New Jersey Law Provides a Cause of Action For Discrimination Between Two Companies

On January 6, 2010, the New Jersey Superior Court, Appellate Division, held that one company may sue another company under the New Jersey Law Against Discrimination (“LAD”) for a discriminatory refusal to do business.  In J.T.’s Tire Service, Inc. v. United Rentals North America, Inc., (No. A-2989-08T2 1/6/10), J.T.’s Tire Service’s owner alleged that a branch manager at United Rentals tried to extort sexual favors from her as a condition of allowing her company to continue doing business with United.  The plaintiff also alleged that because she refused the manager’s advances, United terminated its contract with J.T.’s Tire Service.

J.T.’s Tire Service’s complaint alleged unlawful sex discrimination  under the LAD provision that makes it unlawful “[f]or 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 person on the basis of … sex.”  (N.J.S.A. 10:5-12(l))  The court noted that there are only a few cases interpreting this section of the law, but that courts have recognized that the LAD prohibits refusals to do business with independent contractors based upon protected characteristics, and that it also prohibits discriminatory termination of contracts.  Thus, the Court held that J.T.’s Tire Service stated a viable cause of action against United Rentals. 

Practice Pointer:  This atypical case reminds employers that they must address harassment and discrimination involving their own employees and their customers, vendors, consultants and independent contractors.  Employers should review their harassment and discrimination policies and training programs to ensure that their employees are on notice and understand that the employer’s anti-discrimination policies and complaint reporting procedures extend to employees’ interactions with these “outside” groups. 
For additional information on this topic, please contact Douglas S. Zucker at, or Kathryn V. Hatfield at