded that employers could be vicariously liable in damages under an agency theory for sexual harassment committed by employees, id. at 619-20, 626 A.2d 445, and that such liability would be governed by a variable standard depending on the state of mind of the employer. Id. at 619-26, 626 A.2d 445. Employers that were negligent in failing to take effective steps to end sexual harassment would be liable for compensatory damages, id. at 621-23, 626 A.2d 445, while those that actually participated in or were willfully indifferent to the wrongful conduct would be liable for punitive damages. Id. at 624-25, 626 A.2d 445.

Of particular importance in Lehmann, we noted that an employer’s liability for its own negligence in failing to take effective remedial measures was a form of direct liability in addition to vicarious liability. Id. at 623, 626 A.2d 445. We stated that

[w]hen an employer knows or should know of the harassment and fails to take effective measures to stop it, the employer has joined with the harasser in making the working environment hostile. The employer, by failing to take action, sends the harassed employee the message that the harassment is acceptable and that the management supports the harasser---- “Effective” remedial measures are those reasonably calculated to end the harassment. The reasonableness of an employer’s remedy will depend on its ability to stop harassment by.the person who engaged in harassment.

[Ibid, (quotations and citations omitted).]

Thus, we determined that an employer that failed to take effective remedial measures against a harassing employee was, in essence, liable for its own conduct.

While the effectiveness of an employer’s remedial steps relates to an employee’s claim of liability, it is also relevant to an *537 employer’s affirmative defense that its actions absolve it from all liability. See infra at 540-41, 691 A.2d at 328-29. Thus, the efficacy of an employer’s remedial program is highly relevant to both an employee’s claim against the employer and the employer’s defense to liability.

Given the dual significance of the effectiveness of an employer’s remedial actions, the critical interpretive question that confronts us in this case is the understanding of “effective” as the standard by which to evaluate the adequacy of an employer’s response to a complaint of sexual harassment. If, as defendant argues, the effectiveness of a remedial scheme is measured solely by its final outcome, namely, the ultimate sanction imposed, then documents relating to the internal investigatory process leading up to the sanction are irrelevant to the harassment and hostile-work-environment claims against the employer and hence not discoverable. However, if effectiveness is gauged by the process of the investigation — including timeliness, thoroughness, attitude toward the allegedly harassed employee, and the like — as well as by the result of the investigation, then the documents are clearly relevant and discoverable.

We are persuaded that the “effective” remedial measures emphasized in Lehmann include the process by which the employer arrives at the sanctions that it imposes on the alleged harasser. If effective measures are those “reasonably calculated to end the harassment,” Lehmann, supra, 132 N.J. at 623, 626 A.2d 445, then neither a court nor a jury can evaluate effectiveness without considering the entire remedial process. As the Appellate Division noted:

[The] timeliness of an employer’s response is an important element in determining the effectiveness of an anti-harassment program____ A slow response may be perceived as a reluctant response and call into question the bona fides of an employer’s anti-harassment program. Similarly, an investigation, though timely instituted, may be pursued half-heartedly and unduly prolonged. On the other hand, a timely, vigorously pursued inquiry that corroborates the victim’s accusations will compromise a well-designed anti-harassment program, if the employer drags its feet in acting on the corroborative evidence.

[292 N.J.Super, at 47, 678 A.2d 279 (citation omitted).]

*538 Numerous federal courts have adopted this position as well. See, e.g., Guess v. Bethlehem Steel Corp., 913 F.2d 463, 465 (7th Cir.1990); Harding v. Dana Transport, 914 F.Supp. 1084, 1094 (D.N.J.1996); Van Horn v. Elbeco, Inc., No. CIV. A. 94-2720, 1996 WL 385630, at *9 (E.D.Pa. July 10, 1996); Stewart v. Weis Markets, Inc., 890 F.Supp. 382, 390 (M.D.Pa.1995); Giordano v. William Paterson College, 804 F.Supp. 637, 643-44 (D.N.J.1992); Foster v. Township of Hillside, 780 F.Supp. 1026, 1039 (D.N.J.), aff'd, 977 F.2d 567 (3d Cir.1992); Zabkowicz v. West Bend Co., 589 F.Supp. 780 (E.D.Wis.1984). Federal jurisprudence in this area is particularly relevant because the LAD draws significantly from federal antidiscrimination law. See Lehmann, supra, 132 N.J. at 617-19, 622-23, 626 A.2d 445.

In this case, full discovery may enable plaintiff to support and to advance her argument that defendant’s delay in investigating her complaint and its delay in preparing a report until four days after she had filed this lawsuit reflected an unwillingness promptly to investigate and to remediate her allegations of sexual harassment. The claim is based on an employer’s obligation to create an effective investigatory and remedial process that does not discourage employees from exercising their statutory rights. See Lehmann, supra, 132 N.J. at 623, 626 A.2d 445; cf. Romano v. Brown & Williamson Tobacco Corp., 284 N.J.Super. 543, 665 A.2d 1139 (App.Div.1995) (in context of claim of retaliation against employee, inquiring into employer’s internal reaction to employee’s complaint of employer’s illegal conduct).

In short, a remedial scheme that reaches the correct result through a process that is unduly prolonged or that unnecessarily and unreasonably leaves the employee exposed to continued hostility in the workplace is an ineffective remedial scheme. Such a process, in reality, indirectly punishes employees with the temerity to complain about sexual harassment and cannot constitute “effective” remediation. Indeed, such a scheme can be viewed only as an attempt by the employer to discourage employees from coming forward and utilizing the employer’s remedial process in *539 the first place. Because of the importance of the remedial process in evaluating an employer’s good faith in counteracting and attacking sexual harassment and in eliminating hostile work environment, we conclude that materials relating to an employer’s internal investigation of alleged sexual harassment are relevant to a claim under the LAD and hence generally discoverable.

Ill

Although relevance creates a presumption of discoverability, that presumption can be overcome by demonstrating the applicability of an evidentiary privilege. R. 4:10-2(a). A privilege reflects a societal judgment that the need for confidentiality outweighs the need for disclosure. Hague v. Williams, 37 N.J. 328, 335, 181 A.2d 345 (1962); Wylie v. Mills, 195 N.J.Super. 332, 337, 478 A.2d 1273 (Law Div.1984). Despite the existence of privileges, however, our desire to attain; truth through the adversarial process has led to a disfavoring of such a categorical approach to concerns about confidentiality, see United States v. Nixon, 418 US. 683, 710, 94 S.Ct. 3090, 3108, 41 L. Ed.2d 1039, 1065 (1974); Dixon v. Rutgers Univ., 110 N.J. 432, 446-47, 541 A.2d 1046 (1988); State v. Briley, 53 N.J. 498, 505-06, 251 A.2d 442 (1969); Hague, supra, 37 N.J. at 335, 181 A.2d 345; State v. Szemple, 263 N.J.Super. 98, 101-02, 622 A.2d 248 (App.Div.1993), aff'd, 135 N.J. 406, 640 A.2d 817 (1994), in favor of case-by-case balancing. See Loigman v. Kimmelman, 102 N.J. 98, 103-04, 505 A.2d 958 (1986).

The disfavored status of privileges is the backdrop against which we analyze each of the grounds that defendant asserts to justify exclusion of its relevant investigatory materials from the discovery process. We note that our analysis of the various claims of privilege contains two common themes, namely, the strong public interest, embodied in the LAD, of eliminating discrimination and harassment and the balancing of that interest' against various interests in confidentiality.

*540 A.

Defendant contends that our decision in Lehmann, several decisions of the United States Supreme Court, and former-Governor Florio’s issuance of Executive Order No. 88 combine to create a “public policy of confidentiality.” The trial court relied heavily on this rationale in granting the protective order:

The Court would have to put on blinders to fail to recognize the fact that those who come forward in terms of this type of investigation do so with an understanding that any communication would be privileged.... I am satisfied that the paramount interest in terms of the law against discrimination relates to the public policy in promoting the purpose of the act [i.e., confidentiality and eliminating underreporting]. And to undermine that with an opening of the investigative process involved ... would be inappropriate and contrary to the purpose of the intent.... I am satisfied ... that information that is given under such cover should be maintained under such cover unless there are compelling reasons to dictate otherwise.

Although defendant does not use the word “privilege” in this context, it effectively urges the creation of a privilege that precludes discovery of “confidential” materials relating to internal sexual-harassment investigations.

Both this Court, in Lehmann, supra, 132 N.J. at 622, 626 A.2d 445, and the United States Supreme Court, in Meritor Savings Bank v. Vinson, 477 U.S. 57, 72-73, 106 S.Ct. 2399, 2408, 91 L. Ed. 2d 49, 63 (1986), have allowed employers to avoid liability for sexual harassment by implementing effective procedures to combat this evil internally, thus encouraging victims to come forward and to report prohibited conduct. Moreover, then-Governor Florio, by executive order, mandated a review of anti-sexual-harassment procedures throughout the state government in order to make them “more effective and sensitive to the needs of victims of sexual harassment.” Exec. Order No. 88, 25 N.J.R. 1799(b) (1993). The Department of Personnel, in response to the executive order, recommended that investigators of sexual harassment be cognizant of confidentiality in order to encourage victims to report allegations and to elicit candid statements from all involved. Review Committee on Sexual Harassment, New Jersey Department of Personnel, People Working Together: A Report on Sexual *541 Harassment (1993). We recognized the importance of confidentiality in this context in In re Seaman, 133 N.J. 67, 90-91, 627 A.2d 106 (1993).

We reaffirm our belief that confidentiality is an important component of any policy designed to maximize reporting of alleged sexual harassment and to ensure the accuracy of ensuing investigations into such allegations. However, whether the importance of confidentiality leads to the creation of a privilege to refuse to produce documents relating to internal investigations implicates other important counterbalancing considerations. In Dixon, supra, 110 N.J. at 446-59, 541 A.2d 1046, we were confronted with a similar request to convert confidentiality concerns into a qualified privilege, in that case, one that would have precluded discovery of materials related to peer evaluation for university tenure determinations. We declined to create a privilege in that context, ibid., and the reasoning that we employed there is apposite in the context of this case.

In refusing, in Dixon, to create a qualified privilege in the peer-review situation, we distinguished the cases in which we had created such privileges, emphasizing that in those cases, the Court had been required to “balance private interests in disclosure against public interests in confidentiality,” whereas in the case before it the Court had to “balance the public interest in maintaining a confidential peer review process that protects the university’s academic freedom against our State’s strong public policy favoring disclosure and eradication of discriminatory treatment in employment.” Id. at 451, 541 A.2d 1046. We then determined that the powerful legislative policy embodied in the LAD of eliminating discrimination overrode the interest in maintaining an iron curtain around the peer-review process. Id. at 451-54, 541 A.2d 1046.

As in Dixon, and unlike the cases in which we have recognized new privileges, we are confronted with two competing public interests, as opposed to a private interest in disclosure that is outweighed by a strong public interest in confidentiality. Unlike *542 Dixon, however, the two asserted interests in this case — disclosure to ensure that employers maintain effective sexual-harassment procedures and nondisclosure to enable employers to maintain effective procedures that encourage reporting and candid statements by all involved — both claim to strive for the same goal, namely, an end to sexual harassment.

Because those advocating disclosure and those advocating nondisclosure pledge allegiance to the same goal — eradication of sexual harassment — while arguing for different methods of achieving that goal, we cannot simply fall back on the maxim that “[t]he eradication of the cancer of discrimination has long been one of our State’s highest priorities,” id. at 451, 541 A.2d 1046 (internal quotations omitted) (quoting Fuchilla v. Layman, 109 N.J. 319, 334, 537 A.2d 652, cert. denied, 488 U.S. 826, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988)), to resolve the conflict. Instead, we must determine which method of achieving the unanimously supported goal will best achieve that goal.

We conclude that the appropriate balance is not to create a blanket privilege arising from legitimate general concerns for confidentiality, but rather to recognize a conditional privilege that applies selectively depending on the nature of the materials involved. In its application, the trial court may supervise discovery of the relevant internal investigatory materials and require procedures that protect the confidentiality of those involved in the investigation if a loss of confidentiality would otherwise undermine the efficacy of investigations. Such procedures, short of suppression, may include redaction, issuance of confidentiality or gag orders, and sealing of portions of the record. Only in truly extreme cases should the need for confidentiality require suppression of specific documents.

We believe that those procedures are preferable to a privilege because confidentiality concerns in this context are less acute as a result of the limited number of participants who will benefit from a secretive process. Obviously, a plaintiff waives her confidentiality interest by bringing suit. Moreover, the employer *543 and any other defendants, namely, the actual harassers, already have been named in the suit, and other material witnesses already may be weE-known. Consequently, the only persons who benefit from confidentiality in this type of case are witnesses who may not be known or whose cooperation otherwise may not be forthcoming, and their identities can be protected through redaction. Furthermore, there may be situations in which such witnesses no longer have a continuing need for confidentiality or may be deemed to have relinquished or waived their interest in confidentiality.

The AppeEate Division addressed the concern about witness confidentiaHty, and we agree with its observation that “it may not be possible to protect [witnesses’] identities throughout the entire course of the litigation consistent with plaintiffs right to the opportunity to establish a cause of action____” 292 N.J.Super, at 48, 678 A.2d 279. Unfortunately, even the best efforts to maintain confidentiaHty may fail during the lifespan of a lawsuit. Yet, we must rely on the creativity of the trial court and the good faith of the parties to guard against unnecessary revelation and thus to protect the integrity of the investigatory process. 1

*544 We therefore conclude that, regarding confidentiality, the balance weighs in favor of disclosure with appropriate procedures to ensure justified confidentiality in light of plaintiffs paramount interest in obtaining relevant materials.

B.

Defendant also relies on the so-called privilege of self-critical analysis in justifying the protective order. The trial court relied in part on that privilege in granting the order, while the Appellate Division rejected its applicability because of the importance of the materials to plaintiffs case. 292 N.J.Super. at 48-49, 678 A.2d 279. Both courts, as have a number of lower courts, assumed the existence of this broad privilege in New Jersey despite the fact that this Court never actually has adopted it, only having referred to it without expressing an opinion as to its validity. Loigman, supra, 102 N.J. at 107, 505 A.2d 958; McClain v. College Hosp., 99 N.J. 346, 359, 492 A.2d 991 (1985).

The privilege of self-critical analysis exempts from disclosure deliberative and evaluative components of an organization’s confidential materials. Tharp v. Sivyer Steel Corp.,