Court Opinion

ID: 9732375
Source: CourtListenerOpinion
Date Created: 2023-08-26 16:18:21.659863+00
Date Added: 2024-06-11T18:26:26.946356
License: Public Domain

PER CURLAM.
Plaintiff, Karol Maw, filed this action under the Conscientious Employment Protection Act, N.J.S.A. 34:19-1 to -8 (CEPA), after she was terminated for refusing to execute an employment agreement containing a do-not-compete provision. She claimed that her employer committed impermissible retaliatory action when it terminated her employment because she refused to sign an employment agreement that she perceived to be contrary to public policy. We disagree and reverse the judgment of the Appellate Division, substantially for the reasons expressed in the cogent dissent by Judge Cuff. Maw v. Advanced Clinical Communications, Inc., 359 N.J.Super. 420, 442-48, 820 A.2d 105, 118-122 (App.Div.2003) (Cuff, J.A.D., dissenting). Briefly, we add the following in explanation of our conclusion that plaintiff has failed to present a cause of action under CEPA.
I.
CEPA prohibits an employer from taking retaliatory action against an employee who “objects to, or refuses to participate in any activity, policy or practice which the employee reasonably *444believes ... is incompatible with a clear mandate of public policy-concerning public health, safety or welfare or protection of the environment.” N.J.S.A. 34:19 — 3c(3) (Section 3c(3)). In this ease we confront for the first time a question as to the meaning of the phrase “clear mandate of public policy.” More specifically, we must determine the contours and scope of a “clear mandate” sufficient to assert a claim under Section 3c(3). We begin with the observation that a public policy expressed in the form of a statute, rule or regulation promulgated pursuant to law, is not what was meant under Section 3e(3). To so hold would reduce N.J.S.A. 34:19 — 3c(1) (Section 3c(l)) to mere surplusage, since it employs those legal precepts as a frame of reference for evaluating an employer’s conduct.
That said, Section 3c(l) is helpful in resolving the question before us. Like Section 3c(l), the reference in Section 3c(3) to a “clear mandate of public policy” conveys a legislative preference for a readily diseemable course of action that is recognized to be in the public interest. A “clear mandate” of public policy suggests an analog to a constitutional provision, statute, and rule or regulation promulgated pursuant to law such that, under Section 3c(3), there should be a high degree of public certitude in respect of acceptable verses unacceptable conduct. Indeed, prior decisions involving CEPA claims have reasoned similarly when discussing Section 3c(3) claims. E.g., Higgins v. Pascack Valley Hosp., 158 N.J. 404, 420, 730 A.2d 327, 336 (1999) (citing Mehlman v. Mobil Oil Corp., 153 N.J. 163, 189-90, 707 A.2d 1000, 1013-1014 (1998) (finding that CEPA “prohibits employer retaliation against an employee who objects to an employer practice that violates a foreign country’s public policy, as expressed in an industry safety guideline”)). The legislative approach vis-á-vis a “clear” mandate of public policy bespeaks a desire not to have CEPA actions devolve into arguments between employees and employers over what is, and is not, correct public policy. Such an approach also fits with the legislative requirement of a “mandate” as opposed to *445a less rigorous standard for the type of public policy that is implicated.
The dissent below is in accord with our analysis in respect of its discussion of both the purpose of CEPA, Maw, supra, 359 N.J.Super. at 444-446, 820 A.2d at 119-121 (Cuff, J.A.D., dissenting), and our precedent construing CEPA Id. at 446-47, 820 A.2d at 120-21. Judge Cuffs summary of CEPA’s purpose echoes our observation last term that “[t]he Legislature enacted CEPA to ‘protect and encourage employees to report illegal or unethical workplace activities and to discourage public and private sector employers from engaging in such conduct.’ ” Dzwonar v. McDevitt, 177 N.J. 451, 461, 828 A.2d 893, 900 (2003) (quoting Abbamont v. Piscataway Twp. Bd. of Educ., 138 N.J. 405, 431, 650 A.2d 958, 971 (1994)). As stated in Dzwonar, supra, CEPA is designed to “ ‘prevent retaliation against those employees who object to employer conduct that they reasonably believe to be unlawful or indisputably dangerous to the public health, safety or welfare.”’ 177 N.J. at 464, 828 A.2d at 901 (quoting Mehlman v. Mobil Oil Corp., 153 N.J. 163, 193-94, 707 A.2d 1000, 1015-1016 (1998) (emphasis added)). The dissent found “that a helpful limiting principle [for CEPA claims] is that the offensive conduct must implicate the public interest.” Maw, supra, 359 N.J.Super. at 446, 820 A.2d at 120 (Cuff, J.A.D., dissenting) (citing Mehlman, supra, 153 N.J. at 187-88, 707 A.2d at 1012-1013). “[T]he offensive activity must pose a threat of public harm, not merely private harm or harm only to the aggrieved employee.” Mehlman, supra, 153 N.J. at 188, 707 A.2d at 1013. We reaffirm the limiting principle enunciated in Mehlman that the complained of activity must have public ramifications, and that the dispute between employer and employee must be more than a private disagreement.
II.
In this matter, plaintiffs dispute with her employer is private in nature. Plaintiff concedes that she possessed eonfiden*446tial and proprietary information, and that she had no objection to those portions of the noncompete agreement that would preclude her from sharing such information with future employers. In other words, plaintiffs true dispute was over the reasonableness of the terms of the noncompete agreement, an argument she was free to make if and when her employer tried to prevent her from working at another company. It is telling that plaintiff uniformly refers to the effect that signing the noncompete agreement would have on “her ability to find employment in her field,” and that “she believed that there was no legitimate business reason for defendants to require her to enter into a noncompete agreement.” (Emphasis added). Allowing plaintiffs admittedly private dispute with her employer to go forward under CEPA’s rubric dilutes the statute’s salutary goals.
The private nature of plaintiffs dispute notwithstanding, her CEPA claim must fail because our State’s public policy respecting noncompete agreements is not set forth in a “clear mandate,” and does not “concem[] the public health, safety or welfare or protection of the environment.” N.J.S.A. 34:19 — 3c(3). Over a generation ago, our Court sketched the broad parameters for determining whether a noncompete agreement was unenforceable. Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25, 274 A.2d 577 (1971); Solari Indus., Inc. v. Malady, 55 N.J. 571, 264 A.2d 53 (1970). In Solari, we canvassed, much as has the dissent, the historical treatment of noncompete agreements, and acknowledged the previously held negative view of such agreements. 55 N.J. at 575-84, 264 A.2d at 55-60. We cited academic writings on the topic that elaborated in greater detail on the relation of such agreements to Anglo-American commercial practices. See, e.g., Solari, supra, 55 N.J. at 574-77, 264 A.2d at 54-56 (citing Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625 (1960)).
But Solari was a turning point, for we held then “that the time is well due for the abandonment of New Jersey’s void per se rule in favor of the rule which permits the total or partial *447enforcement of noncompetitive agreements to the extent reasonable under the circumstances.” 55 N.J. at 585, 264 A.2d at 61. In Whitmyer, supra, we expanded on Solari, establishing what is now known as the Solari/Whitmyer test for determining whether a noncompete agreement is unreasonable and therefore unenforceable. Under the Solari/Whitmyer test, a noncompete agreement is enforceable “if it ‘simply protects the legitimate interests of the employer, imposes no undue hardship on the employee and is not injurious to the public.’” Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609, 628, 542 A.2d 879, 888 (1988) (quoting Whitmyer, supra, 58 N.J. at 32-33, 274 A.2d at 581). The first two prongs of the test require a balancing of the employer’s interests in protecting proprietary and confidential information and the asserted hardship on the employee. Ingersoll-Rand, supra, 110 N.J. at 634-35, 542 A.2d at 892. The third requires the reviewing court to analyze the public’s broad concern in fostering competition, creativity, and ingenuity. Id. at 639, 542 A.2d at 894. Solari/Whitmyer has now become an accepted part of the common law, not only in New Jersey but also in other jurisdictions around the country. Id. at 630-34, 542 A.2d at 889-92.
Although our dissenting colleagues may contend that do-not-eompete provisions are, or should be, per se illegal, in point of fact, they are not illegal per se. It is not accurate to describe our current caselaw, which allows enforcement of reasonable non-compete agreements, as a “clear mandate” that disfavors such agreements. The Solari/Whitmyer test is a multi-part, fact-intensive inquiry. Not only must multiple interests of differing parties and entities be identified, but also, those interests must be gauged for reasonableness and legitimacy. The application of that test here, and as a general matter, simply does not evoke the type of a “clear mandate of public policy” that was contemplated by N.J.S.A. 34:19-3c(3).
We are informed by the amici that non-compete agreements are a common part of commercial employment. We do not accept as a premise that employers, in large numbers, are engaging in a *448practice that is “indisputably dangerous to the public health, safety or welfare.” Dzwonar, supra, 177 N.J. at 464, 828 A.2d at 901. It is more appropriate to characterize the business community as having adapted to the Solari/Whitmyer approach that recognizes that noncompete agreements can serve a useful purpose so long as the agreement is not unreasonable.
We conclude that plaintiffs private dispute over the terms of the do-not-compete provision in her employment agreement does not implicate violation of a clear mandate of public policy as contemplated by Section 3c(3) of CEPA. As previously noted, plaintiff did have options available to her. If she could not negotiate terms that were to her liking, she was free to dispute the reasonableness of those terms if and when her employer attempted to enforce the agreement. The burden then would be on the employer to hire counsel and initiate enforcement litigation, Solari, supra, 55 N.J. at 574, 264 A.2d at 54-55, and nothing would preclude an employee-defendant in such an action from asserting any and all affirmative defenses and counterclaims. Ingersoll-Rand, supra, 110 N.J. at 621-22, 542 A.2d at 884-85. What we decline to do, however, is to alter the traditional contract remedies available in restrictive-covenant litigation by recasting the dispute as a CEPA action. See N.J.S.A. 34:19-5e, -5f.
III.
The judgment of the Appellate Division is reversed.