At least four cases spanning from 1998 to 2022 recognized that New Jersey’s whistleblower law, the Conscientious Employee Protection Act (“CEPA”), can apply to NJ employees who work and live in other states.
Best Rationale to Apply CEPA Protection
Perhaps the best rationale to apply CEPA protection to out-of-state workers was offered by the court in Mehlman v. Mobil Oil Corp. In Mehlman v. Mobil Oil Corp., 153 N.J. 163 (1998), the court allowed a CEPA action against New Jersey employer by an employee who objected to a practice that violated another jurisdiction’s public policy and endangered that jurisdiction’s citizens. The court stated, “To accept Defendants’ argument [ that NJ does not have jurisdiction] would compel the conclusion that a national or multi-national corporation could establish headquarters in New Jersey, hire employees to work in every state except New Jersey, and then be exempt from the remedial purposes of CEPA.”
In 2011, the New Jersey Appellate Division in Menth v. Heartland Ostrich Farm, 2011 WL 780884 Unpub, the Court found that New Jersey’s CEPA is the controlling choice of law over Pennsylvania’s whistleblower statute where the defendant employer is headquartered in New Jersey.
In another 2011 case, Moore v. Novo Nordisk, Inc., 2011 WL 1085015, the employee Moore lived in South Carolina and worked as a sales representative for Novo Nordisk at one of their locations in South Carolina. Novo Nordisk is a global pharmaceutical company that maintained its United States corporate headquarters in Plainsboro, New Jersey. Moore alleged a supervisor in South Carolina instructed her to give autographed basketballs to doctors to increase Novo Nordisk’s sales. This type of activity is an unlawful kickback scheme in violation of the pharmaceutical marketing anti-kickback statute, 42 U.S.C. § 1320a-7b(b). She was later fired and filed a New Jersey whistleblower claim under CEPA claim.
Novo Nordisk filed a motion in federal district court seeking to dismiss her CEPA claim because she did not work in New Jersey, arguing that her termination had no connection with New Jersey. The District Court rejected Defendant’s argument, finding that, “The nexus between Plaintiff's alleged injury and the State of New Jersey is that Novo, Plaintiff’s employer, is incorporated in New Jersey.”
In a more recent 2022 decision from New Jersey’s Appellate Division, Halliday v. Bioreference Labs., 2022 N.J. Super. Unpub. LEXIS 1394, the plaintiff worked for a corporation headquartered in NJ, that provided diagnostic laboratory testing and related services. Halliday, the plaintiff, worked remotely at a Bioreference in Houston, Texas where she resided. Duffy, the vice president of remote operations lived in Washington State, but he traveled approximately eighty to eighty-five percent of the time to oversee Bioreference remote laboratories in Florida, Texas, and California. Duffy's travels to New Jersey were infrequent, and he did not supervise any New Jersey-based employees. After Halliday was terminated, she filed whistleblower claim under New Jersey’s CEPA. The court granted the Defendant summary judgment and dismissed Halliday’s CEPA case
Halliday subsequently appealed. On appeal, Halliday argued the court erred by determining Texas law, and not New Jersey law under CEPA, applies to her wrongful termination claim, and she argued against the court’s conclusion that even if CEPA had applied, the case should be dismissed because she failed to present evidence the termination of her employment is causally connected to her complaints.
The Appellate Court concluded that based on its own review of the record, the parties' arguments, and the applicable legal principles, there were genuine issues of material fact that precluded the court's determination Texas law applies to Halliday’s CEPA claim and that the court had not made adequate findings of fact and conclusions of law supporting its determination to dismiss.
The Appellate court found that Plaintiff's CEPA claim was founded on two different theories: 1) She alleged her employment was terminated in part in retaliation for reporting actions, practices, and policies at the Houston laboratory to her supervisors that she claims violated the law. She also claimed her termination was in retaliation for her refusal to participate in an activity that she reasonably believed violated the law. CEPA authorizes a cause of action based on both allegations. By comparison, under Texas common law, there is an exception to the at-will employment principle that prohibits an employee from being discharged for refusing to perform an illegal act. Here, CEPA and Texas law provide causes of action for plaintiff's claim she was terminated based on her refusal to perform what she contends is an illegal act.
However, unlike CEPA, Texas law does not provide a cause of action for plaintiff's other claim that she was terminated in retaliation for objecting to, or disclosing to a supervisor, an activity, policy, or practice she reasonably believed violated a law, or rule or regulation promulgated pursuant to law. The Appellate Court found there is a substantive difference between the applicable laws of Texas and New Jersey because the failure of Texas law to support a cause of action for portion of the plaintiff's claim "is offensive or repugnant to the public policy of New Jersey as reflected in CEPA. Therefore, a conflict between the States' laws exists."
The Appellate Court’s analysis in part was as follows:
"Where a conflict between the States' laws exists, and the claim involves alleged tortious conduct, a court must apply the choice-of-law principles described in the Second Restatement of Conflicts of Laws. However, a conflict between the laws of two states does not always lead to a choice-of-law analysis. A choice-of-law analysis is unnecessary and preempted when our Legislature has determined that New Jersey public policy requires the application of our substantive law whenever our courts have jurisdiction over the kind of claim, regardless of the interest of another state.
Where a legislative directive to apply a state's law cannot be ascertained either through an explicit statutory directive or by a process of interpretation and construction, the court must apply the most-significant-relationship test to resolve choice-of-law questions. If there is no statutory directive, a court applies NJ law if NJ has the most significant relationship to the matter in light of the facts."
The Court stated that with regard to the first inquiry, it was persuaded CEPA is sufficiently broad to extend to plaintiff as an employee of a New Jersey corporation that is also headquartered in this State. The Legislature did not intend to limit the statute's protections to only employees who live and work in New Jersey. Thus, subject to other choice-of-law factors, plaintiff may assert a CEPA claim even though she lived and worked for defendant in Texas.
However here, “plaintiff concedes the injury upon which her CEPA claim is based occurred in Texas, and there is no dispute the alleged unlawful action that caused her injury—the termination of her employment—took place in Texas. Therefore, there is a presumption Texas law applies.”
To overcome the presumption Texas law applies and apply New Jersey law, the motion court was required to determine whether New Jersey has a more significant relationship with the parties based on an assessment of each state's contacts. There is a required consideration of four contacts to determine whether New Jersey or Texas has the most significant relationship to the alleged retaliatory termination of plaintiff's employment and the parties. The four contacts include: (a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.
Although the court in dismissing her case, had referred to the four contact factors, it made scant factual findings concerning them. The court's limited findings had supported a determination the first and third contact factors favor the application of Texas law. The first contact—the place where the injury occurred—favors application of Texas law because, as plaintiff concedes, she was injured by the wrongful termination of her employment in Texas. The third contact also favors a finding Texas law should apply; plaintiff is domiciled and resides in Texas and defendant has a place of business in Texas—the Houston laboratory where plaintiff was employed, where the alleged unlawful practices occurred, and where plaintiff was terminated. Defendant's headquarters are in New Jersey, and plaintiff communicated at times with defendant's employees there, although she worked exclusively at the Houston laboratory.
But the court did not make any findings concerning the second and the fourth contact factors: The second is the place where the conduct causing the injury occurred. The fourth factor is the place where the relationship between the parties is centered. Consequently, the court could not properly determine the place where the conduct causing the injury occurred because that issue is rife with genuine issues of material fact.
The Appellate Court vacated the order which had dismissed Halliday’s CEPA claim and remanded the case for the court to resolve the factual issues.
“We determine only there are genuine issues of material fact essential to a proper analysis of the contacts the court was required to consider... Based on the summary judgment record, the motion court could not properly resolve the factual dispute underlying the location of the conduct causing the harm—the decision-making process that resulted in the plaintiff's termination. .... Moreover, as to the fourth contact factor, the place where the relationship between the parties is centered, the court did not make any findings of fact and correlate them to legal conclusions.”
NOTE: This article is not to be construed as giving legal advice, nor should it be relied upon as legal advice. Jurisdiction, choice-of-law, conflict-of-laws, and the proper forum are complex legal issues. If you have an employment law question or think you may have a Whistleblower Claim, you should contact an employment law attorney.
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If you are being subjected to such unlawful workplace retaliation, contact Hope A. Lang, Attorney at Law today for a free consultation. I accept whistleblower and discrimination cases from all over New Jersey and have locations in Southern, Central and Northern NJ to meet with clients.
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