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<i>New Jersey Supreme Court Chief Justice Stuart Rabner</i> New Jersey Supreme Court Chief Justice Stuart Rabner

A Princeton financial services company on Wednesday asked the New Jersey Supreme Court to reinstate a more than $2 million attorney fee award for defeating an ex-employee’s lawsuit.

Last February, the Appellate Division vacated the $2.06 million award, holding that a surviving claim lodged under the state Conscientious Employee Protection Act was not covered by a contract provision that waived the right to jury trial and awarded fees for prevailing in disputes arising from “this agreement.”

And so an award of fees to Heartland Payment Systems for success in defending both a whistleblower and contract claim, not the contract claim alone, was wrong, the court said, also reinstating the whistleblower claim.

The Supreme Court on Wednesday heard arguments only on the dispute over counsel fees, not on the merits of the original lawsuit filed by the ex-employee, Greg Noren, against Heartland.

The case has been in litigation since 2006.

Heartland’s lawyer, Seth Lapidow, argued that since the contract claim was successfully defeated, Noren should be required to pay the company’s legal fees.

Chief Justice Stuart Rabner acknowledged that if Noren is successful in his CEPA claim, he could be entitled to counsel fees.

Lapidow, of Backes & Hill in Lawrenceville, insisted that Heartland was entitled to the counsel fees, even though the CEPA count remains alive.

“There is no requirement that we have to be entirely successful,” Lapidow said. “The contract requires the losing party to pay all fees. That stands independently” from the CEPA claim.

Rabner asked Lapidow if Heartland should be able to keep the counsel fees if it loses on the CEPA claim. Lapidow said it should be allowed to keep those fees, since the facts behind both claims are intertwined.

Noren’s attorney, Patrick Collins, acknowledged that while Noren will at some point likely have to pay some fees, he should not be required to do so now.

“The litigation is not concluded,” said Collins, of Morristown’s Graham Curtin.

Justice Lee Solomon asked how much in fees Heartland was entitled to receive.

“It’s their burden to establish what fees were expended on the counts in which they prevailed,” Collins said.

“What should we do?” asked Justice Barry Albin.

“Address the fees when the book is closed,” Collins said.

If Noren is successful in his CEPA claim, “we’re going to have to split the baby,” Solomon said.

“That’s correct,” Collins replied.

Rabner asked if the fee issue should be remanded for apportionment. Collins said no.

All issues should be “addressed on an omnibus basis,” he said. “Would that be more orderly?”

The National Employment Lawyers Association of New Jersey participated as amicus, and sided with Noren. The fee issue should be addressed after the entire case has been litigated, said its attorney, Jon Green of Green Savits in Florham Park.

Noren was employed by Heartland from April 1998 to June 2005 as a “relationship manager,” a role in which he sold payment processing services. The contract he signed provided that he and Heartland both “irrevocably waive any right to trial by jury in any suit, action or proceeding under, in connection with or to enforce this agreement,” according to court documents. Another contract provision awarded fees and costs “[i]n any suit, action or proceeding arising out of or related to this agreement.”

Noren was fired in 2005. His suit was eventually whittled down to the two claims: breach of contract and the CEPA violation. His jury trial demand was denied based on the waiver provision and, after 22 days of bench trial, Bergen County Superior Court Judge Susan Steele dismissed both claims. She awarded Heartland $2.06 million in fees and costs for the defense of both claims, finding them so intertwined that the fees could not be apportioned, the decision stated.

In his appeal, Noren did not dispute the jury waiver’s applicability to the contract claim, or the notion that fees may be awarded based on Heartland’s success in defeating that claim. But he did dispute the waiver’s applicability to the CEPA claim, and the corresponding fee award based on the statute.

Michael Booth

Trenton Bureau Chief New Jersey Law Journal American Lawyer Media mbooth@alm.com Twitter: @mboothnjlj

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