Court considers adversaries access to opposing expert witnesses. was described as a preemptive move before trial, plaintiff stated she was not

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1 VOL. CLXXXV NO.10 INDEX 906 SEPTEMBER 4, 2006 ESTABLISHED 1878 Defecting Experts SUPREME COURT Court considers adversaries access to opposing expert witnesses By Rosemary Alito There were no headline-grabbing opinions in employment law this term, but lots of practical guidance for litigators and Law Division judges facing Law Against Discrimination (LAD) and Conscientious Employee Protection Act (CEPA) trials. The Court s LAD decisions this term focused on procedural and litigation issues. In Fitzgerald v. Stanley Roberts, Inc., 186 N.J. 286 (2006), the Court addressed four major trial issues: (1) whether plaintiff s expert should have been permitted to testify for the defense; (2) whether the trial court erred in refusing to permit testimony about plaintiff s truthfulness; (3) whether the trial court erred in allowing testimony about gossip of voluntary sex acts in the office; and (4) whether the trial court erred in allowing testimony from other employees that they were harassed by the individual defendant. The expert witness question is perhaps one of the most broadly applicable rulings in an employment case this term. The expert in question, a psychiatrist originally retained by plaintiff, had modified his initial diagnosis after reviewing additional materials in preparation for his deposition. In what was described as a preemptive move before trial, plaintiff stated she was not certain whether she would call this witness at trial and that defendant should be barred from calling him if she did not. The trial court agreed, based on the Supreme Court s prior opinion in Graham v. Gielchinsky, 126 N.J. 361 (1991), that a consulting expert is prohibited from testifying for an adversary at trial absent the same exceptional circumstances that would have allowed discovery of the expert s opinion under R. 4:10-2(d)(3). A majority of the Supreme Court reversed, holding that Graham is limited to consulting experts who are not identified as potential testifying experts at trial. By declaring that an expert witness will be produced at trial and providing the Alito is a partner at Kirkpatrick & Lockhart Nicholson Graham of Newark and is the author of New Jersey Employment Law (2nd. ed.) and Employment Law for New Jersey Businesses, both published by New Jersey Law Books. She is also the chair o f the New Jersey Law Journal Editorial Board. Lisa Yennella-Granese, an associate at the firm, assisted with the article. expert s identity and opinion to another party the original proponent has waived his claim that the information is privileged. Thus, we hold that access to the testifying expert is allowed and the adversary may produce a willing expert at trial. The party who calls the turncoat expert, however, may not elicit testimony about the original retention unless the original attorney opens the door. The Supreme Court unanimously reversed the trial court s exclusion of opinion testimony as to plaintiff s reputation for truthfulness. The trial court had correctly held that specific inci- This article is reprinted with permission from the SEPTEMBER 4, 2006 issue of the New Jersey Law Journal ALM Properties, Inc. Further duplication without permission is prohibited. All rights reserved.

2 2 NEW JERSEY LAW JOURNAL, SEPTEMBER 4, N.J.L.J. 906 dents of untruthfulness were inadmissible under N.J.R.E. 608, but erred in concluding that an opinion based on such incidents should also be barred. The Supreme Court explained the distinction concisely: Thus, a lay opinion regarding a prior witness bad character for truthfulness will be admissible if it is founded upon the character witness perceptions of the prior witness and will assist the jury in determining the fact in issue What is required is sufficient familiarity with the subject to form an opinion As under the federal rule, under N.J.R.E. 608 a trait of character cannot be proved by specific instances of conduct. Accordingly, at trial, the proponent of a character witness is not permitted to inquire whether the witness knows about any specific instances of conduct to prove the trait in issue. Reputation testimony, in contrast, requires establishment of the relationship of both the subject and the witness to the relevant community and the existence of an expressed community opinion regarding a trait of the subject s character. Upon satisfaction of those foundational requirements, the Court concluded, the defendant should have been permitted to present both opinion and reputation evidence of plaintiff s character. With respect to the admissibility of gossip about supposed voluntary sexual activities of the individually named defendant, the Court found such testimony admissible for a limited purpose of establishing the general character of the office. But since there was no proper limiting instruction and counsel seemed to argue in summation that the gossip was fact, there was error capable of producing an unjust result. Finally, the Court reached a similar conclusion regarding evidence of alleged other harassment. Although inadmissible to prove the defendant s propensity to harass women or as evidence of his general bad character, it could be relevant to the creation of a hostile work environment if the plaintiff personally witnessed it. The trial court had given a limiting instruction in the first trial and, in the retrial, a detailed instruction regarding the jury s permitted and non-permitted uses of it should be given upon defendant s request. Justice John Wallace Jr. issued a concurring opinion to express his disagreement with the majority rule on the expert witness issue. He would have affirmed the trial court s prohibition of the turncoat expert, applying an exceptional circumstances test in this context too. In Potente v. County of Hudson, 187 N.J. 103 (2006), the Court considered two issues under the LAD: (1) whether a directed verdict had been entered properly on plaintiff s failure to accommodate claim; and (2) whether pre-judgment interest is an available remedy. The Court s answer to the first question that fact questions about the extent to which the County had attempted to accommodate plaintiff should have precluded a directed verdict breaks no new ground. The County had alleged that it tried to schedule a meeting with plaintiff to discuss accommodation and that plaintiff refused to attend. Plaintiff denied that any such meeting had ever been scheduled. Because an employee cannot refuse to cooperate with an employer s efforts to accommodate his disability and then claim failure to accommodate, the Court held that the directed verdict had been improperly granted and that the jury should decide whether the meeting had in fact been scheduled. The Court s answer to the second question that pre-judgment interest is available under the LAD, even against public entities resolved an open question contrary to federal decisions. The County did not dispute that prejudgment interest is generally available to private employers, and the Court had little difficulty reaching the same conclusion. Prior to 1972, pre-judgment interest was available in common law tort actions only where the amount in dispute was liquidated. In 1972, Rule 4:42-11(b) was adopted, eliminating the distinction between liquidated and unliquidated claims and making prejudgment interest generally available in common law tort actions. In 1990, the legislature amended the LAD to provide that [a]ll remedies available in common law tort actions shall be available to prevailing plaintiffs. N.J.S.A. 10:5-13. Since pre-judgment interest was by that time available in common law tort actions under R. 4:42-11(b), the Court concluded, it was included as an available remedy under the amendment. Whether pre-judgment interest is available against public entities presented a more difficult issue. The court again started with the language of R. 4:42-11(b), which provides in pertinent part that, Except where provided by law with respect to a public entity or employee, and except as otherwise provided by law, the court shall, in tort actions include in the judgment [prejudgment interest]. (emphasis in original). In Coleman v. Kaye, 87 F.3d 1491, (3d Cir. 1996), and Hurley v. Atlantic City Police Department, 174 F.3d 95, 130 (3d Cir. 2000), the Third Circuit interpreted R. 4:42-11(b) as requiring that pre-judgment interest against public entities be denied except where it is specifically authorized by statute. The Supreme Court rejected those opinions, finding that they got the language of the Rule reversed. The notion expressed in Hurley and Coleman that pre-judgment interest will not be awarded against a public entity except where provided by statute, is simply wrong. What the rule actually says is that pre-judgment interest shall be awarded against all defendants unless it is prohibited by applicable law. As an example, the Court pointed to the Tort Claims Act, which specifically provides that no interest shall accrue prior to the entry of judg-

3 185 N.J.L.J. 906 NEW JERSEY LAW JOURNAL, SEPTEMBER 4, ment against a public entity or public employee. Since the LAD contains no parallel limitation, and LAD claims are to subject to the Tort Claims Act, the Court concluded that pre-judgment interest is an available remedy against public defendants under the LAD. The Supreme Court also addressed procedural issues in Notte v. Merchants Mutual Insurance Company, 185 N.J. 490 (2006), deciding one issue in accordance with lower-court precedent and remanding another more troublesome issue to the Appellate Division. One of the two plaintiffs in Notte had originally filed a complaint alleging that he had been discharged in retaliation for his protests of the harassment of a co-employee, in violation of CEPA. After defendants moved to dismiss the CEPA claim as timebarred, plaintiff sought leave to file two amended complaints, ultimately asserting both a common law claim for wrongful discharge and a retaliation claim under the LAD. Analyzing Rule 4:9-1, regarding amendments, and Rule 4:9-3, regarding relation back of amendments, the Court reiterated the well-settled principle that amendments to pleadings must be granted freely. Proposed amendments will be denied only if (1) the opposing party would be prejudiced, or (2) the proposed amendment would be futile (i.e., a motion to dismiss would be granted). Amended pleadings will relate back if they arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading. The Supreme Court thus agreed with the Appellate Division in Notte that plaintiff s common law wrongful discharge and LAD claims would relate back because the underlying conduct and the subject of controversy remained the same. It rejected the defendants argument that because the original complaint was time-barred, there was nothing to relate back to. Because the statute of limitations is not self-executing, a claim filed after the deadline is valid until dismissed. Moreover, since the defendants were on notice of the claim, relation back to the date of filing the defective claim does not offend the underlying policy of the statute of limitations and accomplishes substantial justice. More difficult was the question whether the amendment should have been denied as futile. That depended on whether, under CEPA s waiver provision, filing of the time-barred CEPA retaliation claim constituted a waiver of all other claims based on retaliatory conduct. Section 8 of CEPA has had more than its share of litigation. It provides that the institution of an action in accordance with this act shall be deemed a waiver of the rights and remedies available under any other contract, collective bargaining agreement, State law, rule or regulation or under the common law. Ever since an early Supreme Court opinion casually suggested that institution of an action might not have its common meaning, the question of when the CEPA waiver becomes applicable has been the subject of continuing dispute. Here, the Supreme Court declined to decide whether plaintiff s filing of a time-barred CEPA claim triggered the waiver provision, but rather remanded to the Appellate Division to decide the issue in light of its opinion in Ballinger v. Delaware River Port Auth., 172 N.J. 586, 602 (2002), that filing a CEPA claim against the Port Authority did not effect a waiver because the statute was constitutionally inapplicable to that agency, as well as the Appellate Division s opinion in Crusco v. Oakland Care Center, Inc., 305 N.J. Super. 605, 613 (App. Div. 1997), where the Court held that an employee who is barred from making a CEPA claim has no remedy under the Act and cannot, therefore, be seen to have any options from which to elect. Another opinion likely to spawn follow-up litigation is Maimone v. City of Atlantic City, A59-05 (N.J. July 20, 2006). Plaintiff John Maimone was an Atlantic City detective who claimed that he was retaliated against for complaining about what he perceived to be an unwillingness to enforce laws related to prostitution and the location of sexually-oriented businesses. He alleged that his protests had resulted in his transfer from detective to patrolman, with a 3 percent loss of pay. The trial court granted defendants motion for summary judgment, holding that although plaintiff had engaged in whistle-blowing, suffered a detriment and created a fact question as to a causal relationship between the two, he had failed to show a reasonable belief that Atlantic City s alleged decision to cease enforcement of the statutes in question violated a clear mandate of public policy. Rather, the trial court saw his complaint as simply a disagreement with a discretionary decision of supervisory police officials regarding the allocation of police personnel and resources. The Appellate Division reversed in an unpublished opinion and the Supreme Court affirmed in a 5-1 opinion by Judge Stephen Skillman, temporarily assigned. Justice Roberto Rivera-Soto filed a dissenting opinion and Justice Wallace did not participate. In finding that plaintiff presented sufficient facts from which a jury could conclude that he had an objectively reasonable belief that Atlantic City s actions were incompatible with a law impacting the public welfare, the Court focused on the fact that plaintiff s allegation was not simply that his recommendations for enforcement were ignored, but that a decision had been made not to enforce the statute at all. As such, the Court concluded, a trier of fact could find that plaintiff had an objectively reasonable belief that defendants made a policy decision that was incompatible with a clear mandate of public policy concerning the public health, safety and welfare. Unfortunately, in describing the plaintiff s burden in this respect in a claim under CEPA section 3c(3), the majority employed broad and unclear language (already attacked by the dissent) that is likely to be the subject of continuing litigation for years to come.

4 4 NEW JERSEY LAW JOURNAL, SEPTEMBER 4, N.J.L.J. 906 The majority opinion states [p]laintiff only has to show that he had an objectively reasonable belief in the existence of such a violation or incompatibility Plaintiff may carry this burden by demonstrating that there is a substantial nexus between the complained-of conduct the cessation of the investigations of promotion of prostitution and failure to enforce laws relating to the location of sexually-orientated business and [the] law or public policy identified by...plaintiff in this case the provisions of the Code proscribing such criminal conduct. Of course, the majority could not have meant that mere proof of a nexus will always satisfy this burden because in some cases the nexus might demonstrate that any objection to the conduct was objectively unreasonable. Precisely what the majority did mean, however, will await further explication. The majority also rejected defendants contention that the 3 percent wage reduction plaintiff suffered did not constitute retaliatory action under CEPA because he had not suffered a loss of rank along with it. The majority reached the common sense conclusion that a loss of wages and resultant loss of pension accruals constituted an adverse employment action taken against an employee in the terms and conditions of employment within the meaning of N.J.S.A. 34:19-2(e). Finally, the majority concluded that plaintiff had made a sufficient showing of causation to proceed to a jury. His transfer followed shortly after his numerous complaints of nonenforcement of the prostitution statutes and the reason given for the transfer his attendance at the wedding of the daughter of an alleged mobster several years earlier was found to be implausible. It did not matter that plaintiff lacked direct proof that the decision-maker knew of his whistleblowing; circumstantial evidence (e.g., his request that one of his written complaints be passed on to the decisionmaker) was enough. In a brief dissent, Justice Rivera- Soto agreed with the trial court that plaintiff s complaint was in reality just a question of how limited municipal resources should be allocated. Highlighting the patent absurdity that results from allowing a rank-and-file police officer to determine law enforcement policy for an entire department, the trial court narrowed the inquiry to the decision-making discretion vested in the police officer on patrol and made the common sense observation that [i]t is self-evident that no police officer can, without prioritizing, effectively prosecute every violation of the law that comes to his or her attention. The trial court further noted that [o]ne may reasonably conclude that a police officer should have the discretion to determine that there are legitimate priorities that would preclude the investment of the same level of resources in the enforcement of every provision of law. Justice Rivera-Soto also objected to the majority s description of plaintiff s burden of proof, quoted above, finding that a municipality now must be governed by its lowest common denominator or risk the imposition of liability. It flips the nature of the employer/employee relationship by suggesting that to avoid CEPA liability an employer must explain to its employees the basis of every discretionary decision to the satisfaction of every line employee. That, Justice Rivera-Soto concluded, was never CEPA s purpose or intendment. In Feldman v. Hunterdon Radiological Associates, 187 N.J. 228 (2006), a unanimous Court adopted a common sense and fact-sensitive standard to determine who is an employee within the intendment of CEPA in accordance with both the statutory language and the legislative intent. Plaintiff Ruth Feldman was a doctor and a shareholder-director of the defendant Hunterdon Radiological Associates (HRA). She claimed, among other things, that she had been constructively discharged for complaining about the incompetence of another shareholder. In determining whether Feldman was an employee under CEPA, the Court held that neither titles nor the mere existence of an ownership interest controlled. Instead, the Court followed the United States Supreme Court s opinion in Clackamas Gastroenterology Associates v. Wells, 538 U.S. 440 (2003), which addressed the question of employee status under the Americans with Disabilities Act. That inquiry is fact-intensive, focusing on the professional association s direction and control over the shareholder-director and the true power and vulnerability of the shareholder-director within the association. Plaintiff Ruth Feldman was one of several shareholders-directors who shared in profits and losses and had an equal vote. She had an employment and stock purchase agreement with HRA that required her to work as a physician, performing duties as directed by the board of directors such as recordkeeping, promoting the firm and rendering quality medical care. The agreement required her to devote herself full time to the business of HRA and to treat those patients assigned to her by the corporation. It set forth the manner in which the relationship could be terminated by HRA and by Feldman, and included a post-termination restrictive covenant. According to Feldman, her problems with HRA began when, as chair of imaging, she tried to address quality issues about another physician s x- rays. When re-education efforts proved unsuccessful, Feldman wanted to take stronger action, but the majority of the shareholders did not agree. After that disagreement, she claimed, she was marginalized, excluded and eventually constructively discharged. In considering whether Feldman was an employee under CEPA, the court began with a statement of the statute s purpose: to provide broad protections against employer retaliat[ion for workers whose whis-

5 185 N.J.L.J. 906 NEW JERSEY LAW JOURNAL, SEPTEMBER 4, tle-blowing actions benefit the health, safety and welfare of the public. The Court then turned to the statute s definition of an employee as any individual who performs services for and under the control and direction of an employer for wages or other remuneration. Since it was undisputed Feldman performed work as a radiologist in return for remuneration, the issue was whether she did so under the control and direction of an employer. In resolving that question, the Court noted, it is important to focus on the goals underlying CEPA, particularly the protection of individuals who are otherwise vulnerable to the improper exercise of authority. Cf. Casamasino v. City of Jersey City, 304 N.J. Super. 226 (App. Div. 1997), rev d on other grounds, 158 N.J. 333 (1999) (tax assessor who could be removed only by Director of Taxation or in court action not protected by CEPA). To make that determination with regard to physician/shareholders, the Court borrowed the six-factor test utilized by the U.S. Supreme Court in Clackamas: 1) Whether the organization can hire or fire the individual or set the rules and regulations of the individual s work; 2) Whether and, if so, to what extent the organization supervises the individual s work; 3) Whether the individual reports to someone higher in the organization; 4) Whether and, if so, to what extent the individual is able to influence the organization; 5) Whether the parities intended that the individual be an employee, as expressed in written agreements or contracts; 6) Whether the individual shares in the profits, losses, and liabilities of the organization. Although noting the holistic nature of the Clackamas test, the Court emphasized the critical importance of the fourth factor. [C]ourts should ask whether, because of a shareholderdirector s inability to influence an organization, he or she is within the class of people the statute was designed to protect Conversely, where there is no factual dispute over whether a shareholder-director has all the tools within [h]er control to root out wrongdoing, and consequently has no need to blow the whistle at all, she is not an employee for CEPA purposes. Applying that standard to the facts before it, the Court easily found the Feldman was not an employee. She had shared in the management and control of the firm for many years; she had an equal vote on all matters including hiring and compensation; and even headed a department. As the Court noted, it was not until she was unable to convince her fellow shareholdersdirectors to adopt her recommendations about an underperforming colleague that she claimed to have a status change from owner to employee. In these circumstances, the Court concluded, no reasonable juror could conclude that Feldman was an employee the legislature intended to protect under CEPA. Finally, in Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511 (2006), the Court put to rest an issue that has plagued employer and employee-side lawyers alike, holding that determinations in unemployment compensation (UC) proceedings do not have collateral estoppel effect in LAD and other civil litigation. By following the majority of jurisdictions in declining to give UC determinations estoppel effect, the Court has relieved litigants from the burden of investing inordinate time and effort in UC proceedings, solely in anticipation of the use of UC determination in a subsequent suit. The Court s elimination of that possibility is another of the practical problem solvers we have grown accustomed to from the Poritz Court.