On certification to the Superior Court, Appellate Division, whose opinion is reported at 409 N.J. Super. 193 (2009).
The opinion of the court was delivered by: Justice Hoens
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Joyce Quinlan v. Curtiss-Wright Corporation (A-51-09)
Argued March 9, 2010-Decided December 2, 2010
HOENS, J., writing for a majority of the Court.
Plaintiff, Joyce Quinlan, began working in 1980 for defendant, Curtiss-Wright Corporation, as a benefits analyst in the company's Human Resources department. When hired by defendant, plaintiff signed an acknowledgment that defendant's official code of conduct precludes employees from using the company's confidential information for private purposes. By 1999, plaintiff had risen through the ranks to become Executive Director of Human Resources. In this role, plaintiff reported directly to Martin Benante, the CEO and president of the company.
In 2000, defendant hired Kenneth Lewis to work in the Human Resources department. Three years later, in part because of departmental reorganization, Lewis was promoted to Corporate Director of Human Resources and Management Development. Following that promotion and reorganization, although objectively Lewis had fewer qualifications and less experience than plaintiff, he became plaintiff's supervisor, requiring her to report to him rather than directly to Benante. Plaintiff believed that defendant had discriminated against her when it promoted the less qualified Lewis and, in an effort to prove that her suspicions were true and that defendant was engaged in widespread gender discrimination, plaintiff gathered documents that were available to her in the ordinary course of her employment and turned copies of those documents over to her attorneys. Plaintiff compiled more than 1800 pages of documents, some of which contained employees' confidential personal information.
In November 2003, plaintiff filed a four-count complaint alleging that: she was the victim of gender discrimination based on the failure to promote her; defendant engaged in a pattern and practice of gender discrimination; and defendant discriminated against her in wages and salary. During discovery, in response to defendant's notice to produce, plaintiff's attorneys delivered to defendant copies of the 1800 pages of records that plaintiff had copied from the company's files. This document production marked the first time defendant became aware that plaintiff had copied confidential personnel files. Several weeks after the document production, plaintiff was given another document in her capacity as the Executive Director of Human Resources. That document was Benante's appraisal of Lewis's performance for the period ending April 2004. Because Benante had rated Lewis as needing improvement in several areas, plaintiff believed the appraisal was important to her discrimination claim. She copied it and turned it over to her attorneys. Soon thereafter, plaintiff's attorneys deposed Lewis and during the deposition, confronted Lewis with this document. Once defendant learned of the unauthorized use of this document, plaintiff was terminated for the unauthorized taking of confidential and privileged information, constituting theft of company property. Believing that defendant had fired her because of the prosecution of her discrimination claim, plaintiff added a retaliation claim to her pending lawsuit.
The matter was tried twice, the first trial resulted in a mistrial and the second trial resulted in a substantial verdict in plaintiff's favor. One of the primary issues addressed by the trial court was the retaliation claim. The court consistently ruled that plaintiff's conduct as it related to taking and copying the 1800 documents was not protected activity under the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42, and that defendant was permitted to terminate her for that conduct. The court also concluded that the taking and copying of the Lewis performance appraisal was not protected activity and if the jury finds that plaintiff was terminated for taking that document, the retaliation claim would fail. The trial court had a different analysis regarding the attorneys' use of the Lewis performance appraisal at the deposition, finding that the attorneys' use was protected activity. The court found that for purposes of the retaliation claim, there was a significant difference between the taking of the document, which was not protected activity, and its use at the deposition, which was protected activity because defendant could fire plaintiff for the former but not the latter. In charging the jury, the trial court attempted to make that distinction clear. The jury returned a verdict in plaintiff's favor, awarding back and front pay on the retaliation claim and punitive damages. On defendant's motion for a new trial or judgment notwithstanding the verdict, the trial court found that there was ample basis for the jury to conclude that defendant covered up its discrimination both before and during trial, that it terminated plaintiff with no intermediate discipline, and that it terminated plaintiff in the letter with words like "theft" and "breach of trust" in an effort to conceal its true motivation for her dismissal. The court also found that a reasonable jury could have concluded that defendant's asserted reasons for declining to promote plaintiff was merely a pretext used to mask discrimination.
In a published opinion, the Appellate Division reversed and remanded the retaliation verdict for a new trial and vacated the punitive damages award in its entirety. On the retaliation claim, the appellate panel agreed with defendant that the trial court erred in drawing a distinction between plaintiff's taking of the Lewis appraisal and her attorney's use of that document during deposition. In determining whether the taking of confidential documents from an employer is a protected activity, the panel looked to federal case law. Based on its consideration of federal precedent, the Appellate Division rejected the line drawn by the trial court between plaintiff's act of obtaining and copying documents and her attorneys' use of them during the Lewis deposition. The panel also agreed with defendant's argument that the record did not warrant submitting the claim for punitive damages to the jury, finding that there was insufficient evidence in the record to satisfy the requirement that the behavior was especially egregious.
The Supreme Court granted certification.
HELD: The jury charge on plaintiff's retaliation claim was not in error and the jury's verdict in favor of plaintiff on that count was amply supported by the evidence. In addition, on the record presented, there was sufficient evidence of egregiousness to permit or to support the punitive damages awarded to plaintiff.
1. The LAD operates not only to fight discrimination wherever it is found, but to protect those who assist in rooting it out. This case presents to the Court starkly opposing views on a matter of fundamental importance. The Court must strike a balance between the employer's legitimate right to conduct its business and the employee's right to be free from discrimination or retaliation. The appropriate balance in the context of LAD claims requires particular care. Because no New Jersey court previously considered the question now posed and because the LAD does not provide a clear answer, the Court looks to federal precedent for guidance. There are analytical differences, however, between the LAD and the relevant federal statutes that must be considered. (pp. 24-32)
2. The federal courts have attempted to identify, within the framework of Title VII and ADEA, factors that should bear on the decision of whether an employee who finds, takes, copies, or even creates, documents relating to a discrimination claim, and who then discloses those documents to others, has engaged in prohibited or protected conduct. There is, however, no clear consensus among courts about what the appropriate factors are, or about how to weigh them in comparison to the concededly legitimate needs of the employer for protection of its confidential documents and its right to conduct its business free of unnecessary interference. As noted by the Appellate Division, the Sixth Circuit decision in Niswander v. Cincinnati Ins. Co. is the most comprehensive. That court identified six factors that it used to balance the rights of the employer and employee in the Title VII context. The Niswander test comes close to capturing the essential elements that must be considered in balancing the rights of employees and employers. However, that test should be expanded in two significant ways: 1) the elements the court identified in Niswander must be further fleshed out to provide better guidance to our courts; and 2) because the Niswander factors fail to take into account the overarching purposes of our LAD, the test the Court adopts must advance the LAD's strong remedial purposes and, therefore, must be identified as a separate analytical factor. (pp. 32-39)
3. The Court adopts a flexible totality of the circumstances approach that rests on consideration of a wide variety of factors, all of which must be balanced in order to achieve the essential goals embodied in the LAD. In deciding whether an employee is privileged to take or to use documents belonging to the employer, the courts must consider and evaluate all of the following factors: 1) how the employee came into possession of, or obtained access to, the document; 2) what the employee did with the document; 3) the nature and content of the particular document in order to weigh the strength of the employer's interest in keeping the document confidential; 4) whether there is a clearly identified company policy on privacy or confidentiality that the employee's disclosure has violated; 5) the circumstances relating to the disclosure of the document, balancing its relevance against considerations about whether its use or disclosure was unduly disruptive to the employer's ordinary business; 6) the strength of the employee's reason for copying the document rather than, for example, simply describing it or identifying its existence to counsel so that it might be requested in discovery ; and 7) consideration of the broad remedial purposes the Legislature has advanced through our laws against discrimination, including the LAD, as well as consideration of the effect, if any, that either protecting the document by precluding its use or permitting it to be used will have on the balance of legitimate rights of both employers and employees. (pp. 39-43)
4. In applying these factors, courts must be mindful that both employers and employees have legitimate rights. Employers have the right to operate their businesses within the bounds of the law and legitimately expect that they will have the loyalty of their employees. Employees have the right to be free from discrimination in their employment and the right to speak out when they are subjected to treatment that they reasonably believe violates that right. Applying this balancing test to the relevant documents, the Court agrees with the distinction the trial court drew; the trial court's approach was the correct one. The jury charge was not in error and the jury's verdict on that count was amply supported by the evidence; therefore, the Court reverses that aspect of the Appellate Division opinion and reinstates the retaliation verdict in plaintiff's favor. (pp. 43-46)
5. On the punitive damages claim, the Court's review of this record leads it to conclude that the plaintiff's evidence regarding the egregiousness of defendant's conduct meets the required standard. The focus of the inquiry should not have been on whether there was evidence to support a lack of egregiousness, but rather on whether there was too little evidence of egregiousness presented to get to the jury at all. (pp. 46-52)
The judgment of the Appellate Division that reversed the jury's verdict on the retaliation claim and remanded for a new trial and that vacated the jury's verdict on punitive damages is REVERSED.
JUSTICE ALBIN, DISSENTING, in which JUSTICE LaVECCHIA joins, is of the view that neither the illicit taking nor the exploitative use of the Lewis performance appraisal was protected activity under the LAD. The theft of the document and the use of it at deposition were hopelessly intertwined, and no rational distinction could be made between the two. Therefore, Curtiss-Wright had a legitimate ground to discharge plaintiff for the taking or the use of the document based on breach of trust and disloyalty.
CHIEF JUSTICE RABNER and JUSTICES LONG, RIVERA-SOTO, and WALLACE join in JUSTICE HOENS's opinion. JUSTICE ALBIN filed a separate, dissenting opinion in which JUSTICE LaVECCHIA joins.
JUSTICE HOENS delivered the opinion of the Court. Plaintiff Joyce Quinlan, then the Executive Director of Human Resources for defendant Curtiss-Wright Corporation, believed that the company had discriminated against her when it promoted a man she thought was less qualified than she and made him her supervisor. In an effort to prove that her suspicions were true and that defendant was engaged in widespread sex discrimination, plaintiff gathered documents that were available to her in the ordinary course of her employment and turned copies of them over to an attorney. During discovery in her discrimination lawsuit, defendant learned that plaintiff had taken, and was continuing to take, copies of hundreds of documents it considered to be confidential. Following disclosure of one document that was particularly helpful to plaintiff's claim that she had been discriminated against when she was not selected for the promotion, defendant fired her. The letter terminating plaintiff from her employment accused her of breach of company policies and theft. Believing that defendant had fired her because of the prosecution of her discrimination claim, plaintiff added a retaliation claim to her pending lawsuit.
After a lengthy and hard-fought trial, the jury agreed with plaintiff, awarding her substantial compensatory and punitive damages. In the appeal that followed, the verdict in her favor on the retaliation claim was reversed and remanded for a new trial and the punitive award was vacated in its entirety. The reasoning of the appellate panel that undergirds those conclusions has given rise to two disputes before this Court and although they can fairly be described as discrete issues, they are matters of great public importance, with far-reaching implications for employers and employees. The arguments raised by the parties relating to the retaliation claim are framed in terms of fundamental rights of employers and employees and each of the parties has offered diametrically opposed views of both the rights that each enjoys and the public policy implications of any decision that this Court might reach.
Plaintiff asks this Court to read the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42, broadly so that it provides complete protection for any employee who copies and takes company documents for the purpose of helping in the prosecution of a discrimination claim. She argues that because she was motivated by the need to assist in the prosecution of her lawsuit and because she disclosed the documents only to her attorneys, permitting defendant to fire her for her conduct would be contrary to the strong remedial purposes of the LAD.
Defendant insists that the employer's right to conduct its business and its right to demand loyalty of its employees is paramount. It argues that if this Court adopts the approach championed by plaintiff, the effect will be to insulate conduct that is a clear ground for termination merely because an employee had the sense to limit the disclosure of the company's confidential documents to a lawyer. Defendant cautions this Court not to create circumstances in which employees will be encouraged to rummage through employers' files hoping to find something to use as a shield against what would be an otherwise permissible termination of their employment.
Articulating the arguments raised by the parties makes plain that the issues before this Court are of great significance. The difficult task before this Court demands that we achieve a fair balance of the legitimate rights of employers and employees in circumstances in which those rights conflict. Our challenge is to create the appropriate framework against which courts may weigh and consider whether, and to what extent, an employee who finds, copies, and discloses an employer's otherwise confidential documents in the context of prosecuting a discrimination case was engaged in conduct protected by the LAD. That is a challenge we do not face in a vacuum, but one that arises in the real world of individual plaintiffs seeking to vindicate their rights and employers legitimately expecting that they will not be required to tolerate acts amounting to self-help or thievery. Today we strike the balance with the essential purposes of the LAD as our guide, but in clear recognition of those very weighty concerns.
The facts that are relevant to our consideration of this appeal were developed during the lengthy trial on the merits of plaintiff's discrimination claim. Plaintiff began her employment in 1980 as a benefits analyst in defendant's Human Resources department. Before that time, she had earned both an undergraduate degree and a master's degree in business administration, and she had gained experience working at several other companies. When she was hired by defendant, she signed an acknowledgement that defendant's official code of conduct precludes employees from using the company's confidential information for private purposes.
By 1999, plaintiff had risen through the ranks to become the Executive Director of Human Resources. Plaintiff contends that her areas of responsibility increased throughout her career and that her elevation to Executive Director was a promotion. Defendant disputed those assertions, claiming that plaintiff's work was limited to employee benefit plans, that her functions and responsibilities did not change when she became the Executive Director, and that the new title was simply a way for defendant to give her a salary increase. Notwithstanding that dispute, the parties agree that, in her role as the Executive Director of Human Resources, plaintiff reported directly to Martin Benante, who was defendant's CEO and President.
In 2000, defendant hired Kenneth Lewis to work in the Human Resources department, awarding him the title of Director of Succession Planning and Management Development. Three years later, in part because of a departmental reorganization, Lewis was promoted to Corporate Director of Human Resources and Management Development. Following that promotion and reorganization, although objectively Lewis had fewer qualifications and less experience than plaintiff, he became her supervisor and she was required to report to him rather than to Benante. Moreover, as a result of that change, there was only one woman who reported directly to Benante, and she had been given that direct-reporting position by Benante's predecessor.
Plaintiff was disappointed when Lewis was promoted because she believed that she was in line for that job, because she thought she was better qualified than he was, and because she was greatly concerned about the small percentage of women employed by defendant. Plaintiff told Benante that she thought he had made a mistake in promoting Lewis. Benante disagreed with plaintiff's view, telling her that Lewis got the position because he had conceived of and had implemented several initiatives in the Human Resources department. He also told plaintiff that she had not been promoted because of perceived problems with her oversight of a budget for a project that had cost over-runs and because she lacked enthusiasm for her job.
Plaintiff was dissatisfied with Benante's explanation. She did not think that she was responsible for the cost over-run and she believed that Lewis was promoted because of defendant's long-standing pattern of gender discrimination. In particular, at trial she presented evidence that few women held senior managerial positions within the company and she testified that Benante often hosted business lunches and dinners, inviting only men, even when the discussions related to her department. She contended that Benante frequently played golf with Lewis and that he had created the Succession Planning position with Lewis in mind.
Shortly after voicing her concerns to Benante, plaintiff consulted with counsel about whether she was the victim of gender discrimination. Thereafter, without her attorneys' knowledge, she also began to review files to which she had access as part of her duties in the Human Resources department. She reviewed the files to look for and copy materials that she thought would show that defendant engaged in a pattern of widespread gender discrimination. Eventually, she compiled more than 1800 pages of documents, some of which contained employees' confidential personal information, including Social Security numbers and salary information, and she delivered copies of the documents to her attorneys.
In November 2003, plaintiff filed a four-count complaint alleging that she was the victim of gender discrimination based on the failure to promote her, that defendant engaged in a pattern and practice of gender discrimination, and that defendant discriminated against her in wages and salary. During discovery, in response to defendant's notice to produce, see R. 4:18-1, plaintiff's attorneys delivered to defendant copies of the 1800 pages of records that plaintiff had copied from the company's files. According to defendant's trial counsel and its in-house counsel, Paul Ferdenzi, that document production marked the first time defendant became aware that plaintiff had copied confidential personnel files.
Several weeks after the document production, plaintiff, who was still employed by defendant, was given another document in her capacity as the Executive Director of Human Resources. That document was Benante's appraisal of Lewis's performance, for the period ending in April 2004, in the job plaintiff believed should have been hers. Because Benante had rated Lewis as needing improvement in several areas, plaintiff believed the appraisal was important to her claim. She therefore copied it and turned it over to her attorneys. Soon thereafter, plaintiff's attorneys deposed Lewis. During the deposition, plaintiff's counsel asked Lewis about his most recent performance evaluation and showed him a copy of the appraisal that had just been received from plaintiff. Lewis claimed that he had never seen the appraisal before, and defense counsel objected to its use at the deposition, arguing that the document had been obtained improperly by plaintiff.
Ferdenzi, who was present during the deposition, informed his superiors about what had happened during the deposition and told them that plaintiff was continuing to copy confidential material. Shortly thereafter, in June 2004, plaintiff was terminated. An explanatory letter advised her of the reason for her termination: "Without authorization, you have removed confidential, and in some instances privileged, information . . . . This unauthorized taking of confidential or privileged information from the Corporation constitutes a theft of Company property . . . ." According to plaintiff, Ferdenzi told her "that the discussion of [her] termination . . . was in reference to having [the appraisal] at the Lewis deposition." After she was terminated, plaintiff amended her complaint to add a count for retaliation.
This dispute was the subject of two jury trials, the first of which ended in a mistrial when the jury was unable to reach a verdict, and the second of which resulted in a substantial verdict in plaintiff's favor. Both trials were lengthy and hard fought, but because the only issues before this Court are discrete questions about the claims for retaliation and punitive damages, we limit our recitation accordingly.
The retaliation claim was the focus of proceedings before the trial court in connection with both jury trials as the parties debated the permissible uses of the documents plaintiff had copied and turned over to her lawyers. In the end, the dispute was addressed in two parts, with arguments directed separately to the 1800 documents and the Lewis appraisal. The trial court consistently ruled that plaintiff's conduct as it related to taking and copying the 1800 documents was not protected activity and that defendant was permitted to terminate her for that conduct. That conclusion was based in part on the court's finding that plaintiff's acts of taking and copying the documents violated defendant's policy on confidentiality, a policy that the court presumed was valid.
The court had a somewhat different analysis of the Lewis appraisal, which had engendered very different arguments by the parties. That dispute began when defendant moved to dismiss the retaliation claim in its entirety, initially by advancing an argument similar to the one raised in connection with the 1800 documents. Defendant argued that plaintiff's taking and copying of the appraisal was not protected activity and that because it was plaintiff's core evidence on the retaliation claim, permitting that claim to proceed would be the equivalent of transforming her conduct into protected activity. Plaintiff responded by arguing that defendant did not in fact terminate her for the unprotected conduct of taking the appraisal, but instead for her attorney's use of that document during the Lewis deposition. She reasoned that because her attorneys, in prosecuting her claim, engaged in protected activity when they used the appraisal, defendant could not terminate her for their act. Because of the timing of the termination, she contended that there was ample evidence on which the jury could conclude that her termination was in retaliation for what her attorneys did, rather than for any unprotected act of hers.
Defendant responded, arguing that notwithstanding the timing, its decision to terminate plaintiff was not based on her lawyer's use of the appraisal at the deposition. Instead, defendant explained that it was not until the lawyer used the appraisal at the deposition that it realized that plaintiff was still taking documents, an unprotected act for which she could be fired. Further, defendant argued that the court could not permit the attorneys' actions to insulate plaintiff from the consequence of her unprotected act. Finally, defendant asserted that even if the attorneys intended to engage in protected activity, because their use of the appraisal during the Lewis deposition was disruptive, it lost the protection it would otherwise have enjoyed.
The trial court divided its analysis into several parts. As with its decision about the 1800 documents, the court concluded that taking and copying the Lewis appraisal was not protected activity and that if the jury agreed with defendant that plaintiff was terminated because defendant learned at the deposition that she was continuing to engage in unprotected activity, her retaliation claim would fail. Notwithstanding that conclusion, the court had a different analysis of the attorneys' use of the appraisal during the Lewis deposition. After finding that the attorneys' use of the document was itself protected and rejecting the argument that it was disruptive, the court concluded that plaintiff could prevail on her retaliation claim if the jury believed that she was fired because of what the attorneys did, rather than because she continued to take and copy documents.
The court therefore found that for purposes of the retaliation claim, there was a significant difference between the taking of the document, which was not protected activity, and its use at the deposition, which was protected activity, because defendant could fire plaintiff for the former but not for the latter. In charging the jury, the court attempted to make that distinction clear:
[W]hile Joyce Quinlan's conduct in copying and removing copies of documents is not protected and is conduct for which she could have been justifiably terminated, the conduct of her attorneys in using those documents in the process of prosecuting this lawsuit is protected activity and could not properly have been a determinative factor in terminating her. In other words, if you find that a determinative factor in CurtissWright's decision to terminate Joyce Quinlan was her attorneys' use of any of the documents, including but not limited to [Mr. Lewis's performance appraisal], such a finding would be the basis of finding for Joyce Quinlan. On the other hand, if the real reason for her termination was her copying and removing the documents, including but not limited to [the performance appraisal], such a motive by Curtiss-Wright would not be actionable.
The parties fully presented their competing theories about the reasons for plaintiff's termination to the jury, each focusing on the taking and the use of the Lewis appraisal as it bore on defendant's decision to fire her. The verdict sheet submitted to the jury included a separate question directed to the retaliation claim that asked the jury whether plaintiff had proven that defendant "intentionally retaliated against her for prosecuting a lawsuit initiated in November 2003 when it terminated her employment."
The jury returned a verdict in plaintiff's favor which in part awarded her back pay and front pay, in the amounts of $475,892 and $3,650,318 respectively, on the retaliation claim.*fn1
After further presentation of evidence and argument in a bifurcated proceeding, the jury concluded, "by clear and convincing evidence, that [defendant's] conduct in intentionally discriminating against [plaintiff] or in intentionally retaliating against her for prosecuting a lawsuit was especially egregious." The jury then awarded plaintiff $4,565,479 in punitive damages. In post-verdict proceedings, the trial court added prejudgment interest, counsel fees and costs to the verdict and entered judgment accordingly.*fn2
After the verdict was announced, defendant moved for a new trial or, in the alternative, judgment notwithstanding the verdict on retaliation and punitive damages. The trial court addressed all of the arguments raised in those motions in a comprehensive written opinion. In rejecting the challenge to the retaliation verdict, the court held fast to the line it had drawn between plaintiff's copying of the documents, which was not protected activity, and her attorneys' use of the Lewis appraisal during the deposition. In part, the trial court relied on federal precedent, see Kempcke v. Monsanto Co., 132 F.3d 442 (8th Cir. 1998), pointing out that because plaintiff was given the appraisal in the ordinary course of her work, she was not precluded from using it. Moreover, the court reiterated its conclusion that even if plaintiff should not have copied that document, she could not be faulted for an attorney's independent choice to use it during the deposition. Finally, the court reasoned that because the Lewis appraisal would and should have been produced during discovery, its use could not be prohibited.
The trial court also rejected defendant's argument that the evidence in the record fell short of the level of egregiousness required to support a punitive damage award. After considering the applicable precedents and reviewing the evidence, the ...