Case 2:06-cv-03790-SRC-CLW Document 225 Filed 07/23/18 Page 1 of 9 PageID: 4775
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`NOT FOR PUBLICATION
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`VALERIE MONTONE
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`Plaintiff,
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`v.
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`CITY OF JERSEY CITY, ET AL.,
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`Defendants.
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`JOHN ASTRIAB, ET AL.,
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`Plaintiffs,
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`v.
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`CITY OF JERSEY CITY, ET AL.,
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`Defendants.
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`CHESLER, District Judge
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`Civil Action No. 6-280 (SRC)
` Civil Action No. 6-3790 (SRC)
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` OPINION & ORDER
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`This matter comes before the Court upon the filing by Plaintiffs of several post-trial
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`motions. Plaintiff Valerie Montone has filed a motion to mold the verdict to offset the negative
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`tax consequences of a lump-sum award and for prejudgment interest (2:06-cv-280, Docket No.
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`351), to which the remaining Plaintiffs (collectively, the “Astriab Plaintiffs”) have filed a
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`supplemental brief in support. 2:06-cv-3790, Docket No. 216. The Astriab Plaintiffs have
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`submitted an additional brief to correct for an error in the calculation of prejudgment interest for
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`Plaintiff Ezio Scerbo. 2:06-cv-3790, Docket No. 218. Defendants have submitted the same
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`opposition brief to both motions (2:06-cv-280, Docket No. 354; 2:06-3790, Docket No. 220,
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`“Defs. Br.”), and Plaintiff Montone has filed a reply brief. 2:06-cv-280, Docket No. 355. The
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`Court has reviewed the parties’ submissions and proceeds to rule without oral argument. See
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`Fed. R. Civ. P. 78(b). For the reasons set forth below, this Court grants Plaintiffs’ motion for
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`prejudgment interest. This Court also grants Plaintiffs’ motion to mold the verdict to offset the
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`negative tax consequences of receiving a lump-sum award. Before determining the appropriate
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`amount by which to mold the verdict to offset such tax consequences, this Court will grant
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`Defendants leave to depose Plaintiffs’ expert Kristin Kucsma regarding the methodology and
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`calculations contained in her report, as well as leave to file an expert report in opposition.
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`I.
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`Background
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`This case concerns an employment dispute between Plaintiffs, all retired police sergeants
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`of the Jersey City Police Department, and the City of Jersey City, its former mayor Jerramiah
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`Healy, and its former police chief Robert Troy. The two above-captioned cases were
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`consolidated for trial purposes, and a jury trial was held before this Court from April 16 to May
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`2, 2018. In its verdict, the jury found that Plaintiff Montone’s political affiliation and expression
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`about a matter of public concern were substantial or motivating factors in Jersey City’s decision
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`not to make promotions from the 2003-2006 Lieutenant’s list, and that Plaintiff Montone’s
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`conduct, which is protected by the NJ Law Against Discrimination (“NJ LAD”), played a role
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`and made an actual difference in this decision. Docket No. 335 (indicating ‘Yes’ to questions 1,
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`2, and 3).
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`The jury awarded Plaintiff Montone $276,834 in economic damages and did not award
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`damages for emotional distress. Based on handwritten jury notations to trial exhibit P-272, this
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`award appears to modify Plaintiff Montone’s’ own estimate of her economic losses by
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`subtracting her estimate of 2005 lost wages, 2005-2017 interest on past loss wages, and 2010-
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`2017 interest on past pension loss. See Docket No. 351, Ex. H, “Economic and Financial Losses
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`of Valerie Montone” (subtracting $4,737, $20,336, and $8,082 respectively from the $309,989
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`“Total loss,” with the resulting $276,834 circled at bottom). As such, the jury did not award
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`Plaintiff Montone prejudgment interest or account for the negative tax consequences of receiving
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`a lump-sum award. The jury awarded approximately $1.9 million in total economic damages for
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`the other eight Plaintiffs. For each Astriab Plaintiff, the damage award exactly corresponds to the
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`damage appraisal from the April 9, 2018 report issued by Plaintiffs’ expert Kristin Kucsma. Cf.
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`2:06-cv-280, Docket No. 335 with 2:06-cv-3790, Docket No. 216, Ex. K, 31. As such, the jury
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`likewise did not award the Astriab Plaintiffs prejudgment interest or account for the negative tax
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`consequences of receiving a lump-sum award.
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`For all nine Plaintiffs, the jury’s award of economic damages includes a present value
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`calculation of the pension differential—accruing annually through the end of Plaintiffs’ life
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`expectancy—that results from retiring with a lower police rank. Each Plaintiff will pay taxes on
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`this lump-sum award within one tax year, instead of paying taxes on smaller amounts spread
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`across past and future years. As a result of the progressive income tax structure, there are adverse
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`tax consequences associated with paying taxes on a single lump-sum award within a single tax
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`year as opposed to paying taxes on smaller amounts spread across multiple tax years.
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`II.
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`Discussion
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`After a careful review of the applicable case law, this Court is satisfied that Plaintiffs are
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`entitled to an award of prejudgment interest as well as a molded verdict to offset the adverse tax
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`consequences of receiving a lump-sum jury award.
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`a. Plaintiffs are Entitled to the Award of Prejudgment Interest
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`The jury found that Defendants violated the NJ LAD, codified at N.J. Stat. Ann. § 10:5.
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`See Docket No. 335 (indicating ‘Yes’ to questions 2). The statute provides a broad set of
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`remedies to prevailing plaintiffs. N.J. Stat. Ann. § 10:5-13 (“All remedies available in common
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`law tort actions shall be available to prevailing plaintiffs”). To effectuate its antidiscrimination
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`policies, the statute codifies a “legislative finding[] and declaration[]” that damages available to
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`prevailing plaintiffs under the NJ LAD “shall be liberally construed in combination with other
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`protections available under the laws of this State.” N.J. Stat. Ann. § 10:5-3.
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`Under the New Jersey Rules of Court, prejudgment interest is available to prevailing
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`plaintiffs in tort actions under certain circumstances:
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`Except where provided by statute with respect to a public entity or employee, and
`except as otherwise provided by law, the court shall, in tort actions, including
`products liability actions, include in the judgment simple interest, calculated as
`hereafter provided, from the date of the institution of the action or from a date 6
`months after the date the cause of action arises, whichever is later, provided that
`in exceptional cases the court may suspend the running of such prejudgment
`interest.
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`N.J. Ct. R. R. 4:42-11. This rule contains a presumption in favor of granting prejudgment
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`interest. Potente v. Cty. of Hudson, 187 N.J. 103, 114 (N.J. 2006) (“What the rule actually says is
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`that pre-judgment interest shall be awarded against all defendants unless it is prohibited by
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`applicable law.”) (emphasis in original). In light of the broad remedies available under the NJ
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`LAD, the New Jersey Supreme Court has held that the presumption in favor of granting
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`prejudgment interest applies to prevailing plaintiffs under the NJ LAD. Id. at 114.
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`Plaintiffs who have been awarded backpay damages under Title VII, codified at 42
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`U.S.C. §2000e-1 et seq, are entitled to a “strong presumption in favor of awarding prejudgment
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`interest.” Booker v. Taylor Milk Co., 64 F.3d 860, 868 (3d Cir. 1995). While this Court has
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`discretion not to award prejudgment interest, it may “exercise its discretion to depart from this
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`presumption only when it provides a justification that reasonably supports the departure.” Id. at
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`868; see also Nance v. City of Newark, 501 F. App’x 123, 129 (3d Cir. 2012) (“Thus, to the
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`extent ... that the damages awarded to the plaintiff represent compensation for lost wages, it is
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`ordinarily an abuse of discretion not to include pre-judgment interest.”) (citing Gierlinger v.
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`Gleason, 160 F.3d 858, 873 (2d Cir. 1998)) (emphasis in original). Plaintiffs who have been
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`awarded backpay damages under 42 U.S.C. §1983 are likewise entitled to a presumption in favor
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`of prejudgment interest. Nance, 501 F. App’x at 131.
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`Notwithstanding the clear presumption in favor of prejudgment interest, Defendants
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`argue that such an award is inappropriate here because the “jury intentionally and willfully
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`removed” prejudgment interest from its award and therefore Plaintiffs seek “to override the
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`jury’s verdict and award the specific monies that the jury determined were not recoverable or
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`should not be awarded as damages.” Defs. Br. 6. This argument is not persuasive. First, the jury
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`rendered a general verdict, which merely asked the jury to determine “the amount of money that
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`would fully and fairly compensate plaintiff” for economic damages. Docket No. 335, 2. The
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`verdict contained no special interrogatories regarding prejudgment interest, nor any indication by
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`the jury that such prejudgment interest was not appropriate. While Defendants make a colorable
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`argument that the handwritten annotations to the trial exhibit evince the jury’s disinclination to
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`award prejudgment interest, those notes are subject to multiple interpretations. In any case, such
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`notes are pre-verdict and do not themselves constitute the verdict. Even if the notes were
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`unambiguous, Defendants provide no caselaw authority for the proposition that this Court is
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`bound by such pre-verdict handwritten notes. As such, Defendants’ argument does not overcome
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`the strong presumption in favor of granting prejudgment interest to Plaintiffs, and this Court will
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`accordingly grant such relief.
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`b. Plaintiffs are Entitled to Molding the Verdict to Offset the Negative Tax
`Consequences of Receiving a Lump-sum Jury Award
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`As noted above, the NJ LAD entitles prevailing plaintiffs to a broad set of remedies. New
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`Jersey courts have interpreted this mandate for broad, liberally construed remedies to include
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`compensating prevailing plaintiffs for the negative tax consequences associated with receiving a
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`lump sum award. Quinlan v. Curtiss-Wright Corp., 409 N.J. Super. 193, 201 (N.J. App. Div.
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`2009), rev’d on other grounds, 204 N.J. 239 (N.J. 2010) (“Under the ‘make whole’ policies of
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`N.J.S.A. 10:5–3, a defendant is called upon to compensate a plaintiff for the negative
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`consequences of receiving a lump sum award of economic damages.”); Ferrante v. Sciaretta, 365
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`N.J. Super. 601, 607 (N.J. Law. Div. 2003) ([U]nder the ‘make whole’ policies of the statute,
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`defendants will be required to compensate plaintiff for the negative tax consequences of
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`receiving the lump sum award.”).
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`No Third Circuit court has yet addressed this issue with respect to the NJ LAD.
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`Nevertheless, “New Jersey courts generally interpret the LAD by reliance upon federal court
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`decisions construing the analogous federal antidiscrimination statutes.” Chisolm v. Manimon, 97
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`F.Supp.2d 615, 621 (D.N.J. 2000), rev’d on other grounds, 275 F.3d 315 (3d Cir. 2001). One
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`such analogous federal antidiscrimination statute is the American with Disabilities Act (“ADA”).
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`In addressing this issue with respect to the ADA, the Third Circuit held that “a district court may,
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`pursuant to its broad equitable powers granted by the ADA, award a prevailing employee an
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`additional sum of money to compensate for the increased tax burden a back pay award may
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`create.” Eshelman v. Agere Sys., Inc., 554 F.3d 426, 441-42 (3d Cir. 2009).
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`Defendants advance two arguments for why Plaintiffs should not receive a molded
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`verdict to adjust for the negative tax consequences of the lump sum award. They argue that there
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`is no binding authority, as the “cases cited by Plaintiffs’ [sic] are state law cases (a Law Division
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`and an unpublished, reversed Appellate Division decision)” such that there is “insufficient legal
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`precedent to proceed forward with such an award.” Defs. Br. 2. As an initial matter, Defendants
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`inaccurately characterize Quinlan, as that Appellate Division case is a published decision (see
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`409 N.J.Super. 193), and therefore is binding precedent for lower courts in New Jersey, unlike
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`unpublished opinions. See N.J. Ct. R. 1:36-3. Further, the subsequent reversal was on different
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`grounds. It is true that decisions by lower New Jersey courts interpreting questions of state law
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`are instructive rather than binding on this Court. See Nat'l Sur. Corp. v. Midland Bank, 551 F.2d
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`21, 28 (3d Cir. 1977); Pennsylvania Glass Sand Corp. v. Caterpillar Tractor Co., 652 F.2d 1165,
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`1167 (3d Cir. 1980) (“In the absence of an authoritative pronouncement from the state's highest
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`court, the task of a federal tribunal is to predict how that court would rule. To make this
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`prognostication, we are not inflexibly confined by dicta or by lower state court decisions.”).
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`Nevertheless, this Court “should look to such [lower court] statements as indicia of how the
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`state's highest court might decide.” Pennsylvania Glass, 652 F.2d at 1167 (emphasis added).
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`Here, the Appellate Division’s decision is particularly instructive because the New Jersey
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`Supreme Court, despite subsequently reversing the lower court on different grounds, affirmed the
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`lower court’s holding that the available remedies under the NJ LAD should be broadly and
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`liberally construed. 204 N.J. 239, 259 (N.J. 2010) (“We have been vigilant in interpreting the
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`LAD in accordance with that overarching purpose, and in recognition that it is, by its
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`terms, see N.J.S.A. 10:5–3, remedial legislation that was intended to be given a broad and liberal
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`interpretation. We have been scrupulous in our insistence that the Law Against Discrimination be
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`applied to the full extent of its facial coverage.”) (internal citations omitted) (emphasis added).
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`As such, Quinlan and Ferrante are particularly instructive that the liberally construed “make
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`whole” policies of the NJ LAD militate in favor of molding the verdict to adjust for the adverse
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`tax consequences from a lump sum award. This holding is consistent with the Third Circuit’s
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`interpretation of the NJ LAD’s federal antidiscrimination analogue in Eshelman.
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`Defendants argue that the “[u]nderlying expert report lacks any specific justification and
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`clarity as to how the calculations were performed and the substantial additional amounts were
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`ultimately calculated.” Defs. Br. 1. Defendants have not submitted an opposing expert report
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`regarding the appropriate calculation of such an offset award, nor have they deposed Plaintiffs’
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`expert regarding this issue. Instead, Defendants’ moving papers attack the legal basis behind
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`such an award. Before determining the appropriate amount by which to mold the verdict, this
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`Court will accordingly grant Defendants leave to depose Plaintiffs’ expert regarding the
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`methodology and calculations contained in her expert report, as well leave to file an expert report
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`in opposition regarding this computation.
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`III. Conclusion
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`IT IS on this 23rd day of July, 2018;
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`ORDERED that Plaintiff Valerie Montone’s motion to be awarded prejudgment interest
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`(2:06-cv-280, Docket No. 351) is GRANTED; and further
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`ORDERED that Astriab Plaintiffs’ motion to be awarded prejudgment interest (2:06-cv-
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`3790, Docket No. 216) is GRANTED; and further
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`ORDERED that the Astriab Plaintiffs’ motion to amend/correct its estimate of the
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`appropriate prejudgment interest for Plaintiff Ezio Scerbo (2:06-cv-3790, Docket No. 218) is
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`GRANTED; and further
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`ORDERED that jury’s verdict shall be modified to include the following amounts in
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`prejudgment interest:
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`Plaintiff Valerie Montone: $28,418;
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`Plaintiff John Astriab: $24,596.91;
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`Plaintiff Clyde Banks: $26,133.67;
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`Plaintiff James Buckley: $26,406.48;
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`Plaintiff William Cullinane: $27,965.45;
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`Plaintiff Richard DeStefano: $26,234.24;
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`Plaintiff David LaBruno: $25,428.33;
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`Plaintiff Ezio Scerbo: $7,929.78;
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`Plaintiff John Whalen: $39,728.6437; and further
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`ORDERED that Plaintiffs’ motion to mold the verdict to offset the negative tax
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`consequences of receiving a lump-sum jury award (2:06-cv-280, Docket No. 351; 2:06-cv-3790,
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`Docket No. 216) is GRANTED; and further
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`ORDERED that Defendants are granted leave to depose Plaintiffs’ expert regarding the
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`methodology for calculating the negative tax consequences of the lump-sum award; and further
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`ORDERED that Defendants are granted leave to issue an expert report in opposition
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`regarding the appropriate calculation of such amounts.
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` /s Stanley R. Chesler___
` STANLEY R. CHESLER
` United States District Judge
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