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Young v. Schering Corp.

July 11, 1995

DR. WILLIAM B. YOUNG, PLAINTIFF-RESPONDENT,
v.
SCHERING CORPORATION AND DR. EDWIN S. BROKKEN, DEFENDANTS-APPELLANTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 275 N.J. Super. 221 (1994).

The opinion of the Court was delivered by Coleman, J. Chief Justice Wilentz and Justices Handler, Pollock, O'Hern, and Stein join in Justice Coleman's opinion. Justice Garibaldi did not participate.

The opinion of the court was delivered by: Coleman

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

DR. WILLIAM B. YOUNG V. SCHERING CORPORATION, ET AL. (A-113)

Argued February 27, 1995 -- Decided July 11, 1995

COLEMAN, J., writing for a unanimous Court.

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

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 that Florfenicol would not receive Food and Drug Administration approval because studies had substantiated that Chloramphenicol, an analogue of Florfenicol, is associated with a form of anemia in humans and was banned worldwide for 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 on Florfenicol violated Schering's policies and federal regulations. Dr. Young's employment was terminated in August 1988. The parties do not agree on the cause of Dr. Young's termination.

Dr. Young filed a complaint against Schering and Dr. Brokken, alleging violations of the Conscientious Employee Protection Act (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, Count I; common-law wrongful discharge and a denial of severance pay in violation of Schering's personnel policies, Count II; and defamation, slander, and malicious interference with prospective employment opportunities, Count III. Dr. Young sought, among other things, reinstatement to his former position, injunctive relief and monetary damages.

In October 1989, the trial court dismissed 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 Dr. Young 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.

On March 27, 1990, the trial court dismissed the CEPA claims, without prejudice. On February 10, 1992, Dr. Young filed an amended complaint alleging Schering and Dr. Brokken terminated him in retaliation for warning them that test results of Flunixin should be reported to certain governmental agencies where Schering allegedly marketed the drug. Dr. Young alleged that Schering failed to report the test results to those agencies and to respond to Dr. Young's warnings to research a safe dose of Flunixin. On May 10, 1992, the trial court dismissed the amended complaint for, among other things, the expiration of the one-year statute of limitations.

On July 25, 1994, the Appellate Division affirmed the dismissal of the amended complaint, finding that it was an entirely new claim and, as such, did not relate back to the original complaint. The Appellate Division also affirmed the dismissal of the CEPA claim, concluding that there is no remedy under CEPA for the discharge of employees who simply disagree with the employer's lawful research decisions. The court also concluded the dismissal of the common-law claims alleged in Count I was proper because those claims sought the same remedy as the CEPA claim and, therefore, were waived under CEPA's waiver provision. The court determined, however, that the waiver provision does not extend to the Count II and Count III claims for severance pay, defamation, slander or malicious interference with prospective employment opportunities. The court considered those issues collateral to Dr. Young's CEPA claim because they did not require the same proofs nor did they require proof of a retaliatory motive.

The Supreme Court granted certification.

HELD: The scope of the waiver provision of the Conscientious Employee Protection Act (CEPA) 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.

1. CEPA was enacted in 1986 to protect from retaliatory action employees who "blow the whistle" on organizations engaged in illegal or harmful activity. The waiver provision of CEPA is far from clear; therefore, the Court must rely on other rules of statutory interpretation. The Court looks to legislative intent and other canons of statutory construction. Where the Legislature's intent is remedial, a court should construe a statute liberally. Statutes in derogation of the common law and exceptions to a statutory scheme should be construed narrowly. Courts should avoid a literal interpretation of individual statutory terms or provisions that would be inconsistent with the overall purpose of the statute. (pp. 6-10)

2. CEPA should not be literally read because the Legislature did not intend to penalize former employees by forcing them to choose between a CEPA claim and other legitimate claims that are substantially, if not totally, independent of the retaliatory discharge claim. The Legislature intended to provide a comprehensive and effective cause of action for retaliatory discharge. Passage of such remedial protection would be weakened or compromised if it would foreclose a legitimate cause of action arising from the same underlying factual circumstances but, nonetheless, not include or involve the retaliatory conduct that is essential to the CEPA claim. Further, any statutory constriction of common-law remedies compels the narrow construction of the waiver provision. (pp. 10-12)

3. It must be inferred that the Legislature intended that the waiver provision prevent an employee from pursuing both statutory and common-law retaliatory discharge causes of action. In addition, the internal structure of the waiver provision supports its narrow application. Moreover, as an exception to the general or remedial scheme of CEPA, the waiver provision must be construed narrowly. The Legislature intended for the waiver to mean that a former employee forfeits his or her common-law retaliatory-discharge cause of action when he or she "institutes" a CEPA cause of action. Parallel claims based on those rights, privileges and remedies are also waived because they present multiple or duplicative claims based on retaliatory discharge. Construing CEPA's waiver clause consistent with the Legislature's inferred intent, and consistent with the express remedial purpose of the entire CEPA statute, convinces the Court that the waiver provision applies only to those causes of action that require a finding of retaliatory conduct that is actionable under CEPA. The waiver exception does not apply to those causes of action that are substantially independent of the CEPA claim. (pp. 12-15)

4. Dr. Young's Count II claim for severance pay and his Count III common-law damages claims under theories of defamation, slander, and malicious interference with prospective employment opportunities do not fall within the waiver provision. Those claims are not substantially related to the retaliatory discharge claim; they do not resemble the alleged CEPA violations nor do they require the same proofs needed to substantiate the CEPA claim. (pp. 15-19)

Judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, O'HERN and STEIN join in JUSTICE COLEMAN's opinion. JUSTICE GARIBALDI did not participate.

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 (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 (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 ...


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