Watchdog Employees May Sue Under New Jersey Whistleblower Law, Says State’s Highest Court

On July 15, 2015, in Lippman v. Ethicon, Inc., Nos. A-65/66-13, 073324 (N.J. July 15, 2015), the New Jersey Supreme Court held that the protections of the New Jersey Conscientious Employee Protection Act, N.J.S.A. §§ 34:19-1 – 34:19-8 (“NJ CEPA” or “the Act”) “extend to the performance of regular job duties by watchdog employees.”  Lippman, Nos. A-65/66-13, 073324, slip op. at 4.

That is, in Lippman, New Jersey’s court of last resort held that “an employee, whose job duties entail knowing or securing compliance with a relevant standard of care and knowing when an employer’s actions or proposed actions deviate from that standard of care, may invoke the whistleblower protections afforded under” section 3 of NJ CEPA, N.J.S.A. § 34:19-3.  Lippman, Nos. A-65/66-13, 073324, slip op. at 2.

This is the case, the Lippman Court held, even if if the whistle-blowing activities of the watchdog employee, because of which the employer retaliated against him or her, are within “the scope of [his or her] job duties.”  Id. at 29.

By way of background, NJ CEPA prohibits all employers in New Jersey from retaliating against employees who disclose to a supervisor or a public body, object to, or refuse to participate in actions of the employer that the employees reasonably believe are either unlawful or in violation of public policy.  NJ CEPA § 3, N.J.S.A. § 34:19-3.

The plaintiff in Lippman was a physician who served as worldwide vice president of medical affairs and chief medical officer of defendant Ethicon, Inc. (“Ethicon”).  Lippman, Nos. A-65/66-13, 073324, slip op. at 5-6 & n.2.  Ethicon, a subsidiary of defendant Johnson & Johnson, Inc. (“J & J”), was a manufacturer of medical devices used in surgical procedures.  Id. at 5-6.

Among other job duties, the plaintiff served on a quality board of Ethicon that was created to assess the health risks posed by Ethicon’s products and to provide medical input concerning any necessary corrective measures with respect to Ethicon’s products in the field.  Lippman, Nos. A-65/66-13, 073324, slip op. at 7.

The plaintiff successfully advocated, over the resistance of other Ethicon executives, for Ethicon to recall DFK-24, a product, used in cardiac bypass surgeries, which the plaintiff believed was dangerous.  Id. at 8-9; see Lippman v. Ethicon, Inc., 75 A.3d 432, 445, 432 N.J. Super. 378, 399-400 (N.J. App. Div. 2013), aff’d as modified, Nos. A-65/66-13, 073324 (N.J. July 15, 2015).  Within weeks after the recall, Ethicon terminated the plaintiff’s employment.  Lippman, Nos. A-65/66-13, 073324, slip op. at 8-9.

Ethicon claimed that it fired the plaintiff because he engaged in a romantic relationship with a female subordinate.  Lippman, Nos. A-65/66-13, 073324, slip op. at 9.  However, the plaintiff’s direct superior admitted at deposition (i) that the plaintiff’s supposed romantic partner did not directly report to the plaintiff, (ii) that, to the superior’s knowledge, no other Ethicon or J & J ever had been terminated, or even disciplined, for having a consensual romantic relationship with an alleged subordinate, and (iii) that, to the superior’s knowledge, J & J lacked any written policy prohibiting the type of consensual romantic relationships that allegedly occurred between the plaintiff and the female employee.  Id. at 9.

The trial court had granted Ethicon’s and J & J’s motion for summary judgment dismissing the plaintiff’s NJ CEPA action on the ground that, because it was the plaintiff’s job to raise issues regarding the safety of Ethicon’s drugs and products, the plaintiff’s objecting to Ethicon’s continued sale of DFK-24 was not a whistle-blowing activity protected by the Act.  Id. at 10.

In a published opinion, New Jersey’s Appellate Division had reversed the trial court’s decision granting the defendant’s motion for summary judgment and had remanded the case for trial.  Lippman v. Ethicon, Inc., 75 A.3d 432, 434, 452, 432 N.J. Super. 378, 382, 411 (N.J. App. Div. 2013).  The Appellate Division determined that “a plaintiff who reports conduct as part of his or her job is . . . entitled to the whistle-blowing protections afforded under CEPA.”  Lippman, 75 A.3d 432, 449, 432 N.J. Super. 378, 407.   The Appellate Division further held, however, that for a watchdog employee to establish a prima facie cause of action under section 3(c) of NJ CEPA, N.J.S.A. § 34:19-3(c)  (the “[o]bjects to” provision), he must show that he “either (a) pursued and exhausted all internal means of securing compliance; or (b) refused to participate in the objectionable conduct.”   Lippman, 75 A.3d at 451.

The New Jersey Supreme Court modified and affirmed the Appellate Division’s judgment, and remanded Ethicon’s vice president of medical affairs and chief medical officer’s case for further proceedings.  Lippman, Nos. A-65/66-13, 073324, slip op. at 38.  As stated above, the New Jersey Supreme Court affirmed the Appellate Division’s holding “that watchdog employees are stripped of whistleblower protection [neither] as a result of their position [n]or because they are performing their regular job duties.”  Id. at 35.

In addition, the Lippman Court disapproved that portion of New Jersey’s Appellate Division’s judgment which “imposed an exhaustion requirement” on watchdog employees suing under section 3(c) of NJ CEPA.  Lippman, Nos. A-65/66-13, 073324, slip op. at 36.  That is, in Lippman, the New Jersey Supreme Court further held that, to maintain a cause of action under NJ CEPA, a watchdog employee, who objects to an action of the employer that the employee reasonably believes is unlawful, need not show that he pursued and exhausted all internal means of securing compliance with the law.

Take-Aways for Employers

The Lippman Court’s determination that watchdog employees may sue under NJ CEPA well illustrates that that Act is considered remedial legislation entitled to liberal construction.  Employers in New Jersey must not fire or otherwise retaliate against compliance officers, in-house attorneys, and the like for blowing the proverbial whistle on the employers’ violations of any laws, rules or regulations.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New Jersey area, call Attorney David S. Rich at (347) 941-0760.