Quick Hits

• The U.S. District Court for the District of New Jersey dismissed a plaintiff’s retaliation claims under CEPA and NJLAD, finding them preempted by the NLRA.
• In Davis v. Benihana, Inc., the court ruled that the NLRB has exclusive jurisdiction over claims related to discussing wages with coworkers.
• The court concluded that the plaintiff’s claims under CEPA and NJLAD were preempted by the NLRA, as they presented a risk of interference with the NLRB’s primary jurisdiction.

Plaintiff’s Complaint

Aaron Davis, who worked as a chef at a Benihana, Inc., restaurant, alleged in his complaint that the company terminated his employment for discussing wages with a coworker and for refusing to comply with a demand by his supervisors to stop doing so. Specifically, Davis alleged that, after he complained to his manager that he was underpaid, the manager called all chefs into a team meeting and told them that discussing their pay with each other was a terminable offense. Davis claims to have told the manager at the meeting that employees had the right to discuss their pay and that threatening to terminate their employment on that basis was illegal. Davis alleged that, about an hour after the meeting, his manager demanded that he clock out of his shift early, terminated his employment “on the spot,” and called the police to have him removed from the restaurant.

Benihana’s Motion to Dismiss

Davis filed a lawsuit in New Jersey state court alleging claims for retaliation under CEPA—New Jersey’s whistleblower protection law—and the NJLAD. Benihana then removed the case to the federal court and moved to dismiss the complaint arguing that, under the Supreme Court of the United States decisions in San Diego Building Trades Council v. Garmon and Sears, Roebuck & Co. v. San Diego District Council of Carpenters, Davis’s state law claims were preempted by the NLRA and must instead be heard by the NLRB. Specifically, the Garmon Court held that, when a workplace activity is “arguably protected” or “arguably prohibited” under Section 7 and/or Section 8 of the NLRA, courts must defer to the exclusive competence of the NLRB to avert the danger of state interference with federal labor policy.

In opposition, Davis argued that his objections to his low pay did not amount to “concerted activity” as defined by the NLRA because he only answered a question about the pay of another individual, which led management to bring all employees into a meeting to discuss his claim. Accordingly, Davis argued that his behavior was not “concerted activity” but rather “individual activity” and thus not subject to the NLRB’s exclusive jurisdiction.

The Court’s Decision

The court disagreed with Davis’s “concerted activity” argument, finding that the NLRB has “broadly interpreted” what constitutes “concerted activity” to include “not only the union and pre-union efforts of groups of employees seeking to protect their rights but also certain actions undertaken by individuals in the unionized and non-unionized workplace.” Further, the court highlighted that individual conduct can in fact be “concerted” “‘both where individual employees seek to initiate or to induce or to prepare for group action and where individual employees bring truly group complaints to the attention of management.’”

Thus, while the court found that Davis privately disclosing the standard rate of pay to his colleague was not likely, by itself, concerted activity, the fact he later “spoke up on behalf of both himself and his colleagues” at the group meeting crossed the line into conduct which qualified as “concerted activity” under the NLRA. (Emphasis in the original.)

But even if Davis had not engaged in concerted activity, the court still concluded that his CEPA and NJLAD claims would be subject to preemption under the NLRA because Benihana’s alleged workplace rule and demand to Davis to refrain from discussing his wages in the workplace “chilled the exercise of the chefs’ Section 7 rights.” Accordingly, the court held, that alleged workplace rule, and Benihana’s alleged demand to obey it, if proven, is an unfair labor practice with or without concerted activity, and therefore subject to NLRA preemption.

Turning to Benihana’s NLRA preemption argument, the court noted that Davis did not meaningfully contest that Benihana’s alleged conduct, if proven, was an unfair labor practice arguably prohibited under Section 8 of the NLRA. “‘It is beyond dispute that,’ as here, ‘an employer violates Section 8(a)(1) by threatening to terminate an employee in order to prevent [him] from exercising [his] Section 7 rights, for example, by discussing wages with coworkers.’” Reasoning further, the court concluded that “[t]hat is because ‘enforcement of a rule against discussing wages effectively interferes with employee rights and violates Section 8(a)(1) even if no employee has yet engaged in protected activity and been disciplined under the rule.’” (Emphasis in the original.)

Accordingly, the court confirmed that, unless Davis could establish that his CEPA and NJLAD claims fall within Garmon’s “local interest” exception, his claims must go before the NLRB. To determine whether the local interest exception applies, the court evaluated whether adjudicating the CEPA and NJLAD claims presented a “risk of interference with the NLRB’s primary jurisdiction.” The court stated that there is a risk of such interference when the “‘controversy presented to the state court is identical with that which could be presented to the [NLRB].’” Once the court determines whether there is any such risk of interference, the court must then determine whether Davis’s CEPA and NJLAD claims “‘touch[] on [significant state] interests so deeply rooted in local feeling and responsibility’” and “balance those interests against the risk of interference with the NLRB’s primary jurisdiction.”

The court quickly concluded that both Davis’s CEPA and NJLAD claims presented a risk of interference with the NLRB’s primary jurisdiction because the controversies presented between those claims and an unfair labor practice charge that Davis could have filed with the NLRB under the NLRA are identical.

Regarding Davis’s CEPA claim, the court acknowledged that, while the New Jersey Supreme Court hadpreviously concluded in Puglia v. Elk Pipeline, Inc. that the NLRA does not preempt the plaintiff’s CEPA claim in that case because it fit within Garmon’slocal interest exception, most courts have declined to find that state whistleblower statutes, including CEPA, fall within the exception. The court therefore parted ways with Puglia, disagreeing that engaging in whistleblowing activity in a CEPA claim differs from engaging in a protected concerted activity in an NLRA claim.

The court reached the same conclusion with respect to Davis’s NJLAD claim, concluding that the identity in proofs between that claim and an NLRA charge “is even more apparent” than it is in the CEPA context. In doing so, the court held that “[b]oth statutes prohibit the exact same conduct—retaliatory termination of an employee for discussing wages in the workplace.” Therefore, there was a risk of interference with the NLRB’s regulatory jurisdiction if Davis’s NJLAD claim proceeded in the courts.

Finally, the court turned to whether CEPA or the NJLAD were deeply rooted in local feeling and responsibility. The court held that the statutes were not “the kind of state laws the Garmon court had in mind when it carved out the local interest exception for state interests ‘deeply rooted in local feeling and responsibility.’” In that context, the court highlighted that Garmon specifically considered state laws regulating “‘conduct marked by violence and imminent threats to the public order.’” Examples of such state laws would be laws regarding violence, threats of violence, intimidation, destruction of property, and certain personal torts. Because CEPA and NJLAD did not regulate any such extreme conduct that is “traditionally and historically committed to States’ police powers,” the court held that neither CEPA nor NJLAD fell under Garmon’slocal interest exception.

Accordingly, because there would be a risk of interference in adjudicating Davis’s state law claims that did not implicate the kinds of deeply rooted local interests contemplated by Garmon, the court granted Benihana’s motion to dismiss, finding that Davis’s claims were preempted under Garmon.

Key Takeaways

The court’s ruling in Davis provides employers some clarity as to how New Jersey’s federal courts will consider the issue of NLRA preemption when an employee asserts a claim under either CEPA or NJLAD that could constitute a “protected activity” under Section 7 or “prohibited activity” under Section 8 of the NLRA. By doing so, employers defending against these kinds of claims may have a basis to argue NLRA preemption. However, it is important to note that the Davis court cautioned that not all CEPA and NJLAD claims are preempted by Garmon, so an analysis as to whether an employee’s claim under these statutes is preempted is a fact-sensitive application.