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Mazz v. George Yelland

September 5, 2001

AMY MAZZA, PLAINTIFF
v.
GEORGE YELLAND, INC., DEFENDANT



The opinion of the court was delivered by: Orlofsky, District Judge

FOR PUBLICATION

OPINION

I. INTRODUCTION

In this variant on the traditional whistle-blower case, a former corporate bookkeeper alleges that she was terminated for refusing to aid in what she perceived to be an illegal scheme to reduce the employer corporation's federal income tax. Not surprisingly, the employer disagrees, asserting that Plaintiff's claim is barred under the controlling New Jersey law either because there was never, in fact, any illegal act, or, that the possibility of any unlawful activity was so remote that the Plaintiff could not reasonably have believed it would happen. Accordingly, Defendant, George Yelland, Inc., has moved for summary judgment, pursuant to Fed. R. Civ. P. 56. For the reasons set forth below, I shall DENY defendant's motion.

II. FACTS AND PROCEDURAL HISTORY

Between June, 1987, and June, 1998, the Plaintiff, Amy Mazza ("Mazza"), was employed, to the evident satisfaction of her employer, by Defendant, George Yelland, Inc ("GYI"). Mazza Depo. at 5, 46; Yelland Depo. at 68-69. During this period Mazza served as controller and secretary-treasurer to GYI; in other words, she kept its books. Mazza Depo. at 74; Yelland Depo. at 34, 36, 58. As part of this duty, Mazza produced a monthly balance sheet reflecting GYI's current profits and outstanding debts. Yelland Depo. at 36. Mazza did not herself prepare GYI's tax returns; that task was given, during the period in question, to an outside accountant, Gary Addis. Yelland Depo. at 35-40. According to Addis, he prepared the firm's return based on both the monthly balance sheets and a year-end summary, also produced by Mazza. Addis Depo. at 29-31.

GYI is operated by one of its principal stockholders, George Yelland ("Yelland"). On June 9, 1998, Yelland entered into two separate loan agreements, totaling $1,400,000, with the Sun National Bank. Compl. Exh. E. According to Mazza, the larger loan, amounting to about $1,200,000, was intended for the personal use of Yelland and his wife, while the remaining $200,000 was for GYI. Pl.'s Br. at 12; Yelland Depo. at 149-53. Mazza alleges that Yelland nonetheless directed that all of the transaction fees for both loans be listed on the GYI books. Pl.'s Br. at 11; Mazza Depo. at 88-89. There appears to be no allegation that GYI itself actually paid the fees on Yelland's behalf; however, there were possible federal income tax benefits in allocating the expense to GYI.

Mazza refused to list the full fee in GYI's books. She alleges that on June 15, 1998, Yelland offered her the choice of listing the fee or resigning. Pl.'s Br. at 14; Mazza Depo. at 147. She resigned. Mazza Depo. at 144.

On June 1, 1999, Mazza filed a complaint in this court seeking damages and injunctive relief pursuant to the New Jersey Conscientious Employee Protection Act, N.J. Stat. Ann. § 34:19 (West 2000) ("CEPA"). *fn1 As the parties are completely diverse, this Court has jurisdiction under 28 U.S.C. § 1332 (1994).

III. SUMMARY JUDGMENT STANDARD

"On a motion for summary judgment, the court must determine whether the evidence shows that `there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Abraham v. Raso, 183 F.3d 279, 287 (3d Cir. 1999) (citing Fed. R. Civ. P. 56(c)). "[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); see also Abraham, 183 F.3d at 287. "Thus, while the nonmoving party must present enough evidence to demonstrate a dispute is genuine, all inferences in interpreting the evidence presented by the parties should be drawn in favor of the nonmoving party." Abraham, 183 F.3d at 287 (citing Boyle v. County of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998)). "Cases that turn crucially on the credibility of witnesses' testimony in particular should not be resolved on summary judgment." Id.

IV. ANALYSIS

I consture GYI's argument that "plaintiff cannot identify any statute, regulation or clear mandate of public policy allegedly violated by defendant" as stating, in effect, three distinct grounds for summary judgment. See Def.'s Br. at 7. First, GYI appears to argue that it is the plaintiff's burden to plead or otherwise come forward with a specific statute or policy that would have been contravened by the activity the plaintiff refused to participate in. Assuming arguendo that such a burden is proper under New Jersey law, Mazza has clearly met it. See Pl.'s Br. at 28-31 (pointing to federal and state statutes and regulations that could have been violated by the alleged conduct).

More substantially, GYI argues that a prima facie CEPA claim requires the plaintiff to show an actual violation of law or policy. Since the loan fees ultimately did not appear in GYI's books, and the fees were not claimed as a deduction on GYI's income tax ...


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