July 5, 2011

Client Alert, Written By: Suzanne M. Marasco and Susan L. Swatski

The New Jersey Supreme Court handed down a significant victory for employees pursuing discrimination claims under New Jersey’s Law Against Discrimination, N.J. Stat. Ann. § 10:5-1 et seq. (“LAD”).

In Quinlan v. Curtiss-Wright Corp., the high court addressed whether an employee’s use of her employer’s confidential business records relating to her discrimination claim constituted a protected activity under LAD. In an opinion issued on December 2, 2010, the Court found that “in certain situations” the use of such material could be protected.

Promotion Denied

The facts in Quinlan are typical of a gender discrimination claim. Joyce Quinlan, the executive director of human resources for Curtiss-Wright (“CW”), filed a gender discrimination lawsuit, while she was still actively working for CW, for passing her over for a promotion. In support of her lawsuit, Quinlan copied and took more than 1,800 confidential CW documents that she thought supported her discrimination claim and provided these documents to her attorneys.

During the course of discovery, CW learned she copied the documents and ultimately fired her, claiming she stole company property in violation of the company’s code of conduct. In response, Quinlan amended her lawsuit to add a claim for retaliation against CW. The case was tried before a jury which found that CW discriminated against Quinlan on the basis of her gender. The jury also concluded that the use of the confidential documents by Quinlan’s attorney at a deposition constituted a “protected activity” under LAD, and therefore CW’s termination of Quinlan was unlawful. The jury awarded Quinlan $5.4 million in compensatory damages and $4.5 million in punitive damages.

On appeal, the Appellate Division reversed, holding that the use of the confidential documents at a deposition was not a protected activity.

High Court Reversal

The New Jersey Supreme Court disagreed and upheld the jury verdict. The Court found that under certain circumstances an employee’s taking and use of an employer’s confidential documents may constitute “protected conduct.” Nonetheless, the Court also concluded that in the case at hand the employee’s wholesale copying and removal of the employer’s documents as part of her effort to prove her discrimination claim was not a protected activity. However, the Court found that CW terminated her in retaliation for filing a discrimination claim, not for her “unprotected” conduct in copying and removing confidential employer documents.

In so deciding, the New Jersey Supreme Court adopted a new “totality of the circumstances” test to determine whether an employee is permitted to take, disseminate and use confidential documents belonging to his or her employer for use in proving a LAD claim against the employer.

The following seven factor test requires weighing the respective interests of both plaintiff employees asserting LAD claims and employers:

• How the employee came to possess the document
• What the employee did with the document
• The nature and content of the document
• Whether there is a clearly identified company policy on privacy or confidentiality that the employee’s disclosure has violated
• The circumstances of the disclosure and whether it was unduly disruptive to the employer’s business
• The strength of the employee’s expressed reason for copying the document as opposed to requesting it through discovery
• How the court’s decision impacts the public policy embodying LAD and the effect precluding or permitting the use of the documents would have on balancing the legitimate rights of both employers and employees.

Going Forward

As a result of Quinlan, New Jersey employers should exercise caution before terminating an employee who asserted a LAD claim if that employee copies or takes confidential documents from the workplace.

Employers should re-think the access they provide to sensitive files and databases, and consider general measures to more carefully safeguard such information. In addition, should an employee file an internal or external claim, the employer should examine the specific confidential information to which the employee has access, and take appropriate measures to safeguard this information. Further, immediately upon termination of an employee, employers should consider canceling or disabling the former employee’s computer passwords and access cards to further protect confidential information.

Given the complicated seven-part test articulated in Quinlan with respect to the use of an employers’ confidential documents, concerned employers should seek legal counsel to review the underlying circumstances to determine how best to proceed with respect to a plaintiff employee/former employee. In addition, employers should consider consulting employment counsel to assess their employee termination procedures and methods for protecting confidential information.

Employees who asserted LAD claims should be cautioned that Quinlan does not give them carte blanche to copy and disseminate their employer’s confidential documents. The Court was careful to find that the wholesale copying and removal of employer documents was not a protected activity. Employees may be lawfully terminated for such conduct even in light of Quinlan. Employees with questions about how to proceed should make such decisions only after careful consideration and consultation with counsel.

About Hill Wallack LLP

Hill Wallack LLP has built a reputation for problem-solving and aggressive advocacy. With offices in Princeton and Atlantic City, N.J., and Yardley, Pa., the firm has comprehensive commercial capabilities and deep experience in a number of industry sectors. Our attorneys have extensive government experience, and the firm represents businesses and public entities in many areas in which public and private interests intersect.

Called upon to tackle some of the toughest legal and business challenges, we work to do more than advise on the law − we craft real-world solutions.

For more information, contact one of the attorneys who work in this area:

In New Jersey:  Suzanne M. Marasco, Esq.  or  Susan L. Swatski, Esq. 

In Pennsylvania:  Joanne Rathgeber, Esq.  or Carolyn M. Plump, Esq.

This article provides information of general interest and is not intended, and should not be used, as a substitute for consultation with legal counsel. Any questions regarding the specific issues raised in this article should be directed to the authors or to your contacts at Hill Wallack LLP.