New Jersey Businesses can Sue each other for Sexual Harassment

March 15, 2010

On January 16, 2010, the New Jersey Appellate Division decided the case of J.T.’s Tire Serv., Inc. v. United Rentals N. Am., Inc., 411 N.J. Super. 236 (App.Div. 2010), and held that New Jersey’s Law Against Discrimination (LAD), N.J.S.A. 10:5-12(l), prohibits “quid pro quo” sexual harassment between businesses.

Eileen Totorello, the owner of J.T.’s Tire Service, Inc., sued United Rentals North America, Inc., claiming that United’s branch manager tried to extort sexual favors from her as a condition of doing business with her company. After several years of Totorello denying the branch manager’s sexual advances, United discontinued its business relationship with J.T.’s Tire Service.

Totorello brought her lawsuit under N.J.S.A. 10:5-12(l), which expressly prohibits “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…sex…of such other person or of such other person’s spouse, partners, members, stockholders, directors, officers, managers, superintendents, agents, employees, business associates, suppliers, or customers.”

The Appellate Division held 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…” and 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 Appellate Division therefore held that N.J.S.A. 10:5-12(l) prohibits quid pro quo sexual harassment between businesses.

As a result of J.T.’s Tire Service, Inc., New Jersey employers must now be aware that they can be held liable not only when their employees become victims of sexual harassment, but also when non-employees whom they conduct business with are victimized by quid pro quo sexual harassment.

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