Steven Trzaska v. LOreal USA Inc
865 F.3d 155
3rd Cir.2017Background
- Steven Trzaska, an in-house patent attorney at L’Oréal USA, supervised patent filings and was governed by USPTO and Pennsylvania Rules of Professional Conduct (RPCs) forbidding frivolous filings and false statements to tribunals.
- L’Oréal imposed a global annual quota for patent applications (40 for Trzaska’s region in 2014) while simultaneously adopting a quality initiative that reduced viable invention disclosures.
- Trzaska told management he and his team would not file applications they did not in good faith believe were patentable and that doing so would violate their RPC obligations.
- After raising concerns, Trzaska was offered severance, refused, and was later terminated; he sued under New Jersey’s Conscientious Employee Protection Act (CEPA).
- The district court dismissed his CEPA claim for failure to state a claim; the Third Circuit reversed as to L’Oréal USA and denied dismissal of the appeal as to L’Oréal, S.A., remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether refusing employer instructions that would cause an attorney to violate RPCs can support a CEPA claim | Trzaska: employer pressure to meet quota could coerce filing frivolous patents; refusing to participate in that violates public policy and CEPA protects him from retaliation | L’Oréal: RPCs govern attorneys, not company business; RPCs thus cannot form the predicate for CEPA protection against employer practices | Held: Yes — an instruction/coercion that would result in disregarding mandatory professional ethics implicates a clear mandate of public policy under CEPA §34:19-3(c) |
| Whether Trzaska plausibly pleaded that he reasonably believed illegal or policy-violating conduct was occurring or imminent | Trzaska: alleged quota pressure, threats of adverse consequences, management ignored his ethical concerns — sufficient at pleading stage to permit discovery | L’Oréal: allegations are conclusory; no specific instance of a frivolous filing alleged; vetting procedures and quality initiative show no imminent or actual wrongdoing | Held: Complaint suffices at motion-to-dismiss stage; factual disputes (whether instructions were actually given) belong to discovery; the pleadings are not implausible |
| Whether appeal should be dismissed as to foreign parent (L’Oréal, S.A.) for failure to expressly appeal that defendant | Trzaska: intent to appeal the district court opinion covered both dismissal orders; procedural liberalism and lack of prejudice support treating the notice as adequate | L’Oréal, S.A.: separate orders and counsel; required specific appeal notation | Held: Denied dismissal — connection between orders, apparent intent, and lack of prejudice justify appellate jurisdiction over both orders |
| Whether attorneys alleging CEPA claims must meet a heightened standard because of their legal training | Trzaska: a reasonable belief that conduct violates RPCs is sufficient at pleading stage | L’Oréal (as advanced in concurrence): Attorneys should meet higher Tartaglia standard and show an actual RPC violation | Held (majority): At the pleading stage, an objectively reasonable belief that employer is instructing disregard of RPCs suffices; concurrence dissents on this point applying a higher standard for attorneys |
Key Cases Cited
- Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (U.S. 1971) (patents are affected with a public interest and patent system requires candor)
- Kingsland v. Dorsey, 338 U.S. 318 (U.S. 1949) (attorneys’ relationship to the Patent Office requires highest degree of candor and good faith)
- Tartaglia v. UBS PaineWebber Inc., 197 N.J. 81 (N.J. 2008) (attorneys may be held to a higher standard when asserting RPC-based public policy claims)
- Dzwonar v. McDevitt, 177 N.J. 451 (N.J. 2003) (plaintiff need only allege a reasonable belief that conduct violates a statute, regulation, or public policy at pleading stage)
- Blackburn v. United Parcel Serv., Inc., 179 F.3d 81 (3d Cir. 1999) (CEPA construed liberally to protect employees who object to or refuse to participate in unlawful practices)