The Third Circuit has ruled the former top patent attorney for L’Oréal USA Inc. is permitted to proceed with his whistleblower suit. This decision was based on the New Jersey whistleblower laws that protect employees from termination due to refusing to violate rules of professional conduct. The Third Circuit also commented that the attorney’s claims were “more than skin-deep.” The suit was originally filed on November 24, 2015.

In April 2015, the former attorney for the company, Steven Trzaska, sued L’Oréal after being fired in 2014, claiming he was fired for objecting to the company’s quotas on patent applications after serving as the in-house head of L’Oréal’s regional patent department for 10 years. According to Trzaska, it was indicated by the company that a failure to meet those quotas would not be good for the careers of attorneys in the company.

The complaint claims the research organization in L’Oréal’s Clark, New Jersey office was given the task to file 40 patent applications. The complaint alleges this was done to help the company’s global parent L’Oréal SA, which is located in Paris, France, which had a 500-application quota for 2014. These quotas were meant to help market the company to financial analysts and shareholders as “innovative, science-based players in the field cosmetics,” according to the claim.

According to Trzaska, his termination came after the company introduced new quality control procedures that would decrease the number of potential patents submitted by researchers. The attorney told his bosses he was not willing to file applications without a good faith belief in its patentability, as it violated rules of professional conduct for attorneys that appear before the U.S. Patent and Trademark Office. He also informed his bosses he would not instruct his team to do so, either, under the same logic. After telling his bosses he was not willing to break these rules, Trzaska reports he was offered two different severance packages and was told to quit or return to his job, all of which he refused and was then fired.

Trzaska, claims L’Oréal fired him after he objected to the company’s quotas on patent applications. Trzaska argued the company was in violation of the New Jersey Conscientious Employee Protection Act. Trzaska felt pressured to break rules against filing patent applications in “bad faith,” which the three-judge panel referred to in its decision to reverse a lower court’s decision to dismiss the case. The panel was split in opinion on the decision.

Judge Thomas Ambro noted in the decision that, “under [CEPA], an employee cannot be terminated for refusing to engage in conduct in which he or she is prohibited from engaging.” Judge Michael A. Chagares argued in a dissenting opinion that although he agreed CEPA protections apply to professional conduct, the attorney did not make a compelling case that demonstrated a violation of the law was looming when he was terminated from his position, which is a direct requirement for CEPA protection.

The district court in New Jersey originally dismissed the case before the discovery process, claiming the rules of professional conduct did not apply to a company’s business practices. Under this assumption, it was not possible to violate them. The Third Circuit argued that, although the company was not bound to the rules of professional conduct, they could not ask attorneys to break those rules, either. According to the opinion, “an employee cannot be terminated for refusing to participate in conduct that he reasonably believes violates public policy.”

It was pointed out that Trzaska had a “higher standard to meet as whistleblower” due to being an attorney in the dissenting opinion where Judge Chagares argued the events outlined by the claimant were “policy dispute.” Despite the dissenting opinion, it was noted that the court did unanimously agree that the rules of professional conduct did apply to CEPA, offering in-house lawyers better protection.

Blowing the whistle on misconduct can be an arduous task. If you have been wrongfully terminated after pointing out violations of your company’s policies, contact our team at Bochetto & Lentz today. We will put our years of experience to work to protect your rights.