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Dzwonar v. McDevitt

August 12, 2003

REGINA DZWONAR AND CYNTHIA A. BURGESS, PLAINTIFFS-APPELLANTS,
v.
ROBERT MCDEVITT, LOCAL 54 OF THE HOTEL EMPLOYESS RESTAURANT EMPLOYEES INTERNATIONAL UNION, DEFENDANTS-RESPONDENTS, AND ALAN M. COHEN, JABIEL SANTIAGO, ALBERT SICILIANO AND THE LOCAL 54 EXECUTIVE BOARD, DEFENDANTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 348 N.J. Super. 164 (2002).

SYLLABUS BY THE COURT

In this appeal, the Court determines whether the jury's verdict in favor of plaintiff is sustainable under the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8.

Local 54 of the Hotel and Restaurant Employees International Union (Union) represents employees in the hotel and restaurant industries in Atlantic City and elsewhere in the state. In accordance with the Union's bylaws and constitution, an Executive Board governs its day-to-day operations. The Executive Board consists of a President, Vice-President, Secretary-Treasurer, Recording Secretary, Chairman of the Trustees and four members elected from the rank and file. Executive meetings occur at least monthly; general membership meetings occur quarterly.

In August 1996, the general membership elected to the Executive Board defendant Robert McDevitt as President and plaintiff Regina Dzwonar as Recording Secretary. Later that year, plaintiff accepted a full-time paid position as an Arbitration Officer/Representative for the Union. Shortly after the election, Dzwonar came into conflict with McDevitt over several of the Union's internal procedures and policies. Specifically, plaintiff claimed that certain Executive Board actions, including the hiring of a business agent, the authorization of overtime pay to the Union Controller, the issuance of credit cards to certain Union officers, a loan arrangement with the parent International Union, and the prepayment of rent for a newly hired Union organizer, should have been disclosed to the rank-andfile members for their approval. In part, plaintiff relied on a bylaw that required Executive Board approval of all proposed expenditures other than routine operating expenses along with membership ratification at a regular or special meeting, a bylaw requiring the approval at a regular meeting of the Union of all wages, salaries and regular expense allowances paid to officers and employees, and a bylaw providing that"[a]ll actions of the Executive Board are subject to the approval of the membership meetings." Plaintiff testified at trial that she did not believe the Executive Board's actions were illegal, but she objected to the Board's refusal to read its minutes at the general membership meetings. She believed the Board was denying the rank-and-file membership the right to participate, deliberate and vote in Union matters as prescribed by the Labor Management Reporting and Disclosure Act (LMRDA), 29 U.S.C.A. §§ 401 to -531. In September 1997, McDevitt, with the approval of a majority of the

Executive Board, discharged plaintiff from her position as an arbitration officer, allegedly for insubordination and the mishandling internal documents, including the official minutes of the Executive Board meetings. It is undisputed that plaintiff provided several Union members with unauthorized access to Executive Board minutes. Despite plaintiff's termination as an arbitration officer, she continued to perform her duties as Recording Secretary.

Plaintiff filed suit under CEPA alleging that she was terminated in retaliation for expressing a reasonable belief that the Executive Board's failure to adequately inform the general membership of its actions violated the LMRDA and the Union's bylaws. At the close of plaintiff's case, defendant filed a motion to dismiss for failure to state a claim under CEPA. The trial court denied the motion. The jury found that defendants had violated CEPA and awarded compensatory damages. Subsequently, the trial court denied defendants' motion to set aside the jury's verdict based on the weight of the evidence and their motion for judgment not withstanding the verdict or for a new trial.

The Appellate Division reversed, 348 N.J. Super. 164 (2002), finding that federal labor law preempted plaintiff's CEPA claim because it was based solely on an alleged LMRDA violation implicating neither federal nor state criminal law. The panel noted that plaintiff's dispute with defendants was over policy relating to the manner and extent of providing information to the general members. Even assuming plaintiff was dismissed because she believed the LMRDA required more of defendant, the panel found that the dispute could not support a CEPA claim.

HELD: Plaintiff's asserted belief that defendants' conduct violated a law or public policy was not objectively reasonable, therefore as a matter of law her claim under the Conscientious Employee Protection Act (CEPA) fails.

1. The Legislature enacted CEPA to encourage employees to report illegal or unethical workplace activities and to discourage employers from engaging in such conduct. In part, CEPA precludes an employer from retaliating against an employee who objects to any activity, policy or practice that the employee reasonably believes violates a law, rule or regulation promulgated pursuant to law, is fraudulent or criminal, or is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or the protection of the environment. The employee must demonstrate that (1) he or she reasonably believed that the employer's conduct violated either a law, rule or regulation promulgated pursuant to law or a clear mandate of public policy, (2) he or she performed a whistleblowing activity described in N.J.S.A. 34:19-3c; (3) an adverse employment action was taken against him or her; and (4) a causal connection exists between the whistle-blowing activity and the adverse employment action. (Pp. 10-12).

2. In satisfying the first prong of the test, the trial court, as a threshold matter, must identify a statute, regulation, rule or public policy that closely relates to the complained-of conduct. The trial court can and should enter judgment for a defendant when no such law or policy is forthcoming. However, N.J.S.A. 34:19-3c does not require a plaintiff

to show that a law, rule, regulation or clear mandate of public policy actually would be violated if all the facts he or she alleges are true. Instead, a plaintiff must set forth facts that would support an objectively reasonable belief that a violation has occurred. When a defendant requests that the trial court determine as a matter of law that a plaintiff's belief was not objectively reasonable, the court must make a threshold determination that there is a substantial nexus between the complained-of conduct and a law or public policy identified by the court or the plaintiff. If the trial court so finds, the jury then must determine whether the plaintiff actually held such a belief and, if so, whether that belief was objectively reasonable. (Pp. 12-16).

3. Here, plaintiff failed to show that she reasonably believed the defendants' conduct violated a law, rule or regulation promulgated pursuant to law or a clear mandate of public policy concerning the public health, safety or welfare or the protection of the environment. In respect of section 101(a)(1) of the LMRDA, which is an antidiscrimination provision, a claimant must allege a denial of rights accorded to other members. Plaintiff's claim regarding the reading of minutes to the general membership does not concern a denial of such rights and reflects only a disagreement regarding access to information. Although CEPA does not require that plaintiff set forth facts that, if true, would constitute a violation of the provision, it does require a close relationship between the claim and the provision. Because no such relationship exists here, plaintiff's belief that defendants' actions were in violation of that provision was not objectively reasonable. In respect of section 101(a)(2) of the LMRDA, which states that every member shall have the right to assemble freely with other members and to express opinions, plaintiff fails to identify any actions by defendants that implicate those protections. Plaintiff's complaints concern the administration of meetings generally, rather than the suppression of any one member's views. To the extent that defendant McDevitt may have precluded a member from speaking at a general membership meeting, that incident occurred subsequent to plaintiff's discharge and therefore is irrelevant to her CEPA claim. Plaintiff's claim that non-compliance with bylaws requiring general membership approval of certain decisions violates section 501(a) of the LMRDA also fails. That provision requires that officers hold union money and property solely for the benefit of the organization and manage it in accordance with its constitution and bylaws. Plaintiff does not contend, however, that the Executive Board's actions constituted misappropriation. She argues only that defendants should have explained their actions more fully to the general membership. Because plaintiff's dispute concerns the adequacy of the Union's internal procedures, the Court concludes as a matter of law that plaintiff did not possess an objectively reasonable belief that section 501 of the LMRDA was violated. (Pp. 16-21).

4. Plaintiff's belief that defendants violated the Union's bylaws also does not provide the basis for an actionable CEPA claim. Bylaws are not laws, rules or regulations, but rather a contract between the union and its members. Nor can the Court identify a clear mandate of public policy concerning the health, safety or welfare or protection of the environment that might have been violated by the Board's conduct. (Pp. 21-22).

5. Because plaintiff failed to establish a CEPA claim, the Court declines to comment on the Appellate Division's holding that federal labor law preempts a state law claim for common law or statutory wrongful discharge when that claim implicates a union's internal policies and fails to allege that criminal conduct has occurred. (P. 22).

The judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO, LaVECCHIA and ALBIN join in JUSTICE ZAZZALI's opinion.

The opinion of the court was delivered by: Zazzali, J.

Argued January 7, 2003

This appeal requires us to determine whether the jury's verdict in favor of plaintiff is sustainable under the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. Plaintiff, formerly a paid arbitration officer and an unpaid elected Executive Board member of Local 54 of the Hotel and Restaurant Employees International Union (Local 54 or the Union), alleges that the Union wrongfully discharged her from her paid position after she repeatedly voiced concerns regarding the Executive Board's failure to read its minutes at general membership meetings. Plaintiff claims that she believed that the Board's conduct denied Union members the right to participate, deliberate, and vote in Union matters as prescribed by federal labor law and the Union's internal bylaws.

The jury found that defendants had violated CEPA, but the Appellate Division set aside the verdict on the ground that federal labor law preempted plaintiff's CEPA claim. We conclude as a matter of law that plaintiff's asserted belief that defendants' conduct violated a law or public policy was not objectively reasonable. We therefore affirm the Appellate Division. Our conclusion that plaintiff has failed to present a CEPA claim ...


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