New Jersey Supreme Court Provides Clarification on the Standards of Proof for LAD and CEPA Claims

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.

Factual Background

Plaintiff Michael Battaglia, a long-time employee of defendant United Parcel Service (“UPS”), filed suit under the LAD and CEPA alleging he was demoted in retaliation for complaints he made both orally to his supervisor, Wayne DeCraine, and in an anonymous letter to UPS Human Resources. Briefly summarized, the plaintiff’s complaints essentially fall into three categories. The first consisted of the plaintiff’s complaints regarding offensive and inappropriate sexual and gender-based comments he attributed to DeCraine. These remarks were made only in the presence of the plaintiff and other male employees; none were made to or in the presence of any female employee. Next, the plaintiff contends that he complained to DeCraine that other UPS employees were going out for liquid lunches, abusing the UPS credit card, and not returning to work. Finally, in his anonymous letter UPS’ HR department, the plaintiff raised a host of other non-specific complaints, including the general complaint about “so many examples [of] poor and unacceptable, unethical behavior.”

The Investigation

UPS Human Resources immediately investigated the allegations included in the anonymous letter, assigning a District HR Manager to conduct the investigation. Shortly after the investigation, the HR Manager happened upon an unrelated document that the plaintiff had written. Comparing that document to the anonymous letter, she came to believe that the plaintiff was the author of the anonymous letter. The plaintiff was thereafter demoted following a series of incidents which UPS alleged constituted a “pattern of poor behavior” by Plaintiff, demonstrated in part by his “cavalier and dismissive” attitude toward management.

Trial Court Decision

Plaintiff’s Complaint alleged that his demotion violated CEPA – New Jersey’s whistleblower statute – because it was in retaliation for the complaint he voiced about the improper use of company credit cards by fellow UPS employees. The plaintiff based his LAD retaliation claim on his complaints about DeCraine’s offensive and derogatory comments about female employees. The jury found UPS liable for unlawful retaliation in violation of both the LAD and CEPA, and awarded the plaintiff $500,000 in economic damages and $500,000 in personal hardship and emotional distress damages. The trial judge reduced the emotional distress award to $205,000, most notably because there was no evidence that the plaintiff’s distress was severe and because the plaintiff failed to present any expert testimony on the issue. Both parties cross-appealed.

Appellate Division Decision

The Appellate Division reversed the LAD verdict, reasoning that there was no evidence that any of the gender-based comments were heard by women, nor any evidence of disparate treatment of women or of a hostile work environment. The Appellate Court affirmed the jury’s CEPA verdict, finding that the plaintiff’s complaints about the improper use of UPS credit cards constituted “protected activity” under the statute, and there was sufficient evidence establishing a causal connection between his complaints and subsequent demotion. Finally, as to the emotional distress award, the Appellate Division concluded that the Trial Court erred by permitting the jury to include future damages in its emotional distress award without expert evidence that plaintiff’s emotional distress was permanent.

Supreme Court Decision

The New Jersey Supreme Court reinstated the LAD verdict, struck down the CEPA verdict, and affirmed the judgment of the Appellate Division that the award of damages for emotional distress could not stand.

First, as to the LAD claim, the Court ruled that “as long as the complaint is made in a good faith belief that the conduct complained-of violates the LAD, it suffices for purposes of pursuing a cause of action.” In other words, a plaintiff asserting an LAD retaliation claim need not also prove that there is a separate identifiable victim of actual discrimination.

Next, the Court held that in order to succeed on a fraud-based CEPA claim, a plaintiff must demonstrate a reasonable belief that the complained-of activity was in fact occurring and was fraudulent. The Court found that the plaintiff had not engaged in protected activity when he complained about the improper use of UPS credit cards because the plaintiff’s complaints – both his anonymous letter to HR and oral complaint to DeCraine – were vague and did not indicate that he believed fraudulent activity was occurring. Moreover, the Court concluded that such behavior merely “amounted to violations of internal company policies” and that “[v]ague and conclusory complaints, complaints about trivial or minor matters, or generalized workplace unhappiness are not the sort of things that the Legislature intended to be protected by CEPA.”

Finally, as to the emotional distress award, the Court held that while lay testimony is sufficient for recovery of emotional distress damages arising from “humiliation, embarrassment or indignity,” an LAD plaintiff may only recover an award for future emotional distress if evidence of permanency is offered in the form of an expert opinion.

The Gibbons Employment & Labor Law Department regularly handles the defense of retaliation and discrimination claims in both state and federal courts. For questions regarding this case or related litigation, please feel free to contact a Gibbons attorney.

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