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D''Agostino v. Johnson & Johnson Inc.

Decided: August 4, 1993.

RICHARD J. D'AGOSTINO, PLAINTIFF-APPELLANT,
v.
JOHNSON & JOHNSON, INC., ROBERT N. WILSON AND RONALD G. GELBMAN, DEFENDANTS-RESPONDENTS



On certification to the Superior Court, Appellate Division, whose opinion is[Table] (1992).

For reversal and remandment -- Chief Justice Wilentz and Justices Clifford, Handler, O'Hern, Dreier, Long and Stein. The opinion of the Court was delivered by O'Hern, J.

O'hern

For a second time we review the 1985 employment dispute between Richard D'Agostino and the Johnson & Johnson Corporation and certain of its employees (hereinafter J & J or J & J defendants). In 1989, we reviewed the contention of J & J that plaintiff's complaint should be dismissed under the doctrine of forum non conveniens. J & J argued that New Jersey was an inconvenient forum for resolution of the dispute more properly brought in a Swiss court, because D'Agostino was a resident of Switzerland and had been employed by a Swiss subsidiary of J & J. On that first occasion, we affirmed substantially for the reasons stated in the Appellate Division opinion, reported at 225 N.J. Super. 250, 542 A.2d 44, holding that the matter could proceed in New Jersey. 115 N.J. 491, 559 A.2d 420 (both cases hereinafter D'Agostino I). At that time, we expressed the reservation that resolution of the forum non conveniens issues did not foreclose or foreshadow any issue of substantive law, including choice-of-law questions that could be better addressed following an exchange of discovery. Ibid.

Following the completion of discovery, the core issues, according to the trial court, remain as "hotly disputed" as they had been at the outset of the case. Plaintiff continues to assert that at the behest of defendants he was wrongfully discharged from employment with J & J's subsidiary because he refused to participate in what he perceived to be an illegal bribing of Swiss licensing

authorities. J & J continues to insist that no illegal payments were involved, but only consulting fees, which are perfectly proper under Swiss law.

In this appeal we must consider the question left open under D'Agostino I, namely, whether Swiss or domestic law governs the claims asserted in the New Jersey forum against a New Jersey corporation and its officers. We hold that because the underlying controversy 1) involves an alleged violation in New Jersey of the Foreign Corrupt Practices Act, 15 U.S.C.A. §§ 78dd-1 to -2 (hereinafter FCPA), which sets forth a domestic policy against bribery of a foreign regulatory official; 2) involves the participation of a United States citizen who might have been exposed to criminal prosecution had the conduct violated the FCPA and was an alleged violation of a New Jersey corporation's internal policy against such overseas commercial bribery; and 3) because violation of the governmental policies could have an indirect effect on the domestic market for pharmaceutical products and the health and welfare of this forum's citizens, New Jersey's interests in resolving this dispute under its laws outweigh the Swiss interest in the at-will employment relationship that would not seek to deter such conduct through its civil law.

I

We hasten to emphasize at the outset of this opinion that these charges against the J & J defendants remain simply that: unproven allegations. Because the case comes before us on a motion for summary judgment, the facts are assumed to be as plaintiff alleges them, and plaintiff is entitled to "all reasonable inferences that may be drawn in [his] favor." Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58, 61, 417 A.2d 505 (1980) (citing R. 4:46-2).

D'Agostino, a United States citizen and a long-time resident of Switzerland, was hired in December 1984 by J & J's wholly-owned overseas subsidiary, Cilag, as General Manager of Cilag's Swiss Marketing Division. Although born in Newark and raised during early childhood in East Orange, at no time during this case has

plaintiff been a New Jersey resident. Plaintiff was hired through the efforts of an employment agency chosen by J & J and was interviewed by a J & J organization in Germany. In accepting employment, plaintiff expressed the hope that he was entering into a long-term career with J & J with the eventual prospect of a United States-based position. Plaintiff signed an employment contract with Cilag in Switzerland on December 21, 1984. The agreement provided that either party could terminate the employment relationship on six-months notice and that Swiss law would govern any disputes under the contract. Plaintiff's employment with Cilag was announced on the letterhead of J & J International, a New Jersey company, on February 14, 1985.

D'Agostino began working for Cilag at its Schaffhausen, Switzerland location in April 1985. His responsibilities included the marketing and registration in Switzerland of pharmaceutical products developed by Cilag and other J & J subsidiaries. D'Agostino reported to Dr. Hans Schmid, Chairman of Cilag, and Paul G. Reinstadtler, Managing Director of Cilag, Germany.

On June 4, 1985, plaintiff received a letter from the office of General Counsel of J & J in New Jersey reminding him to execute and return to New Jersey an acknowledgement of adherence to a J & J Policy Statement, which he had first received on January 5, 1985. The Policy Statement called for the certification that the employee would comply with J & J's policy against the use of corporate funds for unlawful purposes, including bribes, illegal political contributions, or payoffs. Plaintiff asserts that although he asked to see the Policy Statement before returning his acknowledgment, he was bound by the policy nonetheless.

On June 8, 1985, plaintiff participated in a worldwide J & J management meeting in New Jersey. Discussions included the registration in Switzerland of the synthetic hormone Immunox. Robert Wilson, Vice Chairman of J & J and Executive Vice President of J & J International, allegedly inquired about the registration status of Immunox. When plaintiff stated that the Swiss authorities had rejected registration for the second time,

Dr. Schmid and Dr. Hans Balthasar, a Vice President of J & J International and an employee of Cilag, assured J & J management that the matter was under control.

On June 24, 1985, shortly after returning to Switzerland, D'Agostino received a voucher from Dr. G. Kretzschmar, a Cilag executive, seeking payment of "consulting fees" to Dr. Rudolph Preisig. Dr. Preisig was the President of the College of Experts, an advisory committee to the Intercantonal Office of the Control of Medicaments, which controls the registration of new drugs in Switzerland. Plaintiff refused to sign the voucher, suspecting the payment to be a bribe, and sought information. On June 25, 1985, Dr. Kretzschmar presented a second payment voucher for a lesser amount to D'Agostino. Once again, D'Agostino refused to approve the payment. Several days later, after receiving a dossier on Dr. Preisig, D'Agostino discussed the matter with Dr. Kretzschmar. He was told that no contract with Dr. Preisig existed. D'Agostino states that Dr. Kretzschmar told him, "you have to pay, you have to go along. He says, it has been going on for a long time. Be happy that it wasn't more."

On July 23, 1985, plaintiff was asked for "a second or third time" to authorize the payments for Dr. Preisig. Plaintiff met with his supervisor, Reinstadtler, and Dr. Kretzschmar and again refused to sign the voucher without a better explanation. According to D'Agostino, Reinstadtler left the meeting to make a phone call. The next day, July 24, 1985, plaintiff was notified by Reinstadtler that Dr. Schmid had decided to discharge him. Plaintiff asserts that he notified J & J's General Counsel, in late July, in New Brunswick, and an executive of J & J in Sprittenbach, Switzerland, about suspected violations of the company's Policy Statement concerning unlawful bribes and payoffs. A separation agreement was negotiated, but plaintiff never signed it. Dr. Schmid, Chairman of Cilag and Vice President of J & J International, issued a resignation announcement on August 1, 1985, on J & J International letterhead.

Thereafter, plaintiff claims that matters went from bad to worse. J & J allegedly conspired to deprive him of employment in the pharmaceutical industry and defamed his business reputation. On November 3, 1986, Cilag filed a declaratory-judgment action in Switzerland seeking a judgment to establish that D'Agostino had no claims against Cilag resulting from his termination. D'Agostino did not appear, and on November 26, 1986, the complaint was dismissed. On January 20, 1987, Cilag filed another declaratory-judgment action. The Swiss court, on May 3, 1988, dismissed the declaratory-judgment suit, holding that D'Agostino's claims, outside the contract and being pursued in New Jersey, involved many uncertainties, thereby making Cilag's declaratory-judgment action impossible to grant.

In between Cilag's filing of the two declaratory-judgment suits in Switzerland, D'Agostino, on November 20, 1986, filed a criminal complaint in Switzerland, accusing Cilag of bribing Dr. Preisig. On July 31, 1987, after what has been described by the Appellate Division as a "thorough investigation," the examining magistrate found no impropriety.

"The accusation that the payments concerned were intended as gifts, or as improper advantages offered to Professor Preisig, is therefore conclusively refuted -- in retrospect, the accusation must have arisen from the fact that the accuser was totally unaware of the actual situation."

[255 N.J. Super. at 314, 605 A.2d 252 (quoting examining magistrate).]

Before the Swiss magistrate's decision, and prior to the second declaratory-judgment suit, plaintiff, on December 4, 1986, brought this civil suit in New Jersey for damages against J & J, Robert Wilson, the Vice-Chairman of its Executive Committee, and Ronald Gelbman, President of Ortho Diagnostic Systems, Inc., a corporate affiliate. Plaintiff claims that defendants directed Cilag, J & J's wholly-owned Swiss subsidiary, to terminate his employment because he refused to approve the payment of bribes to a Swiss governmental official. The complaint also asserts that defendants made defamatory statements concerning his dismissal and that they entered into a conspiracy to prevent him from obtaining employment in the pharmaceutical industry. The complaint

asserts (1) wrongful termination, (2) intentional causation of injury to another, (3) conspiracy, and (4) libel and slander.

II

We omit reference to various intermediary proceedings, including discovery disputes that the Appellate Division had to resolve. Discovery has been completed. This appeal concerns J & J's second motion for summary judgment. The trial court, concluding that New Jersey law would govern the dispute, granted summary judgment on the defamation count and denied summary judgment on the remaining counts. The Appellate Division reversed, concluding that Swiss law governed the dispute. 255 N.J. Super. 307, 605 A.2d 252.

Both courts used the same method of analysis. For determining choice-of-law, New Jersey no longer follows the rule that the place where the wrong occurred controls. Veazey v. Doremus, 103 N.J. 244, 247, 510 A.2d 1187 (1986). Today, New Jersey uses "the more flexible governmental-interest analysis in choice-of-law decisions." Ibid. "Under that analysis, the determinative law is that of the state with the greatest interest in governing the particular issue." Id. at 248, 510 A.2d 1187. Once a conflict is determined

the next step is to identify the governmental policies underlying the law of each state and how those policies are affected by each state's contacts to the litigation and to the parties. If a state's contacts are not related to the policies underlying its law, then that state does not possess an interest in having its law apply. Consequently, the qualitative, not the quantitative, nature of a state's contacts ultimately determines whether its law should apply.

[ Ibid. (citations omitted).]

The trial court, based on the choice-of-law analysis in Veazey , addressed New Jersey's and Switzerland's policies underlying the retaliatory-discharge claim to determine which law would govern the dispute. Switzerland, an employment-at-will jurisdiction, encourages uninhibited hiring and termination of employment relationships and, unlike New Jersey, does not recognize an action for

wrongful discharge. In an oral opinion the trial court recognized several factors implicating Swiss law. First, plaintiff was a longtime resident of Switzerland and had sought employment there. Second, plaintiff had signed the employment contract in Switzerland and specifically had agreed that Swiss law would govern any disputes. Finally, the alleged bribery implicates the integrity of the Swiss pharmaceutical regulatory process.

On the other hand, the trial court identified several governmental interests supporting the choice of New Jersey law. First, New Jersey "has a compelling interest to preserve job security of employees who refuse to partake in illegal and unethical conduct." Second, New Jersey has an interest in providing a forum to allow legal redress to a plaintiff who may have been the victim of a conspiracy, "masterminded in New Jersey by a New Jersey corporation," to bar him from employment in the pharmaceutical industry. Finally, the court emphasized J & J's corporate Policy Statement forbidding employees from using corporate funds for unlawful purposes. The trial court concluded that "New Jersey's governmental interest outweigh[s] that of Switzerland, especially since Switzerland has refused to hear plaintiff's complaint."

The Appellate Division reversed and granted summary judgment, holding that the law of Switzerland governed the dispute. Applying the governmental-interest analysis described in Veazey, the court examined the "policies underlying the law of each interested jurisdiction * * * in the context of each jurisdiction's contacts with the litigation." 255 N.J. Super. at 318, 605 A.2d 252. It focused on New Jersey's interests in the Pierce doctrine itself. See Pierce, supra, 84 N.J. 58, 417 A.2d 505. Under Pierce, a "discharged employee [must] identify a 'specific expression of public policy' [that] is violated by the employee's discharge." 255 N.J. Super. at 318, 605 A.2d 252 (quoting Pierce, supra, 84 N.J. at 72, 417 A.2d 505). However, the Appellate Division concluded that

New Jersey's interests could not possibly be served by extending the Pierce cause of action to a foreign plaintiff under a foreign employment relationship. * * * New Jersey has an interest in preserving job security and stability in New Jersey. This interest does not extend to the preservation of job security in a foreign nation, like Switzerland. Here, New Jersey would not have a significant interest in preserving job security of a Swiss resident whose employment was in

Switzerland. Similarly, New Jersey would not have a significant interest in protecting the freedom of a Swiss resident employed in Switzerland from performing acts in violation of public policy.

[255 N.J. Super. at 319, 605 A.2d 252.]

The court further concluded that

New Jersey has no interest in extending a wrongful termination cause of action to a Swiss resident where the law of Switzerland does not recognize such an action. Switzerland clearly is more interested than New Jersey in protecting job stability and preserving a right to refuse to violate Swiss public policy.

[ Id. at 321, 605 A.2d 252.]

Although the court recognized that New Jersey "has an interest in deterring future misconduct by corporations located and doing business in New Jersey," id. at 322, 605 A.2d 252, and that if plaintiff's termination was somehow "orchestrated" at J & J headquarters, New Jersey would have some interest in extending Pierce to such a cause of action, the court nevertheless concluded that it is not the state with an " articulable interest," but rather the state with the " greatest interest " whose law should govern the case. Id. at 322-23, 605 A.2d 252.

Turning to Switzerland's interests the court held that Switzerland has a greater interest in the case. The alleged bribe involved a Swiss official and his regulatory duties. "Certainly, Switzerland has a greater interest than New Jersey concerning the bribing of a Swiss official * * *." Id. at 323, 605 A.2d 252. The court concluded that to the extent the alleged bribe might influence the registration of pharmaceuticals in Switzerland, Switzerland has the greater interest. Id. at 323-24, 605 A.2d 252. The court did not rely on the influence of the registration of a drug in Switzerland on the registration of the drug in the United States, because "this nation has its own stringent process for drug registration." Id. at 324, 605 A.2d 252. The court concluded that "Switzerland has the obvious and compelling interest in assuring the integrity of the Swiss pharmaceutical ...


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