Court Weighs Whistleblower Suit For Violations of Company Policy
The state Supreme Court is considering how far New Jersey's whistleblower law can reach when an employee alleges retaliation for complaining about conduct that might have violated company policy but was not necessarily illegal.
The court on Wednesday heard arguments in Battaglia v. UPS Inc., A-86/87-11, an appeal from a judgment awarding damages to a United Parcel Service worker demoted and assigned to the night shift after reporting other employees' improper behavior to his supervisor.
Michael Battaglia complained about managers' actions that he thought violated UPS policy, such as making derogatory comments about women, misusing corporate credit cards and filing false expense reports in order to cover the costs of buying alcoholic drinks at lunches that stretched for hours.
Following a month-long trial before Superior Court Judge Phillip Paley, the jury found that UPS violated both the Conscientious Employee Protection Act and the Law Against Discrimination. It awarded Battaglia $500,000 for economic losses and $500,000 for emotional distress, though Paley reduced the emotional damages award to $205,000. The jury found no cause for Battaglia's claim for punitive damages.
The Appellate Division affirmed the CEPA violation, but vacated the emotional damages award and ordered a new trial. It also found that there was no reason to award punitive damages. Both sides filed appeals to the Supreme Court.
UPS's attorney, Michael Bissinger, told the court there was no basis for there to be a valid CEPA claim.
Battaglia, he said, was not engaging in protected activity when he complained about the alleged misuse of corporate credit cards because there was no UPS policy saying nondriver employees could not drink alcohol at lunch and putting that in their expenses.
Bissinger, of the Piscataway office of Day Pitney, said Battaglia would have to have believed there was evidence of some clear illegal activity, such as fraud, for him to be protected by CEPA.
"There is no CEPA claim when the activity does not violate internal policies," Bissinger said.
Chief Justice Stuart Rabner said Battaglia suggested there was the misuse of company credit cards.
Bissinger said there was no evidence that the employees were violating company policies or any criminal statutes.
Justice Anne Patterson asked whether Battaglia might not have understood company policy and believed he was reporting illegal or fraudulent activity. "Is that actionable?" she asked.
"I don't think so," Bissinger said. "We're talking about UPS internal policy, not laws. Maybe if they were drinking and then driving."
Appellate Division Judge Anthony Parrillo, temporarily assigned, asked whether Battaglia did enough of an investigation before voicing his concerns.
"He could have done more, and should have done more," Bissinger said.
Battaglia's lawyer, Maureen Binetti, told the court that Battaglia should receive CEPA protection.
"He was the quintessential UPSer," she said. "He is no longer the same person. His life was destroyed.
"Michael Battaglia tried to do the right thing," said Binetti, of Woodbridge's Wilentz, Goldman & Spitzer.
If a person has a reasonable, not frivolous, belief that there is improper conduct, CEPA should apply, she said. "That's what happened here."
"He's not required to be a lawyer," Binetti said. "He was trying to protect the company from fraud by its managers."
Patterson asked whether there was anything beyond the purported credit card misuse or manipulation of the meals expense system.
Binetti pointed to the evidence that Battaglia also complained about the derogatory remarks made about female employees.
Justice Helen Hoens asked whether Battaglia had concerns that the employees' behavior was causing poor work performance.
"That's correct," Binetti said. "He believed that because of all the abuses going on."
Justices Barry Albin and Jaynee LaVecchia recused, as did Appellate Division Judges Ariel Rodriguez and Mary Catherine Cuff, also temporarily assigned.
New Jersey Law Journal April 18, 2013
Burden Eased for Railroad Worker Suing Over Retaliatory Discipline
A railroad worker suing over workplace discipline need only present circumstantial evidence of retaliation for his case to be heard by a jury, a federal appeals panel ruled on Tuesday.
Congress had relaxed the burden of proof for a plaintiff to establish a prima facie case and survive summary judgment, while tightening standards for railroads, the U.S. Court of Appeals for the Third Circuit said.
The changes were made in 2007 amendments to the Federal Rail Safety Act addressing allegations that railroads took action against workers who reported safety violations or claimed injury.
In its ruling in Araujo v. New Jersey Transit Rail Operations, 12-2148, the three-judge panel overturned dismissal of the suit — filed by conductor Anthony Araujo against the railroad — on summary judgment.
Araujo's lawyer, Charles Goetsch, says the suit is the first to address with the 2007 amendments.
Araujo alleges that he was retaliated against because of anxiety he suffered after watching a contractor, repairing a bridge over a railroad in Newark, be fatally electrocuted by an energized overhead catenary wire.
Although it was not his job assignment, Araujo mistakenly told the contractor, Anthony Clemente, that the wire had been de-energized.
Araujo was the only NJ Transit employee at the scene on Feb. 25, 2008. Two other employees whose job it was to inform contractors of the status of the wires — Christopher Picton and Jeff Meisner — had left.
Araujo was questioned by his supervisor, Joseph Meade, but, unlike Picton and Meisner, was not ordered to take a drug test.
A counselor with NJ Transit's Employee Assistance Program met with Araujo the next day over his anxiety and concluded he had suffered a workplace injury and couldn't work.
On March 5, 2008, Meade filed disciplinary charges against Araujo, claiming he violated safety rules that require conductors to ensure that people under their protection do not come into contact with catenaries unless the wires have been de-energized.
Araujo was cleared to return to work on Oct. 2, 2008, but was suspended without pay pending the outcome of the disciplinary charges.
A hearing officer upheld the charges and Araujo ultimately was suspended for the four months served. He then filed a complaint with the Occupational Safety and Health Administration's Office of Whistleblower Protection.
OSHA ordered NJ Transit to pay him $569,587, representing the $345,754 value of his home which had been foreclosed on, $75,000 in punitive damages, $50,000 for damage to his credit score, $40,271 for lost wages, $23,350 for lost benefits, $17,915 in counsel fees, $12,297 for the value of his repossessed car and $5,000 for pain and suffering.
NJ Transit objected and, under FRSA rules, Araujo sued alleging wrongful retaliation in violation of the statute.
U.S. District Judge Stanley Chesler held that Araujo did not meet even the reduced burden-shifting standards in the FRSA.
But, writing for the appeals panel, Judge Robert Cowen said Chesler was wrong.
Cowen noted that in approving the 2007 amendments, Congress adopted the burden-shifting whistleblower standards in the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, known as AIR-21.
Those standards require a plaintiff to show by a preponderance of the evidence that the unfavorable action was in response to protected activity — in this case, seeking time off because of a workplace injury.
If the employee makes that prima facie case, Cowen said, the AIR-21 standards then shift the burden to the employer to show by clear and convincing evidence that the action would have been taken regardless of whether the employee engaged in protected activity.
"The District Court apparently did not recognize that, in fact, the FRSA explicitly incorporates the AIR-21 burden-shifting by reference," said Cowen, joined by Joseph Greenaway Jr. and Morton Greenberg.
To meet the clear and convincing evidence burden, the employer must show that the truth of its contentions is highly probable, he said.
The AIR-21 standards for allowing a case to move beyond summary judgment are less strict than those established as the "default" standard in McDonnell Douglas v. Green, 411 U.S. 792 (1973), Cowen said.
Under McDonnell Douglas, the employee must establish a prima facie case of discrimination. Then, the employer must produce evidence of a legitimate nondiscriminatory reason for its actions. If this occurs, the presumption of discrimination disappears.
The employee must then present evidence showing an inference of discrimination — demonstrating that the defendant's explanation is insufficient and only a pretext or proving that the defendant's actions were discriminatory.
Cowen said the AIR-21 burden-shifting standards are similar to those in the Energy Reorganization Act, which placed "tough" burdens on employers in the nuclear industry because of a history of retaliation against whistleblowers.
"The 2007 FRSA amendments must be similarly construed, due to the history surrounding their enactment," Cowen said.
The panel noted that NJ Transit made several significant points, for example that Araujo could not argue disparate treatment because, in the five years before the accident, no conductor had engaged in similar conduct. And, NJ Transit argued, Araujo did violate safety rules.
Cowen said those arguments were not enough because Araujo had established a prima facie of retaliation.
"We emphasize that Araujo has not articulated an overwhelming case of retaliation ... Araujo's evidence is entirely circumstantial, and we express no opinion as to the strength of his evidence," Cowen said.
"Viewing the facts favorably to Araujo, a reasonable jury could find that Meade decided not to drug test Araujo on February 25, 2008 because he did not believe that he violated any rules or was responsible for the accident, and that NJT decided to file disciplinary charges only after Araujo reported his injury," Cowen said.
Goetsch, of Cahill, Goetsch & Perry in New Haven, Conn., says that before the FRSA amendments, "employees basically had no rights at all."
The state Division of Law is representing NJ Transit. A spokesman, Lee Moore, declined to comment because the matter has been remanded.
Nancy Snyder, a spokeswoman for NJ Transit said the railroad does not comment on pending litigation.
New Jersey Law Journal 2/21/13