NJ Supreme Court Rules That Lost Wages are Recoverable Under CEPA Even in Absence of Actual or Constructive Discharge
In a case of particular interest to New Jersey employers, the New Jersey Supreme Court ruled on June 9, 2011, in Donelson v. DuPont Chambers Works (A-112-09) that an employee who files suit under the Conscientious Employee Protection Act (“CEPA”) may recover back and front pay, even if the employee was not fired or constructively discharged, if the employee can show that he became mentally disabled as a result of the employer’s retaliation. The Court rejected the conclusion of the Appellate Division that the same standards govern remedies under CEPA and the New Jersey Law Against Discrimination (“LAD”), and that a constructive discharge must be proven to obtain back and front pay damages.
Plaintiff John Seddon (“Plaintiff”), a thirty-year employee of DuPont Chambers Works, filed complaints with DuPont management and the Occupational Safety and Health Administration regarding alleged unsafe conditions in the workplace. Plaintiff contended that after he engaged in whistle-blowing activities, DuPont retaliated against him, including placing him involuntarily on short-term disability with pay. Following his return to work, DuPont required Plaintiff to work twelve-hour shifts in isolation, a requirement Plaintiff characterized as “torture.” Plaintiff sought psychiatric treatment and then took a voluntary six-month leave of absence. At the conclusion of his six-month leave, Plaintiff retired with a disability pension from DuPont.
The Complaint and Jury Award
Plaintiff filed a complaint under CEPA, alleging that DuPont retaliated against him for complaining about workplace safety concerns, and that as result of DuPont’s actions, he suffered a mental breakdown rendering him unfit for continued employment at DuPont. Notably, Plaintiff did not claim that he was terminated or constructively discharged by DuPont.
At trial, DuPont filed a motion in limine to bar Plaintiff’s front and back pay claims, arguing that Plaintiff was not entitled to such relief because he had not pled constructive discharge and DuPont had not terminated him. The trial court denied DuPont’s motion and ruled that “if [Plaintiff] could prove that DuPont’s retaliation caused him to suffer a psychological breakdown that led to his acceptance of an early disability retirement, then he would be entitled to the difference between the wages he would have earned had he worked and retired in the ordinary course and the disability pension he was receiving.” The trial court then instructed the jury that Plaintiff’s recovery of lost wages was not dependent on him proving constructive discharge. The jury returned a verdict in Plaintiff’s favor, awarding him $724,000 in lost wages and $500,000 in punitive damages. The jury awarded Plaintiff nothing for emotional pain and suffering. The court also awarded $523,289 in attorneys’ fees.
On appeal, the Appellate Division reversed and remanded for entry of judgment in favor of DuPont. Holding that Plaintiff could not prevail on a lost-wage claim under CEPA unless he proved an actual or constructive discharge (i.e., that DuPont’s conduct was “so intolerable that a reasonable person would be forced to resign rather than continue to endure it”), the Appellate Division ruled that Plaintiff was not entitled to economic damages, and that the award of counsel fees was likewise in error. In its decision, the Appellate Division compared CEPA to the LAD, noting that several Appellate Division decisions have concluded in the LAD context “that economic damages cannot be recovered where there has been no constructive discharge,” and that CEPA and LAD cases have been construed “identically on a wide variety of substantive issues.”
New Jersey Supreme Court Rules for Plaintiff
In a 4-2 decision (Justice Rivera-Soto abstaining), the New Jersey Supreme Court reversed the judgment of the Appellate Division and reinstated the jury’s verdict and award of damages, holding that lost wages are recoverable in a CEPA case even where the Plaintiff has not been constructively discharged.
Writing for the majority, Justice Albin (joined by Chief Justice Rabner, Justice Long and Judge Stern) first examined the language of CEPA’s damages provision. Under CEPA, an employee who suffers “retaliatory action” may file a civil suit and, if he prevails, is entitled to “[a]ll remedies available in common law tort actions.” Further, the statute provides that “[t]he court shall also order, where appropriate and to the fullest extent possible[,] . . . compensation for all lost wages, benefits and other remuneration.” The Court then analyzed the applicable common law, finding that “a person injured by the tortious conduct of another ‘has the right to recover damages for diminished-earning capacity,’ provided there is sufficient proof both to establish that the injury will impair his future income and to quantify the lost income.” Finding that traditional principles of damages utilized in tort actions were applicable to Plaintiff’s CEPA claim, the Court concluded that “[t]o the extent that DuPont, by its retaliatory action, proximately caused [Plaintiff] to suffer a mental injury incapacitating him from his former employment, he has ‘the right to recover damages for diminished-earning capacity.’”
Significantly, the Court limited its ruling in Donelson to the CEPA context, although precisely the same language providing for “all remedies available in common law tort actions” appears in both CEPA and the LAD. In so doing, the Court rejected the position of DuPont and the Academy of New Jersey Management Attorneys, which argued as amicus curiae that “the same standards should, and do, govern the remedies available under the LAD and CEPA.” However, while declining to address whether a plaintiff in an LAD retaliation case could proceed with a lost-wage claim absent an actual or constructive discharge, the Court noted that “this Court has never concluded in a LAD retaliation case that front and back pay can be awarded only in cases of actual or constructive discharge.”
In dissent, Justice LaVecchia (joined by Justice Hoens) asserted that the majority opinion erred by allowing the Plaintiff “backdoor access” to damages that would stem from a wrongful termination, although the Plaintiff made a conscious decision not to plead or prove a constructive discharge claim: “By camoflaging his constructive discharge allegation as a nondescript CEPA violation, plaintiff reaped the benefit of the more generous scope of relief available for constructive discharge claims without enduring the more onerous burden of proof associated with that cause of action.”