Tuesday, December 14, 2010

Duty of Loyalty vs. Opposing Discrimination

New Image The New Jersey Supreme Court, which has its own difficulties on other counts, just issued an opinion notable for its pained analysis of the intersection of an employee's duty of loyalty with her right to oppose discrimination. Quinlan v. Curtiss-Wright Corp, decided under the state's LAD, confronts a common scenario -- when an employee, suspecting discrimination, copies her employers documents and hands them over to her attorney for use in her case. The major difference between this and other cases was the wholesale nature of the copying -- plaintiff was the Executive Director of Human Resources and compiled 1800+ pages of confidential documents, plus one more. Ironically, it was the one more that generated the most problems,

The 1800 pages were copied and provided by plaintiff to her attorney before she filed suit, and plaintiff''s attorney reported that fact  to defendant during discovery. Thereafter, Quinlan copied a performance evaluation of her main comparator -- which she also provided her attorney, who promptly sprung it on the comparator at deposition. Defendant cried foul, and fired plaintiff for the "unauthorized taking of confidential or privileged information [which] constitutes a theft of Company property." Plaintiff promptly amended her complaint to state a claim for retaliation.

From the 30,000 foot level, the controversy pits two principles against one another: plaintiff clearly violated a duty of loyalty to her employer (she had in fact signed an agreement to maintain company documents in confidence, but such a duty would surely be implied from her position). On the other hand, the statutory antiretaliation provision would seem to immunize some such conduct -- after all, a promise extracted by employers from all employees not to discuss any of their work with anyone outside the firm might be perfectly valid under normal contract principles but would have to yield to the necessities of the antidiscrimination laws. And, at the 30,000 foot level, maybe there's not much disagreement on this.

Closer to the ground, however, the situation quickly dissolved into chaos in Quinlan. The trial court ruled that the taking of the 1800 documents wasn't protected conduct, nor was the taking of the performance evaluation. Plaintiff had not been fired for the former act, and, if she had been fired for the latter act, it would not be actionable. On the other hand, if she was fired for her attorney's use of the document, she stated a claim. The distinction got plaintiff to trial where, counting punitive damages, she obtained $10 million judgment. The Appellate Division reversed, however, finding no distinction between the taking and the using of documents. 

 The New Jersey Supreme Court, in turn, reinstated the plaintiff's verdict. Needless to say, the decision was greeted with commentary critiquing the court for approval of theft of company property. But the decision was scarely a slam dunk for employees seeking to document potential discrimination claims since the court adopted a multi-factor test for determining whether such conduct is protected:

  • whether the employee came upon the documents "innocently" 
  • whether the employee went beyond sharing them with her attorney to evaluate her claim
  • the nature of the documents, including the strength of the employer's interest in confidentiality
  • whether the disclosure was disruptive
  • the strength of the employee's reason for copying the document (as opposed, for example, to identifying it for a later document request during discovery).

As with most complicated tests, this one leaves both employers and employees in a pretty uncertain position. While there may be clear cases (on the employee's side providing one's attorney with a copy to evaluate the case when there is a reasonable fear the document may be destroyed; on the employer's side, firing an employee for breaking into a file cabinet to obtain a document that is the employee then distributes throughout the company), in most cases both sides will have to act in the shadow of uncertainty. Indeed, it might well be that very uncertainty that led Curtiss-Wright not to fire plaintiff immediately upon learning of her copying of the first 1800 documents.

I couldn't help but wonder whether the court (and federal courts before it) made the whole question unnecessarily complicated. Why not a simple rule that priviliges copying such information for the sole purpose of sharing it with one's attorney when the information is discoverable in any event?  While the notion of discoverable information has its own complexities, it is much more likely to be yield predictable results than application of the Quinlan six-factor test. Such an approach would not resolve all questions of employee use of confidential documents, but it would provide a brighter line as to the situation where the use of such information is most desirable.

One objection to this is that it would deprive the defendant of a right to a judicial determination of discoverability in advance and also deny it the opportunity for a protective order,  But as framed, the right would be limited to those documents that could be obtained anyway in discovery and shared only with those clearly entitled to read them under normal discovery rules.  An employee who went beyond this use would be subjecting herself to the uncertainties of the Quinlan factors.

A gut-level objection to this seems to be the self-help nature of the remedy. Indeed, this is the thrust of  the dissent of Justice Albin: the majority "sends the wrong message to the bar: lawyers should not signal to a client that stealing documents is an acceptable substitute for the discovery process."  But, why not?  And Albin's argument misses the point that in many, maybe most, cases, the will be no lawsuit filed and therefore no discovery. As they say in basketball, no harm, no foul. If the information would be obtainable by the plaintiff's lawyer in discovery, why should the plaintiff be subject to discharge for using it to assess or prepare a case?



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The answer to your question, "Why shouldn't an employee be permitted by the courts to steal document belonging to the employer so long as those documents 'would be discoverable anyway'", I would suggest, is this: Because the employee was being paid by her employer when she stole the documents. If you want to make it a "gut-level" reaction, how about the idea that there was a simple promise made: We will pay you if you work for us." Employer kept its promise and paid employee. Employee, on the other hand, breached her promise when, instead of working for the employer, she elected, instead, to steal from it. The court, I respectfully suggest, got it wrong.

Posted by: Molly DiBianca | Dec 17, 2010 6:55:56 PM

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