A New Jersey business owner may now bring a sexual harassment claim against another business under a section of the New Jersey Law Against Discrimination (LAD) that prohibits refusal to do business on the basis of sex and other LAD protected categories see J.T.'s Tire Service v. United Rentals North America, Docket No. A-2989-08T2, (January 6, 2010).

Eileen Totorello, the sole owner of J.T.'s Tire Service, alleged that United Rentals branch manager, Harold Hinkes, would periodically make sexual advances toward her and withhold business from her company when she declined his demands for sexual favors. Totorello alleged that after she refused Hinkes when he kissed and groped her against her will, Hinkes began delaying payments to J.T.'s and United and then ceased doing business with her company altogether. United had previously been buying $29,000 worth of tires per month from J.T. 's.

Totorello and J.T.'s filed suit against United, claiming unlawful sex discrimination in violation of the New Jersey Law Against Discrimination. The trial court granted United's motion to dismiss the complaint. The New Jersey Appellate Division reversed the trial court's decision, finding that the LAD prohibits discriminatory refusals to do business on the basis of sex.

Sexual harassment lawsuits are generally brought under the employment discrimination provision of the LAD, N.J.S.A. 10:5-12(a). This case was filed under a different section of the LAD, 10:5-12(l), which makes it unlawful to "refuse to buy from . . . or otherwise do business with any other person on the basis of . . . sex, gender. . . " or other protected categories.

United argued that although sexual harassment is prohibited in employment, it is not prohibited sex discrimination within the meaning of Section 12(l) which does not apply to "discriminatory conduct which arises after companies begin engaging in business transactions."

The Appellate Division rejected these arguments, and held that quid pro quo harassment such as that alleged by Totorello violates Section 12(l). The Court also considered the social policy underlying the LAD, finding that courts have long recognized that the LAD was enacted "to eradicate the cancer of discrimination." The alleged quid quo pro harassment, if legally permitted, "would stand as a barrier to women's ability to do business on an equal footing with men."

The Appellate division determined the viability of a quid pro quo sexual harassment claim under Section 12(l). The Courts left unaddressed the potential viability of the more common hostile work environment claim under the same section. This case reinforces the need for employers to ensure that employees receive training on preventing workplace harassment so that they understand that unlawful harassment is prohibited in the workplace in general and with outside vendors, clients, and any other business contacts or partners. Employers should also verify that their anti-harassment policies are up to date.

If you have any questions about this case, need assistance drafting or updating an anti-harassment policy, or would like to schedule an anti-harassment training for your company, please contact the Nukk-Freeman & Cerra attorney with whom you normally work.