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Joseph J. Potena v. State of New Jersey Board of Public Utilities

July 14, 2011


On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2974-04.

Per curiam.


Argued: October 25, 2010

Before Judges A.A. Rodriguez, C.L. Miniman and LeWinn.

Plaintiff Joseph J. Potena appeals from a January 23, 2009 order dismissing his CEPA*fn1 complaint against defendants State of New Jersey Board of Public Utilities (BPU), the BPU's then-president Jeanne M. Fox (Fox), and the BPU's then-chief of staff Lance R. Miller (Miller) with prejudice pursuant to Rule 4:40-2(a) after a jury was unable to reach a verdict following a full trial on plaintiff's claims. He also seeks to appeal the dismissal of his claims against defendant Michael Winka (Winka). Because plaintiff's proofs were insufficient to establish a CEPA violation, we now affirm.


We summarize the pertinent evidence as follows. Plaintiff has been employed as the BPU's Chief Fiscal Officer since 1994. The BPU regulates the rates charged and services provided by certain public utilities and addresses complaints of utilities customers. The BPU is "in, but not of" the Department of the Treasury (Treasury). Plaintiff worked for the BPU in other capacities when it was in the Department of Environmental Protection (DEP) and was involved in restructuring the BPU's financial office in 1994 when it was transferred to Treasury.

As Chief Fiscal Officer, plaintiff is in charge of the BPU's Office of Budget and Finance and is responsible for producing the agency's annual budget and assuring that expenditures comply with all legal requirements. To fulfill his duties, plaintiff must interact with the BPU's division directors and upper management.

In 2002, plaintiff began reporting to Miller, who had been named the BPU's Chief of Staff by Fox, the BPU's newly appointed President, rather than reporting directly to the BPU President. From the start, plaintiff had an uncomfortable working relationship with Fox and Miller. Plaintiff did not like reporting to the Chief of Staff instead of the President. He also had a negative impression of Miller based upon a "reputation that [he] was aware of" and a negative impression of Fox based upon his first conversations with her. In addition, plaintiff did not like having Fox and Miller require him to post a vacancy in 2003, rather than allow him to hire the person he wanted without posting. A contentious struggle over this issue continued for about one year until plaintiff prevailed in early 2004. Miller also had negative feelings about plaintiff because he believed plaintiff was not "a team player."

In March 2003, the BPU created the Office of Clean Energy (OCE), which was responsible for implementing the State's Clean Energy Program and promoting energy efficiency and the development of renewable energy resources. The OCE was headed by defendant Winka, who also reported to Miller. Winka did not supervise plaintiff or control plaintiff's pay or benefits.

A Clean Energy Council (the Council) was established to advise the OCE and the BPU Commissioners on organizing and administering the Clean Energy Program, including the societal benefit funds collected by utilities from their customers, which funded the program. The Council recommended that the Clean Energy Program be administered by the OCE and recommended that the societal benefit funds be held by a fiscal agent outside Treasury. This recommendation addressed a concern that, if the funds were placed in a state account, Treasury would have the ability to "lapse" them into the general fund and use them to balance the state budget, rather than fund the Clean Energy Program.

In September 2003, the BPU adopted orders accepting the Council's recommendations. The BPU also approved a contract with Wachovia Bank to serve as the fiscal agent. The three signatories on the Wachovia account were Fox, Miller, and Winka.

In the fall of 2003, Miller and Winka on behalf of the OCE negotiated with Rutgers University's Center for Energy, Economic, and Environmental Policy for its evaluation of the BPU's energy efficiency and renewable energy programs, and a letter of intent was issued. However, the final contract was not executed until the following summer.

Before that happened, plaintiff found a copy of the draft BPU-Rutgers contract on his desk. His review of the document caused him to be concerned about its funding source, the payment of eighty to ninety percent of the funds to subcontractors (possibly violating rules on procurement), and the identity of the signatory for Rutgers, Scott Weiner, who was a former BPU President. He also believed that maintaining the Wachovia account outside the State's accounting system violated various rules and regulations promulgated by Treasury.

Plaintiff first spoke to Winka and Miller about the contract in January 2004 and spoke to them again that March. Both Winka and Miller responded to his inquiries by stating that he should not worry about it; it was none of his business; no state or taxpayer funds were involved and, therefore, there was no need to comply with Treasury rules and regulations; and there was approval for the transaction from the Governor's office and the BPU. Plaintiff was not persuaded and continued to raise his concerns with others. That spring, he communicated with the BPU ethics officer and in-house attorneys, who communicated the issues to Fox and several Deputy Attorneys General.

In late February or early March 2004, plaintiff also spoke directly with Fox about his concerns. In-house discussions at BPU continued through at least June 2004. Plaintiff was dissatisfied with the responses to his inquiries so he raised the issues with people at Treasury, including David Ridolfino, the Deputy Director of the Division of Administration; Charles Chianese, the Associate Deputy State Treasurer, Director of Administration, and Chief Financial Officer; and Kenneth Kutch, an analyst in the Office of Management and Budget (OMB).

People at Treasury began to inquire about plaintiff's complaint, communicating with both Fox and Miller. In August 2004, Treasury began an audit of the OCE. The parties stipulated that Treasury found as follows:

In or about August 2004, the State of New Jersey, Department of Treasury, Division of Administration, Internal Audit Unit commenced an audit of financial transactions related to the [OCE's] Clean Energy Program. On or about December 8, 2004, the Treasury's Internal Audit Unit prepared a Confidential Memorandum the subject of which was "Draft Report-Office of Clean Energy/Board of Public Utilities."

The draft report raised issues concerning the operations of OCE and corroborated [plaintiff's] statements to [Treasury] that the BPU did not comply with certain Treasury Circular Letters when it opened the Wachovia checking account off the State's accounting system without assistance from the [OMB] and when it contracted with [the] Rutgers Center for Energy, Economics and Environmental Policy. The BPU responded to the draft Treasury Report arguing that the circulars were not applicable in both circumstances.

From January 2004 until the trial of this matter, plaintiff refused to work on matters arising from the Clean Energy Program or any contracts with Rutgers. At various times, plaintiff also instructed his staff not to work on such matters, although Treasury later advised him that he could not do so. Plaintiff also questioned whether a number of defendants' additional business transactions complied with Treasury rules and regulations. This led to a series of disagreements between plaintiff, Miller, and Winka. In several instances, individuals from Treasury were called in to resolve those disputes.

There were two notable disputes with Miller during this time period. First, in July 2004, plaintiff refused to approve two contracts sent to him by Miller. Winka came to speak with plaintiff about the contracts, and they argued. Thereafter, plaintiff received a telephone call from Personnel regarding Miller's inquiry about bringing insubordination charges against him.

Second, in early August 2004, Miller visited plaintiff's office and thanked him for bringing in the auditors from Treasury. Plaintiff told Miller to stop patronizing him and said that management of the BPU was "piss poor." Miller threatened him with insubordination charges if he did not lower his voice, although no such charges were ever filed.

In September 2004, Treasury advised Fox that, effective November 1, 2004, it would begin serving as the fiscal and procurement agent for the BPU's Clean Energy Program. In the fall of 2004, however, Treasury decided to service the entire BPU because it was not feasible to provide services only to the Clean Energy Program. This decision was reportedly at the request of Fox. This request later led to an Inter-Departmental Agreement (IDA).

At meetings held in November and December 2004, Treasury briefed the BPU, including plaintiff and his department, about the IDA. Plaintiff did not object to Treasury's plan, although he and his staff expressed some concern about what their roles would be.*fn2 A formal IDA was signed on January 14, 2005. Under the IDA, Treasury provided oversight and support services to the BPU on fiscal, budgeting, procurement, and grant activities.

In his complaint, plaintiff alleged CEPA violations and intentional infliction of emotional distress.*fn3 The matter was tried between September 8 and 29, 2008. During the trial, plaintiff testified that defendants retaliated against him by implementing the IDA and by maintaining it longer than necessary. He claimed that the IDA constituted a takeover of the BPU's fiscal operations, which had the effect ...

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