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DiMaggio v. Novartis Pharmaceuticals Corp.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


November 15, 2010

EDWARD DIMAGGIO, PLAINTIFF-RESPONDENT,
v.
NOVARTIS PHARMACEUTICALS CORPORATION, DEFENDANT-APPELLANT, AND RONALD SIRA AND MICHAEL BURNS, DEFENDANTS.

On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2301-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 18, 2009

Before Judges Stern, Graves and J.N. Harris.

In a complaint filed on April 13, 2005, plaintiff Edward DiMaggio alleged that defendant Novartis Pharmaceuticals Corporation (Novartis) violated the New Jersey Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14, when it terminated his employment. Following a trial and a no-cause verdict, Novartis filed a motion for counsel fees and costs under the fee-shifting provision of CEPA, N.J.S.A. 34:19-6; the frivolous litigation statute, N.J.S.A. 2A:15-59.1; and Rule 1:4- 8. Novartis appeals from an order denying its application. We reverse and remand for further consideration and findings with respect to defendant's claim that plaintiff's case was "based on lies."

Plaintiff began working for defendant in June 2002, as an investigations manager in the security department. Plaintiff alleged in his complaint and at trial that his termination was in retaliation for making two anonymous telephone calls to "AlertLine," defendant's confidential call reporting system, which allowed employees to report any improper or illegal activity that might be taking place. Plaintiff claimed he telephoned AlertLine on two separate occasions in February 2004 to report that Mike Burns, one of plaintiff's supervisors, had received an improper benefit from a contractor that did work for Novartis and that Burns's supervisor, Ron Sira, knew about it and took no action.

Novartis, on the other hand, claimed plaintiff did not make the anonymous AlertLine calls in February 2004; the Alertline calls had nothing to do with plaintiff's termination; and plaintiff was fired in November 2004 for poor performance, including improper interview techniques. In his summation, defendant's attorney argued that plaintiff was an "opportunist" and that the lawsuit was based on his false representations:

Mr. DiMaggio has manufactured this lawsuit out of whole cloth. He's an opportunist. He seized upon the fact that nine months prior to his termination, nine months, there was an AlertLine call, an anonymous AlertLine call that he is claiming credit for.

There is conclusive evidence that Mr. DiMaggio did not make the calls that we talked about, that his termination was not because of these calls, but rather, in fact, because of his poor performance. Let me [be] blunt. In order to believe Mr. DiMaggio, you have to disbelieve every single witness in the case, because by his testimony he told you that every single person, whether it's Kelly Mnich talking about the circumstances of termination, whether it's Jack Repsha talking about whether or not he was able to go back and get his personal goods, we can go down the line, every single person was lying.

Now let's look at Mr. DiMaggio's testimony for a second and whether or not it was truthful. His law enforcement background, his disability, that's how we started this case. [Plaintiff's attorney] opened up with Mr. DiMaggio [as] a hero cop injured on the job. And he got on the stand, turned towards you, and told you that he would have still been a cop except he was involved in a brutal, head-on collision in which an aspiring gang member tried to kill him because it was part of a gang initiation that they needed to kill a cop.

Was that true? Well, after the dust settled on that one, what did we learn? We learned that there was nothing to do with a gang, this wasn't gang-related. It wasn't a head-on collision, it was [a] hit from the back . . . . [T]he most serious charge that anybody faced in this incident that Mr. DiMaggio talked about [was] reckless driving. Completely manufactured out of whole cloth, and that's how he started with you.

His salary before he came to Novartis. Well, depending upon whether you believe an application, whether you believe his tax returns, or it's somewhere in the middle, it was either $76,000 because that's what he told the federal government, and that's what he put on some applications; it was $109,000 because that's what he told Novartis. Clearly, he either misled the federal government, which we'll talk about in a second, he misled Novartis, or both.

Mr. DiMaggio came before you and claims that he made these AlertLine calls. Had he made the AlertLine calls he'd have a password.

He doesn't have a password. Why doesn't he have a password?

I'm going to say it to you one more time, in order to find for Mr. DiMaggio, you have to conclude that he is the only person in this courtroom telling the truth. That's the only way you can find for him.

The jury was instructed by the court that the first factual question it should decide was whether plaintiff was the person who called AlertLine. However, the first question on the jury verdict sheet asked: "Has the plaintiff Edward DiMaggio proven by a preponderance of the evidence that he objected to or refused to participate in any activity, policy or practice which he reasonably believed was in violation of a law or a rule or regulation promulgated pursuant to law?" In response to a note from the jury requesting "further clarification on the wording of Question 1," the court explained that its previous instruction was "a long way of indicating that . . . the question is whether Mr. DiMaggio was the whistle blower or whether someone else was." The court further explained that in order for the jury to determine whether plaintiff "was a whistle blower," it had to "decide whether he was the one who called" AlertLine.

After further deliberations, the jury answered "No" to the first question on the verdict sheet by a six to one vote. Thus, the jury rejected plaintiff's claim that he was the whistle blower who called AlertLine in February 2004.

After the trial, Novartis filed a motion for counsel fees and costs. During oral argument on May 2, 2008, defendant's attorney argued that plaintiff's CEPA claim was filed in bad faith because it was based on plaintiff's intentional false representations.

The court denied the motion, however, reasoning as follows:

[Defendant has] made a motion for attorneys' fees and costs, pursuant to a court rule, as well as the frivolous cause of action statute, [N.J.S.A.] 2A:15-59.1, and a statute which deals more closely with the type of case we are dealing with here, [N.J.S.A.] 34:19-6. And I have reviewed the motion papers and I'm prepared to deny the defendant's motion for fees and costs.

Mr. DiMaggio lost, but he lost as a result of a jury trial. The motion for summary judgment brought by the defense was denied; the motion for a directed verdict at the end of the plaintiff's case was denied; the motion at the end of all of the evidence was reserved; and the jury found, by a vote of six to one, that plaintiff did not make the calls.

But his credibility had to be submitted to the jury and he lost, but I cannot conclude from that, that the pleadings from day one were in bad faith and that the plaintiff and his counsel knew or should have known there was no reasonable basis in law or equity.

And the other statute, [N.J.S.A.] 34:19-6 does indicate that a court may -- underline may -- order that counsel fees and costs be awarded to an employer if the court determines that an action brought by an employee under this act was without basis in law or in fact. I cannot make that determination. If I had made that determination, it would have been made a long time ago, when the motion for summary judgment was made or at least when the matter was tried and I heard the plaintiff's proofs.

The plaintiff put his credibility squarely in issue . . . and plaintiff lost, but I cannot say . . . that the matter was without basis in law or in fact. I have many cases in which the jury doesn't get past the first question on the verdict sheet, but that doesn't . . . mean that every defendant that prevails in a case in front of me then has a right to come in and request counsel fees.

Now . . . there are many cases that wouldn't fall under Title 34, but the frivolous cause of action statute deals with any kind of case. And I suppose the defendants who get a favorable verdict on question one could all come in and ask for fees. They won't be granted by this Court if they do, I am not a fan of fee shifting, I never have been, but I do allow it where it's legally required. And, in this case, I find that it is not.

On appeal, defendant argues that it is entitled to counsel fees and costs because "it is obvious that plaintiff lied when he said that he called AlertLine." In addition, defendant contends the trial judge failed to properly apply the fee- shifting statute in CEPA, N.J.S.A. 34:19-6, and the frivolous litigation statute, N.J.S.A. 2A:15-59.1, because the "filing of a fabricated lawsuit is precisely the type of malicious conduct the legislators sought to purge from the Court's docket." We are constrained to reverse and remand because the trial court either failed to consider or simply failed to state its findings with regard to defendant's claim that plaintiff's lawsuit was commenced and continued in bad faith.

Defendant's allegation that plaintiff manufactured a cause of action "out of whole cloth" is similar to the defendant's claim for counsel fees and costs in Weed v. Cassie Enterprise, 279 N.J. Super. 517 (App. Div. 1995). In Weed, the plaintiffs sued "to recover damages for an environmental cleanup resulting from a spill of gasoline allegedly caused by defendant's negligent removal of a gasoline storage tank from plaintiffs' property." Id. at 520. In its jury charge, the court observed that the contradictory trial testimony suggested "that someone or others have been playing fast and loose with the truth. In very plain language someone is lying in this case. . . . Now, it's your function to cull the facts and evidence and determine where the truth lies, who has been telling you the truth." Id. at 527-28.

After the jury returned a verdict in favor of defendant, defendant filed a motion for counsel fees and costs. Id. at 526. The trial court granted the motion, reasoning as follows: I am still of the conviction as I was when the testimony ended that one of the parties had fabricated the facts surrounding this incident. The jury, responsive to the charge that had been given to it, concluded that that party was Mr. Weed, and I agree with their conclusion in that regard.

The evidence was replete and overwhelming with a demonstration that Mr. Weed had fabricated this story. . . . [H]is motive in fabricating this story . . . was . . . obvious: He had already incurred . . . significant expense under direction from DEPE to clean up this location and to maintain monitoring wells to make certain that the contaminants did not spread . . . and somehow Mr. Weed came up with the notion that [defendant] could be his patsy. . . .

When a plaintiff or a defendant asserts by way of affirmative claim, one that is totally fabricated, as I find this to have been, I can but conclude that it was commenced in bad faith and was designed to maliciously injure the defendant.

[Id. at 530-31.]

On appeal, we found there was substantial credible evidence in the record to support the trial court's decision to award counsel fees and costs to the defendant. Id. at 533. We also stated that a court must consider "the totality of the evidence" in determining whether a lawsuit is frivolous because evidence was "fabricated to assert an otherwise proper cause of action." Id. at 532. That did not happen here.

Accordingly, we remand the matter to the trial court to determine whether plaintiff's case was frivolous because it was based on "false allegations of fact" that were "made in bad faith, 'for the purpose of harassment, delay or malicious injury.'" McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561 (1993) (quoting N.J.S.A. 2A:15-59.1(b)(1) and discussing legislative history); see also Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div.) ("False allegations of fact will not justify a fee award unless they are made in bad faith, for the purpose of harassment, delay, or malicious injury."), certif. denied, 162 N.J. 196 (1999).

Reversed and remanded. Jurisdiction is not retained.

20101115

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