Section 10:5-12(l) of the New Jersey Law Against Discrimination (LAD) was passed by the New Jersey Legislature in 1977 as a formal amendment to the LAD. The section makes it unlawful for a 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 other person’s statutorily-protected characteristics, or the protected characteristics of the other person’s "spouse, partners, members, stockholders, directors, officers, managers, superintendents, agents, employees, business associates, suppliers, or customers." L. 1977, c. 96, §2. Prior to 2003, Section 12(l) flew under the radar as a little-noted and rarely-invoked provision of the LAD.
The landscape for Section 12(l) changed in 2003, when the Appellate Division held in Rubin v. Chilton Memorial Hospital, 359 N.J. Super. 105 (App. Div. 2003), that Section 12(l) prohibited a hospital’s alleged discriminatory termination of a contract for services with two physicians/independent contractors. Central to the Appellate Division’s holding was its belief that there was no legislative history relating to Section 12(l) or any analogous statutes in other states, freeing the court to divine the legislature’s intent without any extrinsic aids. Numerous courts have followed Rubin and expanded its holding beyond independent contractors, suggesting that any perceived discriminatory termination of a business relationship can be actionable under the LAD.
It turns out, however, that the foundation for the Appellate Division’s decision in Rubin is unsound, as there is legislative history from 1976 and 1977 relating to the purpose and intent of Section 12(l). Furthermore, similar statutory language is found in the New York Human Rights Law and has been interpreted differently by New York’s highest court. The legislative history of the LAD amendment and the interpretation of a similar statutory provision in New York suggest that Rubin was wrongly decided and that Section 12(l) has been extended much further than intended or warranted.
Rubin v. Chilton Memorial Hospital
The plaintiffs in Rubin were pathologists who provided medical services pursuant to a contract with Chilton Memorial Hospital. After their contract was terminated by the hospital, the doctors brought a lawsuit alleging age discrimination under the LAD. The trial court dismissed the lawsuit under Pukowsky v. Caruso, 312 N.J. Super. (App. Div. 1998), finding that the doctors were independent contractors and not employees of the hospital under the multifactor test set forth in Pukowsky and, therefore, were not protected by the LAD.
On appeal, the Appellate Division agreed that the doctors were independent contractors under Pukowsky and could not bring age discrimination claims under Section 12(a) of the LAD, which applies to employees only. But the Appellate Division in Rubin held that the doctors could proceed with age discrimination claims under Section 12(l) based on the rationale that the discriminatory termination of their contract was akin to a refusal to contract. The court explained that if the doctors could demonstrate that the hospital terminated their contracts because of their age, they would establish a violation of Section 12(l). In so holding, the court stated that "[t]he conduct proscribed by N.J.S.A. 10:5-12l is exclusively related to non-employee relationships." The Appellate Division also rejected the hospital’s reliance on Pukowsky as misplaced because that case "stands for no more than the proposition that only employees are protected by the provisions of subsection a."
The Impact of Legislative History and an Analogous N.Y. Statute
We submit that the Appellate Division’s expansive interpretation of Section 12(l) in Rubin was flawed and based on the panel’s erroneous belief that there was neither legislative history regarding Section 12(l) nor analogous statutes in other states that would aid in interpreting the reach of the 1977 LAD amendment. A review of the legislative history from 1976 and 1977, and the New York Court of Appeals’ interpretation of a comparable provision of the New York Human Rights Law, demonstrate that 12(l) should be construed more narrowly.
First, the legislative history of Section 12(l) shows clearly that it was intended to apply to a specific form of economic discrimination — the Arab League’s boycott against Israel and pressures exerted by the Arab League upon American companies to comply with that boycott — that was receiving local, national and international attention in the mid-1970s. The Assembly Committee’s and Sponsor’s statements and Governor Byrne’s message upon signing the legislation explain that Section 12(l) prohibits "refusal to enter into contracts unless they contain discriminatory provisions," "discriminatory boycotts," "commercial blacklisting" and "discriminatory conduct based on the" protected characteristics of "a person’s business associates, suppliers, or customers." Indeed, the references in the governor’s signing message to Israel and federal legislation regarding discriminatory boycotts plainly relate to federal legislation also enacted in 1976 and 1977 to combat the Arab League’s boycott against Israel. See generally https://www.bis.doc.gov/complianceandenforcement/antiboycottcompliance.htm (the United States Department of Commerce’s Bureau of Industry and Security continues to enforce mid-1970s Anti-Boycott Laws, which "discourage, and in some circumstances, prohibit U.S. companies from furthering or supporting the boycott of Israel sponsored by the Arab League").
The LAD’s legislative history does not indicate that Section 12(l) was meant to apply to independent contractors or every other private or business contract termination dispute. Without the benefit of the legislative history, Rubin expanded Section 12(l) beyond "refusals" to buy from or enter into a contract with a person, applying it to terminations of independent contractor agreements, even though Section 12(l) makes no reference to "termination" of a contract. "Refusal" to enter into contracts describes the types of conduct mentioned in the legislative history that the Rubin court did not locate (boycotts, deed restrictions, commercial blacklisting, etc.), whereas "termination" of contracts goes far beyond those situations.
Furthermore, although the Rubin court noted that it could not "find any analogous statutes in other states" to assist in interpreting Section 12(l), an analogous statute actually existed in the neighboring Empire State and had already been construed as not permitting discriminatory termination claims by independent contractors. Specifically, the New York Human Rights Law (NYHRL) was amended in 1975 to add an anti-boycott provision comparable to Section 12(l). See N.Y. Exec. Law § 296(13), which makes it unlawful "for any person to boycott or blacklist, or to refuse to buy from, sell to or trade with, or otherwise discriminate against any person, because of" the statutorily-protected characteristics of such person or the person’s "partners, members, stockholders, directors, officers, managers, superintendents, agents, employees, business associates, suppliers or customers."
Notably, by the time Rubin was decided in New Jersey, the New York Court of Appeals had previously rejected the contention that Section 296(13) of the NYHRL allowed an independent contractor (an insurance agent) to sue for discriminatory termination of her contractual relationship with the defendant insurance company. Scott v. Massachusetts Mutual Life Ins. Co., 86 N.Y.2d 449 (1995). The Scott court observed that the mid-1970s adoption of Section 296(13) "was designed specifically to address such then-prevalent evils as the use by Arab OPEC nations of their ‘new-found economic strength … to discriminate against and boycott certain religious and ethnic groups ….’" Thus, the Court of Appeals rejected the argument that the anti-boycott provision in Section 296(13) should be viewed as broadly outlawing "general discrimination by ‘any person’ against ‘any person’" because such an interpretation would render the NYHRL’s remaining provisions against specific discriminatory practices "mere surplusage."
The legislative history of Section 12(l) and the interpretation of a virtually identical (and contemporaneously enacted) statutory provision in New York suggest that the Rubin decision was wrongly decided. When considered in conjunction with its legislative history, Section 12(l) is better understood as aimed at preventing economic boycotts and discriminatory contract clauses, rather than expanding the LAD to alleged discriminatory terminations of independent contractor agreements. Indeed, as observed by the Scott court in rejecting a similarly expansive interpretation of the anti-boycott provision of the NYHRL, Rubin‘s broad reading of Section 12(l) would essentially render superfluous the employment discrimination provisions of Section 12(a) and the multifactor tests used by our courts in determining whether a contractor may qualify as an employee for purposes of the LAD’s protections against employment discrimination.
Given the opportunity, the Appellate Division or the Supreme Court should closely examine the legislative history behind Section 12(l) and the persuasive reasoning of the New York Court of Appeals’ Scott decision and decide whether the LAD amendment was truly intended to cover discrimination claims by independent contractors and disputes over the termination of other business and private contracts.¢