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Can Company Compliance Officers Be Protected As Whistleblowers? Maybe So.

Posted by Frank Steinberg | Sep 23, 2013 | 0 Comments

A while back we posted on White v. Starbucks, a case that followed Massarano v. New Jersey Transit, an unpublished Appellate Division decision.  The general proposition of White and Massarano is that employees whose job it is to ensure corporate compliance with health and safety laws designed to protect the public are not protected as whistleblowers under CEPA.

Now another panel of the Appellate Division has thrown that position into serious question.

In Lippman v. Ethicon, which was approved for publication on September 4, 2013, the court reinstated the plaintiff's complaint, which had been dismissed by the trial court on the basis of Massarano.  Noting that CEPA at the time of its enactment was the most far-reaching whistleblower law in the country, the court reiterated the NJ Supreme Court's direction that CEPA be interpreted consistently with the intent of the Legislature in enacting it.

Our Supreme Court has recognized that “at the time of its enactment” CEPA was “the most far reaching ‘whistleblower statute' in the nation.” Mehlman v. Mobil Oil Corp., 153 N.J. 163, 179 (1998). Those in the highest level of corporate governance at times might be inclined to decide on a monetary basis the cost of recalling a defective product outweighs the potential cost of compensating those who may be injured by it. These decision makers must also consider that CEPA will protect from retaliation those employees whose core function and duty is to monitor the employer's compliance with the relevant laws, regulations, or other expressions of a clear mandate of public policy.  (Emphasis added.)

And so, calling such compliance officers “watchdog employees,” the court announced its disagreement with the holding of Massarano:

In our view, it would be a sad irony indeed if such a “watchdog” employee, like plaintiff, would be deemed by a court to fall outside the wall of protection created by the Legislature to whistleblowers. If an individual's job is to protect the public from exposure to dangerous defective medical products, CEPA does not permit the employer to retaliate against that individual because of his or her performance of duties in good faith, and consistent with the job description.  (Emphasis added.)

In order to establish a cause of action under CEPA, the watchdog employee must be able to prove that he “pursued and exhausted all internal means of securing compliance; or refused to participate in the objectionable conduct.”  That means taking a stand, not just saying that you tried, and that means taking risks.  The watchdog must “pursue and exhaust” all internal avenues, or “refuse to participate.” 

And so we have dueling Appellate Division views of the same basic question.  The state Supreme Court may well be presented with an opportunity to resolve the dispute. 

About the Author

Frank Steinberg

Frank is the founder and principal of Steinberg Law, LLC. A Jersey boy born and bred, he focuses on employment litigation and counseling, business litigation,  and aviation law. Following law school and a clerkship in the federal district court Frank spent his early career with large litigation ...

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