Parker v. M & T Chemicals, Inc.

• Decision Date: 30 October 1989
• Citation: 566 A.2d 215,236 N.J.Super. 451
• Parties: , 58 USLW 2342, 4 IER Cases 1766 Sheldon H. PARKER, Plaintiff-Respondent, v. M & T CHEMICALS, INC., a corporation of the State of Delaware; Gordon C. Andrews, individually, and as Vice-President, General Counsel and Secretary of M & T Chemicals, Inc.; William M. Kraus, individually, and as Vice-President of M & T Chemicals, Inc., Defendants-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 451

236 N.J.Super. 451

566 A.2d 215, 58 USLW 2342, 4 IER Cases 1766

Sheldon H. PARKER, Plaintiff-Respondent, v. M & T CHEMICALS, INC., a corporation of the State of Delaware; Gordon C. Andrews, individually, and as Vice-President, General Counsel and Secretary of M & T Chemicals, Inc.; William M. Kraus, individually, and as Vice-President of M & T Chemicals, Inc., Defendants-Appellants.

Superior Court of New Jersey Appellate Division.

Argued May 3, 1989.

Decided Oct. 30, 1989.

Jon W. Green, Springfield, for defendants-appellants (Epstein, Becker & Green, attorneys; M. Elaine Jacoby, of counsel; Beverly A. Williams, Princeton, on the brief).

Martin W. Aron, for plaintiff-respondent Sheldon H. Parker (Budd Larner Gross Picillo Rosenbaum Greenberg & Sade, Short Hills, attorneys).

Before Judges KING, BRODY and SKILLMAN.

The opinion of the court was delivered by

KING, P.J.A.D.

We granted leave to appeal in this matter, R. 2:2-4, to examine the question whether an in-house attorney may maintain an action under the Conscientious Employee Protection Act (Act), N.J.S.A. 34:19-1 to 34:19-8, commonly called the "Whistle Blower's Act," consistent with the Code of Professional Ethics adopted by the Supreme Court in the exercise of its exclusive authority to regulate the practice of law. The question whether an attorney's employer can be required to reinstate a discharged attorney is not before us. Plaintiff here seeks money damages and attorneys' fees only, not reinstatement. The Law Division judge ruled that plaintiff's complaint stated a claim for relief under the Act. We agree and affirm.

We relate here in detail the allegations of the complaint, filed on August 8, 1988, which the Law Division judge ruled was sufficient to overcome a motion to dismiss for failure to state a claim upon which relief can be granted. R. 4:6-2(e). A motion under this rule, unlike a motion for summary judgment, R. 4:46, is based on the pleadings. "A complaint should not be dismissed under this rule where a cause of action is suggested by the facts and a theory of actionability may be articulated by way of amendment." Rieder v. State Dept. of Transp., 221 N.J.Super. 547, 552, 535 A.2d 512 (App.Div.1987). As our Supreme Court has recently emphasized, motions to dismiss pursuant to R. 4:6-2(e), "almost always brought at the very earliest stages of the litigation," should be granted "in only the rarest of instances." Printing Mart--Morristown v. Sharp Electronics Corp., 116 N.J. 739, 772, 563 A.2d 31 (1989). We must assume the facts as asserted by the plaintiff are true and give him the benefit of all inferences that may be drawn in his favor. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192, 536 A.2d 237 (1988).

These are plaintiff's assertions. Defendant M & T Chemicals, Inc. (M & T) is located in Woodbridge and develops and markets specialty chemicals for electronics and other industries. Plaintiff was formerly employed for seven years at M & T as Director of Patents. Defendant Gordon C. Andrews was the Vice-President, Secretary and General Counsel of M & T. Defendant William M. Kraus was a Vice-President of M & T. Plaintiff alleges that Andrews and Kraus were his employers within the meaning of the Act.

During his seven years of employment by M & T, plaintiff alleges that he "received favorable evaluations and raises which recognized his meritorious service." Plaintiff claims to have performed administrative and business, as well as legal functions. By interoffice memorandum, dated December 3, 1987, plaintiff was demoted abruptly to Assistant General Patent Counsel.

For several years before this date M & T had eagerly sought to obtain or develop specialized technology so it could manufacture methyltin stabilizers. This desire was reflected in an internal memorandum of June 27, 1986 stating that M & T was "actually working to obtain or develop" methyltin technology and that the company's objective was to be in the methyltin stabilizer business "no later than mid-1989 and possibly in early 1988." Despite these efforts, M & T had little success getting the desired technology.

On August 7, 1987 an M & T employee, Robert Ringwood, telephoned plaintiff to tell him that certain confidential documents containing competitor's trade secrets were about to be transmitted to plaintiff for copying. Because plaintiff was not aware of any decision to obtain or use any competitor's trade secrets, he questioned the propriety of the proposed conduct.

On further inquiry, plaintiff discovered that a former employee of M & T, William Mayo, had obtained confidential documents from his current employer, Cardinal Corporation. Cardinal had obtained a copy of the documents from the United States District Court for the Eastern District of Louisiana. The documents were copies of transcripts in pending litigation in that District and were the subject of a protective order signed by Judge McNamara on February 7, 1986. Upon information and belief of the plaintiff, "the Court's release of the sealed transcripts was inadvertent, and when the error became known, the Court requested return of the documents." M & T was not a party to this litigation and had no right to the sealed transcripts.

The transcripts inadvertently released by the court contained trade secrets of both Argus Chemical Company, a subsidiary of Witco Chemical Company, and of the Carstab Division of Morton Thiokol, Inc. Plaintiff claims that the defendants in the present action believed that these trade secrets would be valuable to M & T because they contained confidential information regarding methyltin stabilizer technology and also because defendants believed that the confidential transcripts would provide them with an advantage in M & T's own litigation with Morton Thiokol, Inc. then pending in the Federal Court in Delaware. Plaintiff claims that William Mayo, the former M & T employee, had offered to make the transcripts available to defendants in return for a sum of money. Plaintiff asserts that William Kraus, M & T's Vice-President, authorized payment to Mayo.

Plaintiff claims that in his absence, M & T's general counsel, defendant Gordon C. Andrews, had conducted a meeting in which he designated plaintiff to supervise the copying and use of these confidential transcripts. Plaintiff says that "this was an attempt by Andrews to insulate himself from any unlawful or unethical conduct." Plaintiff continues that Andrews knew that the sealed transcripts contained trade secrets of Argus and Carstab and that these companies had not permitted their release. Defendant Kraus allegedly told plaintiff that Andrews was "comfortable" with the theft or misappropriation of the trade secrets and that defendants had left no "paper trail" which could be detected. Plaintiff believes that defendants paid Mayo for access to the sealed documents.

On August 17, 1987 plaintiff sent a memorandum to Andrews in which he objected to M & T's action. The defendant filed this memorandum with the court in support of his motion to dismiss. Plaintiff concluded his remarks in this detailed memorandum as follows:

It is my understanding that to date the documents have not been reviewed by anyone at M & T Chemicals, but have remained under lock and key since their receipt. In view of the present situation I strongly recommend that the documents not be examined until such time as we have a definitive written opinion or court approval[. A]t this time it seems appropriate that I turn these documents to you for your safe keeping until this matter is resolved.

I believe it important to resolve this matter promptly and would hope that we can determine our legal rights or obligations regarding such documents by the end of the week. If you need any assistance in this matter please let me know.

Plaintiff alleges that he continued to object to M & T's management of this matter because he reasonably believed that the company was engaged in unlawful and fraudulent conduct in violation of the canons of ethics binding attorneys.

Plaintiff concludes his complaint with a recitation of the retaliations against him. He says that he was "verbally reprimanded for his orchestration of these events" by M & T's president and chief executive officer, Max Bass, and two other officers, Anthony DeLuca and William Brewster. He asserts that he was demoted from Director of Patents to Assistant General Patent Counsel. In contrast, defendant Gordon Andrews was appointed Secretary of M & T and made a member of the company's policy committee.

In the concluding paragraphs of his complaint, plaintiff alleges the course of retaliation and "constructive discharge" in this way:

13. After the unlawful demotion, defendants created an intolerable work environment for plaintiff that exacerbated an existing medical condition and caused plaintiff great anxiety, embarrassment and humiliation. Defendants, inter alia, criticized plaintiff's use of sick days for legitimate medical problems and took other action that was demeaning in nature. Stanley Marcus, plaintiff's new supervisor, made clear that if plaintiff "rocked the boat" he would be terminated. By this conduct defendants constructively discharged plaintiff from his employment.

14. In objecting to defendants' proposed theft and/or misappropriation of trade secrets contained in documents under seal of Court, plaintiff was engaged in conduct protected by the Conscientious Employee Protection Act (the "CEPA"), N.J.S.A. 34:19-1 et seq. Despite that fact, defendants retaliated against plaintiff by demoting him to Assistant General Patent Counsel and then constructively discharging him from his employment, in violation of the CEPA.

We were advised in the briefs and at oral argument that plaintiff resigned his employment on April 29, 1988. Plaintiff demands a jury trial, compensatory and punitive damages, attorney's fees and costs. He does not demand reinstatement, a remedy provided by the...