employee's state tort claim for intentional infliction of
emotional distress was not preempted by the Energy Reorganization
Act because the tort claim had no effect on safety regulations
(i.e. the Act's purpose). See English, 496 U.S. at 81-87, 110
S.Ct. 2270. As in English, the state tort claim initiated by an
employee for retaliation by her employer for "whistle blowing" is
completely unrelated to and has no effect on the purpose of the
FCA, prosecuting for fraudulent acts against the federal
government. Hence, as in English, the plaintiff's state law claim
under CEPA should not be preempted by federal law, the FCA.
Defendants offer legislative history as proof that Congress
intended to enact § 3730(h) as a pervasive scheme to protect
whistleblowers. (Def.'s Br. at 17.) The legislative history
actually supports Ms. Palladino's position. The Judiciary
Committee amended the FCA to include a whistleblowers protection
provision to give whistleblowers "an opportunity to speak up and
take action without fear," False Claims Amendments Act of 1986,
S.Rep. No. 345, 99th Cong., 2d Sess., at 6 (1986). Having both
state and federal protection would allay whistleblowers' fear of
reporting fraud even more so than if only a federal protection
were available. Since Congress' intent is to protect employees
who report fraud, it seems more plausible that Congress would
embrace a state law that provided whistleblowers additional
protection, further encouraging the reporting of fraudulent acts;
disallowing more extensive protection for whistleblowers would
seem to undermine Congress' purpose. At the opening of the
Congressional Hearings on the FCA's 1986 amendments, Mr. Berman
stated that the qui tam provisions of the FCA are "essential to
making the False Claims Act a more effective tool against"
federal fraud. False Claims Act Amendments, Hearings Before the
Subcommittee on Administrative Law and Governmental Relations of
the Committee on the Judiciary, 99th Cong., 2d Sess. 95 (1986).
Allowing both federal and state remedies for whistleblowers would
be even more effective in increasing the likelihood of an
employee reporting federal fraud, due to the more comprehensive
Although Congress did not use language expressly permitting
state tort claims, as in Title VII, see Sandom v. Travelers
Mortgage Serv., Inc., 752 F. Supp. 1240, 1246 (D.N.J. 1990),
Congress has not indicated through the FCA's language that it
intended to take over the field or provide a comprehensive scheme
for remedying retaliation against whistleblowers. Nowhere does
the FCA express an intent to protect wrongdoers from additional
liability under state law. There is no language, like that in
FEHBA, explicitly prohibiting states from creating particular
laws. Section 3730(h) of the FCA provides whistleblowers with
"all relief necessary to make the employee whole." 31 U.S.C.A.
§ 3730(h) (1999). It also entitles whistleblowers to
reinstatement to the same position, "two times the back pay,
interest on the back pay, and compensation for any special
damages." Id. CEPA, on the other hand, also allows for injunctive
relief and punitive damages. See N.J. Stat. Ann. § 34:19-5
(West 1999). Additionally, when a person brings a qui tam action
under the FCA, the government can dismiss or settle the action
without the consent of the individual who initiated the action,
see 31 U.S.C.A. § 3730(c)(2)(A)-(B) (1999), which is not
true of a CEPA claim.
Congress may have attempted to provide a remedy for citizens
residing in states without any whistleblowers protection laws;
however, that does not mean that Congress intended to take over
the entire field. Granting minimal protections to a particular
class of whistleblowers is far from a comprehensive, pervasive
statutory scheme that should supercede a state's whistle blowing
State laws can also be preempted by federal statutes if the
state law requires an interpretation of the federal law. In a
Ninth Circuit case, the Hawaii Whistle
Blower's Protection Act was preempted by a provision of the
Employees Retirement Income Security Act ("ERISA"). See Hashimoto
v. Bank of Hawaii, 999 F.2d 408, 412 (9th Cir. 1993). Hashimoto
held that the federal law preempted the state law because
adjudication of the state law relied on an interpretation of
ERISA. See id. at 411. Since the state law required that the
employee know her report was not false, the state courts would
have to determine if the employee had reasonably believed that a
violation occurred. See id. This would force the state courts to
interpret ERISA. See id.
The Supreme Court recognized this tenet in a similar case
involving a collective bargaining agreement ("CBA") and the
Railway Labor Act ("RLA"), 45 U.S.C.A. § 151 (1986). See
Hawaiian Airlines v. Norris, 512 U.S. 246, 261, 114 S.Ct. 2239,
129 L.Ed.2d 203 (1994). In Norris, the Court held that a state
claim regarding a purely factual question that did not involve
the interpretation of a CBA was not preempted. See id. If the
claim had involved the interpretation of a term of the CBA, then
the state claim would have been preempted by the RLA. See id.
Here, CEPA does not require the state courts to interpret the
FCA. CEPA provides protection in a myriad of contexts, such that
its reach is far broader than the FCA's concerns with protecting
employees who expose conduct defrauding the federal government.
To initiate a claim under CEPA, an employee only needs to prove
that her employer retaliated against her for disclosing an act of
the employer that the employee reasonably believes violates a
state or federal law. See N.J. Stat. Ann. § 34:19-3 (West
1999). Unlike in Hashimoto, it is not necessary to interpret the
FCA to determine if there has been a violation of CEPA. The FCA
is a tool for prosecuting those who presented fraudulent claims
against the federal government. See 31 U.S.C.A. §
3729 (1999). It is not essential to determine whether an employer
attempted to defraud the government when deciding if an employer
retaliated against an employee for whistle blowing. Thus, in this
case, as in Norris, the federal law (FCA) should not preempt the
state law (CEPA).
The final category of instances when federal law preempts state
law is where the state law conflicts with the federal law so that
it is impossible to comply with both the federal and state laws.
Here, both parties concede that there is no conflict between the
state and federal laws. Thus, this issue will not be discussed
Defendants erroneously contend that the decision in
Adler v. Continental Ins. Co., No. 95-2282-EEO, 1996 WL 677085
(D.Kan. Nov. 1, 1996), suggests that the FCA should preempt CEPA.
However, the statement made in the footnote of that unpublished
decision relies on two Kansas cases, Anco Constr. Co. v. Freeman,
236 Kan. 626, 693 P.2d 1183 (1985), and Chrisman v. Philips
Indus., 242 Kan. 772, 751 P.2d 140 (1988), see Adler, 1996 WL
677085, at *10 n. 7, which were both decided in the 1980s prior
to cases such as English. Chrisman does not support either
defendants' or the Adler court's assertion because it holds, in
conflict with English, that state law is preempted by the Energy
Reorganization Act since the federal government occupies the
entire field of nuclear energy safety regulation. See Chrisman,
242 Kan. at 780, 751 P.2d 140. Likewise, the Anco case is easily
distinguishable because it deals with an element of an employment
contract. This issue arises directly out of the National Labor
Relations Act ("NLRA"), 29 U.S.C.A. § 151 (1998). See Anco,
236 Kan. at 630, 693 P.2d 1183. Thus solely federal law, and not
state law, is applicable. See id. Therefore, Defendant's
assertion that Adler suggests that the FCA preempts CEPA is
In conclusion, the FCA does not preempt CEPA for all of the
aforementioned reasons. The language and structure of the FCA do
not indicate, either directly or indirectly, a "clear and
congressional intent to occupy the field of protecting
whistleblowers. Nor does CEPA require an interpretation of the
FCA. CEPA merely expresses the strong state interest in
protecting whistleblowers and, in the process, furthers Congress
purpose by allowing for more extensive remedies for
whistleblowers in New Jersey. Congress' purpose in attaching a
whistleblowers provision to the FCA is to encourage reports of
fraudulent acts against the government in order to recover losses
resulting from such fraud. CEPA only addresses an issue
peripheral to the government's purpose of regaining lost money.
Therefore, Plaintiff's CEPA claim is not preempted by §
3730(h) of the FCA.
Defendants contend that state tort claims are preempted by
federal statutes that allow for private rights of action.
However, such a broad statement is misguided. All case law cited
by defendants is irrelevant or off-point.
First, defendants cite two cases that deal with the railroad,
Rayner v. Smirl, 873 F.2d 60 (4th Cir. 1989), and Mayon v.
Southern Pac. Trans. Co., 805 F.2d 1250 (5th Cir. 1986). These
cases do not support Defendants' point because the basis for
preempting the state law in favor of the federal statute was to
promote national unity of the rail lines. See Rayner; 873 F.2d at
65. Furthermore, the Federal Employers' Liability Act ("FELA"),
45 U.S.C.A. § 51 (1986), the statute involved in Mayon, does
not allow for private claims. See Mayon, 805 F.2d at 1252. These
cases are not analogous to the case as hand because here, the
goal of Congress was not to promote national unity of a
commercial enterprise but to encourage citizens to report fraud
victimizing the federal government and its taxpayers. See False
Claims Amendments Act of 1986, S.Rep. No. 345, 99th Cong., 2d
Sess., at 6 (1986). Preemption is based on congressional intent,
Norris, 512 U.S. at 252, 114 S.Ct. 2239, and Congress did not
have the same intent in the present case as in the two cases
involving the railroad. As a result, the comparison between
statutes is invalid.
The next two cases cited by the defendants are also
inapplicable. In Marlow v. AMR Serv. Corp., a specific preemption
clause in the Airline Deregulation Act preempted a state claim.
See Marlow v. AMR Serv. Corp., 870 F. Supp. 295, 299 (D.Haw.
1994). Preemption is not directly addressed by the court in
Morgan v. Future Ford Sales because the plaintiff did not dispute
the issue of preemption. See Morgan v. Future Ford Sales,
830 F. Supp. 807, 814 (D.Del. 1993). Therefore, these cases also do not
support the defendants' contention that where a federal private
action exists, state law is pre-empted.
Defendants further claim that there also exists precedent to
support the opposite contention, that where no private action
exists, preemption is not found. (Def.'s Br. at 15.) The
defendants propose three cases to support this claim. The first,
Masters v. Daniel Int'l Corp., is not applicable because, upon
remand, the Tenth Circuit did not provide an adequate explanation
for its reasoning; it simply stated that, as suggested by the
Supreme Court, state law is not pre-empted in light of English.
See Masters v. Daniel Int'l Corp., 917 F.2d 455, 456 (10th Cir.
1990). The last two cases which defendants cite, Pacheco v.
Raytheon Co., 777 F. Supp. 1089 (D.R.I 1991), and Kozar v. AT &
T, 923 F. Supp. 67 (D.N.J. 1996), are relevant and applicable.
However, two cases are insufficient to support defendants'
alleged universal rule that state tort claims are not preempted
when the federal law does not provide for private cause of
action. Even assuming that state claims are not preempted if no
federal private cause of action is exists, the converse is not
Defendants offer little support for their broad rule that,
according to precedent, state law claims are preempted if there
exists a private cause of action under the
federal statute. Thus, defendants' argument is unpersuasive.
2. Whether CEPA is Preempted as a Matter of State Law
Defendants assert that Ms. Palladino's CEPA claim is preempted
as a matter of state law because Ms. Palladino also filed a
federal claim based on the same set of occurrences. Defendants
contend that, under New Jersey state law, a plaintiff waives the
right to a cause of action under CEPA upon the filing of an
overlapping federal claim, citing the following language:
Nothing in this act shall be deemed to
diminish the rights, privileges, or remedies
of any employee under any other
federal or State law or regulation or
under any collective bargaining agreement
or employment contract; except
that the institution of an action in accordance
with this act shall be deemed a
waiver of the rights and remedies available
under an other contract, collective
bargaining agreement, State law, rule or
regulation or under the common law.
In support of their interpretation of this provision,
defendants cite to United States ex. rel. Mikes v. Straus,
853 F. Supp. 115, 120 (S.D.N.Y. 1994), in which a district court
interpreted a similarly worded section of the New York
"whistleblower" statute to mean that a claim brought under would
be incompatible with a parallel federal claim. Id. at 120. New
York's waiver provisions reads:
. . [I]nstitution of an action in accordance
with this section shall be deemed
a waiver of the rights and remedies
available under any other contract, collective
bargaining agreement, law, rule
or regulation, or under the common law.
N.Y. McKinney's Labor Law § 740(7). The district court,
while recognizing that a New York claim did not, and could not,
preempt a federal claim, found that the state law preempted
itself by implication when a plaintiff filed an overlapping
federal claim. 853 F. Supp. at 120. The district court believed
that such an interpretation was necessary to give effect to the
purpose of the section to avoid overlapping claims. Id.