Longo v. Pleasure Productions, Inc., 215 N.J. 48 (2013). A plaintiff under the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to -8 (“CEPA”), can recover punitive damages against an employer, under the doctrine of respondeat superior, only where “there is actual participation [in the wrongful conduct by upper management or willful indifference.” That principle was established in Abbamont v. Piscataway Tp. Bd. of Educ., 138 N.J. 405, 419 (1994). That is the same standard that applies to punitive damages claims under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“LAD”). Today’s Supreme Court decision, written by Judge Rodriguez, addresses the need for an “upper management” jury charge in CEPA cases, what happens when such a charge is not given, and what standard of proof governs.
The underlying facts involved a remarkably hostile work environment. Plaintiff originally sued unde both the LAD and CEPA. As the case proceeded, she dismissed her LAD claim. Her CEPA claim went to trial. The jury found in favor of some of the individual defendants, but awarded a total of $150,000 in damages against another defendant and plaintiff’s employer, East Coast News Corp. Following a punitive damages phase, the jury awarded $500,000 in punitive damages against East Coast. East Coast appealed. The Appellate Division unanimously affirmed the compensatory damages awards, but split 2-1 on punitive damages. The majority upheld the punitive award, but Judge Wefing dissented on the grounds that the jury charge did not refer to the requirement that upper management had actually participated in or was willfully indifferent to plaintiff’s rights. East Coast appealed as of right on the punitive damages issue, and the Supreme Court reversed and remanded for a new trial on punitive damages only.
After summarizing the applicable law, and citing Abbamont for the “upper management” requirement, Judge Rodriguez noted three LAD cases, Baker v. National State Bank, 161 N.J. 220 (1999), Mogull v. CB Commercial Real Estate Group, Inc., 162 N.J. 449 (2000), and Lockley v. Department of Corrections, 177 N.J. 413 (2003). Proceeding from those cases, the Court held that omission of an “upper management” charge in “CEPA claims similar to LAD claims,” is “fatal” and requires a new trial. “This lack of guidance could have resulted in an unjust result.”
Remanding the case for a new trial on punitive damages only, Judge Rodriguez cautioned that the jury would need to determine “which employees are part of upper management,” a “fact-sensitive task.” Moreover, he emphasized that the standard of proof for punitive damages is “clear and convincing evidence.” At the prior trial, the jury was erroneously charged using the “preponderance of the evidence” standard.
There is logic in some overlap of the rules applicable to LAD and CEPA cases. Today’s decision largely simply extends the Court’s LAD precedents to CEPA claims.