The Supreme Court Eases Burden for Retaliation Claims Under the LAD

By: Kathleen M. Connelly

By unanimous decision in the recent case of (July 17, 2012), the New Jersey Supreme Court extended greater protection to employees blowing the whistle on suspected violations of law in the workplace. While the decision may have some positive implications for employers, several aspects of the ruling may well spawn increased litigation.

Siding with employees, the court ruled that in actions under the New Jersey Law Against Discrimination (LAD), an employee alleging unlawful retaliation for having complained of discriminatory behavior in the workplace need only show that he/she had a good faith belief that the alleged conduct violated the LAD. The employee is not required to point to an actual victim of discrimination, and the fact that the employee was wrong and complained of conduct that was in fact entirely lawful will not bar a retaliation claim. This holding could significantly expand the number of employees eligible to pursue unlawful retaliation claims in response to a termination or other adverse employment action.

The Facts

Plaintiff Michael Battaglia alleged that he complained to his supervisor, as well as other male managers about certain vulgar, sexist comments they had made about female UPS employees. However, the comments were not directed at the women, nor were they made in the presence of any female employees. Battaglia also alleged that he confronted his supervisor about a rumored consensual affair his supervisor was having with a subordinate, telling him this behavior was inappropriate. Finally, Battaglia alleges that he complained to his supervisor about other managers going out for “liquid lunches” and not returning to work and other corporate credit card misuse. When these behaviors continued, Battaglia sent an anonymous letter to UPS’s Human Resources Department containing vague, broad-brush allegations of inappropriate workplace language and unethical behavior, without identifying his supervisor or specifying the underlying incidents about which he complained.

UPS launched an investigation into the anonymous complaint but had difficulty pursuing the claims due to the non-specific nature of the allegations. As a result, no formal action was taken on the complaint. After closing the investigation, the investigator came to believe that Battaglia was the author of the anonymous complaint and shared her suspicions with his supervisor’s immediate boss. Thereafter, Battaglia was disciplined and demoted for reasons that, according to UPS, were unrelated to his complaints.

Battaglia commenced suit alleging, among other things, that his demotion was in retaliation for i) his complaints about his supervisor’s gender-based derogatory comments and his affair with a subordinate, in violation of the anti-retaliation protections of the LAD; and ii) his complaints about the improper use of corporate credit cards in violation of the anti-retaliation protections of the New Jersey Conscientious Employee Protection Act (CEPA). The jury found for Battaglia on both counts and returned a $1,000,000 verdict, which was affirmed in part, and reversed in part, on appeal. Thereafter, both parties appealed to the New Jersey Supreme Court.

The Court’s Adverse LAD Ruling: The Supreme Court reversed the Appellate Court’s “narrow interpretation” that absent proof that his supervisor’s sexist comments and consensual affair had an adverse impact on a female employees, Battaglia’s complaints about this conduct did not constitute protected activity under the LAD. Rather, the Supreme Court reasoned that the LAD’s retaliation protections extend not only to those who complain about discriminatory conduct directed at an actual victim, but also to those who have a good faith belief that the complained of conduct is prohibited by the LAD, without regard to whether an individual was actually harmed by the conduct.

Although the Supreme Court reiterated that the LAD was not intended to create a workplace “civility code,” its ruling suggests otherwise. First, the ruling strongly suggests that engaging in any form of vulgar, derogatory or inappropriate workplace behavior among colleagues a far riskier activity, even if the comments are not directed at or overheard by the objects of the commentary. Likewise, the Supreme Court’s finding that complaint of a consensual affair between a superior and subordinate (which is entirely permissible under the LAD) is nevertheless protected activity so long as the complaining employee had a good faith, albeit erroneous, belief that such relationships are a form of sex discrimination, imposes added risks to this lawful activity between consenting adults. As a result of this ruling, employers should take additional efforts to curb all offensive and derogatory behaviors from the workplace, even in the absence of a complaint by an employee that he/she found the conduct personally offensive.

The Supreme Court did suggest, however, that the outcome of its ruling may have been different if the offensive comments were made by lower-level employees and not a supervisor. In addition, the Supreme Court hinted that UPS may have escaped liability if it had undertaken a more thorough investigation into Battaglia’s complaint, a puzzling comment in light of the fact that Battaglia’s complaint was anonymous and he did not identify the offenders nor provide any specifics about the offensive conduct.

The Court’s Favorable CEPA Ruling: Turning to Battaglia’s claim that he was retaliated against for complaining of fraudulent use of UPS’s corporate credit card by management employees, the Supreme Court observed that the question under CEPA is not whether the challenged activity meets the legal definition of fraud, but rather, whether the complaining employee reasonably believed the conduct was fraudulent. However, the Supreme Court cautioned that the CEPA does not protect “vague and conclusory complaints directed at minor or trivial matters, or general workplace unhappiness,” and the complaining employee must describe the workplace misconduct with “care and precision.”

Applying the foregoing principles, the Supreme Court reversed the CEPA verdict below. First, it reasoned that Battaglia’s anonymous letter made no reference to the activities underlying his verbal complaints to his supervisor – credit card misuse or business lunches. Second, his verbal complaints about these activities were vague. Third, Battaglia testified that he did not believe the conduct was in fact fraudulent. As a result, the Supreme Court reasoned that Battaglia did not establish that his complaints were protected whistle blowing activity under CEPA.

Although this aspect of the ruling may be viewed as favorable for employers, the Supreme Court once again cautioned employers that inadequate or cursory investigations into any allegations of workplace wrongdoing could increase the employer’s exposure to liability under CEPA. The employer’s ineffective response can constitute indirect evidence of a causal connection between the employee’s protected whistle blowing activity and the adverse employment action against the employee.

The Supreme Court’s Favorable Ruling on Future Damages. To recover damages under the LAD for or emotional distress, an employee is not required to present expert testimony that supports these damages. It is sufficient for the employee to testify about the humiliation, embarrassment or other emotional injuries caused by the unlawful conduct. As concerns emotional distress damages, the Court announced that the employee must offer expert testimony about the permanency of the plaintiff’s emotional injuries. The Supreme Court therefore held that the trial court inappropriately permitted the jury to speculate about Battaglia’s future emotional damages.

The Bottom Line: The decision illustrates several import lessons for employers. First, employers must provide on-going anti-harassment and anti-retaliation training to employees, with emphasis on the prohibition against workplace discussions that include derogatory or offensive discussions even if the targets of these discussions are not privy to these conversations. Second, employers must establish and periodically distribute a written complaint procedure to be used by employees to complain about workplace concerns. Third, employers must be prepared to take all complaints of workplace misconduct seriously, even if the complaining employee fails to identify an actual victim of the inappropriate behavior, and undertake as thorough an investigation as is warranted to address the employee’s concerns.

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