NJ Supreme Court Clarifies Employee “Protected Activity”

by Morgan Lewis
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The ruling provides guidance as to what employee conduct is protected under the antiretaliation provisions of two key state laws.

On July 17, the Supreme Court of New Jersey issued a decision in Battaglia v. United Parcel Service, Inc.,[1] providing guidance as to what employee conduct constitutes "protected activity" under the antiretaliation provisions of two key state laws—the New Jersey Law Against Discrimination (LAD) and the Conscientious Employee Protection Act (CEPA). First, the court held that an employee complaint relating to conduct that the employee reasonably believes violates company policy in the form of sex discrimination is protected from retaliation by the LAD even if the complaint did not concern "directly demonstrable acts of discrimination." Second, an employee claiming retaliation under CEPA cannot base his or her claim on complaints about minor violations of company policy. The court also ruled that claims for future emotional distress must be supported by competent evidence of permanency.

Background

The plaintiff, Michael Battaglia, alleged that United Parcel Service, Inc. (UPS) demoted him in October 2005 in retaliation for complaining about his supervisor's use of crude sexual language when referring to female employees and rumors that his supervisor was having an affair with a female manager. Battaglia also alleged that he was demoted in retaliation for reporting improprieties with respect to credit card usage, specifically that one or more managers "were going out for liquid lunches and abusing the UPS credit card" and not returning to work. Shortly before his demotion, Battaglia allegedly raised these complaints with his supervisor and vaguely referenced "ethical" issues in an anonymous letter he sent to a human resources manager.

In February 2009, a jury in the Superior Court of New Jersey, Law Division, Middlesex County, found UPS liable for unlawful retaliation in violation of both the LAD and CEPA. The jury awarded Battaglia $1 million—$500,000 in economic damages and another $500,000 for emotional distress. The emotional distress award was partially based on Battaglia's alleged future emotional injuries. The trial court rejected UPS's motion to overturn the jury's liability verdict but reduced the emotional distress damages award to $205,000. UPS appealed, and Battaglia cross-appealed, to the Superior Court of New Jersey, Appellate Division.

Appellate Division Decision

In August 2011, the Appellate Division affirmed the jury's CEPA verdict but reversed the jury's LAD verdict and emotional distress damages award.[2] As to the CEPA claim, the court found that Battaglia's complaints about improper use of UPS credit cards were "protected activity" and that there was sufficient evidence to show that Battaglia's subsequent demotion constituted retaliatory conduct under the whistleblower law. As to the LAD claim, however, the appellate court found that Battaglia's complaints about his supervisor's offensive sexual conduct were not "protected activity" because Battaglia had failed to identify an actual victim of discrimination. There was no evidence that any female employees had heard the supervisor's sexual remarks or were actually treated differently by the supervisor in any way. The Appellate Division also noted that the relationship between Battaglia's manager and the female manager was consensual. Finally, the Appellate Division found that the trial court erred in allowing the jury's emotional distress award to include future damages because there was no expert testimony that Battaglia's emotional distress was permanent. UPS and Battaglia filed motions for reconsideration, which were denied by the Appellate Division. Thereafter, both parties petitioned the New Jersey Supreme Court for certification.

Supreme Court Decision

Breaking from the Appellate Division, the New Jersey Supreme Court—in a unanimous decision—reinstated Battaglia's LAD verdict and struck down his CEPA verdict. The Supreme Court also affirmed that the trial court erred in allowing future emotional distress damages without competent evidence of permanency.

Writing the opinion for the Supreme Court, Justice Helen E. Hoens rejected the Appellate Division's narrow interpretation that Battaglia's complaints about his supervisor's sexual language and conduct did not invoke LAD's antiretaliation protections because there was no evidence of actual discrimination against women. Citing the "broad remedial purposes that the LAD is designed to achieve," Justice Hoens observed that there was no support for the Appellate Division's "understanding that the LAD only protects those who voice complaints about directly demonstrable acts of discrimination."[3] She noted that, to the contrary, the statute protects employees who make a good faith complaint about conduct they believe violates the LAD, even if there is no evidence of "an identifiable discriminatory impact upon someone of the requisite protected class."[4] Battaglia had complained about comments "directed to and about numerous women" and comments that were "the words of a supervisor, uttered in meetings . . . both repeatedly and routinely."[5] The court determined that reporting such conduct—even absent evidence of actual discrimination—was sufficient to invoke the antiretaliation protections of the LAD.

In reviving the LAD verdict, the Supreme Court found the company's investigation of the plaintiff's internal complaint to be lacking, despite the fact that the internal complaint in an anonymous letter was "oblique." The court observed that the company's investigator "conducted only a limited investigation and relied on her pre-existing beliefs to discount the complaints[,]" and "as the jury concluded, the corporate response was to take action against the individual who complained."[6]

The court stressed that the case did not involve "the occasional words of a low-level employee having a bad day" and that the LAD is not intended to be a "civility code for the workplace where only language fit for polite society will be tolerated."[7]

The court then found that Battaglia did not engage in any "protected activity" under CEPA when he complained about manager impropriety with respect to UPS credit cards. The court observed that, at most, Battaglia complained about behavior that "amounted to violations of internal company policies" as opposed to having a reasonable belief that his managers were engaged in "fraud within the meaning of the statute."[8] Battaglia admitted that he had no evidence and did not himself believe that the managers were engaged in fraud.

The court emphasized that "'CEPA is intended to protect those employees whose disclosures fall sensibly within the statute; it is not intended to spawn litigation concerning the most trivial or benign employee complaints.'"[9] The court noted that "[W]e do not suggest that, even if proven, a complaint about a minor violation of a company's internal policy on the use of company credit cards would be cognizable."[10]

Finally, the Supreme Court affirmed that the trial court erred by allowing Battaglia to recover emotional distress damages that included an award for future emotional distress in the absence of "credible, competent evidence" on permanency.[11]

Practical Implications

Companies with New Jersey employees will need to take heed of the Supreme Court's decision in Battaglia as they respond to and investigate internal complaints and assess risk in reviewing proposed adverse employment actions.

Employers should pay particular attention to the court's criticisms of the company's investigation of the anonymous letter. The court observed that "personnel versed in human resources and appropriate workplace behaviors" should have been able to conduct a more thorough investigation despite the letter's "oblique" claims.[12] Employers conducting investigations of workplace complaints must be careful to conduct investigations that are thorough and credible, with appropriate remedial actions based on the investigation's findings.

[1]. Battaglia v. United Parcel Serv., Inc., No. A-86/87-11 (N.J. July 17, 2013).

[2]. Battaglia v. United Parcel Serv., Inc., No. A-0226-09T2 (N.J. Super. Ct. App. Div. Aug. 12, 2011).

[3]. Battaglia, No. A-86/87-11, slip op. at 34–35.

[4]. Id. at 36.

[5]. Id.

[6]. Id. at 38–39.

[7]. Id. at 36–37.

[8]. Id. at 29.

[9]. Id. at 50 (quoting Estate of Roach v. TRW, Inc., 164 N.J. 598, 613–14 (N.J. 2000)).

[10]. Id. at 54.

[11]. Id. at 44.

[12]. Id. at 38.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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