MIN AMY GUO v. NOVARTIS PHARMACEUTICALS CORPORATION (L-1486-14, MORRIS COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5652-18
MIN AMY GUO,
Plaintiff-Respondent/
Cross-Appellant,
v.
NOVARTIS PHARMACEUTICALS
CORPORATION,
Defendant-Appellant/
Cross-Respondent.
______________________________
Argued February 3, 2022 – Decided July 25, 2022
Before Judges Haas, Mawla, and Mitterhoff.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-1486-14.
John B. McCusker argued the cause for appellant/cross-
respondent (McCusker, Anselmi, Rosen & Carvelli,
PC, and Porzio, Bromberg & Newman, PC, attorneys;
John B. McCusker, Patricia Prezioso and Patrice
LeTourneau, on the briefs).
James K. Webber argued the cause for
respondent/cross-appellant (Webber McGill LLC, and
Richard J. Murray, attorneys; James K. Webber,
Douglas J. McGill, and Richard J. Murray, on the
briefs).
PER CURIAM
Defendant Novartis Pharmaceuticals Corporation appeals from an August
27, 2019 judgment following a jury verdict in plaintiff Min Amy Guo's favor
pursuant to the Conscientious Employee Protection Act (CEPA), N.J.S.A.
34:19-1 to -14, and awarding her counsel fees. Plaintiff cross-appeals from the
same judgment following the jury's verdict in defendant's favor on its unjust
enrichment counterclaim and she challenges the counsel fees and the no-cause
verdict on punitive damages. We affirm both the appeal and the cross-appeal.
We discern the following facts from the record. Plaintiff began working
for defendant in 2008 as senior director of a new health economics outcome
research (HEOR) department within its oncology division. The department was
tasked with conducting research regarding the economic efficacy of treatment
plans and pharmaceuticals. Over the following several years, plaintiff received
positive performance reviews and earned a promotion to executive director and
salary increase in March 2012. By the time of her termination, she earned an
annual salary of $223,678, as well as cash and stock incentive awards through
defendant's annual incentive plan (AIP) and stock incentive plan (SIP), albeit
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subject to claw-back in the event of misconduct pursuant to the rules of each
respective plan. In the event of an employee's noncompliance with the law, the
company's code of conduct, or any provision of the company guidelines, the AIP
explicitly set forth avenues for recovery of any incentives already paid to the
employee. The SIP likewise required a participant's adherence to the same
company policies, including the code of conduct, under the same terms.
During plaintiff's employment, as part of its settlement of a lawsuit
brought by the U.S. Department of Justice alleging violations of the False
Claims Act (FCA), 31 U.S.C. § 3729 to -33, and Anti-Kickback Statute (AKS),
42 U.S.C. § 1320a-7b(b), defendant entered into a corporate integrity agreement
(CIA) in 2010, requiring that it implement and adhere to policies and procedures
to ensure its compliance with federal law, including the FCA and AKS.
Consistent with those policies, defendant provided plaintiff training regarding
compliance with the CIA and, by extension, the AKS. Plaintiff's understan ding
from that training, as pertinent here, was that the company could violate the
AKS by paying a distributor for a study of negligible scientific value as a
kickback for purchasing and distributing its product. In that connection,
defendant does not sell any of its products directly to the general public; rather,
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it sells them to firms such as McKesson Corporation (McKesson), which in turn
sells them to pharmacies.
In June 2012, while approval for a new indication to treat breast cancer
for Afinitor remained pending, Christi Shaw, head of defendant's oncology
division, met with Grant Bogle, a senior marketing executive at McKesson, to
discuss the drug's launch. Shaw discussed with Bogle the possibility that
McKesson might perform an HEOR study of Afinitor to support the launch.
Early the following month, Greg Grabavoy, head of defendant's Oncology
Scientific Operations – Managed Markets (OSOMM) group, sent an email
message to Shaw apprising her of a proposed study from McKesson, at a cost to
defendant of $248,500, that would examine McKesson's doctors' existing off-
label use of Afinitor to treat their breast cancer patients. He described the
proposal as a "customer engagement project" that offered a "very quick
turnaround time prior to launch" and suggested a telephone conference the
following week to "expedite approval/funding." Despite the HEOR group's
responsibility for evaluation of such studies, he failed to include anyone from
the group as an email recipient.
Plaintiff contended, in support of her CEPA claim, that once she learned
of the proposal, she reasonably believed its approval could constitute the sort of
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kickback that might run afoul of defendant's CIA and federal law. She testified
at trial that she believed approval of the study, and particularly its expedited
approval, would violate numerous compliance principles, noting that the
proposal had been made by commercial leaders rather than qualified health
economists, that it was not accounted for in defendant's annual budget, and that
it would entail off-label usage. Plaintiff promptly sent an email to her
supervisor, Steven Stein, and to Shaw, complaining that her HEOR group had
not been "kept in the loop" about the proposal, observing that the study seemed
impossible to viably complete prior to the drug's launch, and cautioning that
"[p]er [the] CIA, all customer studies w[ould] have to go through Medical and
HEOR review and approval for medical soundness and methodology rigor, and
we are required to document the review and approval of the study protocol."
Over the next few days, on further review of the proposal, plaintiff sent another
pair of emails to Stein describing what she believed to be several flaws in the
study.
On July 6, 2012, Peter Kwok, an employee in the OSOMM group,
mentioned plaintiff in an email to Grabavoy and expressed concern about her
involvement in the process and the implication for expedited approval:
Can you confirm with Christi that she wants us to move
forward with a proposal since [McKesson] is expecting
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a quick response from [Novartis]? Or are we going to
"wait" for Amy? I think it is unwise to have another
"internal review" by Amy and her group; doing so not
only means we will likely miss the "deadline" that
Christi had originally set for an August completion, it
will also send a wrong signal to [McKesson] since they
quickly turned this proposal around.
Another email from Kwok to his superiors in the company a few days later added
that this "was not intended to be an HEOR study as we have structured the
deliverables over . . . [seven] weeks['] time to meet Christi's desire to have the
results ready at product launch."
Despite defendant's modification of the proposal responsive to plaintiff's
comments in some respects, plaintiff continued to raise concerns about the study
and its approval process, both in writing and in conversations with other
supervisors over the course of the following month. In email messages in late
July, she advised that the appropriate procedure would need to be followed "to
ensure rigor and minimize risk" and that the study "require[d] HEOR
analytical/methodological skills to maximize the value of the study and
minimize risk." Moreover, according to plaintiff, when she told her supervisor,
Ling Wu, "about [the] policy violations," the "processes being broken," and
"potential anti-kickback" implications, Wu asked whether Shaw and Stein were
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supporting the approval and, when plaintiff responded in the affirmative, warned
plaintiff to "back off."
In late July 2012, Madhav Namjoshi, one of plaintiff's subordinates,
approached plaintiff and expressed concerns about the proposed study, recalling
an email in which Kwok had appeared to place commercial interests above the
scientific rigor of the approval process by stating, "[w]e like to engage
[McKesson] because they are a key customer, the largest GPO in the country,
and have significant impact on the 'drug purchase' as well as 'influence' with
payers[.]" Yet plaintiff failed to bring Namjoshi's concern to Wu's attention
until the following week, at which point Wu advised plaintiff to report the issue
to William "Charlie" Lucas in the ethics and compliance department.
Plaintiff did so the same day, and Lucas noted in his memorialization of
the conversation his agreement "that the appropriate review process was
important in order to ensure the scientific validity of the project and that it avoid
any suggestion we are engaging in a study as an inducement for the cus tomer to
purchase our products." Lucas contacted defendant's Business Practice Office
(BPO), which declined to conduct an investigation of the matter itself but
assigned Lucas to do so.
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In the course of that investigation, Lucas interviewed the recipients of
Kwok's email and others who were reviewing McKesson's proposal and
ultimately concluded that the email had been poorly worded but did not evidence
any impropriety and that in any event, the proposed study was at that point no
longer being pursued. He recommended that all recipients of the email,
including plaintiff, receive coaching regarding seeking legal or compliance
advice about "manag[ing] poor documentation" and that plaintiff also receive
coaching "about reporting policies for potential compliance violations," given
her failure to promptly report Namjoshi's complaint to compliance.
On August 23, 2012, Namjoshi and James Turnbull, another of plaintiff's
subordinates, approached Tina Grasso, a senior director in the oncology
department, to report that plaintiff had directed them to evade the legal and
compliance departments regarding two studies for which defendant's vendor had
failed to obtain proper approval from an institutional review board, as they
believed was required by federal regulation. Grasso reported the issue to Lucas,
who again contacted the BPO, an action which plaintiff admitted at trial had
been appropriate. The BPO initially assigned Lucas and the oncology
compliance department to investigate, pursuant to guidance from the legal
department, though Lucas was eventually replaced in that role by his colleague
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Annabel Nau after the investigation expanded into areas where Lucas had
provided guidance on compliance to plaintiff's HEOR group.
Investigators interviewed plaintiff on three occasions, as well as more
than two dozen other witnesses, and reviewed voluminous documentary
material, some of it provided to them directly by plaintiff. Moreover, they
considered numerous further allegations aside from those that had initially
spurred the investigation, including from Virginia Lazala, head of the oncology
legal department. The investigation ultimately substantiated, in part based on
plaintiff's admissions, numerous violations of company policy, including that
she had drafted a review procedure without consulting the legal department,
conducted two HEOR studies without proper approval, discouraged
subordinates from raising potential legal and compliance issues with the
appropriate departments, pushed for approval of another study without
disclosing any conflict of interest, consulted with a vendor's attorney regarding
regulatory compliance rather than defendant's own counsel, and failed to correct
overpayments to customers above fair market value. Yet the investigative
report, issued in April 2013, made no recommendation as to any appropriate
disciplinary measures.
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While that investigation remained pending, in March 2013, plaintiff
received a positive performance review for the prior year and a bonus, and
defendant expanded her group's responsibilities and allowed her to hire another
associate. In May 2013, however, an internal review committee (IRC),
comprising reviewers from the human resources, compliance, and legal
departments, recommended retraining and other disciplinary action short of
termination for the other employees involved in the violations detailed in the
investigative report, but recommended termination for plaintiff in light of the
severity of her violations and her leadership role within the organization.
Wu, Shaw, and Stein, as plaintiff's supervisors, formally requested that
the IRC reconsider that recommendation, suggesting that plaintiff instead be
placed on a performance improvement plan, but the IRC affirmed it, explaining
that the pattern and severity of her transgressions demanded nothing less than
termination. Her supervisors then appealed to a global internal review
committee, but that committee reached the same recommendation, adding that
plaintiff's judgment had been poor and that the committee was not confident she
would prospectively refrain from similar misconduct. Her supervisors accepted
that result and rationale, and defendant terminated her employment in July 2013.
Defendant offered her a severance package.
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On June 13, 2014, plaintiff filed a complaint against defendant, alleging
she had been terminated from her employment in violation of both CEPA and
the common law. On September 12, 2014, defendant filed an answer and
counterclaims for breach of contract and unjust enrichment, among other claims.
On August 17, 2018, after a protracted period of discovery, the motion
judge denied a motion by defendant for summary judgment. In denying the
motion, the judge concluded plaintiff presented sufficient evidence to
substantiate her claim. As the judge recounted, plaintiff had stated that she
believed that Kwok's email regarding the proposed study raised potential
violations of the CIA, which had been formulated to ensure compliance with the
AKS, and defendant's expert confirmed that the CIA required defendant to notify
appropriate authorities of a probable violation of that sort. There was therefore
sufficient evidence in the record to support that she had an "objectively
reasonable belief that there was a substantial nexus between the complained of
conduct" and the CIA and the AKS. With regard to whistleblowing activity,
plaintiff had at least formally brought her subordinate's complaint to Lucas's
attention, which led to her investigation and the adverse employment action of
her termination.
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The judge further noted both that plaintiff had satisfied her initial burden
and that defendant had adequately substantiated its purported legitimate reasons
for termination, leaving the burden on plaintiff to demonstrate that those reasons
were pretextual. But the judge concluded she had introduced sufficient evidence
to require submission of the issue to a jury, noting that none of the other
employees who failed to report the same email message were terminated and
that plaintiff had been viewed as delaying the proposed study, which would have
"benefited [defendant] immensely." Defendant was therefore not entitled to
summary judgment on the claim.
Trial was held before a jury from January 2, 2019 to February 26, 2019.
At trial, both parties moved for a directed verdict, but the judge reserved his
decision.
At the conclusion of trial, the judge instructed the jury that in order to
prove the first element of her CEPA claim, plaintiff needed to "establish that she
reasonably believed that the proposed McKesson . . . study and the approval
process was either . . . in violation of the law or rule or a regulation issued under
the law" or "would have been compatible with a clear mandate of public policy
concerning public health, safety or welfare[.]" The judge mentioned the project
approval process in response to plaintiff's theory that because the CIA required
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the company to make and adhere to policies to ensure compliance with the AKS,
misconduct related to the approval process could also implicate the AKS. The
judge also instructed, "[t]o prove the second element of her claim, plaintiff must
establish that she complained or actually blew the whistle."
The judge provided the following instruction on CEPA's third element:
To prove the third element of their claim, the plaintiff
must establish that the defendant took an adverse action
against her. Adverse action can be a termination,
suspension, demotion, or any other employment action
taken against an employee in the terms and the
conditions of their employment.
The parties in this case do not contest that
[defendant] terminated [plaintiff's] employment. That
is considered an adverse action. The plaintiff claims it
was retaliatory. [Defendant] claims she was an
employee and [defendant] properly terminated her after
an internal investigation because of her misconduct and
that retaliation was not a determinative motivating
factor in [defendants'] decision to terminate her.
Plaintiff claims that the internal investigation
itself was an adverse action for the retaliation or the
retaliative motive. Again, it is for you, the jury, to
decide which to believe.
Finally, the judge instructed as follows:
In order to prove the final element and to prevail
in her case the plaintiff must prove by a preponderance
of the evidence the existence of a causal connection
between her reporting, complaining, or objecting to the
McKesson . . . study which is her blowing the whistle
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and the adverse employment action taken by her
employer.
In other words, there must be a connection
between the whistleblowing and the termination. It's
the plaintiff's burden to prove that it is more likely than
not that [defendant] engaged in intentional retaliation
against the plaintiff because she blew the whistle or in
other words, reported, complained, or made objections
to her supervisors regarding her objectively reasonable
belief that the McKesson . . . study violated the anti-
kickback statute or CIA.
That's really the ultimate issue for you to decide
in this case. Did [defendant] intentionally terminate
[plaintiff] because she blew the whistle . . . .
After the trial, the jury returned a verdict awarding plaintiff $1,816,040
on her CEPA claim. The jury also awarded defendant $345,360.79 on its
counterclaim for unjust enrichment.
The jury also issued a verdict denying plaintiff any punitive damages after
a brief trial on that issue. During the punitive damages trial, the judge agreed
to plaintiff's request to include Lisa Goldman, defendant's chief compliance
officer, as well as Shaw and Lazala as upper management employees in his
instructions to the jury. The judge declined to include Lucas and Nau because
although they worked in the compliance department, they took direction from
Goldman and thus could not qualify as upper management. It further declined
to include Liz McGee, an attorney who eventually replaced Lazala as executive
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director of the legal department and who participated in plaintiff's investigation
by interviewing Shaw, offering only that, "[w]hether she was involved [in the
investigation] or not, I don't think she's upper management in the sense that
we're looking for."
On March 26, 2019, the judge denied motions by both parties for judgment
notwithstanding the verdict (JNOV). The judge acknowledged that there had
been "little direct evidence" supporting any element of plaintiff's claim but
concluded that she had presented sufficient circumstantial evidence to permit a
rational juror to return the verdict in her favor. The judge reasoned that both
testimony and documentary evidence suggested that plaintiff was left out of the
initial legal and compliance review chain for the proposed study and that once
it was presented to her for review, she raised numerous objections, some to th e
effect that the proposal could be interpreted as a payment to McKesson to induce
the distributor to push defendant's product in violation of the AKS. Moreover,
even if plaintiff had been mistaken in that regard, the record showed that other
employees initially shared the same perception, supporting the notion that her
belief was a reasonable one.
The judge further recounted that the AKS was "very broad in its efforts to
prevent abuse in this area of the pharmaceutical business[,]" and noted that
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Kwok's email could be construed to suggest defendant should approve the study
for reasons prohibited under that statute. The judge reiterated that the other
employees investigated in conjunction with plaintiff had been disciplined rather
than terminated, that plaintiff was fired despite her otherwise satisfactory
performance record, her immediate supervisor appealed for reconsideration of
the recommendation for termination, and that other superiors had recommended
counseling instead. Because reasonable minds could have differed on this
record, the judge concluded defendant was not entitled to a JNOV.
In rejecting plaintiff's motion for JNOV, the judge reasoned that "[o]ur
law only prohibits double recovery for alternate claims out of the same set of
facts[,]" but that had not been the case here. The judge recounted that there had
been considerable evidence in the record demonstrating that plaintiff had
violated defendant's code of conduct and other policies governing conflicts of
interest, ethics, and compliance, and that she discouraged subordinates from
seeking appropriate advice and approvals. Indeed, despite warnings and
coaching for prior noncompliance, she sought advice from a vendor's attorneys,
rather than defendant's, regarding the need for regulatory approval of a proposal,
and hired outside counsel to train defendant's employees. The judge concluded
there was "ample evidence" establishing that she had "inequitably placed her
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own self-interest" over her employer's and unjustly enriched herself at
defendant's expense, contrary to the company's code of conduct.
On August 8, 2019, the judge granted defendant an award reimbursing it
for the $8,466 in attorney's fees it had expended due to plaintiff's disruptive
conduct during trial. The following day, the judge issued an order and opinion
granting plaintiff $1,531,434.54 in attorney's fees and costs on her CEPA claim.
In calculating plaintiff's award of attorney's fees, the judge arrived at a
reasonable rate of $350 per hour for the services of counsel Webber McGill's
lead attorney, consistent with the rate represented in the firm's retainer
agreement with plaintiff. She set rates ranging from $200 to $300 per hour for
other attorneys from the same firm on careful, thorough consideration of t heir
relative levels of experience, education, and role in the litigation. For solo
practitioner Richard J. Murray, the judge concluded a rate of $450 per hour
would be appropriate, based on similar considerations and in light of his award
calculated with the same rate in another recent CEPA case.
The judge then undertook a thorough review of the attorneys' billing
records, carefully identifying redundancies and other excess expenditures of
time, as well as those expenditures for which he found the documentary support
was lacking and reducing the total number of billable hours accordingly. On
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careful consideration of the relevant legal factors, the judge concluded that the
fee awards would not be reasonable absent some enhancement but reduced that
enhancement in light of defendant's success on the unjust enrichment claim and
other mitigating factors, thereby arriving at figures of $940,916.25 for Webber
McGill and $484,076.25 for Murray.
On August 27, 2019, the judge issued a final order. These appeals
followed.
On appeal, defendant presents the following arguments for our
consideration:
POINT I
THE COURT SHOULD HAVE GRANTED
[DEFENDANT'S] MOTIONS FOR SUMMARY
JUDGMENT DIRECTED VERDICT, AND JNOV
BECAUSE THE EVIDENCE SHOWED THAT
PLAINTIFF DID NOT IDENTIFY ANY ILLEGAL
CONDUCT, DID NOT ENGAGE IN PROTECTED
ACTIVITY, AND WAS TERMINATED FOR
EGREGIOUS MISCONDUCT UNRELATED TO
ANY ALLEGED WHISTLEBLOWING.
A. Plaintiff Failed To Meet The First
Prong of CEPA Because She Did Not
Demonstrate A Reasonable Belief That A
Violation Of Law Or Public Policy Had Or
Would Imminently Occur.
i. The Internal Process For
Reviewing Research Proposals
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Has No Substantial Nexus To
The Anti-Kickback Statute.
ii. The CIA Also Has No
Standard For Reviewing
Research Proposals And Is Not
A Clear Mandate Of Public
Policy.
iii. Plaintiff Did Not
Demonstrate Any Wrongdoing
With Regard To the McKesson
Proposal.
B. Plaintiff Failed To Meet The Second
Prong of CEPA Because She Did Not
Engage In Any Protected Whi[s]tleblowing
Activity.
C. Plaintif[f]'s Serious Misconduct
Warranted Termination [And] Was Wholly
Unrelated To Alleged Whistleblowing.
i. There Was No Evidence
That The Investigati[o]n was
Retaliatory Or Pre-
Determined to Terminate.
ii. Plaintiff Never Suggested
That She Believed There Was
Any Illegality Occurring.
iii. Plaintiff Admitted To
Much Of The Misconduct
Alleged By Her Subordinates
And Coworkers.
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iv. The Only Support For
Pretext Was Plaintiff's
Speculation.
v. Plaintiff Admitted Lucas
Was Required To Report The
Allegations Of Her
Misconduct And There Was
No Evidence That Any
Investigator Acted With Any
Retaliatory Motive.
vi. There Was No Comparator
Evidence To Support Pretext
Since Plaintiff Alone
Committed Serious Acts of
Misconduct.
POINT II
THE DUAL VERDICT UNDERSCORES THE
COURT'S ERROR IN DENYING [DEFENDANT]
JNOV ON PLAINTIFF'S CEPA CLAIM.
POINT III
THE TRIAL COURT'S JNOV OPINION CONTAINS
ERRONEOUS FACTUAL AND LEGAL FINDINGS
THAT CANNOT BE UPHELD BY THIS COURT.
A. The Trial Court Failed To Identify A
Substantial Nexus To Any Law Or Public
Policy Or Point To Any Protected Activity.
i. The Trial Court Pointed To
No Evidence Of
Whistleblowing.
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ii. The Court Acknowledged
That Plaintiff Could Not Have
Reasonably Believed
Approval Of McKesson's
Proposal Was Imminent.
iii. Plaintiff Admitted It Was
Not Her Job To Ensure
Proposals Complied With The
Law.
iv. Plaintiff Never Expressed
That She Thought The
Proposal Could Be Interpreted
Simply As A Payment To
McKesson.
v. There Is No Evidence That
Anyone Thought The Proposal
Was Unlawful.
vi. The Court Conflated The
Kwok Email With The
McKesson Proposal.
B. The Court Pointed To Nothing But
Unreasonable And Erroneous Inferences
To Justify A Finding That Plaintiff Met
Her Burden Of Establishing Pretext.
i. The Court Ignored That
Plaintiff, Unlike All The Other
Employees Disciplined, Was
Terminated For A Pattern of
Serious Policy Violations.
ii. There Was No Evidence to
Support The Court's Inference
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That Shaw Engaged In
Misconduct.
iii. The Study Proposal Had
No Impact On The Launch
And [Carlos] Garay,[1] Who
Criticized The Proposal, Was
Promoted.
POINT IV
THE COURT INCORRECTLY INSTRUCTED THE
JURY THAT IT COULD FIND PROTECTED
ACTIVITY BASED UPON COMPLAINTS ABOUT
THE COMPANY'S INTERNAL "APPROVAL
PROCESS" AND COULD FIND THE
INVESTIGATION ITSELF RETALIATORY.
A. The Court Incorrectly Instructed The
Jury Thirteen . . . Times That Complaints
About Internal "Approval Process" Could
Constitute Whistleblowing.
B. The Jury Was Wrongfully Instructed
That It Could Find The Investigation Itself
[Was] Adverse Action.
POINT V
PLAINTIFF IS NOT ENTITLED TO AN AWARD OF
COUNSEL FEES FOR HER FAILED DEFENSE
AGAINST THE COUNTERCLAIMS, LET ALONE
ENHANCED FEES.
1
Executive Director of Solid Tumors and lead reviewer of the study.
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On cross-appeal, plaintiff presents the following arguments for our
consideration:
POINT I
DEFENDANT'S UNJUST ENRICHMENT
JUDGMENT SHOULD BE REVERSED AS A
MATTER OF LAW.
POINT II
THE LOWER COURT ABUSED ITS DISCRETION
IN AWARDING PLAINTIFF'S COUNSEL
REDUCED FEES.
A. The Applicable Law Favors Plaintiff.
1. The Standard Of Review.
2. Establishment Lodestar
Award.
i. Establishing
Appropriate
Hourly Rates.
ii. Principles For
Approving Time
Entries.
B. The Lower Court Abused Its Discretion
In Awarding Webber McGill A Reduced
Lodestar.
1. The Lower Court Imposed
An Impermissible Rate
"Ceiling" Based On Webber
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McGill's Engagement Letter
With Plaintiff.
2. The Lower Court Erred By
Failing To Award A Fee Based
On Current Market Rates As
Established By
Uncontroverted Attorney
Certifications.
3. The Lower Court Abused Its
Discretion In Imposing
Across-the-Board Rate
Reductions For Attorneys
Who The Court (Mistakenly)
Believed Did Not Actively
Participate At Trial Or In
Motion Practice.
4. The Lower Court Abused Its
Discretion By Arbitrarily
Disallowing Significant
Amounts of Time And By
Failing To Identify With
Requisite Precision Which
Time Entries It Reduced
and/or Cut
C. The Lower Court Abused Its Discretion
In Awarding . . . Murray A Reduced
Lodestar.
1. The Lower Court Erred By
Failing To Award A Fee Based
On Current Market Rates.
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2. The Lower Court Abused Its
Discretion In Reducing Hours
Expended By . . . Murray.
D. The Trial Court Erred By Relying On
Inappropriate Factors To Limit Plaintiff's
Counsel's Fee Enhancement.
POINT III
THE LOWER COURT ERRED IN REFUSING TO
GRANT PLAINTIFF'S SUPPLEMENTAL FEE
APPLICATION.
POINT IV
THE TRIAL COURT COMMITTED REVERSIBLE
ERROR IN THE PUNITIVE DAMAGES TRIAL.
A.
Defendant first argues that the judge erred by denying it judgment as a
matter of law at various stages of the proceedings—at summary judgment, at the
close of plaintiff's case, and after the verdict. We review a trial court's decision
on motions for summary judgment, directed verdict, and JNOV de novo, applying
the same standard as the trial court. See, e.g., Prudential Prop. & Cas. Ins. Co. v.
Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998); Luczak v. Twp. of Evesham,
311 N.J. Super. 103, 108 (App. Div. 1998); Barber v. ShopRite of Englewood &
Assocs., 406 N.J. Super. 32, 52 (App. Div. 2009).
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A court may grant summary judgment only where "the pleadings,
depositions, answers to interrogatories and admissions on file, together with the
affidavits, if any, 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). An equivalent standard applies to a motion for a
directed verdict at trial. Frugis v. Bracigliano, 177 N.J. 250, 269-70 (2003).
Finally, the court may grant a motion for JNOV only "if, having given due regard
to the opportunity of the jury to pass upon the credibility of the witnesses, it
clearly and convincingly appears that there was a miscarriage of justice under
the law." R. 4:49-1(a).
The CEPA provides in relevant part that:
An employer shall not take any retaliatory action
against an employee because the employee does any of
the following:
a. Discloses, or threatens to disclose to a supervisor or
to a public body an activity, policy or practice of the
employer . . . that the employee reasonably believes:
(1) is in violation of a law, or a rule or regulation
promulgated pursuant to law . . . or
....
c. Objects to, or refuses to participate in any activity,
policy or practice which the employee reasonably
believes:
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(1) is in violation of a law, or a rule or regulation
promulgated pursuant to law . . . [or]
....
(3) is incompatible with a clear mandate of public
policy concerning the public health, safety or
welfare or protection of the environment.
[N.J.S.A. 34:19-3.]
The statute defines "retaliatory action" as "the discharge, suspension or
demotion of an employee, or other adverse employment action taken against an
employee in the terms and conditions of employment." N.J.S.A. 34:19-2(e).
To prevail on a claim for violation of those provisions, the employee must
establish that:
(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 [CEPA]; (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.
[Dzwonar v. McDevitt, 177 N.J. 451, 462 (2003).]
The employer's conduct need not have actually violated a law or clear
mandate of public policy; it suffices that the employee held a reasonable belief
that it did. Ibid. Nonetheless, there must be an identifiable "statute, regulation,
A-5652-18
27
rule, or public policy that closely relates to the complained-of conduct[,]" the
absence of which will compel judgment in the employer's favor. Id. at 463. As
for causation, that element need not be satisfied by direct evidence but may
instead "be satisfied by inferences that the trier of fact may reasonably draw
based on circumstances surrounding the employment action[.]" Maimone v.
City of Atl. City, 188 N.J. 221, 237 (2006). That may include "[t]he temporal
proximity of employee conduct protected by CEPA and [the] adverse
employment action[,]" ibid., though "[t]emporal proximity, standing alone, is
insufficient to establish causation." Hancock v. Borough of Oaklyn, 347 N.J.
Super. 350, 361 (App. Div. 2002).
Once the employee establishes a prima facie case pursuant to that
framework, the burden of production shifts to the employer
to advance "a legitimate, non-discriminatory reason for
its rejection of the employee." The plaintiff retains the
ultimate burden of proving that the retaliatory motive
played a determinative role in the adverse decision. As
in any cause of action, plaintiff can meet that burden by
means of circumstantial as well as direct evidence, or a
combination of the two. One way the employee can do
this is by proving that the employer's articulated reason
"was not the true reason for the employment decision
but was merely a pretext for discrimination."
[Donofry v. Autotote Sys., Inc., 350 N.J. Super. 276,
292 (App. Div. 2001) (internal citations omitted)
A-5652-18
28
(quoting Bergen Com. Bank v. Sisler, 157 N.J. 188, 211
(1999)).]
Ultimately, the employee must prove by a preponderance of the evidence that
the employer's retaliation "was more likely than not a determinative factor" in
its decision with regard to the adverse employment action. Id. at 293 (quoting
Kolb v. Burns, 320 N.J. Super. 467, 479 (App. Div. 1999)).
I.
On appeal, defendant first argues that plaintiff failed to show she had a
reasonable belief that any violation of law or public policy had occurred or was
imminent. It contends, moreover, that there was no substantial nexus between
the violation of defendant's internal approval process about which plaintiff
complained and either the AKS or CIA, neither of which prescribed any
requirements for such an approval process, and the latter of which did not even
qualify as either a law or a clear mandate of public policy in the first place.
Defendant also asserts plaintiff did not demonstrate any wrongdoing with regard
to the McKesson proposal.
We reject, as did the trial judge, defendant's assertion that the proofs were
insufficient to establish plaintiff's reasonable belief that the law was being
violated. Plaintiff's testimony and documentary evidence showed that she had
specifically voiced to Wu and Lucas her belief that the McKesson study was a
A-5652-18
29
kickback that violated the CIA, which in turn was designed to ensure compliance
with the AKS. She had received training on the policies after Novartis was
heavily sanctioned by the federal government for violations of the AKS and the
FCA. Plaintiff's understanding from that training was that the company could
violate the AKS by paying a distributor for a study of negligible scientific value
as a kickback for purchasing and distributing its product. Other employees
shared her perception that approval of the study might be improper on that
ground, particularly in light of the "unfortunately worded" email from Kwok.
The trial judge correctly concluded that the evidence was sufficient to support
an inference that plaintiff's belief had been objectively reasonable. As for the
nexus between the AKS and the misconduct of which plaintiff complained,
plaintiff's emails and other communications showed that she took issue, not only
with defendant's adherence to the approval process, but also with the perceived
kickback in violation of both the AKS and the CIA, which was meant to ensure
defendant's compliance with the AKS. As the judge aptly concluded, the
evidence was sufficient to show a substantial nexus.
II.
Defendant next argues that plaintiff failed to demonstrate that she had
engaged in any protected whistleblowing activity. This argument ignores that
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30
plaintiff explicitly mentioned the notion of a kickback in her July 2012
conversation with Wu, and it was the jury's prerogative to determine whether to
credit that account. See State v. Feaster, 156 N.J. 1, 81 (1998) (noting the jury's
exclusive prerogative to evaluate witness' credibility and find of facts based on
record). Moreover, Lucas' memorialization of his initial conversation with
plaintiff in his report mentioned concern that approval of the study could be
perceived as "an inducement for the customer to purchase our products[,]" albeit
without using the specific term "kickback." The jury could reasonably conclude
that those communications constituted protected whistleblowing activity. As
for plaintiff's subjective belief on the subject, we note that plaintiff's trial
testimony indicated that she did not know at the time whether Shaw was
engaging in any kickback scheme but was "concerned." Her testimony was not
that she affirmatively did not believe Shaw engaged in such impropriety.
III.
Defendant next argues the judge erred in finding the evidence supported
an inference of retaliation, claiming that plaintiff's serious misconduct
warranted her termination and the firing bore no relationship to the alleged
whistleblowing. Defendant reasons that there was no direct evidence defendant
had conducted the investigation in retaliation for her complaints. Defendant
A-5652-18
31
asserts that plaintiff never suggested that she believed there was any illegality
occurring and acknowledged much of her own misconduct. Defendant contends
the disciplinary actions taken as to the other employees who failed to report
Kwok's email did not constitute a viable comparison for plaintiff's treatment in
evaluating causation because plaintiff's termination was brought about by
further misconduct discovered only after the initial investigation that resulted in
the lighter discipline to the others.
We reject these arguments and agree with the judge that evidence of other
disciplinary actions, the timing and outcomes of those actions, and evidence that
defendant resented plaintiff's holding up the approval process for an important
and financially beneficial proposal, sufficed to support an inference of
retaliation. The jury was not bound to simply accept defendant's evidence,
considerable though it may have been, at face value. See ibid. There was
enough for the jury to determine that the retaliation and not plaintiff's
misconduct was the reason plaintiff was terminated.
IV.
Defendant next contends that the mixed verdict should have compelled
the court to grant its JNOV motion. Yet defendant acknowledges that when the
jury asked during deliberations whether the verdicts could be "mutually
A-5652-18
32
exclusive," the parties agreed that it could, betraying defendant's understanding
that these results were not inherently irreconcilable. Indeed, the jury could find
from the record that plaintiff had engaged in numerous violations of company
policy justifying the claw-back of prior incentive awards on the unjust
enrichment claim but that her complaint about the McKesson study, given the
coincidence of its timing and of the investigation revealing the other violations,
nonetheless was a decisive factor in defendant's decision to terminate her
employment. Nor was the size of the unjust enrichment award of any mom ent,
as defendant asserts, because the measure of the award was the value of those
prior incentives, not the severity of plaintiff's misconduct.
V.
Finally, defendant asserts that the judge relied on mistaken factual
findings and legal conclusions to deny its JNOV motion. It complains that the
judge failed to identify a substantial nexus to any law or public policy or point
to any protected activity and that the judge pointed to no evidence of
whistleblowing. Defendant contends that plaintiff could not have reasonably
believed approval of the McKesson proposal was imminent; that plaintiff, as an
economist, was not actually responsible for determining whether that or any
other proposal complied with the law; that plaintiff never actually expressed a
A-5652-18
33
belief at the relevant time that she believed the McKesson proposal could be
interpreted as a kickback; or that anyone else believed the proposal to be
unlawful. Defendant also asserts the judge conflated the Kwok email with the
McKesson proposal. It argues, moreover, that there was no basis for the notion
that defendant's asserted reason for plaintiff's termination was pretextual,
arguing that the judge ignored that plaintiff was terminated for a pattern of
serious policy violations, that there was no evidence to support the judge's
inference that Shaw engaged in misconduct, and that the study proposal had no
impact on the launch.
Defendant's objections are without merit. First, while the judge
acknowledged Stein's statement that he would not approve the proposal until
plaintiff had reviewed it, a juror could nonetheless reasonably infer from
communications in the record regarding Shaw's desire for expedited review that
plaintiff reasonably believed the proposal's inappropriate approval might be
imminent. Moreover, while plaintiff was certainly not a legal expert, ample
evidence in the record showed that she was as responsible as any other employee
for recognizing and reporting possible legal and compliance issues, including
with respect to the AKS. She even received training to that effect from
defendant consistent with its own obligations under the CIA. Indeed,
A-5652-18
34
defendant's recovery on the unjust enrichment claim rested in part on plaintiff's
breach of her responsibility in that regard.
As for defendant's insistence that plaintiff never actually objected to the
proposed study at the relevant time, specifically on the ground that it could be
construed as a kickback, even accepting at face value the notion that none of her
email communications could be construed to qualify, her conversation with Wu
certainly did, and the jury could reach the same conclusion as to her conversation
with Lucas. Moreover, as defendant acknowledges, other employees did express
concern about the study, even if they ultimately concluded nothing was amiss
based on counseling that they misunderstood an "unfortunately worded" email.
Regarding defendant's remaining arguments on these issues, defendant
presented a considerable case on all these points at trial, but the jury was simply
not bound to take that case at face value. See ibid. Therefore, as the judge's
findings of fact are supported by the record, his legal conclusions are correct
and defendant was not entitled to judgment as a matter of law on plaintiff's
CEPA claim at any stage of the proceeding, and its arguments to the contrary
present no grounds for reversal.
A-5652-18
35
B.
Defendant next contends that the judge made two prejudicial errors in his
instructions to the jury: instructing the jury that plaintiff's complaints regarding
an internal approval process for the proposed study constituted whistleblowing
and instructing that that the investigation alone was a retaliatory adverse action.
A "jury is entitled to an explanation of the applicable legal principles" in
the case and of how those principles "are to be applied in light of the parties'
contentions and the evidence" in the record. Viscik v. Fowler Equip. Co., 173
N.J. 1, 18 (2002) (quoting Rendine v. Pantzer, 276 N.J. Super. 398, 431 (App.
Div. 1994)). To that end, in its jury charge, a court must "correctly state the
applicable law, outline the jury's function and be clear in how the jury should
apply the legal principles charged to the facts of the case at hand." Ibid. It must
do so, moreover, in "clear[ly] understandable language[,]" Toto v. Ensuar, 196
N.J. 134, 144 (2008), and in a manner "tailored to the specific facts of the case."
Est. of Kotsovska, ex rel. Kotsovska v. Liebman, 221 N.J. 568, 592 (2015).
Clear and accurate jury instructions are essential to a fair trial. Velazquez
ex rel. Velazquez v. Portadin, 163 N.J. 677, 688 (2000). Consequently, where
a timely objection was made, as is the case here, an inaccurate instruction will
warrant reversal "unless the error is harmless." Toto, 196 N.J. at 144. In that
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36
connection, an error is harmful if, considered in the context of the charge a
whole, it was "clearly capable of producing an unjust result." Kotsovska, 221
N.J. at 592 (quoting R. 2:10-2).
Defendant relies for its argument primarily on Battaglia v. United Parcel
Serv., Inc., 214 N.J. 518, 559-60 (2013), in which the Court explained the need
for precise jury instructions responsive to the evidence in a CEPA case, given
the demands of the statute:
[I]t is critical to identify the evidence that an aggrieved
employee believes will support the CEPA recovery
with care and precision. Vague and conclusory
complaints, complaints about trivial or minor matters,
or generalized workplace unhappiness are not the sort
of things that the Legislature intended to be protected
by CEPA.
More to the point, trial courts must be precise in
their communications with the jury and must ensure
that the factual evidence could support a basis for a
CEPA claim. When instructing juries, trial courts must
be vigilant in identifying the essential complaint made
by the employee in order that the jury will be able to
test it against the standards that the law imposes as a
prerequisite to recovery.
In particular, "it is incumbent upon the court to identify the protected
activity precisely, that is, to articulate the complaint that plaintiff made that
constitutes whistle-blowing[,]" rather than a "broad and open-ended
description[.]" Id. at 561. The model charges, which the court followed here,
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37
echo those guidelines. Model Jury Charges (Civil), 2.32, "New Jersey
Conscientious Employee Protection Act ('CEPA') (N.J.S.A. 34:19-1 et seq.)"
(rev. Apr. 2014).
I.
With these guiding principles in mind, we discern no error in the judge's
instructions regarding the internal approval process. The judge explicitly
informed the jury that "[p]laintiff need not prove that the proposed . . . study and
its approval process actually violated the law or a clear mandate of public
policy[,]" but only that she "actually held the objectively reasonable belief that
[defendant] executed or was about to execute the proposed . . . study and that
such execution and or that such approval process actually violated the anti -
kickback law or were unlawful or [was] in violation of public policy." The judge
explained the AKS and read the sections of the CIA requiring that defendant
implement policies and procedures meant to ensure its compliance with federal
law, including the AKS.
Moreover, the judge cautioned that CEPA was "not intended to provide a
remedy for employees who simply disagree with an employer's decision where
that decision is lawfully made" and that the jury's focus should consequently
"not be on the efficiency or sufficiency of [defendants'] internal research
A-5652-18
38
proposal review" but, with reference to the AKS, on whether defendant
"knowingly and willfully offer[ed] to pay or do something to induce another
person or company to purchase or recommend [its] drug or product." The judge
reiterated, plaintiff had to "establish that she reasonably believed that
[defendant] was executing or about to execute the . . . study as a kickback
disguised as research in violation of the anti-kickback law or by reference to
[the] corporate integrity agreement which incorporates it." We conclude these
instructions accurately conveyed to the jury the relevant facts and the governing
law, and we discern no error.
II.
We also reject defendant's assertion that instructions led the jury to believe
the investigation standing alone qualified as an adverse employment action.
Defendant states that under the statute, the "definition of retaliatory action
speaks in terms of completed action[,]" such as "[d]ischarge, suspension or
demotion[,]" and, for that reason, "action taken to effectuate the 'discharge,
suspension or demotion'" does not qualify. Keelan v. Bell Commc'ns Rsch., 289
N.J. Super. 531, 539 (App. Div. 1996). An investigation into misconduct
"normally" falls outside the definition. Beasley v. Passaic Cnty., 377 N.J. Super.
585, 606 (App. Div. 2005).
A-5652-18
39
In this case, however, the judge explicitly and correctly instructed the jury
that to prevail in her case, plaintiff needed to show a connection specifically
between the whistleblowing and the termination, with no mention of the
investigation. Although the judge described the investigation again as an
alleged retaliatory action, he repeatedly tasked the jury with evaluating the
existence of a causal connection only between the whistleblowing and the
termination.
The jury verdict sheet echoed those instructions, asking whether plaintiff
"establish[ed] by a preponderance of the evidence that there [wa]s a causal
connection between the 'whistle blowing' activity and plaintiff's termination of
employment at Novartis[,]" again with no mention of the investigation.
Considered in this full context, we discern no error, nor did the instructions have
the clear capacity to produce an unjust result warranting reversal. Kotsovska,
221 N.J. at 592.
C.
On her cross-appeal, plaintiff first argues that the judge erred in denying
her judgment as a matter of law on defendant's unjust enrichment claim. Using
the same standard as the trial court, we find no error in the judge's decision.
A-5652-18
40
To prevail on a claim for unjust enrichment, a party must demonstrate that
the opposing party "received a benefit" from him or her and that "retention of
that benefit without payment would be unjust." VRG Corp. v. GKN Realty
Corp., 135 N.J. 539, 554 (1994). Most commonly, such a claim arises in the
situation where a party "has not been paid despite having had a reasonable
expectation of payment for services performed or a benefit conferred." Cnty. of
Essex v. First Union Nat'l Bank, 373 N.J. Super. 543, 550 (App. Div. 2004).
This sort of "quasi-contractual recovery is known as quantum meruit ('as much
as he [or she] deserves')[] and entitles the performing party to recoup the
reasonable value of services rendered." Weichert Co. Realtors v. Ryan, 128 N.J.
427, 437-38 (1992). The obligation is "wholly unlike an express or implied-in-
fact contract in that it is 'imposed by the law for the purpose of bringing about
justice without reference to the intention of the parties.'" Saint Barnabas Med.
Ctr. v. Cnty. of Essex, 111 N.J. 67, 79 (1988) (quoting Saint Paul Fire & Marine
Ins. Co. v. Indem. Ins. Co. of N. Am., 32 N.J. 17, 22 (1960)).
However, "[i]t is only when the parties do not agree that the law
interposes" such an obligation. Moser v. Milner Hotels, 6 N.J. 278, 280 (1951).
Consequently, "the existence of an express contract excludes the awarding of
relief regarding the same subject matter based on quantum meruit." Kas Oriental
A-5652-18
41
Rugs, Inc. v. Ellman, 394 N.J. Super. 278, 286 (App. Div. 2007). A party may
still plead breach of contract and quantum meruit in the alternative and, where
sufficient evidence exists for each, have both claims submitted to the jury.
Caputo v. Nice-Pak Prods., Inc., 300 N.J. Super. 498, 504 (App. Div. 1997). But
once the jury concludes that an express contract exists, recovery may not be had
under the alternative theory. N.Y.-Conn. Dev. Corp. v. Blinds-To-Go (U.S.)
Inc., 449 N.J. Super. 542, 557 (App. Div. 2017).
The agreements at issue here undisputedly existed, were viable, governed
a participating employee's entitlement to incentive benefits under each plan,
detailed the employee's responsibility to adhere to company policies to maintain
that entitlement, and explained the appropriate mechanism for identifying any
violation and recovering benefits already paid on account of such violation.
Specifically, the AIP agreement provided:
The payment of any award under this [p]lan is subject
to the participant's adherence to and compliance with
all applicable laws, as well as all internal rules of
Novartis such as the [c]ode of [c]onduct, the Novartis
Pharmaceuticals [c]orporation [c]onflicts of [i]nterest
[p]olicy, the [g]uideline on reporting violations of law
and policies, and the other Novartis policies,
procedures, and guidelines applicable to a participant's
work . . . . These [g]uidelines, which may be amended
from time to time through publication on the Novartis
intranet or otherwise, form an integrated part of this
incentive plan.
A-5652-18
42
In the event of an employee's noncompliance, the agreement explicitly set
forth the following avenue for recovery of any incentives already paid to the
employee:
[I]n case the administrator of the [c]ompany's [p]lan, in
its sole discretion, determines that the participant has
violated the law, the [c]ode of [c]onduct, or any
provision of the [g]uidelines in a substantial or material
way (including, but not limited to, fraud, bribes,
scientific misconduct, illegal marketing practices such
as off-label promotion, offering kickbacks, etc.), AIP
awards will be withheld and the participant shall agree
promptly to repay any incentive already received for
any period in which such violation(s) occurred or were
discovered. In the event of the participant's failure to
disgorge such amounts illegitimately received by him
or her under the above provision, the participant agrees
that the [c]ompany may sue him or her for recovery of
such proceeds on the basis of breach of contract . . . .
The SIP likewise required a participant's adherence to the same company
policies, including the code of conduct, under the same terms. But it left
determination of whether the participant violated any of those policies,
justifying a clawing back of paid incentives, whether voluntarily or through
legal action, to a committee charged with administering the plan.
The agreements thus governed the same basic subject as that at issue in
defendant's unjust enrichment claim. But, as the judge aptly noted, defendant's
code of conduct, which plaintiff routinely certified a commitment to follow,
A-5652-18
43
imposed an independent equitable obligation to return any incentives earned
while in violation of the law or company policy, without any reference to the
AIP or SIP agreements or the mechanisms for recovery. The code of conduct
set forth:
[E]mployment with the [c]ompany and the [c]ompany's
payment of any incentive and/or bonus compensation
are conditioned on compliance with applicable laws
and associated company policies.
Any associate found by the [c]ompany to be in
violation of the law or any material provision of any
[c]ompany [p]olicy (including fraud, pattern of off-
label promotion, pattern of offering kickbacks,
antitrust, bribery, scientific misconduct, etc.) will not
earn or receive any incentive bonus compensation for
any period in which such violations occurred or were
discovered. Associates will be required to repay to the
[c]ompany any such incentive or bonus compensation
already paid during a period in which the associate
violates the law or any material provision of any
[c]ompany [p]olicy or the period in which such
violation was discovered.
In addition to any other remedy that the
[c]ompany may have to recover damages, if an
associate fails to repay any such incentive or bonus
compensation already paid to him or her, the [c]ompany
may institute a lawsuit to recover the amount of
incentive or bonus compensation plus costs and fees
incurred in pursuing the lawsuit.
Caselaw does not bar imposition of this equitable obligation because it
does not conflict with plaintiff's obligation under the express contract. See
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44
Blinds-To-Go, 449 N.J. Super. at 557 (explaining that the law forbids recovery
only on "inconsistent theories"). It simply affords an independent avenue of
recovery. Moreover, plaintiff does not quarrel with the judge's reasoning or the
viability of the unjust enrichment claim in any other respect. Thus, the judge
did not err in declining to grant plaintiff judgment as a matter of law on
defendant's counterclaim for unjust enrichment.
D.
Both parties next take issue with plaintiff's attorney fee award. Defendant
asserts that the award was excessive, while plaintiff argues that the judge abused
his discretion in reducing the base award in various respects, in limiting the
enhancement of that award, and in declining to grant a supplemental fee
application. We reject the parties' arguments and find the award of attorney's
fees were well within the judge's discretion.
Our courts generally adhere to the American Rule, which holds each party
responsible for its own attorney fees. Rendine, 141 N.J. at 322. But the CEPA
statute expressly authorizes recovery of reasonable attorney fees and costs to a
"prevailing employee," N.J.S.A. 34:19-5(e), and a court may grant such relief to
the extent of that party's "overall success" in the litigation. DePalma v. Bldg.
Inspection Underwriters, 350 N.J. Super. 195, 219 (App. Div. 2002).
A-5652-18
45
In setting an award, a trial court must first determine an appropriate
lodestar, "'the most significant element in the award of a reasonable fee[,]'"
which is "derived by multiplying the number of hours reasonably expended on
the litigation by a reasonable hourly rate[.]" Walker v. Giuffre, 209 N.J. 124,
130 (2012) (quoting Rendine, 141 N.J. at 335). For that purpose, pursuant to
Rule 4:42-9(b), counsel for the prevailing party must submit a certification of
services sufficiently detailed to enable accurate calculation. Id. at 131. That is,
with "fairly definite information as to the hours devoted to various general
activities . . . and the hours spent by various classes of attorneys." Ibid. (quoting
Rendine, 141 N.J. at 337). Yet courts must not accept such submissions at face
value and instead must undertake a "careful[] and critical[]" evaluation of the
hours and rates entailed. Rendine, 141 N.J. at 335.
In undertaking its task, the court must ensure the lodestar reflects only the
time counsel reasonably expended, rather than actually expended, in prosecuting
the case. Ibid. Consequently, the court may exclude any hours "for which
counsel's documentary support is marginal[,]" Szczepanski v. Newcomb Med.
Ctr., 141 N.J. 346, 368 (1995), or otherwise reduce that element of the
calculation to the extent "the hours expended, taking into account the damages
prospectively recoverable, the interests to be vindicated, and the underlying
A-5652-18
46
statutory objectives, exceed those that competent counsel reasonably would
have expended" in the same litigation. Rendine, 141 N.J. at 336. Moreover, the
court must ensure the hourly rate awarded is "fair, realistic, and accurate" and
must calculate it "'according to the prevailing market rates in the relevant
community'" for "'similar services'" offered by attorneys of comparable
"'experience and skill'" to the prevailing party's counsel. Id. at 337 (quoting
Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)).
Once the court establishes an appropriate lodestar based on those
elements, it may enhance the fee award to adequately compensate the attorney
for his or her assumption of the "actual risk that the attorney will not receive
payment if the suit does not succeed." Id. at 338. To ensure an appropriate
"relationship between the amount of the enhancement awarded and the extent of
th[at] risk[,]" the court should set the enhancement on consideration of "'whether
[the] case was taken on a contingent basis, whether the attorney was able to
mitigate the risk of nonpayment in any way, and whether other economic risks
were aggravated by the contingency of payment[.]'" Id. at 339 (quoting
Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 483 U.S. 711, 747
(1987) (Blackmun, J., dissenting)).
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47
Ultimately, a trial court's decision as to an attorney fee award rests within
its broad discretion. Desai v. Bd. of Adjustment of Phillipsburg, 360 N.J. Super.
586, 598 (App. Div. 2003). Such an award "will be disturbed only on the rarest
of occasions, and then only because of a clear abuse of [that] discretion."
Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (quoting
Rendine, 141 N.J. at 317).
I.
First, defendant takes issue with the judge's fee decision only insofar as it
believes the award effectively reimburses plaintiff for fees attributable to her
unsuccessful defense on defendant's counterclaim for unjust enrichment at an
enhanced rate. While there is certainly authorization for reduction of an award
to reflect a claimant's limited success, in particular by excluding excess hours
expended on unsuccessful aspects of the litigation, see Rendine, 141 N.J. at 336,
where a "a plaintiff's unsuccessful claims are related to the successful claims,
either by a 'common core of facts' or 'related legal theories,' the court must
consider the significance of the overall relief obtained to determine whether
those hours devoted to the unsuccessful claims should be compensated." Singer
v. State, 95 N.J. 487, 500 (1984) (quoting Hensley v. Eckerhart, 461 U.S. 424,
435 (1983)). So long as the "results obtained are fully effective in vindicating
A-5652-18
48
plaintiff's rights, counsel should recover for all hours reasonably expended on
the litigation." Ibid.The judge aptly concluded that was the case here, noting that the
"counterclaim was so interwoven with [p]laintiff's case that regardless of
whether it was a counterclaim or merely an affirmative defense, [p]laintiff was
required to respond to arguments that she violated company policy[,]" leaving
no excess expenditure of time on that account that would warrant exclusion.
Indeed, the alleged misconduct underlying defendant's counterclaim was
identical to that which defendant had advanced as its true, appropriate reason
for plaintiff's termination in defense to the CEPA claim. Notably, however, the
judge did consider defendant's success on the counterclaim in limiting the
enhancement and so reduced the award in that manner. The judge's
determination not to also reduce the lodestar on the same ground, in light of the
interwoven nature of the claims, was not an abuse of discretion. Ibid.II.
On her cross-appeal, plaintiff argues that the judge abused his discretion
in calculating a reduced lodestar for Webber McGill's services, asserting that the
judge imposed an inappropriate ceiling on rates for the firm's attorneys and that
the judge settled on a reasonable rate that was contrary to counsel's submissions.
A-5652-18
49
Moreover, she contends the judge inappropriately imposed rate reductions for
attorneys he mistakenly believed did not actively participate at trial or in motion
practice and arbitrarily excluded considerable amounts of time without
identifying precisely which entries it had reduced.
In determining fees, the judge merely considered the terms of the
agreement as a factor in determining a reasonable rate, consistent with the
Supreme Court's guidance to that effect in the same authority. Szczepanski, 141
N.J. at 357. And, in light of his conclusion that the rate indicated in the
agreement would be a reasonable one for the firm's lead attorney, that rate would
thereby effectively serve as a "ceiling" for the rates assigned to other less
experienced attorneys in the same firm.
Moreover, plaintiff's contention that the judge was bound to set rates
consistent with counsel's submissions, in the absence of any contrary showing
on defendant's part, runs directly contrary to the judge's responsibility not to
merely accept those submissions at face value, but to engage in a "careful[] and
critical[]" evaluation of the issue. Rendine, 141 N.J. at 335. The judge's diligent
undertaking of that task is clear from the opinion, wherein he arrived at a set of
reasonable rates for the firm's attorneys on consideration of several factors,
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among them the retainer agreement and each attorney's relative level of
education, experience, and role in the litigation.
Nor is there any merit to the balance of plaintiff's contentions with regard
to the lodestar for Webber McGill's services. Plaintiff asserts the judge's
perception of certain attorney's relative roles in the litigation was mistaken yet
cites no evidence in the record contradicting the judge's findings based on his
review of counsel's submissions and his own observation of the proceedings.
Moreover, the judge's exhaustive identification of the billed hours he found
excessive on various grounds, such as redundancy and failure of proof, based on
his careful review of counsel's submissions, were accompanied by explanations
of those grounds that were adequate to ensure the reductions were within the
judge's discretion.
Plaintiff next argues the judge should have accepted counsel's submissions
relevant to Murray's reasonable hourly rate, rather than the rate reflected in a fee
award from unrelated litigation and asserts that the judge arbitrarily excluded
reasonable hours Murray had expended on the case for various meetings,
conferences, and other communication among the attorneys. Plaintiff ignores,
however, that the judge reduced Murray's hours in that respect not on a
conclusion that such meetings were unnecessary in themselves but because the
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billing records failed to include any detail establishing the need for "multiple
attorney attendance." The judge was well within his discretion to discount
expenditures of time for which counsel failed to provide adequate information
to ensure their reasonableness. See Szczepanski, 141 N.J. at 368. And, with
regard to Murray's hourly rate, the judge was not bound to simply accept
counsel's submissions at face value but could conclude that the rate reflected in
a recent award to the same attorney in the same sort of litigation could constitute
a reasonable one, on consideration of the balance of the relevant circumstances.
Rendine, 141 N.J. at 335.
Plaintiff also argues that the judge abused his discretion by relying on
inappropriate factors to limit counsel's fee enhancement—specifically her lack
of success in defending against the unjust enrichment claim, her abandonment
of an emotional distress claim, and her decision against calling two experts
during trial. The judge, however, was within his discretion to consider the
unfavorable verdict on the counterclaim in evaluating the extent to which
plaintiff prevailed in this litigation and to ensure the reasonableness of the fee
award relative to her overall level of success. See DePalma, 350 N.J. Super. at
219. Moreover, the judge never considered, in the balance, plaintiff's
abandonment of the counterclaim or decision not to call the expert witnesses on
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the notion that those actions inherently weighed in favor of reduction of an
enhancement, as plaintiff suggests. Instead, consistent with his discretion in
setting a reasonable award, he considered only that the late timing of those
decisions in this litigation ultimately brought about an excess expenditure of
fees that would have been unfair for the ultimate award to reflect. Packard-
Bamberger, 167 N.J. at 444.
Lastly, plaintiff argues that the judge erred, on the limited remand, in
declining to grant her motion for a supplemental award of past fees, which she
failed to raise until after the matter had already been appealed. The judge denied
her motion for that relief without prejudice on the ground that it exceeded the
scope of the remand and that the judge therefore was without jurisdiction to
consider it at that point.
The judge was correct in his findings. The matter was already on appeal,
and authorization for the remand was confined to entertainment of the parties'
motions for reconsideration of the judge's August 27, 2019 order. See In re
Plainfield-Union Water Co., 14 N.J. 296, 302 (1954) (noting that filing of notice
of appeal "divests the lower court of jurisdiction save as reserved by statute or
rule" and that such jurisdiction is restored only pursuant to mandate by this
court). Plaintiff does not dispute that, but merely urges this court to remand the
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matter for consideration of the supplemental award anyway. Even aside from
the lack of any error justifying that outcome, plaintiff's prior motion was denied
without prejudice, already leaving her free to renew it once this appeal
concludes, as the trial judge aptly noted. Thus, we discern no abuse of discretion
in the judge's fee awards.
E.
Finally, plaintiff argues that the judge erred in the punitive damages phase
of the trial, specifically by denying a requested jury instruction that would have
placed at issue the conduct of three additional management-level employees and
excluding as evidence an unredacted version of defendant's CIA. We reject
plaintiff's argument.
The CEPA statute explicitly authorizes recovery of punitive damages,
where appropriate. N.J.S.A. 34:19-5. Generally, such damages—sanctions
awarded separately from compensatory damages to punish or deter "particularly
egregious conduct"—are meant to be a "limited remedy" and "must be reserved
for special circumstances." Maudsley v. State, 357 N.J. Super. 560, 590-91
(App. Div. 2003). Accordingly, our Punitive Damages Act (PDA), N.J.S.A.
2A:15-5.9 to -5.17, permits recovery of such sanctions only on proof, "by clear
and convincing evidence, that the harm suffered was the result of the [adverse
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party]'s acts or omissions, and [that] such acts or omissions were actuated by
actual malice or accompanied by a wanton and willful disregard of persons who
foreseeably might be harmed by [them]." N.J.S.A. 2A:15-5.12(a). In setting an
appropriate award, a factfinder should consider "all relevant circumstances,"
Herman v. Sunshine Chem. Specialties, Inc., 133 N.J. 329, 338 (1993), including
the nature, duration, and severity of the offending conduct and the defendant's
awareness of the risk of serious harm arising from that conduct. N.J.S.A. 2A:15-
5.12(b) to (c).
In CEPA claims in particular, "punitive damages are available against an
employer only if there is 'actual participation by upper management or willful
indifference.'" Longo v. Pleasure Prods., Inc., 215 N.J. 48, 58 (2013) (quoting
Abbamont v. Piscataway Twp. Bd. of Educ., 138 N.J. 405, 419 (1994)).
Discerning whether individuals qualify as "upper management" is a fact-
sensitive undertaking but will ultimately depend not on their formal titles, but
on whether they have "'significant power, discretion and influence within their
own departments,' capable of furthering the mission of the organization and of
selecting courses of action from available alternatives." Cavuoti v. N.J. Transit
Corp., 161 N.J. 107, 122-23 (1999) (quoting N.J. Tpk. Auth. v. AFSCME,
Council 73, 150 N.J. 331, 356 (1997)). In general, upper management should
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consist of those responsible to formulate the
organization's anti-discrimination policies, provide
compliance programs and insist on performance (its
governing body, its executive officers), and those to
whom the organization has delegated the responsibility
to execute its policies in the workplace, who set the
atmosphere or control the day-to-day operations of the
unit (such as heads of departments, regional managers,
or compliance officers). For an employee on the second
tier of management to be considered a member of
"upper management," the employee should have either
(1) broad supervisory powers over the involved
employees, including the power to hire, fire, promote,
and discipline, or (2) the delegated responsibility to
execute the employer's policies to ensure a safe,
productive and discrimination-free workplace.
[Id. at 128-29.]
Guided by these principles, the judge's determination to include Goldman,
Shaw, and Lazala as upper management employees and to exclude Lucas, Nau,
and McGee was not error because his findings are adequately supported by the
record. McGee arguably had no less claim to qualify as upper management than
Lazala, whom she succeeded in the legal department and whom the judge did
include. Moreover, to the extent of any reasonable dispute, whether McGee or
the others qualified should have been a question for the jury. See Cavuoti, 161
N.J. at 122 (noting that issue is fact-sensitive). Plaintiff cites no clear and
convincing evidence of "actual malice" or "wanton and willful disregard" on any
of their parts, N.J.S.A. 2A:15-5.12(a), that would have rendered the judge's
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decision on this jury instruction anything other than harmless, even if it were
error. Toto, 196 N.J. at 144.
The judge also reasoned that punitive damages were available in a CEPA
lawsuit specifically to punish and deter the retaliatory conduct at issue in that
statute and that the CIAs, which documented transgressions of unrelated
statutes, were irrelevant on that point. A trial judge's determination as to the
relevance and consequent admissibility of evidence rests within its broad
discretion and will not be disturbed on appeal absent its palpable abuse of that
discretion. Verdicchio v. Ricca, 179 N.J. 1, 34 (2004). Here, nothing in the
CEPA statute suggests its authorization for punitive damages is any broader than
logic would dictate—as punishment for conduct specifically violating that
statute, N.J.S.A. 34:19-5—and the PDA enumerates for consideration in setting
an award characteristics exclusively of the conduct that caused the plaintiff
harm, not any broader wrongdoing. N.J.S.A. 2A:15-5.12(b) to (c). In light of
that standard, we discern no abuse of discretion.
Affirmed.
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