Fired L’Oreal Patent Attorney’s Lawsuit Over Filing Quotas OK’d

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By Tony Dutra

A L’Oreal USA Inc. patent attorney fired for complaining about application filing quotas should be able to sue the company under a New Jersey employee protection law, a federal appeals court ruled July 26 ( Trzaska v. L’Oreal USA, Inc. , 2017 BL 256629, 3d Cir., No. 15-3810, 7/25/17 ).

New Jersey’s Conscientious Employee Protection Act protects employees from retaliatory actions by their employers when the employees refuse to perform illegal or unethical actions. A district court had dismissed Steven J. Trzaska’s lawsuit because the quota requirement by itself was not the same as requiring Trzaska to violate the law.

The U.S. Court of Appeals for the Third Circuit reversed. CEPA also covers employer actions that are “incompatible with a clear mandate of public policy,” the court noted. The public policy mandate here, it said, was the need for patent attorneys to heed professional conduct rules that bar filing frivolous applications, essential to a “well-functioning patent system.”

The case now returns to the U.S. District Court for the District of New Jersey for litigation.

Patent Attorney Codes of Conduct Important

Trzaska’s complaint argued that general attorney Rules of Professional Conduct and specific rules set by the Patent and Trademark Office bar attorneys from filing frivolous or bad-faith patent applications or from knowingly making false statements.

Trzaska complained to L’Oreal management that he couldn’t meet the company’s quota without having to file applications he knew would not succeed. He refused two severance offers and then was fired.

The district court erred to the extent it looked at the impact on L’Oreal’s business practices—i.e., quota-setting—for a CEPA violation, the Third Circuit said. It was the instruction to the patent-attorney employees to disregard their professional responsibilities and duties that violated the mandate of public policy.

“An instruction, coercion, or threat by an employer that would result in the disregard of obligatory ethical standards of one’s profession violates a clear mandate of public policy within the meaning of CEPA,” the court said.

Judge Thomas L. Ambro wrote the court’s opinion, which was joined by Judge Julio M. Fuentes.

Judge Michael A. Chagares dissented. He said that a case can be brought under CEPA “only when illegal activity is occurring or imminent.” Trzaska failed to make factual allegations that L’Oreal demanded he violate his professional code or was ready to act against him unless he did so. Further, Chagares said, when the employee in question is an attorney, CEPA requires a showing that the employer’s behavior resulted in an actual violation, not just the threat that one might happen.

Raynes McCarty, Philadelphia, represented Trzaska. K&L Gates LLP, Newark, and Littler Mendelson P.C., New York, represented L’Oreal.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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