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NJ Family Legal Blog Pertinent Information As It Relates To New Jersey Family Laws

IMPUTATION OF INCOME IN THE WORLD OF ADVERTISING

Posted in Alimony, Divorce, Practice Issues

Reading the recently unpublished (not precedential) Appellate Division matter of Connaughton v. Connaughton  brought me back to my days of toiling as an account executive at an advertising agency in Manhattan. Our team often worked long hours and frequently traveled for client meetings, commercial shoots, and the like. 

Advertising also was and remains notorious for forcing account and creative executives to switch from agency to agency in order to make more money over time.  For instance, a person who just joined an agency may be making tens of thousands of dollars more than a similarly situated person who started with and remained at the same agency throughout their career for no other reason than that the newly hired person came from a different agency.

The income situation in Connaughton was interesting in that Brian’s historical income increased as he frequently switched jobs and moved up the proverbial ladder.  Similarly interesting was Elizabeth’s income growth, which stalled once she left the workforce and gave birth to the parties’ child.  Specifically, the parties married in 1995, and a year later, Brian obtained a job with J. Walter Thompson while Elizabeth commenced a period of freelance work that lasted throughout the remainder of the marriage. 

Following the terrorist attacks in 2001, the parties decided to slow down and move to South Carolina, where Elizabeth’s parents lived, and start their own business. Brian was working long hours and traveling extensively prior to the move, as is common in the industry. The business failed, however, and the parties returned to New York five years later, at which time Brian re-entered the agency world and procured a position as Vice President and Associate Creative Director at Digitas. Brian’s long hours and heavy travel schedule, however, resumed.

Elizabeth filed for divorce in 2008. One issue at trial was what level of income should be imputed to Elizabeth in determining alimony and child support. Here, as is oftentimes the case, each party had their own vocational expert to provide an expert opinion on a party’s earning capacity. In this instance, Elizabeth’s expert testified that she could earn between $26,000 (part-time) and $52,000 (full-time).

By contrast, and, not surprisingly, Brian’s expert testified that Elizabeth was capable of "working in the Competitive Labor market in a freelance or salary position as an Art Director and/or Creative Director." As a result, Brian’s expert concluded that Elizabeth was capable of earning an annual income of $75,000 to $95,000 on a full-time basis – even if such employment occurred in the Greenville/Spartanville, South Carolina area where Elizabeth sought to relocate.

In deciding to impute to Elizabeth an annual income of $42,000, the court rejected the testimony of Brian’s vocational expert because the expert relied on a wage data website that is less reliable than the United States Department of Labor wage statistics; the salary range conclusion was "incredibly high" for a position in South Carolina; and some of the employment opportunities contained in the expert’s report were unrealistic because they were not within a reasonable commuting distance, or entirely lacked contact information.

Affirming the trial court on appeal, based upon what Brian considered the trial court’s "superficial observations of the opinions of the employability experts," the Appellate Division concluded that the trial court properly considered the factors listed in the alimony statute, and that the court’s conclusions as to Elizabeth’s need for alimony and Brian’s ability to pay were supported by substantial credible evidence.

Ultimately, the income situation was reflective of industry norms – Brian’s income substantially increased as he switched jobs and moved locations, and, Elizabeth’s income as a freelance creative stagnated at lower levels as she raised the parties’ child.

By my review of the decision, the opinion of Elizabeth’s expert seemed far more consistent with someone who has been out of the full-time, or even part-time workforce than that of Brian’s expert, especially considering the fact that the income imputed was based on the South Carolina workplace, rather than the heart of the advertising industry in New York City. While the conclusion may present somewhat of a cautionary tale as to the use of experts, the opinion of Brian’s expert seems to be more of an aggressive effort to, perhaps, have the trial court "split the baby" in rendering its decision on Elizabeth’s income. When the court weeded through the details of the expert’s conclusions and testimony, however, the court’s decision seems like the only logical conclusion at the end of the day.

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Robert Epstein is an associate in Fox Rothschild LLP’s Family Law Practice Group. Robert practices in the firm’s Roseland, New Jersey office and can be reached at (973) 994-7526, or repstein@foxrothschild.com.