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By: Thomas Paschos

Thomas Paschos & Associates, P.C.

Haddonfield, NJ

In J.T.s Tire Service, Inc. v. United Rentals North America, Inc., --- A.2d ---, 2010 WL 26495 (January 6, 2010), Plaintiffs, J.T.'s Tire Service, Inc. (J.T.) and its sole owner Eileen Totorello, filed a complaint alleging discriminatory refusal to do business, under the Law Against Discrimination (LAD), against Defendant, United Rentals North America, Inc. (United). Specifically, plaintiffs alleged that a branch manager at United tried to extort sexual favors from Totorello as a condition of allowing her company to continue doing business with United. Plaintiffs allege that because she refused the manager's advances, United ceased contracting with J.T.

Plaintiffs' complaint accused United of unlawful sex discrimination and retaliation in violation of the LAD. Before filing an answer or engaging in any discovery, United filed a motion to dismiss the complaint for failure to state a claim on which relief could be granted. The trial court held that there was no evidence to suggest that Defendant United discriminated against Plaintiff based on her sex and that United had not unlawfully retaliated against plaintiffs as contemplated by the statute. The court dismissed count one of Plaintiff's Complaint as to Defendant United. Plaintiffs appealed.

The appeals court acknowledged that the LAD prohibits discriminatory refusals to do business on the basis of sex. Specifically, subsection (l) prohibits:

For any person to refuse to buy from, sell to, lease from or to, license, contract with, or trade with, provide goods, services or information to, or otherwise do business with any other person on the basis of the race, creed, color, national origin, ancestry, age, sex,. . . .

N.J.S.A. 10:5-12(l) (emphasis added). From the plain wording of the statute, it prohibits sex discrimination in the form of refusals to buy from or otherwise do business with a person because of her gender. However, defendant contends that for purposes of subsection (l), sexual harassment is not prohibited sex discrimination. Defendant argued that sexual harassment is prohibited only in employment, under subsection 12(a), and is not sex discrimination within the meaning of 12(l); that subsection 12(l) does not apply to discriminatory conduct which arises after companies begin engaging in business transactions; and that women business owners do not need protection against sexual harassment by those with whom they do business. The appeals court rejected these arguments.

The court noted that although the LAD does not specifically mention sexual harassment as a prohibited form of discrimination, it is well-established that sexual harassment is a form of sex discrimination that violates both Title VII and the LAD. The court provided that [w]here, as here, the harassment consists of sexual overtures and unwelcome touching or groping, it is presumed that the conduct was committed because of the victim's sex. The court considered this case to involve quid pro quo sexual harassment which occurs when an employer attempts to make an employee's submission to sexual demands a condition of his or her employment. The court held:

The quid pro quo sexual harassment alleged in the complaint, if legally permitted, would stand as a barrier to women's ability to do business on an equal footing with men. Construing N.J.S.A. 10:5-12(l) to prohibit such opprobrious conduct is consistent with the Legislature's intent to eliminate sex discrimination in contracting.

As such, the court reversed the trials courts dismissal of plaintiffs action against defendant.

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