71 A.3d 775
N.J.2013Background
- Longo, a sales employee at East Coast News, complained about co-worker Marc Kercheval’s violent and sexually threatening conduct after reporting it to supervisors; Kercheval was later fired and Longo was terminated.
- Longo sued under CEPA seeking compensatory and punitive damages; jury found East Coast and Frank Koretsky liable for compensatory damages.
- At the separate punitive-damages phase the jury was instructed on egregiousness and clear-and-convincing proof generally, but was not given the court’s standard definition or guidance on “upper management.”
- Plaintiff’s counsel argued broadly that East Coast could be punished for misconduct by any employees, and referenced conduct by non-upper-management supervisors.
- The jury awarded $500,000 in punitive damages against East Coast; East Coast appealed arguing omission of the upper-management instruction and misstatement of standards.
- The Supreme Court held the punitive award must be vacated and remanded for retrial on punitive damages because the jury was not instructed on (1) the upper-management requirement and (2) that punitive findings required clear-and-convincing proof assessing upper-management involvement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an "upper management" jury instruction was required to award punitive damages in a CEPA case | Longo argued no special upper-management instruction was needed because Koretsky (a co-president) was found individually liable at compensatory stage, implying employer exposure | East Coast argued punitive damages require a finding that upper management actually participated in or was willfully indifferent, so the omission of that instruction was reversible error | Court held omission was fundamental error; an upper-management instruction is required before awarding punitive damages against an employer in CEPA cases |
| Whether the Lehmann/upper-management standard applies to CEPA punitive awards | Longo asserted punitive damages could be assessed based on broader employee conduct when employer liability established | East Coast argued Lehmann’s requirement of actual participation or willful indifference by upper management governs CEPA punitive awards | Court confirmed Lehmann/Abbamont standard applies to CEPA: punitive damages against employers require actual participation by or willful indifference of upper management |
| Whether jury was properly instructed on burden/standard for assessing punitive damages as to individuals whose conduct supports employer liability | Longo relied on compensatory-stage finding against Koretsky (preponderance) to support punitive award without separate clear-and-convincing assessment of his role | East Coast argued jury needed to assess Koretsky’s (and any upper manager’s) involvement under the clear-and-convincing standard at the punitive stage | Court held punitive findings regarding upper-management involvement must meet the clear-and-convincing standard and the jury must be instructed accordingly; failure to do so warrants retrial on punitive damages |
Key Cases Cited
- Lehmann v. Toys ‘R’ Us, Inc., 132 N.J. 587 (establishes that employer punitive liability requires actual participation or willful indifference by upper management)
- Abbamont v. Piscataway Twp. Bd. of Educ., 138 N.J. 405 (applies Lehmann principle to CEPA; punitive damages against employer require upper-management participation or willful indifference)
- Cavuoti v. New Jersey Transit Corp., 161 N.J. 107 (defines “upper management” as employees with broad supervisory authority or delegated responsibility to implement workplace policy)
- Baker v. National State Bank, 161 N.J. 220 (failure to give upper-management instruction is plain error unless wrongful actors are indisputably upper management)
- Mogull v. CB Commercial Real Estate Group, Inc., 162 N.J. 449 (omission of upper-management instruction can require reversal; instruction especially important when many employees with varying titles are implicated)
- Lockley v. Department of Corrections, 177 N.J. 413 (reversed punitive award where jury charge gave no meaningful guidance on upper-management involvement)
- Quinlan v. Curtiss-Wright Corp., 204 N.J. 239 (explains "especially egregious" standard for punitive damages)