Week Ending 11/16/12: Flecker v. Statue Cruises

Alan Schorr’s Case of The Week ending November 16, 2012

Flecker v. Statue Cruises, LLC, 2012 WL 5499894 (unpublished) (N.J.App.Div. November 14, 2012).

The CEPA news coming out of the New Jersey Appellate Division is not all bad and seemingly depends upon which panel is reviewing the case. In Flecker v. Statue Cruises, LLC, the Appellate Division addressed some very interesting issues in the context of CEPA, including whether CEPA requires a completed action, the preemption of New Jersey’s Wage and Hours laws by the FLSA, and whether class actions can be brought under CEPA. Unlike the recent appellate panels who sought to restrict the application of CEPA, this appellate panel reversed summary judgment and did not seek to further restrict the application of our whistleblower statute.

Howard Flecker was a deckhand on a ferry service operating from New York and New Jersey to Liberty and Ellis Island. His union negotiated a contract that provided that time and a half overtime pay would only be paid after 48 hours per week of work. Flecker, believing that the contract violated wage and hours laws, filed a single count lawsuit class action complaint. The employer promptly retaliated by cutting Flecker’s hours back to 40 hours per week and sending out a memo advising all employees that, because of the lawsuit, they would be losing their overtime. The memo further stated:

We have been informed, and have reason to believe, that this lawsuit (which is brought by Howard Flecker III, the brother of an official in Local 333) may be supported by your collective bargaining representative, Local 333. If that is the case, we are puzzled and disappointed that the Union apparently did not consider the impact the lawsuit would likely have on you and our Company. For those of you who will lose a day's pay (or more) every week, I leave it to your good judgment whether Local 333's possible involvement in this lawsuit was in your best interests.

This memo created great animosity toward Flecker, who, in addition to having his hours cut from 50 hours a week to 35, was confronted angrily by many of his co-workers. Flecker alleged that the harassment by his co-workers and management caused such stress that he was forced to resign from his position. His attorney was able to convince the company to issue a curative letter, but not until after Flecker had been forced to leave.   He amended his complaint to bring a claim under CEPA, as well as a class action under CEPA on behalf of all similarly situated employees. The parties filed cross-motions for summary judgment. Plaintiff’s motion was denied and Defendant’s motion was granted, dismissing the case.

The Hudson County judge dismissed the CEPA claim, holding that the memo sent by the employer was not a “completed action” and citing Keelan v. Bell Communications Research, 289 N.J.Super. 531 (App. Div. 1996). The trial court also dismissed the class action, holding that CEPA does not protect anyone other than the whistleblower. The trial court dismissed the wage and hour claim holding that Flecker was a “seaman”, and that the New Jersey wage and hour claim was pre-empted by the Federal FLSA which specifically exempts seamen. Flecker appealed and also appealed an order compelling him to undergo an independent medical examination on his claim for emotional distress.

The Appellate Division reversed the dismissal of the CEPA claim. The Court held that the trial court had incorrectly relied upon Keelan because that case involved completed actions only with regard to the statute of limitations argument in that case. Here, the court ruled that the universe of retaliatory actions is not limited to completed actions. The court also ruled that constructive discharge can constitute an adverse action. The court stated:

The universe of possible retaliatory actions under CEPA is greater than discharge, suspension, and demotion. Consequently, that universe may include creating a hostile work environment through a memorandum that defendants knew or should have known would incite plaintiff's co‑workers, who then commenced harassing plaintiff about his lawsuit to such an extent that the work environment became so intolerable to plaintiff that he was forced to resign...Likewise, the universe of retaliatory action may also include reducing plaintiff's hours of employment. (Citations omitted).

With regard to the class action, the Appellate Division stated that they were declining to rule on whether CEPA permits class actions, but at the same time, the court applied an analysis that would make it virtually impossible to maintain a CEPA class action. The court ruled that the class of employees who suffered retaliation also included the employees that harassed him. Because of the adverse interests, the Court ruled that Flecker could not represent the class, and therefore it was not necessary to address the larger issue.

The Court also punted on the FLSA preemption issue, holding that there were not enough facts developed below to determine whether the plaintiff was a “seaman” and remanding for a fuller factual determination. The Court did not address whether the controversy over the preemption of the FLSA would impact whether Flecker maintained a reasonable belief that the overtime agreement violated the law, but presumably that would be addressed once the FLSA facts are fully developed.

With regard to the compelled IME, the Appellate affirmed because Flecker had made specific allegations of symptoms of emotional distress, rather than “garden variety” emotional distress. The Court specifically stated, however, that “emotional distress stemming from the consequences of reporting suspected illegal or unethical employer activity should also be presumed and generally not require expert testimony.” This case can certainly be cited in opposition to motions for IME where only garden variety emotional distress is alleged and is testified to.

            All in all, it is a relief to get CEPA news from the Appellate Division that is not all bad.

Plaintiff’s counsel: Ravi Sattiraju, The Sattiraju Law Firm, P.C.

Defendant’s counsel: Raymond G. McGuire (Kauff, McGuire & Margolis) of the New York bar, admitted pro hac vice, argued the cause for respondents (Genova, Burns & Giantomasi, and Mr. McGuire, attorneys; Patrick W. McGovern and Mr. McGuire, of counsel; Aislinn S. McGuire (Kauff, McGuire & Margolis) of the New York bar, admitted pro hac vice, on the brief).

Trial Judge: Mark A. Baber, J.S.C.

Appellate Judges: Axelrad, Sapp–Peterson and Ostrer.