Week Ending 7/17/15: Lippman v. Ethicon

Alan Schorr’s Employment Case of The Week ending July 17, 2015

Lippman v. Ethicon, __ N.J. __; 2015 N.J. LEXIS 791 (NJ Supreme Court, July 15, 2015)

In the most important employment case of the year, the Supreme Court unanimously rejected the line of recent cases holding that “watchdog” employees are not protected by the Conscientious Employee Protection Act.  The Appellate Division decision, 432 N.J. Super. 378, had coined the term “watchdog employees” to describe those employees who, as part of their job duties, had the responsibility to report and take action on corporate wrongdoing.

Joel S. Lippman, M.D. was a watchdog employee with Ethicon, a division of Johnson & Johnson.  Lippman rose to the level of worldwide vice-president of medical affairs and chief medical officer.  The Supreme Court went into great detail about a long series of products that Lippman opposed or expressed safety concerns about.  Some of these concerns resulted in recalls which were very costly to Ethicon.  Lippman alleges that he was first “reorganized” in order to strip of some of his authority.  He was then terminated allegedly for engaging in a consensual sexual relationship with a woman who later complained of sexual harassment.  Lippman alleged that the reasons for termination were pretextual and that the real reason was retaliation for his whistleblowing activities.

A little history is necessary here.  In 2006, the U.S. Supreme addressed a case, Garcetti v. Ceballos, 547 U.S. 410, in which a public employee brought a claim under 42 U.S.C. §1983 claiming retaliation under the First Amendment for making statements of public concern.  In that case, the Supreme Court held that the employee, a deputy district attorney who expressed concerns in a memo about inaccuracies in a search warrant, was not protected by the First Amendment reasoning that he was not engaging in free speech because it was part of his job duties to point out inaccuracies in search warrants.

Even though it was a First Amendment case and not a CEPA case, the New Jersey employment defense bar seized upon the Garcetti case and began arguing in every CEPA case that the employee was not a whistleblower under CEPA if the complaints were part of the employee’s job duties.  The defense bar scored a big victory in 2008 in Massarano v. New Jersey Transit, 400 N.J. Super. 474.  In that published opinion, the Appellate Division, without actually citing Garcetti, held that an employee could not qualify as a whistleblower if she was “merely doing her job.”  A series of cases disqualifying employees whose reporting was arguably part of their job followed, most recently, White v. Starbucks.

Based upon these cases, the trial court in Lippman followed Massarano and granted summary judgment, reasoning that Lippman’s actions were part of his job duties.  The Appellate Division reversed, holding that watchdog employees are among the most vulnerable employees because their duties require them to make reports that may be unpopular and unprofitable to their employer. However, the Appellate Division created an additional hurdle for watchdog employees, requiring such employees to first pursue and exhaust all internal means of securing compliance.  Both parties petitioned for certification.  The Supreme Court granted certification and literally dozens of amici participated in the filing of briefs.

The Supreme Court unanimously held that the CEPA statute does not differentiate between different types of employees and therefore it does not matter what the employee’s job duties are so long as the employee can demonstrate that he or she objected to, reported, or refused to participate in an employer activity that violates public policy.  Furthermore, the Supreme Court rejected the Appellate Division’s attempt to add an additional hurdle to watchdog employees, holding that there should be no different standard for watchdogs, and also that the CEPA statute itself already contains a requirement that all types of employees bring their concerns or objections to the attention of a supervisor unless the practice is already known to the employer or if the employee reasonably fears physical harm.

This decision corrects nine years of court misperceptions regarding the protection of watchdog employees who are terminated in some cases because they did their jobs too well.  A reversal would have eviscerated the broad and important protection of whistleblowers.  Instead, CEPA’s vitality has been made stronger than ever by this very important opinion.

Counsel: Francis X. Dee argued the cause for appellants and cross-plaintiffs (McElroy, Deutsch, Mulvaney & Carpenter, attorneys; Mr. Dee and Stephen F. Payerle, on the briefs).

Bruce P. McMoran argued the cause for plaintiff and cross-appellant (McMoran, O'Connor & Bramley, attorneys; Mr. McMoran and Michael F. O'Connor, on the briefs).

Adam N. Saravay argued the cause for amici curiae New Jersey Business & Industry Association, New Jersey Civil Justice Institute, Employers Association of New Jersey, New Jersey Defense Association and New Jersey Management Attorneys, Inc. (McCarter & English, Proskauer Rose, Gibbons, and Drinker Biddle & Reath, attorneys; Mr. Saravay, David R. Kott, Christopher S. Mayer, Mark A. Saloman, Daniel L. Saperstein, Allana M. Grinshteyn, Nicholas M. Tamburri, Joseph J. Sarno, Natalie H. Mantell, Michelle M. Bufano, Michelle G. Haas, John A. Ridley, and Lawrence J. Del Rossi, of counsel and on the briefs).

Andrew W. Dwyer argued the cause for amici curiae The New Jersey Work Environment Council, The New Jersey State Industrial Union Council, and 25 other environmental, [10]  labor, consumer and community organizations, and The New Jersey Association for Justice (The Dwyer Law Firm, Law Office of Bennett D. Zurofsky, and Schiffman, Abraham, Kaufman & Ritter, attorneys; Evan L. Goldman, of counsel; Mr. Dwyer, Mr. Zurofsky, Mr. Goldman, and Kristen Welsh Ragon on the briefs).

Judges: JUSTICE LaVECCHIA delivered the opinion of the Court. CHIEF JUSTICE RABNER and JUSTICES ALBIN, FERNANDEZ-VINA and SOLOMON join in JUSTICE LaVECCHIA's opinion. JUSTICE PATTERSON and JUDGE CUFF (temporarily assigned) did not participate.

Opinion by: LaVECCHIA.

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