District of New Jersey Reaffirms Individual Liability Under CEPA
By Matthew R. Grabell and Steven Siegler[1]
In a recent decision by the United States District Court for the District of New Jersey, the Court reaffirmed that individual defendants, including supervisors, can be held personally liable for violations of the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq. (“CEPA”). This case continues the judicial trend of interpreting CEPA broadly to effect its remedial purposes,2 and marks another significant victory for conscientious employees who blow the whistle on illegal or improper workplace activity in New Jersey.
The issue of individual liability under CEPA came before the Honorable William G. Bassler, U.S.D.J., in Dennis Espinosa v. Continental Airlines, Inc., Manny Horta, Daniel Wineglass and Jim McGuiness, 2000 WL 27686 (D.N.J.), upon plaintiff Espinosa’s motion for remand. Espinosa filed his initial complaint in the Superior Court of New Jersey, Passaic County, alleging that defendant Continental Airlines and three of its supervisory employees violated CEPA by terminating Espinosa shortly after he reported serious safety violations to his supervisors and to the Federal Aviation Authority (“FAA”). Espinosa, an aircraft technician responsible for inspecting aircraft prior to takeoff, claimed that he was terminated because his supervisors were more concerned with Continental’s on-time record than with correcting the violations.
Defendants removed the action to Federal Court, arguing that Espinosa’s claims were preempted by the Federal Aviation Administration Authorization Act, 29 U.S.C. § 41713(b)(1), and the Railway Labor Act, 45 U.S.C. § 151, et seq. Defendants also argued that the District Court had diversity jurisdiction over the matter because Continental was an out-of-state defendant and because the individual defendants could not, by law, be held liable under CEPA.
After rejecting both of defendant’s preemption arguments,3 the Court addressed whether the individual defendants could be sued personally under CEPA. Relying primarily on an earlier District Court opinion, Palladino v. VNA of Southern New Jersey, Inc., 68 F.Supp.2d 455 (D.N.J. 1999), Judge Bassler reaffirmed that liability extended to individuals.
In Palladino, decided on June 30, 1999, the individually-named defendants moved to dismiss plaintiff’s CEPA claims against them. They argued that if the Legislature had intended to create individual liability under CEPA, it would have done so expressly, as it did in the New Jersey Law Against Discrimination, N.J.S.A. 10:5-12(e), by including a separate “aider and abettor” provision. However, the Court held that this argument ignored the definition of employer under CEPA, which includes “any person or group of persons acting directly or indirectly on behalf of or in the interest of an employer with the employer’s consent.” N.J.S.A. 34:19-2(a) (emphasis added). Stated the Court: “It is the very inclusion of that language in CEPA which would create individual liability.” Palladino, 68 F.Supp.2d at 472.
In support of this interpretation, the Palladino Court first recalled the statute’s remedial purpose, and the liberal construction which it requires. Id. at 473 (citing Young v. Schering Corp., 141 N.J. 16, 24-25 (1995)). The Court next noted two earlier CEPA cases decided in the District of New Jersey, Lynch v. New Deal Delivery Service, Inc., 974 F.Supp. 441 (D.N.J. 1997) and Boody v. Township of Cherry Hill, 997 F.Supp. 562 (D.N.J. 1997), whose results suggest that CEPA’s definition of “employer” is not limited to actual employers. If it were, the Palladino court reasoned,
then whistleblowers presumably could still seek to recover from the individuals actually responsible for the retaliation through other means, such as state tort claims for intentional infliction of emotional distress or interference with business relations. If, on the other hand, the definition of “employer” is broad enough to include individual liability for agents of the employer, then the filing of a CEPA claim should act to bar other remedies against both the employer and its agents.
Palladino, 68 F.Supp.2d at 473. In both Lynch and Boody, the plaintiffs’ CEPA claims were dismissed as being untimely filed. At the same time, the plaintiffs’ state law claims against the individual defendants were also dismissed by operation of CEPA’s waiver provision.4 Because the plaintiffs were left without a remedy, the Palladino court reasoned that individual liability under CEPA must exist. “[T]here is no indication that the Legislature intended to bar common law claims against individuals upon the filing of a CEPA claim if the CEPA claim cannot be properly filed against those individuals.” Id.
Further, the Palladino Court noted that the ruling of the New Jersey Supreme Court, in Higgins v. Pascack Valley Hospital, 158 N.J. 404 (1999), clearly indicated that CEPA provides a cause of action against individual defendants. In Higgins, the trial court dismissed the plaintiff’s claims against the individual defendants, finding that CEPA did not provide for individual liability. Significantly, however, the Supreme Court, in leaving this ruling undisturbed, stated that on the merits of this particular case, the record did not support liability against the individual defendants anyway. As stated by the Court in Palladino, “[p]resumably the Supreme Court would not look to whether there was individual liability if the law did not allow for individual liability.” Palladino, 68 F.Supp.2d at 474.
The foregoing reasoning was adopted in full by Judge Bassler in the recent Espinosa opinion. In Espinosa, the Plaintiff alleged that on separate occasions throughout his employment, while inspecting aircrafts prior to takeoff, he discovered mechanical problems, which he believed, or knew, violated FAA Regulations. At various times, he reported these problems to his supervisors, Defendants Horta and Wineglass. Plaintiff claimed that in response to these reports, Horta and Wineglass used choice words to inform Plaintiff, in essence, that such problems were not his concern. Plaintiff also complained to Defendant McGuiness, Director of Aircraft Maintenance, regarding some of the mechanical problems. According to Plaintiff, McGuiness threatened him with retaliation if he contacted the FAA, which Plaintiff eventually did regardless of McGuiness’ threat. Subsequently, shortly after one of his contacts with the FAA, Plaintiff was terminated for allegedly sleeping on duty, a charge denied by Plaintiff.
In holding that Horta, Wineglass and/or McGuiness could be held liable under CEPA, Judge Bassler agreed with the “well reasoned interpretation set forth in Palladino, Higgins, Lynch, and Boody,” Espinosa, 2000 WL 27686, at * 9, declined to look to the LAD, and relied on the CEPA definition of “employer” as “any person or group of persons acting directly or indirectly on behalf of or in the interest of an employer with the employer’s consent.” The matter was, therefore, remanded to the Superior Court of New Jersey as the defendants were non-diverse.
The New Jersey Conscientious Employee Protection Act, which protects employees who report or refuse to participate in illegal and/or unethical activities in the workplace, established a much-needed exception to the traditional “employee at will” doctrine. As remedial legislation, the statute should continue to be interpreted as liberally as necessary to achieve its important social goals. The District Court’s decision in Palladino, as followed and adopted by Judge Bassler in Espinosa, marks a significant step towards protecting and preserving the rights of whistleblowing employees in New Jersey.
[1]Matthew R. Grabell is a Partner and Steven Siegler is an Associate with Deutsch Resnick Green & Gramigna in Hackensack, New Jersey.
2 See Young v. Schering Corp., 141 N.J.16 (1995) (one purpose of CEPA is to make it easier, not harder, for a former employee to prevail on a retaliatory discharge claim by allowing the employee to report the employer’s illegal conduct to a supervisor or public body); Higgins v. Pascack Valley Hospital, 158 N.J. 404 (1999) (extending CEPA to complaints about co-worker conduct).
3 See Espinosa, 2000 WL 27686 at *2 -*7.
4 N.J.S.A. 34:19-8 provides, in pertinent part:
[T]he institution of an action in accordance with this act shall be deemed a waiver of the rights and remedies available under an other contract, collective bargaining agreement, State law, rule or regulation or under the common law.
