Newsletter April 2015

Newsletter April 2015


CEPA and Pierce Claims: What’s the Difference?

By: Ty Hyderally, Esq.April 2015 Newsletter

The Conscientious Employee Protection Act (“CEPA”) is a New Jersey statute which protects employees who face retaliation for blowing the whistle on their employer’s illegal activities. N.J.S.A. 34:19-1. A Pierce claim is a common law cause of action for whistleblower retaliation, which was defined by the New Jersey Supreme Court in Pierce v. Ortho Pharmaceutical. 84 N.J. 58, 72 (1980). Although CEPA claims and Pierce claims both protect employees who suffer retaliation for their whistleblowing, there are several key differences between the two claims.

As discussed in the article below, CEPA contains a waiver provision which requires a plaintiff to choose between a CEPA claim and a Pierce claim. However, a Plaintiff need not elect which remedy to pursue until after the completion of discovery, which is needed to determine which cause of action is applicable because of the key differences between these two claims. These differences include:

  1. Statute of limitations. The statute of limitations for CEPA is one year. N.J.S.A. 34:19-5. The statute of limitations for Pierce claims is two years for tort claims and six years for contract claims. Montells v. Haynes, 133 N.J. 282 (1993); Pierce, 84 N.J. at 72.
  2. Whistleblowing activity covered. While Pierce claims may require an employee to report the employer’s illegal conduct to a public agency, CEPA also protects employees who blow the whistle to a supervisor. N.J.S.A. 34:19-2(d).
  3. Attorney’s fees. A prevailing plaintiff is entitled to attorney’s fees under CEPA. N.J.S.A. 34:19-5e. However, a Pierce claimant can only collect attorney’s fees under certain circumstances, such as a retaliatory discharge in violation of the Civil Rights Act. N.J.S.A. 10:6-2.
  4. Retaliatory Actions protected against. CEPA claimants only need to suffer an “adverse employer action” in order to have a valid claim. N.J.S.A. 34:19-3. An “adverse employer action” is defined in CEPA as discharge, suspension, demotion, and adverse change in conditions of employment. N.J.S.A. 34:19-2(e). In contrast, Pierce claimants must be terminated in order to have a common law claim. Pierce, 84 N.J. at 72.

Despite the fact that CEPA claimants can bring a claim for retaliation which is short of termination, they are generally required to complain about the retaliatory action internally to their employer. N.J.S.A. 34:19-4. There are two exceptions to CEPA’s internal complaint requirement. An employee does not have to complain to her or his employer internally if the employee is reasonably certain that one or more supervisors already know about the problem, or if the employee reasonably fears physical harm or that the situation is emergent. N.J.S.A. 34:19-4. In contrast, Pierce claims do not require an internal complaint but usually do require a complaint to an outside agency. Young v. Schering Corp., 141 N.J. 16, 27 (1995). However, some courts have determined that Pierce complaints only require an internal expression of a disagreement with a corporate policy, directive, or decision based on a clear mandate of public policy. New Jersey, 6 Emp. Coord. Employment Practices §62:32. Thus, although external complaints are often evidence of an employee’s disagreement with corporate policy, it is not the exclusive method. For example, Pierce claims have been sustained where an employee was terminated for refusing a random illegitimate drug test and for requesting a personnel file to prove discriminatory and retaliatory practices on behalf of the employee. Hennessey v. Coastal Eagle Point Oil Co., 129 N.J. 81, 92, 93 (1992); Velantzas v. Colgate-Palmolive Co. Inc., 109 N.J. 189 (1988).

CEPA claims and Pierce claims are substantially similar in principle, but there are key differences that would make one cause of action more favorable than the other, depending on the circumstances of the case. Thus, whether the Plaintiff brings a Pierce claim or a CEPA claim for whistleblowing activity will depend upon a number of factors.

By Malcolm Thorpe and Jennifer Vorih, Esq.


Can CEPA Co-exist With Other Claims?

By: Ty Hyderally, Esq.

The Conscientious Employee Protection Act (“CEPA”) is a New Jersey statute that protects employees who are subjected to adverse employment actions for taking part in whistleblower activity. N.J.S.A. § 34:19-1. CEPA was enacted to codify prior common-law causes of action for whistleblower retaliation, defined by the New Jersey Supreme Court in Pierce v. Ortho Pharmaceutical, 84 N.J. 58, 72 (1980) (commonly referred to as a “Pierce” claim).. Young v. Schering Corp., 141 N.J. 16, 26, (1995).

CEPA contains a waiver provision, which forces a plaintiff to choose whether to pursue a CEPA claim or another claim for retaliation under the same set of facts. N.J.S.A. § 34:19-8. Pierce claims are thus often dismissed because of the legislature’s intent to codify all common law retaliation claims within CEPA. Id. at 29. However, both CEPA and Pierce causes of actions may be pled in the complaint, as long as one cause of action is dropped before trial. In Maw v. Advanced Clinical Communications, Inc., the Appellate Division held that it is inappropriate to dismiss a Pierce claim until the plaintiff has had an opportunity to take discovery in order to determine which cause of action is applicable. 359 N.J. Super. 420, 440-41 (App. Div. 2003), rev’d on other grounds, 179 N.J. 43 (2004).

The CEPA waiver provision has also been interpreted to prevent an employee from pursuing other statutory causes of action. Young, 141 N.J. at 27. It is important to note, though, that this waiver does not prohibit employees from asserting other independent claims, because it excepts those rights, privileges and remedies which are not afforded by CEPA. N.J.S.A. § 34:19-8. CEPA’s waiver provision was intended to waive all parallel claims, but not to prevent other causes of action stemming from the employee-employer relationship. See, Casper v. Paine Webber Grp., Inc., 787 F. Supp. 1480, 1509 (D.N.J. 1992). As a result, if an asserted claim is substantially unrelated to a retaliatory discharge, then the CEPA wavier provision does not preclude the claim and it may be included without error. Young, 141 N.J. at 31.

So, can CEPA co-exist with other claims? Yes. CEPA in no way precludes a plaintiff from pleading additional claims which do not require a finding of retaliation. Further, a plaintiff can plead both CEPA and another retaliation claim, but must drop one prior to trial.

By Malcolm Thorpe and Jennifer Vorih, Esq.


Watchdog Employees Look to CEPA for Protection

By: Ty Hyderally, Esq.

A case pending before the New Jersey Supreme Court poses the question of whether “watchdog employees” are protected under New Jersey’s Conscientious Employee Protection Act (“CEPA”). CEPA protects employees from retaliation if they expose their employer’s illegal practices. The term “watchdog employees” refers to workers who are hired to ensure the employer’s compliance with the law. The Appellate Division has come to different conclusions on whether a “watchdog employee” is covered by CEPA. In Massarano v. New Jersey Transit, the Appellate Division held that an employee whose job was to report security breaches was not a “whistle-blower” under CEPA. 400 N.J. Super. 474, 491 (App. Div. 2008). The Plaintiff in Massarano was not protected by CEPA because her decision to go over her supervisor’s head, rather than the reporting of a security breach, was what led to poor treatment. Id. In Lippman v. Ethicon, Inc., the Appellate Division refused to adopt Massarano, finding that an employee’s job responsibilities are not outcome-determinative for a whistle-blower claim under CEPA. 432 N.J. Super. 378, 381 (App. Div. 2013). The New Jersey Supreme Court granted certiorari to review this unsettled issue. Lippman v. Ethicon, Inc., 2014 N.J. LEXIS 317, 1 (N.J. 2014).

In Lippman, Joel Lippman, M.D., a former employee of a Johnson & Johnson subsidiary, claims he was fired for demanding the recall of products he believed were harmful to the public. The Appellate Division held that Lippman fit the definition of a “whistle-blower” under CEPA and overturned the trial court’s decision. Lippman, 432 N.J. Super. at 408. Plaintiff appealed and on March 14, 2014, the New Jersey Supreme Court granted certification. At oral argument on January 20, 2015, Justice Albin posed the question of whether a company could simply silence someone on a quality control board by firing them and replacing them with someone who is willing to put products on the market. Francis Dee, an attorney for one of the subsidiaries, argued that companies should be allowed to “performance manage” their employees and decide who sits on quality control boards. He argued that if this decision were removed from the employer’s control it would result in a class of “untouchable employees.”

Lippman’s attorney, Bruce McMoran, argued that all employees are protected under CEPA, since whistleblowing serves as a check on employers. He also argued that, because plaintiffs bear the burden of proof in maintaining a CEPA claim and causation is not automatically established, employers’ fear of “untouchable employees” is unsubstantiated.

It is difficult to predict how the Supreme Court will rule on this issue. The Lippman and Massarano cases present two very different contexts. Joel Lippman sat on a quality control board and the Appellate Court expressed concern over an employer’s interest in removing such a watchdog employee who engages in whistle-blowing. Unlike Joel Lippman, Barbara Massarano reported the security breach to individuals higher up in the company rather than to her immediate supervisor. Massarano, 400 N.J. Super. at 478. This angered her immediate supervisor, who subsequently treated her poorly and refused to speak with her for weeks. Id. at 480. However, the trial court found and the Appellate Court affirmed that her supervisor’s subsequent treatment of Massarano was not due to any whistle-blowing activities, but rather because she went over her supervisor’s head before approaching him. Id. at 491. Thus, due to the substantially different factual circumstances, whether or not the Supreme Court affirms the decision in Lippman, finding that Joel Lippman was a whistle-blower employee under CEPA, it may limit its holding to similar contexts.

By Yoana Yakova and Jennifer Vorih, 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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