Young v. Schering Corp.

• Decision Date: 11 July 1995
• Citation: 660 A.2d 1153,141 N.J. 16
• Parties: , 10 IER Cases 1437 Dr. William B. YOUNG, Plaintiff-Respondent, v. SCHERING CORPORATION and Dr. Edwin S. Brokken, Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 16

141 N.J. 16

660 A.2d 1153, 10 IER Cases 1437

Dr. William B. YOUNG, Plaintiff-Respondent, v. SCHERING CORPORATION and Dr. Edwin S. Brokken, Defendants-Appellants.

Supreme Court of New Jersey.

Argued Feb. 27, 1995.

Decided July 11, 1995.

Jerrold J. Wohlgemuth, Warren, for appellants (Apruzzese, McDermott, Mastro & Murphy, attorneys).

Arnold S. Cohen, Newark, for respondent (Balk, Oxfeld, Mandell and Cohen, attorneys).

The opinion of the Court was delivered by

COLEMAN, J.

This wrongful termination of employment case requires us to determine the scope of the waiver provision of the New Jersey Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-8. The Appellate Division held that the statutory waiver does not preclude an employee from pursuing common-law claims that are sufficiently distinct from a CEPA claim. 275 N.J.Super. 221, 645 A.2d 1238 (1994). The Appellate Division, however, affirmed the dismissal of the CEPA claim and the related common-law claims. We denied plaintiff's petition for certification. 139 N.J. 184, 652 A.2d 172 (1994). We granted defendant's cross-petition, ibid., to determine whether the waiver provision in CEPA requires dismissal of all of plaintiff's common-law tort and contract claims. We hold that the scope of the CEPA waiver provision does not prevent an employee from proceeding with his or her common-law tort and contract claims that are sufficiently distinct from the CEPA claim.

I

In January 1981 Schering Corporation (Schering) hired plaintiff William B. Young, a veterinary doctor, as Manager of International Clinical Research and Technical Services in its Animal Health Division. Schering promoted Dr. Young to Director of that department in April 1984 and to Director of its Worldwide Clinical Research and Technical Services in November 1986. In January 1988 defendant Dr. Edwin S. Brokken became Dr. Young's immediate supervisor.

Soon thereafter, Dr. Young complained to Dr. Brokken that Schering had an "unrealistic priority" of funding by investing in research and development of Florfenicol, a veterinary drug. Dr. Young believed Florfenicol would not receive Food and Drug Administration approval because studies had substantiated that Chloramphenicol, an analogue of Florfenicol, is associated with idiosyncratic aplastic anemia [a peculiarly, individualized decrease in red-blood cells] in humans, thereby causing a worldwide ban on its use in food for animals. Dr. Young disagreed with Dr. Brokken's decision to concentrate research on Florfenicol rather than Netobimin and Flunixin because he believed research of Florfenicol violated Schering's policies and federal regulations. Dr. Young's employment was terminated in August 1988. The parties disagree over what caused the termination.

Dr. Young filed a complaint against Schering and Dr. Brokken on February 2, 1989. He alleged in Count I violations of CEPA and common-law claims of malicious interference with an advantageous business relationship, harassment, intentional infliction of emotional distress, unjust work evaluation, wrongful discharge and loss of present and future salary. In Count II, plaintiff alleged common-law wrongful discharge and denial of severance pay in violation of Schering's personnel policies. In Count III, plaintiff alleged defamation, slander and malicious interference with prospective employment opportunities. The relief plaintiff sought by the complaint was reinstatement to his former position, injunctive relief and monetary damages, among other things.

In October 1989 Schering and Dr. Brokken succeeded in dismissing all common-law claims alleged in Count I and the breach of implied employment contract claims alleged in Count II on the ground that the CEPA waiver provision, N.J.S.A. 34:19-8, precluded plaintiff from pursuing those claims. The court preserved the CEPA claim and the Count III claims of defamation, slander and malicious interference with prospective employment opportunities against Dr. Brokken individually for his alleged ultra vires conduct.

On March 27, 1990, the trial court dismissed the CEPA claims for failure to state a claim upon which relief could be granted. R. 4:6-2(e). That dismissal was without prejudice to filing an amended complaint. In dismissing the CEPA claim, the trial court in part reasoned:

Even accepting as true and viewing in the light most favorable to Young, all allegations in his complaint and all reasonable inferences that can be drawn therefrom ... these averments do not set forth a cause of action under N.J.S.A. 34:19-3a [and] c(1) or c(3) of CEPA. What Young has "disclosed" to Brokken and Schering officials, is his own disagreement with the choice made by both Brokken and Schering, to research the marketability potential of Florfenicol as opposed to Flunixin and Netobimin. He does not allege that he, in his oral and written communications, confronted Brokken or senior colleagues, with a particular law, rule, or regulation that would be violated by the decision to pursue the Florfenicol research, nor does Schering's decision, which this court believes to be a company policy decision, violate public policy.

[Young, supra, 275 N.J.Super. at 227, 645 A.2d 1238.]

Approximately twenty months after the Count I CEPA claim was dismissed, Dr. Young filed an amended complaint on February 10, 1992, alleging Schering and Dr. Brokken terminated him in retaliation for warning them that test results of Flunixin should be reported to the governmental agencies of the United States, the United Kingdom and Canada where Schering allegedly marketed Flunixin. He alleged that Schering failed to report the test results to those countries and to respond to Dr. Young's warnings to research a safe dosage of Flunixin. On May 29, 1992, the trial court dismissed the amended complaint because the one-year statute of limitations had expired, see N.J.S.A. 34:19-5, and because the doctrine of laches had been violated. The court stated that "not only [is the amended complaint] a distinct claim from the one originally raised, but it is one which is almost entirely contradictory to the thrust of his first allegation." The judge found no reasonable basis for the delay in filing the amended complaint.

On July 25, 1994, the Appellate Division affirmed the dismissal of the amended complaint because it did not relate back to the original complaint. Young, supra, 275 N.J.Super. at 229, 645 A.2d 1238. It was an entirely new claim. Id. at 229-30, 645 A.2d 1238. The Appellate Division also affirmed the dismissal of the CEPA cause of action alleged in Count I because CEPA does not provide a remedy for the discharge of employees who simply disagree with the employer's lawful research decisions. Id. at 237, 645 A.2d 1238. The Appellate Division also concluded that dismissal of the common-law claims alleged in Count I was proper because they sought the same remedy that plaintiff sought in the CEPA claim. As such, they were deemed waived under CEPA's waiver provision, N.J.S.A. 34:19-8. Id. at 237-38, 645 A.2d 1238. However, the court determined that CEPA's waiver provision does not extend to the Count II and III claims of severance pay, defamation, slander or malicious interference with prospective employment opportunities. It deemed those issues collateral to Dr. Young's CEPA claim because they require different proofs and do not require proof of a retaliatory motive. Id. at 238-40, 645 A.2d 1238.

II

A

Schering and Dr. Brokken contend that the Appellate Division misconstrued CEPA's waiver provision and incorrectly preserved Dr. Young's Count II contractual claim for severance pay and his Count III common-law tort claims under theories of defamation, slander and malicious interference with prospective employment opportunities. They argue that those claims depend on a showing that Dr. Young was terminated in retaliation for his opposition to their research-funding decisions; therefore, those claims are waived by the institution of a CEPA claim. They suggest that a contrary interpretation of the waiver provision would result in duplicative claims.

Dr. Young argues that the severance-pay claim is based on contractual obligations that are unrelated to the retaliation claim, and the Count III tort claims are based on Dr. Brokken's conduct after the dismissal. Dr. Young asserts that Dr. Brokken falsely told former colleagues and prospective employers that plaintiff was fired because of irregular expense reports. See Erickson v. Marsh & McLennan Co., Inc., 117 N.J. 539, 562-66, 569 A.2d 793 (1990). He argues that the post-employment conduct is not part of the retaliatory discharge claim and thus not covered by the waiver provision.

B

CEPA was enacted in 1986 to protect from retaliatory action employees who "blow the whistle" on organizations engaged in illegal or harmful activity. Abbamont v. Piscataway Twp. Bd. of Educ., 138 N.J. 405, 417-18, 650 A.2d 958 (1994). N.J.S.A. 34:19-3 defines the class of employee actions protected by CEPA, and it provides:

An employer shall not take any retaliatory actions against an employee because the employee does any of the following:

a. Discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer or another employer, with whom there is a business relationship, that the employee reasonably believes is in violation of a law, or a rule or regulation promulgated pursuant to law;

b. Provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any violation of law, or a rule or regulation promulgated pursuant to law by the employer or another employer, with whom there is a business relationship; or c. Objects to, or refuses to participate in any activity, policy or practice which the employee reasonably believes:

(1) is in violation of a law, or a rule or regulation promulgated pursuant to law;

(2) is fraudulent or criminal; or

(3) is...