Whistle(blow) While You Work: New Jersey Supreme Court Rules That “Watchdog” Employees Are Protected Under CEPA
On July 15, 2015, the New Jersey Supreme Court settled the debate over whether employees who are responsible for monitoring and reporting employer compliance may seek whistleblower protection under New Jersey’s Conscientious Employee Protection Act, N.J.S.A. § 34:19-1 et seq. (“CEPA”), and if so, under what circumstances. Ultimately, the court in Lippman v. Ethicon held that CEPA protects such “watchdog employees.”
Plaintiff Joel Lippman was employed by Ethicon. His position involved determining whether medical products were too dangerous for distribution, and if so, whether a recall was required. In 2006, Ethicon discharged Lippman for a sexual relationship with a subordinate. Lippman sued, claiming that in fact he was fired in retaliation for blowing the whistle on Ethicon’s distribution of seven products he viewed as dangerous or defective.
The trial court dismissed the matter on summary judgment, concluding that Lippman failed to distinguish his job duties from whistleblowing activities, and therefore could not prove he was fired for whistleblowing. The trial court relied on Massarano v. New Jersey Transit, in which the Appellate Division held that a security operations manager who alerted the company to confidentiality issues could not sue under CEPA because she “was merely doing her job as the security operations manager by reporting her findings and her opinion.”
In Lippman, however, the Appellate Division overturned the trial court’s decision and expressed its disagreement with the Massarano holding. The court reasoned that watchdog employees are “the most vulnerable to retaliation because they are uniquely positioned to know where the problem areas are and to speak out when corporate profits are put ahead of consumer safety.” The appellate court did, however, place an enhanced burden of proof on Lippman, requiring that he prove as part of his prima facie case that he had exhausted all internal means of compliance or refused to participate in the conduct at issue prior to filing a CEPA claim.
Both parties appealed this decision. Ethicon challenged the appellate court’s holding, while Lippman challenged the enhanced burden of proof for watchdog employees. The New Jersey Supreme Court affirmed the Appellate Division’s holding, but modified it to remove the enhanced burden of proof that had been applied to Lippman as a watchdog employee. The court held that CEPA does not limit its definition of “employees” to those with certain job duties, and therefore applies to all employees equally. Additionally, the court held that an enhanced burden of proof for watchdog employees is “nowhere found in the statutory language” and cannot be applied to them absent legislative amendment.
This decision poses significant challenges for employers, particularly those in industries that typically employ workers to monitor compliance, such as the pharmaceutical industry. Such individuals are employed for the very purpose of bringing concerns or potential issues to the attention of the company, and as such may engage in activity that is protected under CEPA simply by performing their jobs. To succeed on a claim, however, such individuals would still have to prove that they suffered an adverse employment action (such as termination or demotion), and that the adverse action occurred because of the protected activity.