Newsletter July 2015

Newsletter July 2015


 Ty Hyderally, Esq.July 2015 Newsletter 

The New Jersey Supreme Court recently ruled that employees who take company documents risk being criminally prosecuted, whether or not their motive for taking the documents was to support a discrimination or whistleblowing claim. In State v. Saavedra, 2015 N.J. LEXIS 641 (N.J. June 23, 2015), Ivonne Saavedra filed claims of discrimination under the common law and the New Jersey Law Against Discrimination against the North Bergen Board of Education. When it was revealed through the discovery process that Ms. Saavedra had in her possession several hundred copies of documents taken from the Board’s files containing confidential student educational and medical records, the Board reported the alleged theft of its documents to the county prosecutor. The State then charged Ms. Saavedra with official misconduct, as well as theft by unlawful taking of movable property.

Ms. Saavedra moved to dismiss the charges based upon the Supreme Court’s previous holding in Quinlan v. Curtiss-Wright Corp., 204 N.J. 239 (2010), that such conduct was protected activity in a discrimination case. In Quinlan, the New Jersey Supreme Court held that an employee alleging discrimination may be privileged to take or use company documents, depending upon a balancing of seven factors, such as whether the employee came upon the documents in the course of his or her duties and the likelihood that the documents would otherwise be destroyed or discarded. Id. at 267-272. Since the Quinlan Court found such conduct was privileged, Ms. Saavedra argued that it could not simultaneously serve as the basis for a criminal charge. However, the Supremes disagreed. The Saavedra Court opined that the Quinlan decision does not provide any immunity from criminal prosecution for taking company documents because Quinlan did not sanction the taking of documents, address any issue of criminal law, or expressly hold that an employee taking company documents for use in a discrimination case would be immune from criminal prosecution. Therefore, the Saavedra majority opined that there were no constitutional or public policy issues at stake by permitting the State to prosecute Ms. Saavedra.

However, the majority did not foreclose the possibility that Ms. Saavedra could still prevail. The majority found that Ms. Saavedra could assert a “claim of right” defense based upon her taking the documents to support her employment discrimination claim. Therefore, the Saavedra Court remanded the case to the Trial Court to permit Ms. Saavedra to present evidence in support of this defense. In addition, despite that the Saavedra Court disputed the applicability of Quinlan to a criminal charge base upon taking company documents, it agreed that the Quinlan balancing test could be used by the Trial Court in deciding Ms. Saavedra’s “claim of right” defense. As the Saavedra majority opined: “[a]lthough the Quinlan balancing test for LAD retaliation cases does not govern the availability of a claim of right or other justification in a criminal prosecution, evidence that would be relevant to that test in a civil case may be considered if a jury evaluates defendant’s claim of right defense or other defense of justification.” Id. at *59-60, citing Quinlan, 204 N.J. at 268-71. This would include “such issues as the contents of the documents, the presence or absence of confidentiality policies, the privacy interests at stake, the circumstances under which defendant gained access to the documents, the extent to which she disclosed them, and her reasons for taking an original or copying a document rather than simply seeking it in discovery.” Id. Thus, the Trial Court’s decision on remand may yet shed further light on whether and under what circumstances an employee can avoid a criminal conviction for taking confidential company documents.

By Francine Foner, Esq.


 Ty Hyderally, Esq.

As discussed above, the Appellate Division in Saavedra concluded that an employee could be criminally prosecuted for taking company documents, largely because it found that the Quinlan’s holding did not sanction such self-help behavior. Yet, after the Appellate Division’s decision in Saavedra, it came to a somewhat opposite conclusion in a case involving an employee’s taking of company documents. In Spencer Savings Bank, S.L.A. v. McGrover, 2015 N.J. Super. Unpub. LEXIS 459 (App. Div. March 5, 2015), before leaving his job for a new banking position, Michael J. McGrover downloaded certain documents from his employer’s computer system to his private email account. The employer subsequently discovered that McGrover had taken about 40 documents and filed a lawsuit against him and his new employer for McGrover’s breach of the confidentiality agreement; breach of an implied covenant of good faith and fair dealing; breach of his duty of loyalty; breach of his fiduciary duty; and violation of the Computer Related Offenses Act (CROA), N.J.S.A. 2A:38A-3. Spencer also accused McGrover and his new employer of misappropriating its confidential information in violation of the New Jersey Trade Secrets Act (NJTSA), N.J.S.A.56:15-1 to -9; common law misappropriation; converting its documents and proprietary information; causing the disclosure of its trade secrets; and unfair competition. Id. at *5-6.

McGrover’s stated reason for taking the documents was not to support any claim against his former employer for discrimination, as in Quinlan and Saavedra. Rather, McGrover’s defense was that the documents were “merely forms that he had collected over the years… from various sources. Some documents came from his prior employers and colleagues, and he had personally developed others” and his sole motivation for taking the documents “was to maintain the reference library that he had developed during his career.” There was also evidence presented at trial that maintaining such resources was common practice among banking professionals and that his supervisors at Spencer approved of his use of other institutions’ forms and manuals, even though they knew that he had brought those documents from his prior employers.

Despite that McGrover had not asserted any discrimination or other claim against his former employer, the Appellate Division nonetheless upheld dismissal of the claims, balancing the “Quinlan factors that a court should consider in identifying the circumstances under which an employee’s taking of information from his or her employer can be deemed disloyal.” Id. at *23-24. Under this analysis, the Spencer Court found that the factors weighed in favor of the employee’s legitimate rights to take the documents. Id. at 25-27.

Although not criminal statutes, the CROA and NJTSA have federal counterparts that provide for criminal penalties. The Computer Fraud and Abuse Act (“CFAA”) generally prohibits unauthorized accessing of a computer. Similarly, 18 U.S § 1832, governing Theft of Trade Secrets, provides for criminal penalties. Yet in Spencer, the Court found such conduct was justified in light of the employee’s interests under the Quinlan factors, while in Saavedra the Court found that Quinlan had no application in the criminal context. It is difficult to square these two decisions. Hopefully, on remand, the Trial Court in Saavedra will supply support for a strong enough “claim of right” defense to discourage prosecution of employees merely exercising their legitimate rights.

By Francine Foner, Esq.


 Ty Hyderally, Esq.

The Supreme Court’s much anticipated, recent decision in EEOC v. Abercrombie & Fitch Stores, Inc., 135 S. Ct. 2028 (2015), placed the onus of ensuring that employees’ religious needs are accommodated firmly on the shoulders of employers.

Samantha Elauf is a practicing Muslim who, based on her understanding of her religion’s requirements, wears a headscarf. She applied for a position in an Abercrombie store, and was interviewed by Heather Cooke, the store’s Assistant Manager. Ms. Cooke deemed Ms. Elauf qualified to be hired, but was concerned, however, that Ms. Elauf’s headscarf would conflict with the store’s “Look Policy” governing its employees’ appearance. Ms. Elauf had not requested an accommodation for, or mentioned at all, her religious requirement to wear a headscarf.

Ms. Cooke sought guidance from Randall Johnson, Abercrombie’s District Manager, regarding whether Ms. Elauf’s headscarf was considered a “cap,” in violation of Abercrombie’s Look Policy. Ms. Cooke told Mr. Johnson that she believed Ms. Elauf wore her headscarf because of her faith. Mr. Johnson told Ms. Cooke that Ms. Elauf’s headscarf would violate the Look Policy, as would all other headwear, religious or otherwise, and directed Ms. Cooke not to hire Ms. Elauf.

The EEOC filed suit on Ms. Elauf’s behalf, alleging that Abercrombie had discriminated against her because of her religion in violation of Title VII. The District Court granted the EEOC summary judgment on the issue of liability, 798 F.Supp.2d 1272 (ND Okla. 2011), held a trial on damages, and awarded Ms. Elauf $20,000. The Tenth Circuit, however, reversed and granted Abercrombie summary judgment. It concluded that an employer cannot be liable under Title VII for failing to accommodate a religious practice unless the applicant (or employee) requests an accommodation, thereby providing the employer with actual knowledge of his/her need for an accommodation.

The Supreme Court, however, disagreed with the Tenth Circuit’s understanding of Title VII and reversed its decision, remanding the case back to the District Court for further consideration in light of its decision. The Court’s opinion, authored by Justice Scalia, explained that Title VII does not have a “knowledge” requirement. The criteria for a violation is if the hiring decision is made “because of” the applicant’s religion, which means that an employer will be in violation if the applicant’s need for a religious accommodation was a “motivating factor” in its decision not to hire the applicant. The need for a religious accommodation can be a “motivating factor,” the Court ruled, even if the employer has a mere suspicion of the accommodation required, but no actual knowledge.

In another critical ruling, the Court rejected Abercrombie’s argument that because their policy applied to all head gear and not just religious head gear, it is a neutral policy and cannot constitute “intentional discrimination.” The Court reasoned that “Title VII does not demand mere neutrality with regard to religious practices—that they be treated no worse than other practices. Rather, it gives them favored treatment, affirmatively obligating employers not to fail or refuse to hire or discharge any individual . . . because of such individual’s religious observance and practice.” Id. at 2034.

The Supreme Court’s ruling requires a heightened level of vigilance on the part of employers. When employers so much as suspect that an applicant or employee may require a religious accommodation, they must make sure that their suspicion is not playing a role in their hiring decision, or other adverse action. An employer cannot claim that their decision was not discriminatory simply because they maintain a neutral policy that is not directed at a religious practices. Nor can they defend a failure to hire or adverse action based upon a lack of knowledge of the employee’s need for a religious accommodation.

By Isaac Graff and Francine Foner, Esq.

These articles are for informational purposes only. They do not constitute legal advice, and may not reasonably be relied upon as such. If you face a legal issue, you should consult a qualified attorney for independent legal advice with regard to your particular set of facts. This newsletter may constitute attorney advertising. This newsletter is not intended to communicate with anyone in a state or other jurisdiction where such a newsletter may fail to comply with all laws and ethical rules of that state of jurisdiction.

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