Recent Appellate Division Case Expands Whistleblower Protections

whistleblower-1764379__340-300x300 New Jersey employment law has some of the strongest employee protections in the United States. A recent unpublished decision by the Appellate Division of New Jersey’s Superior Court may have expanded those already strong protections.

New Jersey Whistleblower Laws

New Jersey has two main employment laws protecting whistleblowers. The first is the common law rule established by New Jersey’s Supreme Court in the case of Pierce v. Ortho Pharmaceutical Corp. in 1980, which prohibits an employer from retaliating against an employee in violation of a “clear mandate of public policy” found in legislation; administrative rules, regulations and decisions; and judicial decisions. Thus, an employer may not discipline an employee for disclosing, objecting to or refusing to participate in a practice which violated one of these policies.

The second protection is the Conscientious Employee Protection Act (known as “CEPA”), which the New Jersey Legislation enacted in large part to codify Pierce’s protections. It has been described as “one of the most far-reaching whistleblower statues in the nation.” However, while CEPA provides broader protections that Pierce, if it has stricter procedural requirements. CEPA provides:

34:19-3 Retaliatory action prohibited.

3. An employer shall not take any retaliatory action against an employee because the employee does any of the following:

a.Discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer, or another employer, with whom there is a business relationship, that the employee reasonably believes:

(1)is in violation of a law, or a rule or regulation promulgated pursuant to law, including any violation involving deception of, or misrepresentation to, any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity, or, in the case of an employee who is a licensed or certified health care professional, reasonably believes constitutes improper quality of patient care; or

(2)is fraudulent or criminal, including any activity, policy or practice of deception or misrepresentation which the employee reasonably believes may defraud any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity;

b. Provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any violation of law, or a rule or regulation promulgated pursuant to law by the employer, or another employer, with whom there is a business relationship, including any violation involving deception of, or misrepresentation to, any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity, or, in the case of an employee who is a licensed or certified health care professional, provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into the quality of patient care; or

c. Objects to, or refuses to participate in any activity, policy or practice which the employee reasonably believes:

(1)is in violation of a law, or a rule or regulation promulgated pursuant to law, including any violation involving deception of, or misrepresentation to, any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity, or, if the employee is a licensed or certified health care professional, constitutes improper quality of patient care;

(3)is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment.

There are other rules protecting whistleblowers who suffer retaliation because they lodged complaints of discrimination, filed workers compensation claims, and various other situations, but CEPA and Pierce are the major whistleblower protections under New Jersey employment law.

Restrictions on Protection for Personal Complaints

Despite CEPA’s and Pierce’s broad protections. They are not unlimited. New Jersey’s Supreme Court explained in the case of Maw v. Advanced Clinical Communications, Inc., that CEPA is “designed to prevent retaliation against those employees who object to employer conduct that they reasonably believe to be unlawful or indisputably dangerous to the public health, safety or welfare.” It thus, ruled that “the complained of activity must have public ramifications, and that the dispute between employer and employee must be more than a private disagreement.

Likewise, in 1991 in the case of Devries v. McNeil Consumer Products Co., the Appellate Division of New Jersey’s Superior Court ruled that Pierce could not form the basis for a claim by an employee who objected to violation of a personal right or privilege, or the employee’s own personal interests.

The Appellate Division Potentially Loosens the Restrictions on Personal Complaints

In the recent case of Cotto v. Newaark Public Schools, the Appellate Division may have loosened the reins on this restriction just a tiny bit, at least in the case of CEPA. Although Cotto is an unpublished opinion and therefore not binding, it certainly opens up new lines of arguments.

Jose Cotto was an elementary school teacher in Newark. One of his 8^th grade students, J.O., who had gang affiliations, threatened to kill Cotto in class, called his friends to participate in an assault on Cotto after school, and pointed his cell phone at Cotto like a gun, and moved his finger as if pulling a trigger. Cotto was justifiably upset, and complained to the vice-principal. When the school did nothing, Cotto called the Newark Police Department. An officer was dispatched, but he advised he could do nothing if the school did not initiate a report; it did not. J.O. apparently drove to school every day with the principal, and lounged in the principal’s office.

The Newark Public Schools had rules which required discipline for the types of conduct which J.O.’s engaged in. In particular the fact that under New Jersey criminal law J.O.’s actions could be considered the crimes of assault and terroristic threats. The District’s rules were required by regulations promogulated by the New Jersey Department of Education, with the required contents specified in the Department’s rules.

Cotto did not have tenure. His evaluations had not been great but were passing. However, 8 days after the incident with J.O., the vice-principal gave him an unsatisfactory grade, and three days later the principal – who drove J.O. to school recommended him for non-renewal (ie., termination of his employment). Cotto asked for and received a Donaldson hearing before the Board of Education, but he was nonetheless non-renewed. He was thereafter suspended until the end of the year.

The trial judge denied the District’s motion to dismiss the case on summary judgment, and a jury delivered a verdict in Cotto’s favor. The Newark Public Schools appealed. The Appellate Division denied the District’s appeal, and upheld the judge’s ruling and the jury’s verdict in favor of Cotto.

Takeaways from the Cotto Decision

First, it is important to remember that this is an unpublished decision. It is not binding on subsequent courts. However, it can be persuasive and form the basis for future arguments.

Here, the court held that the complaint was covered because the conduct was “incompatible” with a mandate of public policy. Arguably, however, the only one affected by the employer’s actions was Cotto – by all accounts he was the only one harassed by J.O. This is where the court may have expanded the laws to include when only the complaining company employee is affected. The court did not spend time on this, perhaps because the defendants did not raise it; why is unclear. The argument could be made that the policy affected all staff and students, but the conduct affected only Cotto.

CEPA protects all retaliatory acts by employers, not just firing.

In another expansion, the court ruled that violation of an employer’s own internal rules can constitute a violation of law, rule or public policy, provided the rules were established pursuant to law, rule or public policy. Moreover, the fact that the Newark Public Schools was a government employer may have increased the weight of its rules in the court’s CEPA analysis, particularly since the court went to great lengths to distinguish prior cases which barred CEPA suits based on violation of an employer’s internal rules.

Moreover, conduct by a third party – here J.O. – can form the basis of a CEPA complaint in appropriate circumstances.

The fact that an employee did (or did not) pursue a Donaldson Hearing does not preclude her from successfully pursuing a lawsuit in Superior Court.

Because teacher-mentors assigned for instructional purposes only, not evaluation, mentors will not be allowed to testify about a mentee-employee’s performance in a CEPA case.

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