2014 was another busy year for developments in whistleblowing and retaliation law in New Jersey. This blog post summarizes noteworthy state and federal cases for employers to consider in the new year.
Conscientious Employee Protection Act
In 2014, New Jersey’s lawmakers proposed a further expansion of the state’s already broad whistleblower protection statute, the Conscientious Employee Protection Act (“CEPA”). In the wake of the “Bridgegate” scandal (a term that refers to employees in the Governor’s office allegedly directing the closure of lanes leading to the George Washington Bridge), the Senate Labor Committee approved a bill (S768) that would provide public employees with express protection against retaliation when reporting a “substantial waste of public funds by a governmental entity or . . . an abuse of authority or gross mismanagement.” The bill is now before the full Senate. For more on S768, please see our prior blog post.
2014 also saw significant whistleblowing cases reach the New Jersey Supreme Court. Earlier this year, the New Jersey Supreme Court refused to lower the bar for bringing a CEPA claim in Hitesman v. Bridgeway, Inc., 214 N.J. 235 (2014). According to the Court, to bring a CEPA claim based on complaints concerning “improper quality of patient care or conduct” or implicating “a clear mandate of public policy concerning the public health,” a plaintiff must at a minimum, identify a source of law or other authority that sets forth a standard demonstrating a reasonable belief the employer engaged in the alleged misconduct. For more on Hitesman, please see our CEPA Roundup.
In another high profile case, Lippman v. Ethicon, Inc., No. A-65/66-13, the high court is considering the fate of the so-called “job-duties” exception to CEPA. Breaking with longstanding precedent, the Appellate Division had concluded that the plaintiff here could blow the whistle by merely performing the job functions for which he was hired to perform. For more on Lippman, check out our blog post/amicus brief filed before the NJ Supreme Court.
Also quite recently, the New Jersey Supreme Court agreed to hear another CEPA case in State v. Saavedra, No. A-68-13. In that case, the Appellate Division affirmed that a public employee may be indicted for stealing her employer’s confidential documents, even where the employee took the documents to support her discrimination claims. The Appellate Division distinguished the criminal case in Saavedra from Quinlan, a civil matter in which the New Jersey Supreme Court opined that in some situations employees may be protected from discipline for using confidential company documents to support discrimination claims. For more on Saavedra, please see our Appellate Division Roundup.
Similarly, in Stark v. South Jersey Transit Auth., No. A-1758-11T2, 2014 N.J. Super. Unpub. LEXIS 1150 (App. Div. May 21, 2014), the Appellate Division held that the illegal recording of a private conversation also did not constitute protected activity under Quinlan. Though the plaintiffs had not alleged that their employer engaged in any specific acts of discrimination, for purposes of “completeness,” the Appellate Division still engaged in the multi-factor inquiry under Quinlan only to reach the same conclusion that the recording was not protected activity and should be excluded as evidence. Given that the plaintiffs’ conduct appeared to violate both the law and company policy, the Court also held that such “substantiated disciplinary charges [we]re not retaliatory” under CEPA. For more on Stark, please see our CEPA Roundup.
Federal Whistleblowing Cases
New Jersey courts also addressed important federal whistleblowing cases. In Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153 (3d Cir. 2014), the Third Circuit held that, to avoid dismissal, a relator in a qui tam suit need only allege the “particular details” of a claims scheme and a “sufficient indicia” of the false claims. By way of background, qui tam actions under the False Claims Act (or FCA) allow a plaintiff, here called a relator, to bring a claim on behalf of the government if he or she has knowledge of fraud perpetrated on it. The holding in Foglia stands in contrast to other federal circuit courts of appeal that have held that FCA relators must comply with Federal Rule of Civil Procedure 9(b) requiring plaintiffs to plead claims of fraud with particularity. Given this split, expect a challenge before the U.S. Supreme Court in the future. For more on Foglia, please see our prior blog post.
In another FCA case, United States v. Boston Scientific Neuromodulation Corp., No. 2:11-CV-1210 (SDW) (MCA), 2014 WL 4402118 (D.N.J. Sept. 4, 2014), a New Jersey federal court allowed a medical device maker to proceed with counterclaims against two of its former employees for allegedly violating their contracts with the company by retaining and disclosing company proprietary data after their terminations. Accepting the factual allegations in the counterclaims as true for purposes of deciding the former employees’ motion to dismiss, the court succinctly held that “[t]he amended counterclaims state with sufficient particularity the circumstances constituting the Relators’ breach of contract.” For more on Boston Scientific, see our prior blog post.
Finally, the Third Circuit recently made news regarding the securities anti-retaliation provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In Khazin v. TD Ameritrade Holding Corp., No. 14–1689, 2014 WL 6871393 (3d Cir. 2014), the Third Circuit ruled that the “text and structure of Dodd-Frank compel the conclusion that whistleblower retaliation claims brought pursuant to 15 U.S.C. §78u-6(h) are not exempt from predispute arbitration agreements.” For more on Khazin, please click here.