The New Jersey Appellate Division recently upheld sanctions of more than $191,000 to Sunhillo Corporation (Company) in connection with its defense of claims under the New Jersey Conscientious Employee Protection Act, Fulton v. Sunhillo Corp., No. A-3950-13T2, 2015 WL 4390550 (N.J. Super. Ct. App. Div. Jul. 20, 2015), finding the whistleblower claims frivolous.

Background

In December 2007, the Company hired Ronald Fulton (Plaintiff) as its Director of Business Development to develop new business and new markets.   In late 2008 and early 2009, Plaintiff raised concerns about whether the Company was complying with federal export requirements in its business dealings with China and the Company investigated.  The Company terminated Plaintiff’s employment in September 2009 based on the stated reason that he did not develop sufficient business.  Plaintiff responded by filing a pro se complaint in October 2009, seeking $5 million in damages and alleging that he had been terminated for his whistleblowing activity.

The trial court granted the Company summary judgment, finding Plaintiff could not establish a causal connection between his alleged complaint and his discharge, but denied the Company’s subsequent motion for attorneys’ fees.  Both issues were appealed to the New Jersey Appellate Court, which affirmed the grant of summary judgment and remanded the case to the trial court for reconsideration of the fee issue.

Trial Court Awards Company Attorneys’ Fees; Appellate Court Affirms

On remand, the trial court awarded the Company $191,652 in attorneys’ fees pursuant to New Jersey’s Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1.  The court determined that the lawsuit was baseless and that Plaintiff’s conduct during the litigation had the intent of harassing his former employer.  The court noted that this was the third time Plaintiff had sued a former employer under similar theories and that Plaintiff knew there was no evidence to support his claims against the Company.  It also found that Plaintiff misrepresented certain facts concerning his employment status, requiring the parties to engage in unnecessary litigation on those issues.  The New Jersey Appellate Court found that the trial court did not abuse its discretion in awarding the Company attorneys’ fees.  It also concluded that the Company was also entitled to fees for both of the appeals and remanded back to the district court for a calculation of those fees.

Implications

This decision is a welcome advancement for employers faced with serial whistleblower litigation that is not grounded in defensible facts.  It may cause individuals to think twice before filing unfounded whistleblower claims.