## Facts

- John Erickson was hired by Marsh & McLennan Co. (M&M) as an at-will account representative in 1981 and later transferred to the Commercial Accounts Department.
- In the Commercial Accounts Department, Erickson reported to department manager Angela Kyte, who reported to operations manager Frank Hayes.
- Two employees reported to management that Erickson had sexually harassed an employee; M&M investigated, warned Erickson his job was in jeopardy, and later discharged him.
- Erickson denied harassment and claimed he was terminated because of favoritism stemming from a consensual romantic relationship between Kyte and the complaining employee and because he sought legal counsel after the allegations.
- M&M asserted Erickson was discharged for deficient performance and insufficient technical ability for client needs.
- After termination, prospective employers contacted M&M for references; M&M employees communicated mixed assessments, including that Erickson lacked the level of expertise required for M&M clients.
- Erickson sued for reverse sex discrimination under the New Jersey Law Against Discrimination (LAD) and for defamation based on the references; a jury found for Erickson on both claims.
- The Appellate Division reversed and directed judgment for M&M; the Supreme Court affirmed as to discrimination, but reversed and remanded as to defamation due to an erroneous jury instruction on the burden of proof.

## Issues

1. Whether a male employee stated and proved a prima facie claim of reverse sex discrimination under the LAD based on termination allegedly tied to a supervisor’s consensual relationship with a female subordinate.
2. Whether employer communications to prospective employers about a former employee’s performance are protected by a qualified privilege.
3. What burden of proof applies to overcome that qualified privilege by showing actual malice.

## Decision

- The court held Erickson did not establish a cognizable prima facie reverse sex-discrimination claim under the LAD and affirmed judgment for M&M on that claim.
- The court held M&M’s post-termination communications to prospective employers were protected by a qualified “common interest” privilege.
- The court held the trial court’s instruction allowing Erickson to defeat the privilege by proving actual malice by a preponderance of the evidence was erroneous.
- The court required proof of actual malice by clear and convincing evidence to overcome the privilege.
- The court reversed the directed judgment for M&M on the defamation claim and remanded for reconsideration under the correct clear-and-convincing standard.

## Legal Principles

- In LAD reverse-discrimination cases, a plaintiff from a traditionally favored group must show circumstances supporting an inference of discrimination, such as that the employer is an unusual employer that discriminates against the majority, or other facts indicating gender-based decisionmaking.
- Favoritism arising from a supervisor’s consensual romantic relationship (“paramour preference”), without evidence that employment decisions turned on sex as such, does not by itself constitute unlawful sex discrimination against a third party under the LAD.
- A former employer’s statements to a prospective employer about a former employee’s qualifications and performance are conditionally protected by a qualified privilege when both parties share a legitimate interest in the information.
- A plaintiff may defeat that qualified privilege only by proving “actual malice” (knowledge of falsity or reckless disregard for truth) by clear and convincing evidence.
- A jury instruction that dilutes the clear-and-convincing burden on actual malice in this setting is prejudicial error requiring reversal and remand.

## Conclusion

The court rejected Erickson’s LAD claim because alleged favoritism linked to a consensual relationship did not support an inference of sex-based discrimination, but it required a remand of the defamation claim because the jury was misinstructed: a plaintiff must prove actual malice by clear and convincing evidence to defeat the qualified privilege protecting employment references.


Erickson v. Marsh & McLennan Co., 117 N.J. 539 (1990)