NJ Appellate Court Rules Volunteers Not Protected By Whistleblower Law

In a decision handed down last week, the Appellate Division of the New Jersey Superior Court has ruled that volunteer firefighters are not employees for purposes of protection under the state’s whistleblower law.

The case involved a firefighter with the Colts Neck Volunteer Fire Company #2, Jeffrey Sauter, who claimed he was retaliated against following several related occurrences. Sauter sued the fire company previously in 2004 for a whistleblower violation that resulted in a $10,000 settlement. He remained bitter about the settlement believing the fire company should have reimbursed him for all his attorneys’ fees. He eventually convinced the membership to vote to reimburse him.

However, after a legal opinion concluded that reimbursing Sauter would jeopardize the 501(c)(3) status of the fire company, the vote was rescinded. Thereafter, Sauter reported members for dumping their personal trash in the fire company’s dumpster, and demanded the fire company obtain a legal opinion about whether the use of the dumpster for personal trash risked the 501(c)(3) status of the fire company. He also wrote to the fire company’s insurance carrier suggesting a recent claim the fire company submitted was fraudulent.

In response, Sauter was terminated from the fire company, prompting his second suit under New Jersey’s Conscientious Employee Protection Act (“CEPA”), a whistleblower protection law. The suit also alleged defamation and discrimination. The trial judge dismissed the action finding the CEPA only protected employees, not volunteers. Sauter appealed.

Last week a three-judge panel of the Appellate Division handed down its ruling upholding the trial court’s dismissal. From the decision:

• It is fair to say that plaintiff’s relations with Fire Company No. 2 over his twenty-year tenure were not always harmonious.
• This is his second CEPA action against the fire company. He first sued the fire company in 2004 after it suspended him for eighteen months. Plaintiff claimed the suspension was in retaliation for his complaints about the bid process for renovations to the company’s fire hall after his brother was denied the contract.
• Although that suit was eventually settled for $10,000, inclusive of plaintiff’s attorney’s fees, plaintiff continued to believe the fire company “owed” him another seven or eight thousand dollars to make him “whole” for his fees in that suit.
• Several years after that settlement, plaintiff again raised the issue of his legal fees with various members of Fire Company No. 2.
• In response to plaintiff’s request, the general membership voted to reimburse him for what remained of his fees from the first suit. The fire company, however, subsequently got legal advice that doing so would jeopardize its 501(c)(3) tax status and so advised plaintiff. As a consequence, the company declined to make any further payment to him.
• At about the same time as these events, Fire Company No. 2 discovered after the death of its long-time treasurer that he had embezzled approximately $300,000 from its accounts.
• The company subsequently made a claim under its fidelity policy for the loss.
• After the fire company notified plaintiff it would not reimburse his fees, he wrote to the fire company’s fidelity carrier claiming the company’s 2011 proof of loss for the defalcation was fraudulent.
• The alleged fraud was failing to disclose a letter plaintiff had written to the Monmouth County Prosecutor in 2003 in connection with the complaints he made in his first suit, which that office investigated and found did not warrant further action.
• The member who submitted the claim on behalf of the fire company is a lawyer, and the first person to have questioned the legality of the fire company reimbursing plaintiff for his attorneys’ fees.
• Following his letter to the company’s fidelity carrier, plaintiff reported to the Executive Fire Council that Fire Company No. 2 was permitting members to dispose of their household trash in the fire company’s dumpster, something plaintiff himself admitted doing on occasion.
• Plaintiff, employing the advice the fire company got about not reimbursing his fees, asked that the Executive Council obtain a legal opinion that members using the dumpster did not threaten the fire department’s 501(c)(3) status by conferring a financial benefit on insiders.
• Days later, several members of Fire Company No. 2, including plaintiff’s brother, signed a letter to the president and the membership committee lodging a formal complaint against plaintiff.
• Those members alleged plaintiff had been disrespectful and abusive to members at meetings, drills and fire calls after “the outcome of the legal opinion was not in [his] favor”; went “out on his own to sabotage the company’s insurance claim,” by “falsely claiming that the company intentionally attempted to defraud the insurance company”; and made “a frivolous charge” to the Executive Fire Council that use of the dumpster by members could threaten the company’s 501(c)(3) status.
• The complainants alleged plaintiff’s “angry and belligerent” conduct was “unbecoming of a Company #2 member,” and “detrimental to the Company and the safety of members both at the fire house and on the fire ground.”
• The membership committee took the matter under advisement and made the decision to terminate plaintiff’s membership in Fire Company No. 2.
• Thereafter, several members wrote to the president and the membership committee asking that plaintiff be immediately reinstated to allow him “to defend himself against the charges” in accordance with the bylaws and that the membership committee bring its recommendation to the company for a vote.
• The membership committee rescinded the termination and suspended plaintiff pending investigation and presentation of the matter to the membership.
• The committee subsequently sustained each of the charges against plaintiff and again determined to terminate his membership. Plaintiff appealed its decision to the general membership, which voted fourteen to eight against reinstatement.
• Although plaintiff concedes he does not perform services for Fire Company No. 2 for wages, he asserts his receipt of LOSAP benefits constitutes sufficient remuneration to bring him within the definition of an employee under the statute. We disagree.
• Because plaintiff did not perform services for Colts Neck as a member of its volunteer fire department for wages or other remuneration, notwithstanding that those services were performed under the fire company’s direction and control, he simply cannot qualify as an employee under CEPA regardless of the test one employs to evaluate the relationship.
• None of plaintiff’s alleged “whistleblowing” activities posed the least threat to his livelihood for the simple reason that he was not “employed” as a volunteer firefighter.
• As a volunteer member of his fire company, plaintiff stands outside the employment relationship which gave rise to the doctrine underpinning the statute and beyond the scope of the problem the Legislature designed CEPA to address.
• Because we conclude plaintiff is not an employee of Fire Company No. 2, its vote to strip plaintiff of his membership in the organization in alleged retaliation for his letters to the fire company’s fidelity carrier and Colts Neck’s Executive Fire Council, even if true, is not a CEPA violation. Accordingly, we affirm the judgment dismissing the complaint.

Here is a copy of the ruling: Sauter v Colts Neck VFC