In a decision clarifying the standards of proof for retaliation claims arising under the Law Against Discrimination (“LAD”) and the Conscientious Employee Protection Act (“CEPA”), the New Jersey Supreme Court held in Battaglia v. UPS that, for purposes of an LAD retaliation claim, a plaintiff need only demonstrate a good faith belief that the complained-of conduct violates the LAD, and need not identify any actual victim of discrimination. As to the fraud-based CEPA claim, the Court held that the plaintiff must have “reasonably believed” that the complained-of activity was fraudulent. Finally, addressing the plaintiff’s emotional distress damages, the Court ruled that claims for future emotional distress must be supported by an expert opinion regarding permanency.
Introduction – In a case of particular interest to New Jersey employers, the New Jersey Supreme Court has been asked to review an appellate ruling that an employee who reported violations of law to her superiors was not a “whistle-blower” because her reporting was required as part of her job duties. A decision by the Supreme Court will have a substantial impact on the scope of New Jersey’s whistle-blower statute, the Conscientious Employee Protection Act (“CEPA”) . Factual Background – In White v. Starbucks, plaintiff Kari White was employed as a district manager in Starbucks’ Upper Mid-Atlantic Region, where she was responsible for the overall management of six Starbucks locations including some in New Jersey. According to the job description for plaintiff’s position, she was responsible for, among other things, “ensuring that employees adhere to legal and operational compliance requirements.” Prior to formally assuming her management role, plaintiff participated in a six-week training period, where she received instruction in retail management and compliance with public health laws. She also received and reviewed a manual titled “Starbucks Food Safety, Store Cleanliness and Store Condition Standards.”
In our June 15, 2011 post, we reported on Donelson v. DuPont Chambers Works, a case in which two employees alleged they were retaliated against after they raised safety concerns about the employer’s manufacture of a dangerous chemical. The jury rendered a verdict in favor of one employee (Seddon) and against the other (Donelson). On appeal, the New Jersey Supreme Court held that the employer was liable under New Jersey’s Conscientious Employee Protection Act (“CEPA”) for the economic losses of Seddon, who was unable to continue working because of his mental injuries caused by the employer’s retaliatory actions. The Court reversed the decision of the Appellate Division that Seddon could not recover his economic losses because he had not been discharged or constructively discharged from his job. The Supreme Court remanded the case to the Appellate Division to decide the issues of punitive damages and attorneys’ fees.
“The Whistleblower Improvement Act of 2011,” a new bill which would amend the whistleblower program under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), was introduced by Representative Michael Grimm (R-NY) on July 11, 2011. The new bill addresses the concern that the whistleblower program of the Dodd-Frank Act, as it currently stands, will undermine internal compliance programs as there is no requirement in the statute that employees first report potential securities violations to the employer before going to the U.S. Securities and Exchange Commission (“SEC” or “Commission”). With limited exceptions, the proposed legislation would require employees to first report any misconduct through the employer’s internal reporting system before going to the Commission. As we previously reported, the Final Rules implementing the Dodd-Frank Act whistleblower program became effective on August 12, 2011.
Publicly traded employers should be aware that the U.S. Securities and Exchange Commission (“SEC”) recently adopted Final Rules implementing the whistleblower program under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act”). Consistent with the Final Rules, which become effective on August 12, 2011, employers should not interfere with an employee’s efforts to communicate with the SEC or take any adverse actions against an employee for exercising his or her rights under the whistleblower program. In addition, employers should have clear policies in place for employees to be able to report any perceived violations of federal securities laws and employees should be trained on the procedures for reporting any such violations. The Act creates a private right of action for whistleblowers who have suffered retaliation and remedies include reinstatement, double back pay with interest, litigation costs, expert witness fees, and reasonable attorney’s fees.
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.
New Jersey Supreme Court Holds That Employees Disciplined for Stealing Confidential Company Documents in Support of Discrimination Claims Can Sue for Unlawful Retaliation
The New Jersey Supreme Court has just announced a new test under which an employer may be held liable for unlawful retaliation when taking action against an employee who misappropriates and uses confidential company documents against the employer in support of a discrimination claim. Those who believe that simplicity is a virtue will not have their minds changed by the New Jersey Supreme Court’s decision in Quinlan v. Curtiss-Wright Corporation, in which the Court, by a 5-2 majority, established a complex and confusing seven-part “balancing test” for determining whether an employee’s wrongful taking of company documents nevertheless constitutes “protected activity” under the New Jersey Law Against Discrimination (the “LAD”). Applying this test, the Court held that the plaintiff in Quinlan could have been terminated for the wrongful taking of documents, but should not have been terminated for her attorney’s use of one of the documents at a deposition.