A new decision from New Jersey’s Appellate Division recognizes that an employer can be liable for retaliating against an employee who filed an anonymous whistleblower complaint if the evidence supports the inference that it could have realized she was the one who filed the complaint.
For 14 years, Carol Smith worked for Konica Minolta Business Solutions (“KMBS”), primarily as a sales representative. In 2018, Ms. Smith reported to her supervisors that over a million dollars of equipment had been shipped to a warehouse, and KMBS had recorded it as installed and paid employees a commission for selling that equipment, but the equipment actually remained in the warehouse and KMBS was improperly using it as collateral for bank loans.
Ms. Smith’s supervisors failed to address her complaint, and instead began harassing her. Accordingly, she eventually reported the fraudulent activity anonymously, through KMBS’ employee whistleblower hotline.
Ms. Smith’s supervisors claim they did not know she was the one who made the anonymous complaint. However, according to Ms. Smith, they became even more hostile toward her soon after she did so, including excluding her from meetings.
A few days after Ms. Smith made the anonymous complaint, she received an email with an attachment regarding equipment that KMBS had marked as installed even though it actually had not been installed. Ms. Smith told one of her supervisors that she believed the document corroborated the fraud she previously had disclosed.
Approximately one month later, KMBS opened an investigation into Ms. Smith under the company’s Bring Your Own Device (“BYOD”) policy, and instructed her to give the company access to the personal laptop she had been using for work. Ms. Smith refused. She instead offered to bring her laptop to the office to have the company’s IT Department examine it in her presence. Alternatively, she offered to electronically transfer the work-related data to KMBS before deleting that information from her laptop. KMBS rejected both of those offers. Instead, it fired Ms. Smith, claiming she had refused to comply with its BYOD policy.
Ms. Smith filed a lawsuit in which she alleges KMBS fired her in retaliation for reporting violations of law and public policy in violation of New Jersey’s whistleblower law, the Conscientious Employee Protection Act (“CEPA”).
The trial court granted summary judgment to KMBS, and dismissed Ms. Smith’s CEPA claim. It concluded she could not show a sufficient connection between her whistleblowing activity and the company’s decision to fire her since she could not prove KMBS knew she was the one who made the anonymous call to the whistleblower hotline. The trial court also found Ms. Smith could not prove KMBS’ justification for firing her was a pretext (excuse to cover up) retaliation. Ms. Smith appealed.
On October 19, 2023, in Smith v. Konica Minolta Business Solutions U.S.A., the Appellate Division overturned the trial court’s decision. Among other things, it relied on the fact that Ms. Smith’s supervisors could have deduced she was the one who filed the anonymous complaint, since that complaint was almost identical to Ms. Smith’s previous complaints to her supervisors. It also relied on the less than two months between Ms. Smith’s anonymous complaint and KMBS’ decision to fire her.
Further, the Appellate Division agreed with Ms. Smith that a jury could conclude KMBS had no reason to inspect her laptop since she told her supervisor about the email she had received and the attachments to it, and had reasonably believed the email and attachments were not confidential since they were not labeled confidential and had no encryption or password protection. Likewise, the appellate court ruled that a jury could find Ms. Smith attempted to comply with the company’s BYOD policy by offering to let KMBS inspect her laptop in the office.
Ultimately, the Appellate Division concluded that a jury could find KMBS internal investigation and decision to Ms. Smith were pretexts to retaliate against her. Accordingly, it reinstated her case.