N.J. Supreme Court Will Decide if Watchdogs Can Be Whistleblowers

N.J. Supreme Court Will Decide if  Watchdogs Can Be Whistleblowers

A New Jersey Supreme Court case that promises to have a major impact on the scope of whistleblower protection in the state has drawn participation from both sides of the employment bar.

Six amicus motions have been filed over the last few days in Lippman v. Ethicon, which will resolve whether “watchdog employees”—those responsible for monitoring and reporting on employer compliance with the law—can seek whistleblower protection under the Conscientious Employee Protection Act and, if so, under what circumstances.

Appellate courts have split on whether watchdogs can sue under CEPA. In Massarano v. N.J. Transit , 400 N.J. Super. 474 (2008), a panel held in a precedential opinion that they couldn’t. Barbara Massarano was a security operations manager for a New Jersey Transit security contractor who claimed she was fired for alerting supervisors that blueprints for bridges, tunnels, a new rail operations center, underground gas lines and building specifications had been dumped in a publicly accessible recycle bin. The Appellate Division said that Massarano was “merely doing her job.”

A series of similar rulings followed, including White v. Starbucks, decided in December 2011. Starbucks district manager Kari White alleged she was forced to resign because of her complaints to supervisors about problems such as employee theft, failure to ensure that refrigerated foods were kept at a safe temperature, unsanitary conditions, after-hours employee sex parties and violation of wheelchair-access laws.

Based on Massarano, the panel affirmed a lower court’s dismissal of the suit, noting that it was White’s job to deal with the kinds of violations she alleged. Her duties included overseeing operations and management, making decisions on management staffing, ensuring customer satisfaction and product quality, and managing safety and security. White’s request for an appeal was rebuffed.

Between 2011 and 2013, the court denied review in three other CEPA cases that followed Massarano: Richardson v. Deborah Heart & Lung Center; Aviles v. Big M, Inc.; and Tayoun v. Mooney.

Only after the Lippman panel came out the other way did the Supreme Court decide to step in and decide whether watchdogs can be whistleblowers.

Joel Lippman, a medical doctor, claimed he engaged in whistleblowing activities while employed as a vice president at two Johnson & Johnson subsidiaries—Ortho-McNeil Pharmaceutical, where he was vice president in charge of clinical trials, and Ethicon, a company that makes surgical products, where he was vice president of medical affairs and sat on internal global management, products and quality boards.

His alleged whistleblowing activity over the years involved opposing the release of or pushing for the recall of seven products he viewed as dangerous or defective, including the Ortho-Evra contraceptive patch and Panacryl surgical sutures. In one instance, where a recall was done, it cost between $10 million and $100 million, according to testimony from a company witness.

The company fired him in 2006, saying it was for a sexual relationship with a subordinate while Lippman claimed it was retaliatory.

Middlesex County Superior Court Judge Edward Ryan dismissed the case on summary judgment, relying on Massarano. He said “it was [Lippman's] job to bring forth issues regarding the safety of drugs and products” and he thus “failed to show that he performed a whistle-blowing activity.”

The appeals court reversed, saying it disagreed with Massarano and the idea that “an employee’s job title or employment responsibilities should be considered outcome determinative” in deciding whether the employee has a CEPA claim.

“The facts of this case illustrate the gaping holes this line of reasoning creates in the wall erected by the Legislature to protect whistleblowers from retaliation,” said Judge Jose Fuentes in a published opinion. He called “watchdog employees” like Lippman “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.”

Whistleblowers in the pharmaceutical and medical products industry need CEPA protection because of its highly regulated and highly competitive nature, which “creates enormous pressure on those entrusted to monitor, and when necessary enforce the process and procedures created to ensure that safety rules are followed,” Fuentes added.

Ethicon sought an appeal, as did Lippman, on the basis that although the court recognized that watchdogs can sue, it imposed on them a greater burden than other employees by requiring that they show they exhausted all internal remedies in order to establish a prima facie case.

The court granted the cross appeals in March.

Lippman’s lawyer, Bruce McMoran, of McMoran, O’Connor & Bramley in Manasquan, said Massarano has no support in the language of the statute or in any prior case, nor does making it harder for watchdog employees to sue than others. He pointed out that Fuentes, who was a member of the per curiam panel that decided White, essentially overruled himself in Lippman.

Ethicon’s lawyer, Francis Dee of McElroy Deutsch Mulvaney & Carpenter in Morristown, declined comment.

The New Jersey Association for Justice seeks to weigh in as an amicus on Lippman’s side, as do 27 labor, environmental, consumer and other groups, including the New Jersey chapters of the National Employment Lawyers Association and the American Federation of Teachers, in a joint brief.

NJAJ lawyer Evan Goldman, of Hackensack’s Schiffman, Abraham, Kaufman & Ritter, said that Massarano would allow companies to add watchdog duties to employee responsibilities in order to evade CEPA liability and create a slippery slope that would eviscerate the law.

He counters suggestions that Lippman would result in more lawsuits, saying that it is Massarano that will lead to a “flood of litigation” over who is a watchdog and who isn’t.

The brief for the 27 groups, filed by Newark lawyers Andrew Dwyer and Bennet Zurofsky, urges placing the ultimate burden of persuasion on the employer whenever a “watchdog” employee brings a case to trial.

Zurofsky says public policy requires more protection for watchdogs so they can be “fearless” to do their jobs vigorously and diligently and thereby protect the public.

CEPA’s continued viability is at stake, Dwyer said. Failure to protect watchdogs will mean that “employees who are best positioned to identify and object to illegal or dangerous practices will put their jobs at risk if they complain,” he said.

Employer interests see a similar urgency.

The Academy of New Jersey Management Attorneys called Lippman a “game changer that will have dire practical consequences on employers doing business in this state” because it will prevent employers in some industries from taking valid employment actions against watchdog-type employees and deter them from creating job positions that involve monitoring and reporting safety and compliance issues.

Lawrence Del Rossi of Drinker Biddle & Reath in Florham Park, who wrote the brief, said it articulates a “core job duties” standard for true watchdog employees, addressing concerns that employers could try to fit everyone within Massarano.

Natalie Mantell of Gibbons in Newark said the brief she filed for the New Jersey Defense Association focused on how Lippman “disrupts the delicate balance between the product benefits and risks that is embodied in the law and public policy governing New Jersey’s pharmaceutical and medical device industry. Companies must be able to discipline the employees responsible for that balancing if they do not appropriately perform their jobs without facing CEPA liability.”

The other two pro-employer briefs were filed by Mark Saloman of Proskauer Rose in Newark for the Employers Association of New Jersey and Adam Saravay of McCarter & English in Newark for the New Jersey Business & Industry Association and the New Jersey Civil Justice Institute.

Contact the reporter at mgallagher@alm.com.

LOAD MORE
Practice Area(s):