Discovery Rule Confirmed for LAD Discrimination Claims (Lopez Hearing Required); Retaliation Claims Accrue at Resignation as a Discrete Act

Introduction

This commentary examines the Supreme Court of New Jersey’s decision in Henry v. New Jersey Department of Human Services, 204 N.J. 320 (2010). The Court addressed two critical timing issues under the New Jersey Law Against Discrimination (LAD): (1) when a discrimination claim accrues for statute-of-limitations purposes in light of the equitable discovery rule, and (2) when a retaliation claim accrues where the claimant resigns. The decision further appears against the backdrop of a notable constitutional debate about the Chief Justice’s authority to make temporary assignments to the Supreme Court.

The plaintiff, Lula M. Henry, an African American nurse hired at Trenton State Psychiatric Hospital in an entry-level position despite advanced credentials, alleged she was the victim of racial discrimination in hiring/placement and retaliation. She resigned in November 2004, learned comparators’ facts in 2006, and filed her LAD suit in July 2007. The Law Division and Appellate Division dismissed as time-barred. The Supreme Court affirmed the dismissal of the retaliation claim but revived the discrimination claim for a Lopez discovery-rule hearing on accrual.

The opinion clarifies that discrete acts of retaliation (like resignation or termination) accrue when they occur, while LAD discrimination claims may be tolled if the plaintiff, despite reasonable diligence, could not have discovered the basis for an actionable claim earlier. When a material dispute exists about when discovery reasonably occurred, a Lopez hearing is required.

Summary of the Opinion

The Court, per Judge Stern (temporarily assigned), held as follows:

• Two-year limitations period applies to Superior Court LAD claims (MONTELLS v. HAYNES). Accrual is governed by N.J.S.A. 2A:14-2 and principles of equitable tolling.
• Retaliation: Plaintiff’s retaliation claim accrued at or before her discrete act of resignation in November 2004. The discovery rule and continuing violation doctrine do not save time-barred retaliation claims based on such discrete acts (ROA v. ROA). The dismissal of the retaliation claim was affirmed.
• Discrimination: Plaintiff’s discrimination claim based on hiring/placement may be tolled by the discovery rule. Because facts bearing on when the plaintiff reasonably should have known she had an actionable discrimination claim were disputed (including the employer’s neutral explanations and later-learned comparator information), the Court remanded for a Lopez hearing to determine accrual.

Additionally, the Court noted, without deciding, that the plaintiff’s internal complaints did not explicitly allege racial discrimination, raising a question whether they qualified as “protected activity” for a retaliation claim under the LAD. That issue was mooted by the limitations holding.

Appended to the merits decision were separate writings concerning the constitutionality and scope of the Chief Justice’s temporary assignment power under Article VI, Section II, Paragraph 1 of the New Jersey Constitution: a concurrence by Chief Justice Rabner (endorsing long-standing broad authority), an abstention by Justice Rivera-Soto (contesting the assignment in the absence of quorum necessity), and a dubitante opinion by Justice Hoens (expressing doubts about “necessity” but deferring to the Chief Justice’s authority). Those writings do not alter the merits disposition but illuminate an important institutional question.

Analysis

Precedents Cited and Their Influence

• MONTELLS v. HAYNES, 133 N.J. 282 (1993): Established a two-year statute of limitations for LAD suits filed in Superior Court. The Court reaffirmed that prompt filing protects evidence and furthers repose.
• LOPEZ v. SWYER, 62 N.J. 267 (1973): The foundational discovery-rule case. When a plaintiff is reasonably unaware of an injury or that it is attributable to another’s fault, accrual is tolled until discovery, assessed under an objective standard at a pretrial Lopez hearing where factual disputes exist. Henry deploys Lopez directly to LAD discrimination claims.
• ROA v. ROA, 200 N.J. 555 (2010): Distinguished “discrete acts” (termination, failure to promote) from “continuing violations.” Discrete acts accrue when they occur and cannot be resuscitated by later acts. Roa confirmed the discovery rule’s availability in LAD cases but rejected the continuing-violation doctrine for discrete retaliatory discharge. Henry imports Roa’s discrete-act framework to the resignation-based retaliation claim and its discovery-rule principles to the discrimination claim.
• Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002): A Title VII anchor distinguishing discrete acts from continuing violations. Henry follows the same taxonomy.
• SHEPHERD v. HUNTERDON DEV. CTR., 174 N.J. 1 (2002): Applied continuing-violation doctrine in LAD hostile-work-environment contexts; contrasted with discrete acts. Henry signals that plaintiffs cannot reframe discrete acts to invoke continuing violation.
• Galligan v. Westfield Ctr. Serv., 82 N.J. 188 (1980); O’Keeffe v. Snyder, 83 N.J. 478 (1980); GRUNWALD v. BRONKESH, 131 N.J. 483 (1993); BAIRD v. AMERICAN MEDICAL OPTICS, 155 N.J. 54 (1998): A line of equitable-tolling decisions underscoring that statutes of limitations should not be inflexibly applied where individual justice and equitable considerations justify tolling. Henry’s discovery-rule holding for discrimination claims is grounded in this tradition.
• ZIVE v. STANLEY ROBERTS, INC., 182 N.J. 436 (2005); Dixon v. Rutgers, 110 N.J. 432 (1988); VICTOR v. STATE, 203 N.J. 383 (2010); Tartaglia v. UBS PaineWebber, Inc., 197 N.J. 81 (2008): These cases set out McDonnell Douglas burden-shifting in discrimination and the elements of retaliation (including the “good faith, reasonable basis” for protected complaints). Henry references them to frame substantive standards, even as the case turns on timeliness.
• VILLALOBOS v. FAVA, 342 N.J. Super. 38 (App. Div. 2001): Recognized equitable tolling where the plaintiff is misled about the true reason for an adverse job action. Henry applies that insight by noting the potential tolling effect of non-discriminatory explanations that reasonably deflect suspicion of discrimination.

Legal Reasoning

Standard of Review and Summary Judgment Posture

• The Court reviewed de novo whether any genuine disputes of material fact existed and whether the trial court correctly applied legal standards (Brill; Manalapan Realty). Accrual is a legal issue for the court, but where discovery-timing facts are genuinely disputed, a pretrial Lopez hearing is required.

Discovery Rule and Accrual for the Discrimination Claim

• Accrual normally occurs when a discriminatory act happens. But the discovery rule delays accrual until the plaintiff discovers, or should discover through reasonable diligence, facts forming the basis of a claim or otherwise providing a basis for an actionable claim.
• Applying an objective standard, the Court emphasized that where an employer contemporaneously supplies a neutral, non-discriminatory explanation (for example, “you must be in the position for one year”), a reasonable employee may lack a sufficient basis to suspect racial discrimination. If later, credible comparator information surfaces (e.g., a similarly credentialed white nurse not starting entry level; knowledge of other same-institution claims alleging racism), the plaintiff may, at that later point, first possess the reasonable awareness necessary to trigger accrual.
• Because Henry presented evidence that:
  • she received neutral explanations in 2004 (time-in-grade and a suggestion she harmed her reclassification by elevating the issue to “downtown” and a legislator), and
  • she did not learn of relevant comparators and a pattern of alleged racism until 2006,
  there was a genuine factual dispute on when she reasonably should have discovered that discrimination, not mere bureaucratic delay or “personality conflict,” caused her treatment. That dispute necessitates a Lopez hearing, where the judge weighs whether her suspicions in 2004 were too tentative to trigger accrual and whether she exercised reasonable diligence thereafter.
• The Court expressly noted that equitable tolling may apply when an employee is misled as to the real reason for a job action and thus fails to act within the prescribed time.

Retaliation Claim Accrual

• Relying on Roa and Morgan, the Court treated Henry’s claimed retaliatory mistreatment culminating in resignation as a discrete act. Accrual therefore occurred at or before her November 2004 resignation; subsequent discoveries do not revive the claim via continuing-violation theory.
• Because Henry sued in July 2007, the retaliation claim exceeded the two-year period. The Court found no equitable basis to toll or extend that claim. The fact that Henry’s internal complaints did not expressly allege racial discrimination also raised a question whether she engaged in “protected activity,” though the Court did not reach that merits question.

Procedural Note on Administrative Alternatives

• Although not pursued here, the Court observed that LAD complainants may file with the Division on Civil Rights within 180 days, and some classification disputes may be brought to the Merit System Board/Civil Service Commission. Such channels can facilitate early fact development and may bear on diligence under the discovery rule, though they do not control accrual for a Superior Court LAD suit.

Impact

On LAD Litigation

• Trial courts must hold Lopez hearings when plaintiffs plausibly allege they reasonably lacked knowledge of an actionable discrimination claim within the two-year period. The opinion discourages rigid accrual rulings at summary judgment where employer-proffered neutral explanations and later comparator disclosures could reasonably delay discovery.
• Employees are not forced to file LAD discrimination suits on mere hunches. A reasonable, good-faith need for corroboration (such as comparators or pattern evidence) can delay accrual, but only if the employee exercised ordinary diligence to investigate.
• Retaliation claims based on discrete acts (including resignations, even if framed as constructive discharges) accrue when the discrete act occurs and are rarely amenable to discovery-rule tolling. Plaintiffs should docket the two-year deadline from that date.

For Employers and Public Agencies

• Contemporaneous, accurate, and well-documented non-discriminatory explanations remain essential. However, if those explanations materially mislead employees about the true motivation, they can support equitable tolling and extend exposure.
• Early, transparent classification reviews and access to comparator data through appropriate channels may reduce contested discovery-rule disputes and foster prompt resolution.

For Counsel

• Advise clients to promptly investigate suspected discrimination. Preservation of dates, comparators, communications, and steps taken to inquire will be scrutinized at a Lopez hearing for diligence.
• Calibrate retaliation advice: confirm that workplace complaints explicitly invoke discriminatory conduct in a good-faith, reasonable manner to satisfy the “protected activity” element; separately, calendar the two-year clock from termination/resignation.
• Consider administrative avenues (DCR complaint; Civil Service Commission review) both to preserve alternative remedies and to demonstrate diligence in investigating and clarifying classification decisions.

Institutional Impact: Temporary Assignments to the Supreme Court

• Although not affecting the LAD holdings, the appended writings address whether Article VI, Section II, Paragraph 1 allows the Chief Justice to make temporary assignments beyond quorum necessity. The concurrence marshals constitutional text and history to support broad discretion “when necessary,” including to expedite the Court’s business and maintain full strength. The abstention urges a quorum-only reading, warning of separation-of-powers concerns. The dubitante opinion raises a narrower concern: whether an assigned judge’s outcome-determinative vote creates a constitutional problem.
• Practically, Henry was decided by a six-member majority, so the issue was not outcome-determinative here. Nonetheless, the discussion flags a live, recurring question about judicial administration during vacancies.

Complex Concepts Simplified

• Accrual: The moment a legal claim comes into existence for statute-of-limitations purposes. Under LAD in Superior Court, a two-year period applies.
• Discovery Rule: An equitable doctrine delaying accrual until a reasonable person, exercising ordinary diligence and intelligence, knows or should know of the facts forming the basis of an actionable claim. Applied via a pretrial Lopez hearing when facts are disputed.
• Lopez Hearing: A focused, pretrial evidentiary hearing at which the court determines when the plaintiff reasonably discovered, or should have discovered, the claim. The plaintiff bears the burden to show lack of earlier reasonable awareness despite diligence.
• Discrete Act vs. Continuing Violation:
  • Discrete acts (e.g., termination, failure to promote, resignation) start the limitations clock when they occur.
  • Continuing violations (e.g., hostile work environment) may render earlier component acts timely if at least one act falls within the limitations period. They cannot revive time-barred discrete acts.
• Comparator Evidence: Facts showing similarly situated employees of a different protected class were treated more favorably (e.g., hired at a higher classification). Comparator evidence often supplies the “corroboration” that converts suspicion into a reasonably discoverable claim.
• Protected Activity (Retaliation): Conduct such as opposing practices made unlawful by the LAD or filing a discrimination complaint. The activity must be undertaken in good faith with a reasonable basis.
• Equitable Tolling: Extensions of the filing period based on fairness, such as where a defendant misleads the plaintiff about the real reason for an adverse action, thereby delaying the plaintiff’s recognition of a claim.

Conclusion

Henry delivers two core messages for New Jersey employment law:

• Retaliation claims based on discrete acts like resignation accrue when they happen and must be brought within two years; neither discovery-rule tolling (absent unusual circumstances) nor continuing-violation theory will revive them.
• Discrimination claims, by contrast, may be tolled under the discovery rule if a plaintiff, despite reasonable diligence, lacks a reasonable basis to know the adverse action was discriminatory until later. Where accrual timing is genuinely disputed, a Lopez hearing is mandatory.

In practice, plaintiffs should investigate promptly and document what they knew and when, particularly regarding comparators and employer explanations. Employers should ensure that their decisions, criteria, and communications are accurate, consistent, and well-documented. Courts should resist mechanistic limitations rulings when equitable discovery principles and disputed facts warrant a Lopez hearing.

Finally, although collateral to the merits, the appended opinions on temporary judicial assignments underscore an important, ongoing institutional dialogue about the scope of the Chief Justice’s assignment authority. That debate does not diminish Henry’s substantive holdings, which meaningfully calibrate fairness and repose in LAD litigation by marrying Montells’ two-year period with Lopez’s equitable discovery framework.