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Mehlman v. Mobil Oil Corp.

June 13, 1996

DR. MYRON A. MEHLMAN, PLAINTIFF-RESPONDENT-CROSS-APPELLANT,
v.
MOBIL OIL CORPORATION, A NEW YORK CORPORATION, DEFENDANT-APPELLANT-CROSS-RESPONDENT, AND F.M. CUNNINGHAM, C.R. MACKERER, IRIS KAPLAN, NORMAN MORGAN AND K.A. TORTORIELLO, DEFENDANTS, AND MOBIL OIL CORPORATION, DEFENDANT-THIRD-PARTY PLAINTIFF, V. PRINCETON SCIENTIFIC PUBLISHING CO., INC., THIRD-PARTY-DEFENDANT.



On appeal from Superior Court, Law Division, Essex County.

Approved for Publication June 13, 1996. As Corrected August 21, 1996.

Before Judges Petrella, P.g. Levy, and Eichen. The opinion of the court was delivered by Petrella, P.j.a.d.

The opinion of the court was delivered by: Petrella

The opinion of the court was delivered by PETRELLA, P.J.A.D.

Plaintiff, Dr. Myron A. Mehlman, and the individual defendants were employees of defendant Mobil Oil Corporation (Mobil). Mehlman claimed that Mobil had discharged him in retaliation for his objecting to excessive levels (over 5%) of benzene, a toxic substance, in gasoline produced and sold by Mobil's subsidiary in Japan. Mehlman brought suit under the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. A jury returned a verdict in his favor and awarded him $3,440,300 in compensatory damages and $3,500,000 in punitive damages.

The trial Judge granted Mobil's motion for judgment notwithstanding the verdict on the ground that Mehlman had failed to identify a clear mandate of public policy which he reasonably believed Mobil had violated, as required by CEPA. See N.J.S.A. 34:19-3c(3). The Judge was reluctant to give CEPA extraterritorial effect. Nevertheless, because the Judge considered Mobil's conduct outrageous, he amended the complaint to conform to the evidence supporting a prima facie tort claim and entered judgment for Mehlman on that claim. As a result, the Judge granted Mehlman only the amount of punitive damages that the jury had awarded. On this appeal, Mobil challenges the prima facie tort award and defends the dismissal of the CEPA claim as mandated by the Commerce Clause. Mehlman cross-appeals, seeking reinstatement of his CEPA award and reversal of the pretrial dismissal of his defamation claim.

Mehlman's complaint alleged, among other things, that (1) Mobil had violated CEPA and wrongfully terminated his employment in violation of Mobil's regulations and the parties' employment contract, and (2) Mobil and the individual defendants had defamed him. His complaint asserted that while conferring with Mobil employees in Japan in the fall of 1989, Mehlman had warned them that they should reduce benzene levels in Mobil gasoline because the chemical "posed a serious threat to the public health and environment...." Mehlman's employment was terminated immediately upon his return from Japan.

Mobil denied the material allegations of Mehlman's claims, asserting that it had terminated him for just cause, and counterclaimed that he had misappropriated Mobil's assets and funds. It also filed a third-party complaint against Princeton Scientific Publishing Co., Inc., a company owned by Mehlman's wife. *fn1

In March 1992, Mobil successfully moved to dismiss certain of Mehlman's non-CEPA claims against the individual defendants on the ground that they were barred by N.J.S.A. 34:19-8, which provides that a CEPA action waives other rights and remedies. As to the remaining claims, the Judge denied Mobil's subsequent motion for summary judgment, which was based upon Mehlman's failure to cite any law, regulation or clear mandate of public policy that Mobil had violated. See N.J.S.A. 34:19-3. The case proceeded to trial.

We conclude that the trial Judge erred in vacating the jury award on the CEPA claim. Although we reject Mobil's due process objections to the post-trial amendment of the complaint, we agree that the prima facie tort claim is barred by the CEPA waiver provision because it was based upon the same retaliatory discharge as the CEPA claim. On the other hand, since Mehlman's defamation claim was independent of his CEPA claim, the Judge erred in dismissing it. Hence, for the reasons hereinafter stated, we affirm in part, reverse in part, and reinstate the jury verdict and damage awards.

I.

A proper understanding of the case necessitates a somewhat lengthy Discussion. Mehlman earned his Ph.D. at the Massachusetts Institute of Technology in 1964. He served as a post-doctoral fellow at the University of Wisconsin's Institute for Enzyme Research and thereafter as an associate professor of biochemistry at Rutgers University and a professor of biochemistry at the University of Nebraska. In succession, Mehlman worked as Chief of Biochemical Toxicology for the Bureau of Foods in the U.S. Food and Drug Administration; as Special Assistant for Toxicology, Nutrition and Environmental Affairs in the Office of the Assistant Secretary for Health in the U.S. Department of Health, Education and Welfare; and, as Special Assistant and Liaison Officer for the Office of the Director of the National Institutes of Health.

In 1976, Mobil recruited Mehlman as Director of Environmental Health and Toxicology in its Medical Department. He was promoted in 1978 to Director of Toxicology and Manager of the Environmental Health and Science Laboratory in Mobil's Princeton-based Department of Environmental Affairs and Toxicology. Shortly after he became Mobil's toxicology director and laboratory manager, Mehlman reported to John McCullough, General Manager of the Mobil Toxicology Division's Environmental Affairs and Toxicology Department and Vice President of the Mobil Research and Development Corporation (MRDC). *fn2 In his new capacity, Mehlman established a laboratory, which began operating around 1980 or 1981 with a staff of over 100 people. Between 1981 and 1985, Mehlman's level of responsibility had increased so as to give him full authority in all of his job tasks except assisting other departments. Mehlman's duties included representing Mobil on toxicology matters and providing "toxicological and regulatory advice for prudent business decisions."

Mehlman's curriculum vitae includes some 200 books and articles written and published in the fields of toxicology and biomedical science. He authored various articles on benzene and chaired several symposia on the harmful effects of gasoline vapors. In addition, Mehlman helped to found the American College of Toxicology, of which he served as president, and the Collegium Ramazzini, of which he served as an officer and a director. He has belonged to many professional societies, enjoying numerous editorial appointments, professional committee assignments, and symposia chairmanships.

According to Mehlman's 1988 job description, the laboratory that he managed "had full responsibility for toxicology testing for Mobil Corporation...." As the only one performing toxicological testing for Mobil's affiliates, Mehlman's laboratory received praise from Mobil's senior managers as well as outside scientists. The key speaker at a 1986 Clean Air Conference described it as "magnificent." In April 1987, D'Ambrisi thanked Mehlman for the "positive overtones" of a magazine article written about the laboratory. The record reflects that Mehlman's job performance appraisals were excellent, including one given just five months before he was terminated. Based upon his performance, Mehlman received annual merit raises and stock options from Mobil. *fn3 In addition, Mobil's vice president of research nominated him to the National Academy of Sciences in May 1989. The nomination described Mehlman as "an international expert in toxicology [who] is often consulted on issues involving the toxicity of chemicals in relation to environmental health."

The genesis of the present controversy was Mehlman's participation in the organization of the First Pacific Cooperative Symposium, "Industrialization and Emerging Environmental Health Issues - Risk Assessment and Risk Management," held in 1989 at the University of Japan. Mehlman explained that the symposium could have impacted upon company business in Japan, which Mobil transacted through its wholly-owned affiliate, Mobil Sekiyu Kabushiki Kaisha (MSKK), because Japanese regulatory people were expected to attend and speak. When Silvestri approved Mehlman's attendance, Mobil's International Administration arranged for him to discuss toxicology and environmental health issues at MSKK during his visit to Japan.

On September 27, 1989, Mehlman met with MSKK management at Mobil headquarters in Tokyo and gave a slide presentation on the health effects of gasoline. One slide showed the concentration of benzene in gasoline in the United States, Japan, and Europe. When Mehlman finished his presentation, MSKK Technical Manager Takashi Tsunemori asked to see this slide again. Tsunemori informed Mehlman that he had inaccurately reported Japanese benzene levels at 2.5% to 3.5% for regular gasoline and 2.5% to 4.6% for premium gasoline. According to Mehlman, Tsunemori informed him that the benzene level in Japanese gasoline was 5.7% or 5.8%.

Mehlman testified that he told Tsunemori that benzene was "a very poisonous chemical--dangerous and toxic. And [these] concentrations are too high. They have to be reduced." Mehlman asked Tsunemori whether the Japanese regulatory agency was aware of these benzene levels. Tsunemori allegedly responded, "We do not have to tell them." Mehlman contends that he reiterated that "this is much too dangerous and you must reduce it" and that Tsunemori answered that the levels could not be reduced because of old equipment that would cost "several hundred million dollars to change [a] single refinery to produce a product with low levels of benzene." Mehlman advised Tsunemori to "reduce it or do not sell it," which left those in attendance "shocked and surprised." At trial, Tsunemori recalled attending Mehlman's slide presentation, but denied having told him that the benzene level of regular gasoline sold by MSKK was 5.7% or 5.8%.

John Drummond, of Mobil Oil International, explained that MSKK had purchased its gasoline from at least three different refineries, the one in question being the Chiba refinery. *fn4 Tsunemori produced monthly test reports for that refinery from May 1988 through December 1989, showing the monthly volume percentage of benzene produced in that period. From May 1988 through April 1989, the monthly benzene levels were between 4.5% and 4.7%. *fn5 The level from May 1989 through September 1989 was 4.5%. On cross-examination, Tsunemori admitted that these batch reports showed only the "typical" benzene levels for each month without showing their actual range.

Mehlman explained that hydrocarbons, including benzene, vaporize from gasoline mixtures into the air and condense into liquid form that contaminates other water sources. He noted that benzene also reaches water sources through gasoline spills. Based upon an article published in 1988 by a foremost epidemiologist, Mehlman testified that human exposure to mixtures containing benzene, a carcinogen, causes myelogenous leukemia. He referred to a Consumer Product Safety Commission regulation, amended in 1988, which provided that:

Because inhalation of the vapors of products containing 5 percent or more by weight of benzene may cause blood dyscrasias, such products shall be labeled with the signal word "danger," the statement of hazard "Vapor harmful," the word "poison," and the skull and crossbones symbol....

[16 C.F.R. § 1500.14(b)(3)(i)].

Mehlman indicated that MSKK had no warnings on its gasoline in 1989, however, despite the fact that blood dyscrasia, the disturbance of normal blood cells, leads to various diseases including leukemia. He stated that the United States had imposed controls, such as catalytic converters in automobiles and vapor containment systems for the transportation of gasoline, which Japan had not yet adopted. In fact, he noted that the Occupational Safety and Health Administration had enacted a regulation in 1987, which had reduced permissible benzene exposure in the workplace from ten parts per million to one part per million.

Citing his job responsibility to monitor the toxicity of his employer's products, Mehlman testified that he believed that New Jersey law prohibited MSKK from marketing gasoline with benzene levels over 5%. He felt that "many people would die from this ... unnecessary overexposure, because we knew how to correct it." Mehlman also feared the impact of product liability acknowledged in a February 1987 draft paper forwarded by McCullough to D'Ambrisi on "Potential Health Effects of Gasoline--An Update." The paper concluded that "the greatest potential, and unestimable, cost of a governmental finding that exposure to gasoline causes cancer in humans would arise from personal damage claims." Mehlman was additionally concerned about his own possible professional negligence in the event that he failed to inform Mobil of the benzene risk. *fn6

Mehlman also referred to an April 1977 interoffice memo about benzene sent to the president of Mobil Marketing and Refining. The memo recalled how benzene "has been considered toxic," possibly carcinogenic, and that containers with 5% or more benzene were required to have a "poison" label as a result. The memo warned that reduction of the benzene level in Mobil's gasoline and other products could cost Mobil hundreds of millions of dollars.

In August 1983, McCullough had sent then MRDC President J.E. Penick a memo enclosing a background paper on benzene, which similarly stated that "major investment would be required to reduce the benzene content below one percent, especially overseas." The paper indicated that "health and safety requirements in the future will not differ much wherever we operate." Accordingly, Mobil had pledged in its "Policy on Product Safety Stewardship" that "in the absence of adequate local government requirements, Mobil affiliates will maintain standards of safety and health protection that consider scientific knowledge and established practices in developed countries."

Mehlman asserted that the "Japanese [have] usually copied American regulation," such as by removing lead from gasoline and using seat belts. He thus "naturally assumed that they would follow the same regulation with respect to benzene because they're very quick in accepting certain standards to protect their population...." At trial, he referenced a 1974 Japanese Environment Agency Notification regarding benzene in drinking water. *fn7 Mehlman admitted, however, that he was unaware of this specific regulation when he spoke in Japan in 1989. Even so, Drummond stated that the Japanese Petroleum Association, which "looks after ... the interests of the oil industry members operating in Japan," had voluntary guidelines establishing 5% as the maximum benzene content of gasoline during 1988 and 1989. MSKK was a member of the Japanese Petroleum Association and, according to Tsunemori, was obligated to obey its guidelines.

After his meeting at MSKK, Mehlman attended the First Pacific Cooperative Symposium from October 1 to October 5, 1989. During his presentation, Mehlman showed the same benzene slide, commenting that the levels were between 3.5% and 5% in Japanese gasoline. Mehlman refrained from objecting to the high levels of benzene at the conference because he had not yet had an opportunity to speak to his superiors. He was "very concerned" about people being injured and "really astonished that knowing what we know today, that these levels existed in Mobil's gasoline." Mehlman intended to raise the issue with Mobil as soon as he returned from Japan.

Mehlman arrived home from Japan late in the evening of Friday, October 6, 1989, to learn that Silvestri had called. When Mehlman returned his call the following morning, Silvestri informed him that Mobil had received information about a possible conflict of interest on Mehlman's part involving his wife's publishing company, which had prompted an investigation that necessitated placing him on "special assignment indefinitely." His home became his work place as his access to Mobil's premises was restricted. Silvestri also asked Mehlman not to "call anyone at the lab" and would not allow Mehlman to respond. Silvestri corroborated Mehlman's version of this conversation.

In May 1989, Mobil had retained Kymn and Company, a management consulting firm owned by Kymn Rutigliano, to improve employee communications within the lab. In the course of interviewing employees, Rutigliano had heard allegations that Mehlman was misusing Mobil's assets for his personal gain. According to Rutigliano, she called Silvestri on September 20 or 21, who asked her to deliver a report on this matter to him by September 28. Silvestri confirmed the accuracy of this conversation, saying he wanted the report quickly because "I thought I had a hot potato in my hands and I wanted to pass that potato to my boss [D'Ambrisi] as quickly as possible."

Rutigliano reported that employees had accused Mehlman of using Mobil's personnel and supplies, including postage, for his publishing business; of hiring consultants for his personal lawsuits at Mobil's expense; of obtaining Mobil grants for his publishing patrons; and, of promoting only employees who agreed to assist with publishing activity on company time. She also stated that several individuals had attempted to alert senior management to these problems, but were unsuccessful in doing so. Rutigliano recommended an internal security investigation, a possible reorganization, removal of Mehlman from the laboratory, and counselling for his staff. She conceded that "given this can be viewed as a grey area since technical publishing and related activities can benefit Mobil, I urge you to be rigorous in drawing the line as to what is acceptable and what is not." Rutigliano was surprised by how fast Silvestri left his office to deliver her report to D'Ambrisi in light of the lack of success experienced by others who had tried to bring this issue to Mobil's attention.

When D'Ambrisi received Rutigliano's report, he immediately authorized an internal investigation into the accusations against Mehlman. D'Ambrisi, Silvestri, MRDC General Counsel John Blay, MRDC Personnel Manager Robert Meyer, and MRDC Security Manager Paul Geneas met on September 29 to review Rutigliano's report. Blay indicated that those in attendance thought that Mehlman had been "perhaps wrongfully" accused and wanted to proceed quickly to "clear it up" before Mehlman returned from Japan so that his work at the laboratory could continue. He stated that there had been no Discussion of the nature of Mehlman's presentations in Japan. By the time Mehlman was due back from Japan, however, the investigation, conducted by Geneas, had produced substantial material against him.

Silvestri later asked McCullough whether he had authorized Mehlman "to use Mobil assets for the benefit of Princeton Scientific," to which McCullough answered that he had not. When Silvestri relayed this information to D'Ambrisi, they agreed to read Mehlman the written statement that Silvestri had prepared. Silvestri denied that anyone had told him or D'Ambrisi of Mehlman's remarks to the MSKK managers at the time that the supervisors decided to place him on special assignment. They hoped to avoid embarrassing him and to expedite the investigation then underway.

On October 12, Silvestri met with Mehlman and personnel employee Gary Habla to review the allegations and to give Mehlman an opportunity to respond. Silvestri told Mehlman that he was accused of relying on his subordinates to examine papers for Princeton Scientific; employing Mobil's mail system to send out Princeton Scientific books and documents; spending Mobil's petty cash on stamps for Princeton Scientific; utilizing the services of Mobil's personnel for Princeton Scientific; using Mobil's materials and graphics equipment for brochures for Princeton Scientific; paying honoraria to laboratory visitors when they provided services for Princeton Scientific; providing Mobil grants to people who were doing things for Mehlman; and, submitting irregular travel and entertaining expense account forms. Mehlman denied some of the allegations and had no comment on others. Mehlman was neither given a written copy of the Rutigliano report nor allowed access to the laboratory to obtain records pertinent to the investigation. Instead, another meeting was scheduled for October 24 to afford Mehlman, with his attorney present, an opportunity to tell his "side of the story."

On or about October 16, Geneas finished his interviews of Rutigliano, McCullough, and fifteen employees supervised by Mehlman. On October 19 or 20, Silvestri convened a meeting with D'Ambrisi, Blay, Meyer, and Geneas, at which he recommended that Mehlman be relieved as manager of the laboratory because "he had abused the trust that we would put into him in that position." D'Ambrisi decided that Mehlman would be offered two choices: either make restitution and resign or be terminated for cause. An October 20 memo from D'Ambrisi to Mobil President Robert Tucker accused Mehlman of misconduct and concluded that "we have no recourse but to sever Mr. Mehlman's relationship with Mobil." Blay and Silvestri recalled, however, that D'Ambrisi had agreed to take no final action until Mehlman was given an opportunity to explain himself on October 24. Nevertheless, Mehlman canceled the meeting on the morning of October 24 and, through counsel, declined to reschedule it. Geneas considered an interview with the accused "absolutely critical" and represented that he would have included Mehlman's comments in his report. Geneas maintained that he had planned to provide Mehlman with a copy of his report at the October 24 meeting.

According to an October 24 "Investigative Inquiry" prepared by Geneas, Mehlman had utilized Mobil personnel and resources to run his wife's publishing business. Acknowledging that the endeavor had operated at a loss, the report noted that it had nonetheless enhanced Mehlman's "personal prestige." Although Mehlman had agreed to terminate his publishing activity in 1985, he allegedly had failed to do so. Highlights of the report included defendant K.A. Tortoriello, Mehlman's Executive Secretary, describing him as a "crook," and defendant Carl Mackerer, Mobil's Manager of Toxicology Services, accusing him of spending most of his time on his publishing business and of ignoring the laboratory.

On cross-examination, Geneas admitted that he had omitted several exculpatory statements from his report. Mehlman produced checks given to a Mobil employee, which refuted her reported accusation that Mobil had paid her for working for Princeton Scientific. McCullough acknowledged that Princeton Scientific Publishing Company had not interfered with Mehlman's job performance and conceded that the issue had never been mentioned on his annual performance appraisals.

D'Ambrisi asserted that he made the final decision to terminate Mehlman in late October 1989. He claimed to have had no knowledge of Mehlman's remarks to MSKK representatives at the time he decided to fire him. As a result, D'Ambrisi told Silvestri to meet with and terminate Mehlman unless he provided documentation authorizing his use of Mobil's assets for the benefit of Princeton Scientific. Silvestri met with and terminated Mehlman on November 2 after he made no attempt to defend himself. On November 8, Silvestri wrote to Mehlman terminating his employment for cause as of the date of their meeting. Mobil never provided Mehlman with any written reports or evidence against him until he filed suit.

Denying that he had made Princeton Scientific mailings at Mobil's expense, Mehlman explained that he frequently did mailings on behalf of professional organizations, whose meetings Mobil had paid him to attend on its behalf. Mehlman asserted that he had discussed his activities in these organizations with his supervisors.

Mehlman testified that Mobil had agreed when it offered him employment in 1976 to his continuing as editor of the Journal of Environmental Health and of the Journal of Toxicology as well as to his completion of several books. One of Mehlman's job tasks was "establishing a high degree of credibility and reputation for Mobil worldwide in areas of toxicology and environmental health." According to Mehlman, this was accomplished by publishing, which enhanced his reputation and enabled him to deal on behalf of Mobil more effectively with regulatory agencies. In fact, several employees of the U.S. Environmental Protection Agency served as editors of Princeton Scientific publications. ...


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