Yesterday, the Supreme Court, in Lippman v. Ethicon, (A-65/66-13) (073324) (July 15, 2015), resolved a conflict among appellate panels, holding that the Conscientious Employee Protection Act (CEPA or Act), N.J.S.A. 34:19-1 et seq., covers whistleblower employees whose job duties include alerting the employer to actual or potential violations of the law or standards of care, i.e., “watchdog” employees. Although several recent unpublished opinions, and arguably one published opinion, have held to the contrary, Lippman makes clear that CEPA applies, without restriction, to these watchdog employees.
In Lippman, the plaintiff had been employed by Ethicon, a medical devices manufacturer, as its worldwide vice president and chief medical officer. The plaintiff’s regular job duties included providing medical opinions regarding the safety of Ethicon’s pharmaceutical products. Shortly before his termination from Ethicon, the plaintiff advocated for the recall of a product he believed was dangerous.
After he was terminated, the plaintiff filed a CEPA action, claiming that Ethicon retaliated against him in violation of CEPA’s “participation” clause, which prohibits an employer from retaliating against an employee who “objects to, or refuses to participate in any activity, policy or practice which the employee reasonably believes, [in part,]: (1) is in violation of a law, or a rule or regulation promulgated pursuant to law; . . . (2) is fraudulent or criminal . . . ; or (3) is incompatible with a clear mandate of public policy . . .” The defendants filed a motion for summary judgment, which the trial court granted, holding that an employee’s performance of his or her regular job duties is not protected by CEPA.
The Appellate Division, in a published opinion, reversed, holding that watchdog employees “are among those most in need of CEPA’s protection, and that the plain language of the statute does not exempt from protection conduct that constitutes a job duty.” Notably, the Appellate Division announced a new, heightened prima facie case for watchdog employees who assert N.J.S.A. 34:19-3(c) claims. This new standard deviated from the traditional standard by requiring such plaintiffs to establish that they either “(a) pursued and exhausted all internal means of securing compliance; or (b) refused to participate in the objectionable conduct.” Both parties appealed, focusing on whether and to what extent watchdog employees are covered by CEPA.
On appeal, the Supreme Court decided in favor of the plaintiff, holding that watchdog employees are covered by CEPA, without limitation. The Supreme Court articulated three bases for its holding. First, it rejected the defendants’ argument that CEPA did not protect watchdog employees, relying on the both the plain language of the Act (which broadly defines “employee” and nowhere excludes watchdog employees from its purview) and two principles of statutory construction (specifically, that courts should not rewrite plainly worded statutes and that legislation, such as CEPA, should be liberally construed). Second, the Court rejected the defendants’ reliance on certain appellate precedent, which the Court found unpersuasive, taken out of context, and, to the extent any such opinions were unpublished, not authoritative. To the contrary, prior Supreme Court decisions provided sufficient precedent to hold that watchdog employees were protected by CEPA.Third, the Supreme Court rejected the Appellate Division’s new, heightened prima facie case for watchdog employees. In doing so, the Supreme Court noted that the Act’s plain language contained no such heightened standard for watchdog employees and reiterated that courts should not rewrite plainly worded statutes.
The Bottom Line. Lippman wasa widely anticipated decision, expected to have an immediate impact on the numerous companies that employ (and subsequently terminate) watchdog employees. Such employers are strongly encouraged to review their handbooks and whistleblower policies for compliance with Lippman’s holding.