NJ Supreme Court to Address “Watchdog” Exception to CEPA

The New Jersey Supreme Court recently decided to review a recent decision by the Appellate Division which threatens to expand the protections of the Conscientious Employee Protection Act (“CEPA”) to those employees whose job duties and responsibilities expressly require them to report to their employer potential or actual violations of law or public policy. The issue to be decided by the Supreme Court in Lippman v. Ethicon will be whether employees who are responsible for monitoring and reporting on employer compliance with relevant laws and regulations — so-called “watchdog” employees — seek whistleblower protection under CEPA, and, if so, under what circumstances?

The Appellate Division’s decision in Lippman appears to be at odds with the Appellate Division’s 2008 decision in Massarano v. N.J. Transit, 400 N.J. Super. 474 (App. Div. 2008), which held that reporting violations of law as part of one’s job duties and responsibilities does not constitute “whistle-blowing” activity as required by CEPA. Since Massarano, and as we have previously discussed, the “job duties” exception to CEPA had gained significant support over the course of the last several years, and was shaping up to serve as a strong defense for employers defending against CEPA retaliation claims. Numerous cases decided in the wake of Massarano, in both New Jersey state and federal court, including the much publicized White v. Starbucks decision, have continued to develop and expand upon the “job duties” exception to CEPA.

Factual Background

The Plaintiff, Joel Lippman, served as an executive with Ethicon and one of his primary job responsibilities was to review and report on product safety. On numerous occasions, Plaintiff voiced his concern on a number of different issues and advocated for the recall of certain products that, in his professional opinion, were harmful to the public. Plaintiff was terminated in May 2006, allegedly for having an inappropriate relationship with a subordinate. He thereafter filed a lawsuit under CEPA alleging he was terminated in retaliation for his “whistleblowing” activities. The trial court, relying heavily on Massarano, granted summary judgment in favor of Ethicon, holding that because “it was his job to bring forth issues regarding the safety of drugs and products,” the plaintiff failed to show that he engaged in protected whistle-blowing activity as required by CEPA.

Appellate Division’s Decision

The Appellate Division “refused to endorse” the prior Massarano decision and rejected “the motion court’s incorrect legal assumption that an employee’s job title or employment responsibilities should be considered outcome determinative in deciding whether the employee has presented a cognizable cause of action under CEPA. We disagree that this notion is consistent with the legal principles established by our Supreme Court in construing the protections afforded to whistleblowers under CEPA.”

Addressing those “watchdog” employees whose job duties or responsibilities include the reporting of illegal conduct to their employers, the Lippman court opined that such individuals “are the most vulnerable to retaliation because they are uniquely positioned to know where the problem areas are and to speak out when corporate profits are put ahead of consumer safety.”

Who Is A “Watchdog” Employee?

A “watchdog” employee, the Appellate Division noted, is an “employee who, by virtue of his or her duties and responsibilities, is in the best position to: (1) know the relevant standard of care; and (2) know when an employer’s proposed plan or course of action would violate or materially deviate from that standard of care.”

Where a “watchdog” employee asserts a cause of action under CEPA, the Lippman decision set forth the following modified four-part test, as reflected in the highlighted language below. for establishing a prima facie case of retaliation under CEPA:

  1. The employee must reasonably believe that the employer’s conduct was violative of a law, government regulation or public policy;
  2. The employee must establish that he or she refused to participate or objected to the unlawful conduct, and advocated compliance with the relevant legal standards to the employer or to those designated by the employer with the authority and responsibility to comply (emphasis added);
  3. The employee must have suffered an adverse employment action; and
  4. There must be a causal connection between the complained-of conduct and the adverse employment action.

The Appellate Division reversed the trial court’s summary judgment decision in favor of Ethicon and remanded for further proceedings, concluding that “[i]f an individual’s job is to protect the public from exposure to dangerous defective medical products, CEPA does not permit the employer to retaliate against that individual because of his or her performance of duties in good faith, and consistent with the job description.”

Implications for Employers

As noted in Lippman, CEPA continues to be the “most far reaching whistle-blower statute in the nation.” We will, of course, continue to follow the case and report on the Supreme Court’s decision as soon as it comes down. It is hoped that the Supreme Court will finally bring some clarity and finality to the issue of whether and under what circumstances employees who are responsible for raising and reporting legal concerns to their employer are protected under CEPA. Until a final decision by the Supreme Court, New Jersey employers should exercise caution when making any employment-related decision involving an employee whose job duties include the reporting of potential or actual violations of law or public policy.

The Gibbons Employment & Labor Law Department regularly handles the defense of retaliation and discrimination claims in both state and federal courts. Please feel free to contact us with any questions regarding CEPA or whistleblower-related issues.

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