Week Ending 9/14/12: Winters v. No. Regional Fire & Rescue

Alan Schorr’s Employment Case of The Week ending September 14, 2012

Winters v. North Hudson Regional Fire & Rescue, A-45/46/47-10, (N.J. Supreme Court, September 13, 2012)

The New Jersey Supreme Court’s decision this week in Winters v. North Hudson Regional Fire & Rescue, will affect public employment law for the next decade. It is a classic case of bad facts making bad law, and at this point it is difficult to predict some far ranging its effects will be in the area of private employment and beyond. The core issue is what constitutes a prior hearing on the merits for purposes of collateral estoppel. According to this opinion, a public plaintiff appealing discipline who believes he has suffered retaliation is collaterally estopped from bringing a retaliation lawsuit, even if the issue of retaliation was not litigated or actually decided in the disciplinary hearing. The factual and procedural history is almost as strange as the holding.

Steven J. Winters was the equivalent of a Captain in the North Hudson Regional Fire and Rescue, which was a regional fire department. Throughout his 22 years with the Regional Department and its predecessor, Winters was a frequent and vocal critic and whistleblower. He was terminated after two disciplinary actions - one for allegedly falsely whistleblowing, which, in itself, sounds like retaliation. The final, more serious infraction was for working for two other municipalities while out on disability and collecting full pay from his employer. There was discovery and a hearing before the Office of Administrative Law. Although the issue of retaliation was the elephant in the room, the issue was never addressed head on, and the Administrative Law Judge refused to hear evidence of retaliation because he did not want to extend and multiply the Administrative hearing. Ultimately, the Administrative Judge and the Commission upheld the termination finding that Winters had engaged in “egregious conduct.” Winters appealed to the Appellate Division, which affirmed

While the Appellate Division appeal was pending, Winters then filed a CEPA, LAD, and Constitutional Complaint in Superior Court. Regional moved for summary judgment on the basis of collateral estoppel. The trial court denied the motion because the administrative decision did not address the issue of retaliation. Regional filed an interlocutory appeal, which affirmed the trial court for the same reasons. Regional then appealed to the Supreme Court, which granted interlocutory review. Then the Supreme Court wrote a letter inviting amicus to submit briefs on the subject, to which NELA-NJ and EANJ responded. The Supreme Court then reversed, holding that Winters blown his opportunity to argue retaliation at the OAL, and because he had to opportunity to argue retaliation but chose not to do so, he was collaterally estopped, even though the issue was never adjudicated. This decision will certainly have a chilling effect on public employees who face discipline in mixed motive situations.

This is where the bad facts come into play. The Supreme Court acknowledged that there may have been mixed motives at play here. In other words, the employer may have been motivated by both legitimate and unlawful reasons to terminate Winters. In such a case, as the lower had ruled, Winters should have a fair opportunity to argue that, even though he may have engaged in wrongdoing, that was not the real reason for his termination, which was a retaliation for his whistleblowing activities. The Supreme Court, however, found that Winters’s actions were so egregious that it was unnecessary for the Court to undertake that analysis, given that it was collaterally estopped. Amid this chorus of illogic from the Supreme Court, there was but one voice of dissent. Justice Albin dissented, chiding his benchmates that “collateral estoppel has been sacrificed on the altar of judicial economy.”

The end result of this decision is that public employees who believe that discrimination or retaliation was partially or entirely responsible for the decision to discipline must either argue those issues exclusively at the OAL, or else they must forfeit their disciplinary hearing and head straight to Superior Court. While Justice Albin was correct that it is illogical to find collateral estoppel where an issue clearly has not been litigated or adjudicated, he is incorrect that this decision is for purposes of judicial economy. If anything, it is precisely the opposite. This will bog down and complicate the judicial system even more than it already is. The likely effect of the Winters case is that disciplinary hearings at the OAL will necessarily become much longer and more complicated as all issues of motive must now be resolved along with the disciplinary issues. Even worse, many more lawsuits will now be filed because every disciplinary action where a motivation of discrimination or retaliation is alleged will now have to be brought to Superior Court or else the LAD, CEPA, or Constitutional claims will be forever forfeited.

The outer contours of this decision will be litigated for the rest of this decade and possibly beyond. Undoubtedly this decision will be cited in motions to dismiss for private employment matters. For example, what about union grievance hearings, union arbitrations, and other administrative hearings involving discipline? The Supreme Court had previously ruled in Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511 (2006) that unemployment Appeal Tribunal hearings do not have preclusive effect on future employment actions, but the issue in question involved an Appeal Tribunal Hearing, not a Board of Review or Appellate decision. Will the perceived egregiousness of Winters’ action limit this case to its facts, or will the enhanced application of collateral estoppel change the face of litigation of all disciplinary matters? This excerpt from the case will no doubt be scrutinized. Prior to recounting the “egregious” actions of Mr. Winters, the Court wrote:

“The question at the heart of this matter is whether the issues in the two proceedings were aligned and were litigated as part of the final judgment in the administrative action. We hold that they essentially were. Winters cannot take advantage of his own tactic of throttling back on his claim of retaliation in the administrative proceeding after having initially raised it. Retaliation was a central theme of his argument and that he chose not to present there his comprehensive proof of that claim does not afford him a second bite at the apple in this matter.”
Slip op. at 27.

Counsel for both employees and employers will need to very carefully counsel their clients and rethink their strategies. It is no longer a question of what you are litigating. An employee’s lawsuit can now be estopped for merely believing that there is discrimination, retaliation, or even a mixed motive, even if it is never litigated or adjudicated in a prior administrative hearing.

Plaintiff’s counsel: Robert L. Herbst, Jonathan I. Nirenberg, The Nirenberg Law Firm

Defendant’s counsel: Thomas R. Kobin and David J. Pack, Chasan Leyner & Lamparello for Defendant D’Orio;

Thomas B. Hanrahan, Thomas R. Kobin and Brion McEldowney for Defendant North Hudson Regional Fire and Rescue;

David F. Corrigan and Bradley D. Tishman, The Corrigan Law Group for Defendant Welz;

Amicus counsel: Richard E. Yaskin and Bennet Zurofsky for National Employment Lawyers Asscociation - New Jersey (NELA-NJ);

Marvin M. Goldstein, Mark A. Saloman, and John J. Sarno, Proskauer Rose for Employers Association of New Jersey (EANJ);

Justices: For reversal : Rabner, LaVecchia, Hoens, Patterson, Wefing; for affirmation: Albin, who wrote a separate dissenting opinion.

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