On June 23, 2015, the Supreme Court of New Jersey issued its first of two expected landmark decisions this term concerning the rights of and protections afforded to whistleblowers. New Jersey employees enjoy great protection under whistleblower laws that are among the broadest, most robust and comprehensive in the country, including the Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq., and the Law Against Discrimination, N.J.S.A. 10:5-1 to -42. The State Supreme Court’s decision in State v. Saavedra, 2015 N.J. LEXIS 641 (A-68-13) (073793) (2015), however, may curtail those protections.

In Saavedra, the State Supreme Court affirmed the trial court’s denial of the Saavedra’s motion to dismiss her indictment, where the defendant-employee had taken into possession hundreds of pages of confidential student educational and medical records (protected by federal and state privacy laws), which she intended to use in her employment discrimination case against her employer, the North Bergen Board of Education (the “Board”). Somewhat ironically, the criminal indictment upheld by the Supreme Court originated from a civil suit filed by Saavedra against the Board alleging claims of employment discrimination and retaliation. Through discovery in that civil action, Saavedra, through counsel, produced copies of the documents she had copied or removed from the Board’s files. The Board reported the alleged theft and misappropriation of these documents to the county prosecutor, who pursued the matter. The grand jury indicted Saavedra for official misconduct and theft by unlawful taking, largely due to the privacy implications triggered by her appropriation and use of the documents.

Saavedra moved to dismiss the indictment on public policy grounds, arguing that because the documents were taken for use in her employment discrimination litigation, the Court’s decision in Quinlan v. Curtiss-Wright Corp., 204 N.J. 239 (2010), immunized her conduct as a matter of public policy and prohibited the State from prosecuting her. Her motion was denied and affirmed by the Appellate Division on appeal.

The Supreme Court affirmed the denial of Saavedra’s motion to dismiss her indictment. In its opinion, the Supreme Court held that Saavedra’s indictment did not conflict with the public policy concerns articulated by the Court in Quinlan, which the Court expressed did not govern the application of the criminal laws at issue in Saavedra. While affirming the indictment, however, the Supreme Court indicated that Saavedra would not be precluded from presenting, as a defense to the criminal charges, a “claim of right” or other justification based on New Jersey’s policy against employment discrimination.

By way of background, in Saavedra, the defendant-employee was employed by the Board as a clerk. As a clerk, she had some access to student records protected by the federal Family Educational Rights and Privacy Act of 1974 (FERPA), 20 U.S.C.A. § 1232g, as well as the state pupil records statute, N.J.S.A. 18A:36-19, and implementing regulations codified at N.J.A.C. 6A:32-7.1 to -7.8. The Board also established its own privacy policy with respect to these files, as well as a Code of Ethics which put its employees, including Saavedra, on notice that the disclosure of these records was prohibited.

During the course of her employment, Saavedra filed suit against the Board alleging several claims of discrimination, retaliation, and violations of the federal and state wage and hour and family leave laws. In connection with that lawsuit, it was undisputed that Saavedra, without the Board’s permission, copied or removed 367 pages of confidential student records, which subsequently were produced by Saavedra in response to the Board’s request for the production of documents. Upon this factual predicate, the grand jury returned a two-count indictment for official misconduct and theft by unlawful taking of legally protected documents.

In seeking the dismissal of the indictment, Saavedra argued that her removal and use of those documents was sanctioned by the Supreme Court’s decision in Quinlan, and that her indictment would establish precedent that would chill, if not freeze, an employee’s pursuit of anti-discrimination and anti-retaliation rights. The Supreme Court disagreed. The Supreme Court distinguished its holding in Quinlan, expressing in relevant part that Quinlan “did not endorse self-help as an alternative to the legal process in employment discrimination litigation[,] [n]or did Quinlan bar prosecutions arising from an employee’s removal of documents from an employer’s files for use in a discrimination case, or otherwise address any issue of criminal law.” Rather, in Quinlan, the Court analyzed “whether an employee’s conduct in taking documents from his or her employer for use in a discrimination claim — and in using those documents in pursuit of that claim — is protected activity for purposes of the employee’s claim when the employer takes adverse employment action against the employee.” State v. Saavedra, 2015 N.J. Lexis 641, *50-51 (citing Quinlan, 204 N.J. at 267-69). According to the Court, in Quinlan it “acknowledged an employee’s duty to safeguard confidential information that he or she gains through the employment relationship and to refrain from sharing that information with third parties” but held “that the employer’s interest must be balanced against the employee’s right to be free from unlawful discrimination.” Id. at 260-261. Expanding the standard set forth by the Federal Sixth Circuit Court of Appeals in Niswander v. Cincinnati Ins. Co., 529 F.3d 714, 719-20 (6th Cir. 2008), under Title VII, the Supreme Court in Quinlan adopted a totality of the circumstances approach for balancing an employee’s right to access and use documents in combating workplace discrimination or retaliation against the employer’s legitimate interest in protecting private or confidential documents. In doing so, the Supreme Court cautioned that employees may still be disciplined for taking documents. Id. at 272. Furthermore, the Court expressed that “the risk that a jury will reject a plaintiff’s argument that he or she was fired for using the document, rather than for finding it and taking it in the first place, will serve as an important limitation on the employer’s concern that it would be powerless to discipline employees for taking, using or disclosing documents they are not privileged to access, use or disclose.

Summarizing this piece of the Supreme Court’s opinion in Saavedra, the Court expressed, quite simply: “nothing in Quinlan states or implies that the anti-discrimination policy of the LAD immunizes from prosecution an employee who takes his or her employer’s documents for use in a discrimination case.” However, in a clear effort to circumscribe the potential impact of its holding, the Court expressed that notwithstanding the inapplicability of Quinlan to criminal proceedings, Saavedra could assert as a defense to the criminal prosecution that her intent to use the documents in support of her employment discrimination claim gives rise to a “claim of right” defense or other justification, and that the trial court was in the best position to evaluate any such assertion in the setting of a full record regarding defendant’s conduct, the content of the documents, the Board’s policies regarding the records, and the impact of federal and state privacy laws. The Court listed factors for the jury to weigh in considering Saavedra’s claim of right or justification defense, including: the contents of the documents; the presence or absence of confidentiality policies; the privacy interests at stake; the circumstances under which defendant gained access to the documents; the extent to which she disclosed them; and her reasons for taking an original or copying a document rather than simply seeking a document through the ordinary channels of civil discovery.

Whether the Supreme Court’s decision in Saavedra impacts or has a chilling effect on whistleblower litigation in New Jersey remains to be seen. Indeed, as Justice Albin noted in his dissent, “it may be possible that an employee taking confidential documents from an employer’s files to pursue a LAD claim will win a multi-million dollar discrimination lawsuit but serve time in prison for committing a crime.” Saavedra, 2015 N.J. LEXIS 641, *71 (Albin, J., dissenting). While this may seem farfetched – indeed, one might question whether and under what circumstances the State would pursue criminal charges in civil disputes – it is conceivable such inconsistent or inharmonious results could occur.

Furthermore, while the Court’s decision in Saavedra could be limited to matters involving public servants or documents protected from disclosure by federal or state law. While that perhaps is the true breadth or intent of the decision, it is not so narrowly tailored. The statement that “nothing in Quinlan states or implies that the anti-discrimination policy of the LAD immunizes from prosecution an employee who takes his or her employer’s documents for use in a discrimination case” certainly suggests that any employer theoretically could press charges against an employee for “stealing” company documents used in connection with a retaliation case. For example, an employee who takes confidential documents in breach of the trust of his/her employer or, perhaps more importantly, in breach of the trust of those who have entrusted that information to the employer, such as documents and information protected by the federal Health Insurance Portability and Accountability Act (“HIPAA”), will not be immune from criminal prosecution even if those documents are salient to and used by the employee only in connection with an LAD or CEPA lawsuit. According to the Supreme Court in Saavedra (and some pundits), the discovery process is available to plaintiffs so plaintiffs need not engage in self-help to support their discrimination claims and subject themselves to criminal prosecution.

There are many implications and “takeaways” from the Court’s holding in Saavedra. To begin with, the ruling may not be satisfactory to either side of the employment bar. Employees hoping for a bright line rule granting whistleblowers some form of qualified immunity did not get it. Employers looking for a bright line rule allowing them to terminate employees who steal confidential documents likewise did not get it. Perhaps more critically, whistleblower attorneys now must exercise even greater caution in advising their employee clients who may have to make disclosures in a civil lawsuit that expose them to criminal prosecution. Proactive counseling may be required. Employers likewise should be proactive. Without having the appropriate policies and procedures in place, employers will find little solace in the Court’s holding in Saavedra. Confidentiality/nondisclosure agreements and handbook provisions should be revisited and, to the extent necessary, revised to put employees on notice of the privacy interests at stake and the potential consequences of violating those policies, which could include criminal prosecution. While it remains to be seen how Saavedra ultimately will impact whistleblower litigation, these are just a few issues that warrant prompt attention in light of the Court’s ruling.