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Media Alerts - Steven Trzaska v. L'Oreal USA, Inc. - Third Circuit
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July 26, 2017
  Steven Trzaska v. L'Oreal USA, Inc. - Third Circuit
Headline: An implicit threat by an employer that would result in the disregard of obligatory ethical standards of one's profession violates a clear mandate of public policy within the meaning of New Jersey's Conscientious Employee Protection Act

Area of Law: Employment Law

Issue(s) Presented: Can the rules of professional conduct governing attorneys serve as a basis to bring a CEPA claim alleging that employer fired employee who refused to violate such rules?

Brief Summary:

Steven Trzaska was working as a patent attorney for L'Oréal USA, Inc. The patent team had to meet a certain annual quota or face losing their jobs. After Trzaska approached his superiors with concerns that he was being expected to violate ethical standards in order to meet this quota, he was fired. Trzaska sued L'Oréal for wrongful retaliatory discharge. The Third Circuit reversed the dismissal of the claim, determining that the rules of professional conduct were mandates of public policy and that Trzaska had sufficiently pleaded facts showing that his employer implicitly directed him to disregard those ethical obligations, supporting a CEPA claim.



Extended Summary:

Steven Trzaska was the head of the patent team for L'Oréal USA. His team was in charge of determining a product's patentability and submitting patent applications to the United States Patent and Trademark Office (USPTO). As an attorney, Trzaska was required to follow the Rules of Professional Conduct established by the Supreme Court of Pennsylvania, as well as the rules provided by the USPTO. These ethical standards prevented attorneys from filing bad-faith patent applications. The patent team was given an annual quota of 40 patent applications. If they were unable to meet this quota, management said that their careers could be negatively impacted. Trzaska was concerned that he would be expected to file frivolous patents in order to meet the quota, so he brought these concerns to his superiors. After making it known that he would not violate the rules of professional conduct, Trzaska was offered two severance packages to leave the company. When he did not accept, L'Oréal fired him. In response, Trzaska filed a claim for wrongful retaliatory discharge in violation of the New Jersey Conscientious Employee Protection Act (CEPA) against L'Oréal USA and L'Oréal, S.A.

The Third Circuit reversed the District Court's decision to dismiss, finding that Trzaska had sufficient grounds to bring a CEPA claim. The CEPA protects employees from retaliatory actions when an employee refuses to participate in an activity or policy that he/she believes is in violation of a law or rule pursuant to law. The Court concluded that Trzaska's allegation that L'Oréal was instructing or threatening its patent attorneys to disregard the rules of professional conduct is a violation of the public policy mandate under CEPA. The Third Circuit determined that CEPA protection was triggered because a patent itself is relevant to public policy and violation of the rules of professional conduct can harm the public's interest. For these reasons, termination for failure to disregard the ethical obligations of one's profession creates an adequate CEPA claim.

The Third Circuit also reversed the District Court's holding that even if there was sufficient basis to bring a claim, Trzaska failed to adequately plead that claim. The Court concluded that Trzaska had met the standard of review, whether a complaint provides enough facts to raise a reasonable expectation that a cause of action can be determined through discovery. Trzaska's complaint alleged the company policies, as well as the threatened termination of employees. These allegations supported Trzaska's reasonable belief that he would be fired if he did not disregard his ethical obligations sufficient to proceed to discovery.

The Third Circuit denied L'Oréal, S.A.'s motion to dismiss the appeal due to the failure file a notice of appeal. The Court held that there was a connection between the appeal against L'Oréal USA and L'Oréal, S.A. and there was an inferred intent to appeal both orders The Third Circuit determined that there was clear intent that Trzaska wanted to appeal against both orders. In addition, L'Oréal, S.A. was still given the full opportunity to brief the issues.

Circuit Judge Chagares dissented in part, noting that he would have found that Trzaska did not sufficiently plead a CEPA claim because a heightened standard should be applied to Trzaska as an attorney and he failed to plead that L'Oréal demanded that he violate his professional obligations.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153810p.pdf

Panel: Ambro, Chagares, and Fuentes, Circuit Judges

Argument Date: November 16, 2017

Date of Issued Opinion: July 25, 2017

Docket Number: No. 15-3810

Decided: Reversed and Remanded

Case Alert Author: Kristina Flatley

Counsel: Daniel Bencivenga and Harold Goodman, Counsel for Appellant; George Barbatsuly, Laura Scully, Christopher Carton, and Eric Savage, Counsel for Appellees.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/26/2017 03:07 PM     3rd Circuit  

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