A New Jersey appeals court has thrown out a jury award worth more than $1 million in a wrongful discharge suit against the Elizabeth Board of Education, saying hearsay testimony about an alleged motive could have prejudiced the jury.

The Appellate Division said the evidence, admitted by Superior Court Judge Lisa Chrystal over defense objections, fit none of the hearsay rule’s exceptions.

“Under either the plain error or abuse of discretion analysis, the matter must be reversed,” the panel said in Pace v. Elizabeth Board of Education, A-4995-10, decided Dec. 10.

Anthony Pace, a security guard, sued the board and the district superintendent after his contract was not renewed in 2006. Pace was 63 years old at the time and had been employed for 15-1/2 years.

That year, the superintendent, Pablo Munoz, faced a $30 million budget shortfall that required severe layoffs. In all, 78 district employees were to be let go, including 15 security guards.

James Heims, the director of security guards, testified that Pace was targeted for termination because of a history of absences. Over a four-year period, he missed 60 days of work. He had been warned four times about absenteeism and twice about leaving his post for breaks without arranging for coverage.

At the time his contract was not renewed, he was still in the process of seeking workers’ compensation for 10 days of work he missed in 2003 due to a knee injury.

At trial, Chrystal allowed two plaintiff’s witnesses — Francesco LaFace, a former board electrician, and Vito Nufrio, a former vice principal — to testify that a former school board member, Carol Cascio, told them that board members, whom she did not name, had been discussing the possibility of terminating district employees who were pursuing workers’ comp claims. If so, it would violate the Law Against Discrimination.

The district’s attorney at the trial, Philip Morin III, of Phillipsburg’s Florio Perrucci Steinhardt & Fader, objected to LaFace’s testimony as to Cascio’s statements on the ground of relevance and to Nufrio’s testimony on hearsay grounds.

Chrystal overruled both objections. As to hearsay, she said the testimony was admissible under the statement-against-interest exception because it referred to a time when Cascio was on the board of education, which could subject her to personal liability under the LAD and workers’ compensation law.

“Because it can be attributable to a Board member while she was on the Board I think [it's] not hearsay. So I mean because she’s a member of the Board … it was attributable to her while she was on the Board,” Chrystal said.

The jury found for the plaintiff on the LAD and wrongful discharge claims. It awarded Pace $147,630 in lost wages, $427,370 in future lost earnings and $250,000 in punitive damages. Chrystal added $245,551 in counsel fees and costs, bringing the total to $1.07 million.

Appellate Division Judges Clarkson Fisher Jr., Carmen Alvarez and Jerome St. John said the hearsay statement clearly could have led to an unjust result. There was no corroboration, no identification of which board member, if any, may have actually made the statements and clear evidence to the contrary that Pace was targeted because of his history of absenteeism, they said.

“[T]he admission of Cascio’s alleged statements, if on improper grounds, is so consequential that it is clearly capable of producing an unjust result,” the judges said. “Nothing in either witnesses’ version of the conversation with Cascio implied that she did more than fail to act when told others might make termination decisions for improper or unlawful reasons. Since she acknowledged no wrongdoing, the statements were not against her interest. If the statement was not against a declarant’s interest when made, it is not admissible.”

Making it worse, “this hearsay-within-hearsay statement was inadmissible because it repeated an assertion made by an unidentified speaker under unclear circumstances,” they said. “The statements raised the specter that the [board] acted improperly, while providing no details or names.

“Cascio’s statements were, to coin a phrase, the smoking gun. Without the statements, on this record, plaintiff could not have connected the nonrenewal with any disability, actual or perceived, or the nonrenewal and retaliation for a workmen’s compensation claim.”

The board’s attorney on the appeal, Samuel Samaro of Hackensack’s Pashman Stein, says that without the improper evidentiary ruling, Pace would have had no case. “There was really no other evidence that he was fired for any other reason” than his absenteeism, says Samaro. “That was his whole case. In light of this ruling, there is really nothing left.”

The board’s president, Fernando Nazco, said: “Despite the lengthy appeals process, we are ultimately satisfied that the court determined that the board was completely justified in its nonrenewal of Mr. Pace, and any allegations that the district acted improperly were completely baseless.”

Pace’s attorney, Edison solo Phillip Linder, did not return a telephone call seeking comment.