BERNICE WILL v. CARUSO THOMPSON ROBERT CARUSO

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Superior Court of New Jersey, Appellate Division.

BERNICE WILL, Plaintiff–Appellant, v. CARUSO THOMPSON, L.L.P., and ROBERT CARUSO (individually and in his representative capacities), Defendants–Respondents.

DOCKET NO. A–1620–12T2

-- December 13, 2013

Before Judges Fisher, Espinosa and Koblitz. Law Offices of William J. Courtney, L.L.C., attorney for appellant (Mark G. Yates and William J. Courtney, on the briefs). Piro, Zinna, Cifelli, Paris & Genitempo, P.C., attorneys for respondents (Margarita Romanova and Alan Genitempo, on the brief).

Plaintiff Bernice Will appeals from an October 26, 2012 order granting defendants' summary judgment motion on claims that defendants violated the New Jersey Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19–1 to –14, and public policy when they terminated plaintiff's employment.   We affirm the dismissal of the public policy count because Will waived her right to pursue this cause of action when she filed her CEPA claim.   We reverse the dismissal of the CEPA count because it was based on a credibility determination not properly made at the time of summary judgment.1

Plaintiff is an accountant who was employed with defendant accounting firm Caruso Thompson, L.L.P. (Caruso Thompson) for approximately seven weeks.   Defendant Robert Caruso, one of the firm's partners, claims plaintiff's employment was terminated due to incompetence and insubordination.   Plaintiff claims her employment was terminated because she voiced objection to one aspect of the firm's compensation scheme.

Plaintiff was hired by Caruso Thompson to serve as an accountant starting in November 2008.   Although plaintiff testified at her deposition that she left her prior accounting job because her position was temporary, employment records show that plaintiff's employment was terminated because of the firm's dissatisfaction with her job performance.

Plaintiff's compensation package at Caruso Thompson included an annual salary of $100,000, bonuses, and a $12,000 annual allowance for business development expenses.   According to plaintiff, the business development allowance was actually intended by Caruso Thompson to be part of plaintiff's base compensation.   To receive the promised additional $1,000 each month, plaintiff claims that she was required to submit false expense reports;  that is, she would have to report that she incurred expenses she never actually incurred.   As an example, on an expense report, plaintiff stated that she incurred $97 in expenses to travel to Lakewood, but never actually traveled to that location.   Caruso Thompson compensated employees in this way, plaintiff alleges, in order to avoid taxes that would have to be paid by both the firm and its employees if the base salary were higher.

Plaintiff does not deny that she understood the illegality of this arrangement when she accepted the job nor that she submitted false expense reports, but she claims she “had no choice” if she wanted to receive the promised additional $12,000 each year.   Plaintiff asserts that she complained to Caruso or his partner Michael Thompson “[a]t least four or five times” about this practice, but her objections were met with displeasure at her having raised the subject.   Plaintiff also claims to have expressed her disapproval of the arrangement in a conversation with Mary Lou Bayer, a certified public accountant at the firm.   Bayer allegedly responded only by saying that “this is how it is done.”   Caruso and Bayer deny those conversations with plaintiff ever occurred and there is no evidence other than plaintiff's testimony that she expressed any objection to Thompson or Bayer.

Plaintiff's employment with Caruso Thompson was terminated in February 2009.   Caruso testified the reasons for the termination included “gross insubordination, failure to follow company procedures, failure to be a team member,” only “cursory” knowledge of how to prepare tax returns, and generally poor performance culminating in the mishandling of a client's tax return in early February of 2009.   Caruso admitted that he wrote on plaintiff's unemployment paperwork that the reason for plaintiff's termination was “lack of work,” but he claims that he did so in order to allow plaintiff to receive unemployment benefits.   Caruso Thompson gave plaintiff two weeks of severance pay and continued to pay for plaintiff's health insurance “probably through the end of February,” according to Caruso.   The firm also wrote a reference letter for plaintiff in May 2009 stating that plaintiff was an “intelligent, personable and hardworking” senior tax manager.

Plaintiff contends that her employment was terminated not because of incompetence or insubordination, but in retaliation for her objection to Caruso Thompson's allegedly fraudulent compensation system.   With regard to the allegedly mishandled tax return that precipitated plaintiff's termination, the parties agree that plaintiff composed a memorandum explaining her actions.   However, defendants claim that Caruso “threw the memorandum she composed away” and failed to produce another copy in discovery.   Plaintiff asserts that defendants' stated reasons for firing her were pretextual.

Plaintiff argues the trial court erred in its application of the standard for summary judgment and incorrectly determined there was no genuine issue of material fact in this case.   Specifically, plaintiff challenges the trial court's determination that she presented insufficient evidence to establish one of the elements required for relief under CEPA:  that she took a “whistle-blowing” action in accordance with N.J.S.A. 34:19–3(c).

This court reviews orders granting summary judgment by applying the same standard of review as the trial court.  Burnett v. Gloucester County Bd. of Chosen Freeholders, 409 N.J.Super. 219, 228 (App.Div.2009).   Under that standard, a summary judgment motion should be granted if “the competent evidential materials presented, when viewed in the light most favorable to the non-moving party,” Brill v. Guardian Life Ins. Co., 142 N.J. 520, 540 (1995), “show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law.”   R. 4:46–2(c).  “In the context of a summary judgment motion, the judge does not weigh the evidence, or resolve credibility disputes.   These functions are uniquely and exclusively performed by a jury.”  Conrad v. Michelle & John, Inc., 394 N.J.Super. 1, 13 (App.Div.2007).  “Where issues of credibility are presented, summary judgment is generally inappropriate.”  Singer v. Beach Trading Co., 379 N.J.Super. 63, 73 (App.Div.2005).

This court must first determine whether the moving party has shown “that there is no genuine issue as to any material fact,” id., and “then analyze whether the motion judge's application of the law was correct.”  Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J.Super. 224, 230–31 (App.Div.), certif. denied, 189 N.J. 104 (2006).   Issues of law are reviewed de novo, with no deference given to the motion judge's interpretations of law.  Zabilowicz v. Kelsey, 200 N.J. 507, 512–13 (2009).

CEPA prohibits an employer from “tak[ing] any retaliatory action against an employee because the employee ․ [o]bjects to ․ any activity, policy or practice which the employee reasonably believes ․ is in violation of a law, or a rule or regulation promulgated pursuant to law” or “is fraudulent or criminal, including any activity, policy or practice of deception or misrepresentation which the employee reasonably believes may defraud any ․ governmental entity.”  N.J.S.A. 34:19–3(c).  To maintain an action under CEPA, a plaintiff must demonstrate the following elements:

(1) he or she reasonably believed that his or her employer's conduct was violating either a law, rule, or regulation promulgated pursuant to law, or a clear mandate of public policy;  (2) he or she performed a “whistle-blowing” activity described in N.J.S.A. 34:19–3(c);  (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.

[Battaglia v. United Parcel Serv., 214 N.J. 518, 556 (2013) (citation omitted).]

Our Supreme Court has said that “[b]ecause CEPA is remedial legislation, it should be construed liberally to effectuate its important social goal—to encourage, not thwart, legitimate employee complaints.”  Donelson v. DuPont Chambers Works, 206 N.J. 243, 256 (2011) (internal quotations and citations omitted).

In ruling on defendants' summary judgment motion, the motion court only addressed the second CEPA element, “assuming, for the purposes of the motion, the plaintiff can meet the first, third, and fourth” elements.   The court found plaintiff had not produced sufficient evidence that she performed a whistle-blowing activity.   The trial court explained, “There's only allegations of conversations, which are disputed.   Discovery is over for the last six months.   She informed defendant Robert Caruso and other employees of alleged fraudulent practices.   The evidence is insufficient to survive a motion for summary judgment;  and, therefore, it's granted.”

A plaintiff employee can satisfy the second CEPA element by disclosing to a supervisor an activity “that the employee reasonably believes” is illegal.   N.J.S.A. 34:19–3(c);  Battaglia, supra, 214 N.J. at 557.   Although defendants point out that plaintiff never reported the improper compensation practice to an outside authority, they do not dispute that Caruso and Thompson were plaintiff's supervisors for CEPA purposes, and they do not dispute that disclosure to a supervisor is a whistle-blowing activity.   Rather, they deny the conversations in which plaintiff blew the whistle ever occurred.

It appears that the court granted summary judgment based on its assessment that defendants' denials were more credible than plaintiff's allegations.   “Where issues of credibility are presented, summary judgment is generally inappropriate.”  Singer, supra, 379 N.J.Super. at 73.   Assuming the conversations took place, as a court must for purposes of ruling on a motion for summary judgment, plaintiff disclosed to her supervisors a fraudulent activity:  a practice of providing compensation through tax evasion.   Such action constitutes whistle-blowing under N.J.S.A. 34:19–3(c).  Battaglia, supra, 214 N.J. at 557.   Summary judgment was therefore inappropriately granted to defendants with respect to the CEPA claim.

Plaintiff concedes that her common law public policy claim must be dismissed if the CEPA claim survives.  N.J.S.A. 34:19–8;  Battaglia, supra, 214 N.J. at 556 n.9 (“By pursuing a CEPA claim, a plaintiff waives any alternative remedy that would otherwise have been available for the same retaliatory conduct[.]”).  We thus affirm the dismissal of this claim.

Affirmed in part, reversed in part and remanded.   We do not retain jurisdiction.

FOOTNOTES

1.  FN1. Plaintiff has abandoned the remaining counts of her complaint.

PER CURIAM

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