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HomeMy WebLinkAbout2014-2240 (2) CHARLES P. DANIELS : IN THE COURT OF COMMON PLEAS OF and IMRAN DALVI, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs : : v. : CIVIL ACTION – LAW : ATLANTIC COMMUNITY : BANKERS BAND, and JON E. : EVANS, : Defendants : NO. 2014-02240 CIVIL TERM IN RE: DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT BEFORE EBERT, MASLAND, and PECK, JJ. OPINION FACTS AND PROCEDURAL HISTORY A.The Conflict The heart of this case is a dispute over whether Plaintiffs Charles Daniels and Imran Dalvi were effectively fired from their former positions as executives of ACBB- BITS, LLC, (“BITS”) a telecommunications subsidiary of Defendant Atlantic Community Bankers’ Bank (“ACBB”), because they threatened to report actions they believed were improper undertaken by ACBB and Defendant, Jon Evans, an ACBB executive. Plaintiffs allege that New Jersey’s whistleblower law, the Conscientious Employment Protection Act, N.J. Stat. § 34:19-1 et seq, which protects employees of private corporations, applies because they worked for BITS throughout their employment in New Jersey, where BITS was located. Defendants contend that Plaintiffs were not actually fired, but chose to resign, because of ordinary conflict with management, not in retaliation for any supposedly threatening action. Defendants characterize Plaintiffs’ suit as a groundless money-grabbing effort, where Plaintiffs are simply disgruntled because they did not get to earn the monies they had speculated they would earn. Defendants 1 allege that Pennsylvania’s Whistleblower Law, 43 P.S. §1423 et seq, which does not 1 (prior to 2014 amendment) offer protection to employees of private companies, applies because BITS was incorporated in Pennsylvania and Plaintiffs’ work was therefore under the scope of Pennsylvania law. B. Background Defendant ACBB is incorporated in Pennsylvania, with headquarters in Camp Hill, Pennsylvania. ACBB is subject to the regulations of the Federal Reserve and the Pennsylvania Department of Banking. In 2004, Evans, who was President and CEO of ACBB, approached Plaintiffs in regards to creating a technology subsidiary of ACBB which would allow ACBB to provide technology services to its customers. Plaintiffs presented a business plan to the ACBB Board of Directors, and by vote the Board approved the business plan and formation of BITS. Before officially forming BITS, Evans and Daniels made presentations and submitted supporting documentation to the Federal Reserve Bank and Pennsylvania Department of Banking in order to obtain a 2 Letter of Non-Objection (“LONO”). The materials they submitted included the BITS Operating Agreement and BITS business plan, which included the following aspects which were later incorporated into the BITS Operating Agreement: 1) a shared ownership structure where ACBB and BITS would split BITS’ net income equally, 2) annual cash distributions of net income totaling 90% BITS’ net income, 3) that BITS could never borrow from ACBB an amount in excess of 5% of ACBB’s shareholder equity, and 4) that ACBB would sell 2.5 million out of 10 million of BITS membership units to ACBB’s member banks. See Plaintiffs’ Brief at 4-5. Plaintiffs allege the LONO was obtained in reliance of the representations and information submitted to the regulatory 3 authorities. In early 2005, Daniels and Dalvi entered into Employment Agreements with BITS. Daniels, who was hired as CEO, was, at all times relevant to this action, a resident of New Jersey. Dalvi, who was hired as CFO, was, at all times relevant to this action, a resident of New York. BITS was incorporated in Pennsylvania but at all times relevant to 2 Plaintiffs’ Exhibit P, Presentation Made to Federal Reserve Bank, December 10, 2004. 3 Plaintiffs’ Exhibit D, Evans Dep. Tr. 12:15-13:5. 2 this action was located in the Newark, New Jersey, area. Plaintiffs were formally employed by BITS, but they were hired by approval of the ACBB Board and throughout their employment reported to the ACBB Board and Defendant Evans. Plaintiffs allege they took on their positions at BITS and agreed to the terms laid out in their respective Employment Agreements, which included allegedly below-market salaries, at least in part because of Evans’ representations to them that they would “have an opportunity to purchase a significant share of equity in \[BITS\] and would receive substantial bonuses and distributions once \[BITS\] achieved a positive net income for two consecutive quarters.” Plaintiffs’ Brief at 3. As prospective owners of substantial shares of BITS, it was also important to Plaintiffs that 90% of BITS’ net income would be distributed annually in cash, per the BITS Operating Agreement. Id, at 6-7. The provision was referenced in the Plaintiffs’ Employment Agreements; per their Agreements, any change to the section of the BITS Operating Agreement which established the 90% annual cash distribution would result in constructive termination of Plaintiffs. Id. at 7 (citing Plaintiffs’ Employment Agreements). In 2005, Defendant Evans was President and CEO of ACBB. Per the BITS operating Agreement, he was the “Managing Member” of BITS and exerted significant control over the regular business operations at BITS. Specifically, Evans ran the “Managing Member’s Executive Committee, which met weekly or bi-monthly and exerted substantial influence over BITS operations. Ex. FF at ¶12 -18. Per the Operating Agreement, The business and affairs of \[BITS\] shall be managed by its Managing Member…the Managing Member shall have full and complete authority, power and discretion to manage and control the business, affairs an properties of the LLC, to make all decisions regarding those matters and to perform any and all other acts and activities customary or incident to the management of the LLC’s Business. Exhibit E, Operating Agreement §10. Evans also had “the exclusive power to appoint any person to \[officer positions for BITS\], or from time to time, create, such officers of 3 the LLC, who shall serve at the exclusive pleasure of the Managing Member.” Exhibit E, Operating Agreement, §20. Plaintiffs allege that, beginning in 2006, ACBB and Evans made a number of changes that contravened what had been set out in the materials presented to the Pennsylvania Banking Authority in order to obtain the LONO. Plaintiffs allege the following changes: 1) in 2006, ACCB unilaterally passed a resolution to sell only 1 million membership units to member banks, instead of 2.5 million, and eventually sold only 320,000 units to the member banks; 2) by 2010 the debt burden placed on BITS far outweighed the 5% figure presented before obtaining the LONO; and 3) in 2010, ACBB unilaterally amended the BITS Operating Agreement such that the 90% annual cash distribution provision was made a “goal” instead of a requirement, and allowed Evans to decide what percentage of the profits should be distributed. Plaintiffs’ Brief at 10-12. Plaintiffs argue that these steps, along with other efforts by ACBB, prevented BITS from reaching profitability as fast as it would have without the changes, thereby depriving them and other shareholders of the benefits of BITS net income. Plaintiffs aver they believed such steps were in contravention of the LONO under which ACBB obtained permission to form BITS. Plaintiffs allege that they became increasingly concerned about what they perceived as significant changes to the BITS Operating Structure from the structure laid out in the LONO. Plaintiffs and Defendants disagree about the nature of a series of conversations that followed. It is not disputed that, at a meeting in Philadelphia on March 26, 2013, Plaintiffs were informed by Evans and another ACBB Board Member that they were 4 being terminated. They were given letters of termination notifying them that the effective date of their termination would be September 30, 2013. 4 Plaintiffs state they were fired by Evans and an ACBB Board member; the letters were on ACBB letterhead. Plaintiff’s Brief at 16, citing Plaintiff’s Exhibit A. Defendants aver Plaintiffs were fired by BITS. Defendants’ Brief at 4. 4 Plaintiffs characterize the lead-up to their firing as a drawn out period in which they repeatedly threatened to report what was happening and Evans stalled. Plaintiffs alleged in March 2011, they had a conversations with Evans in which they informed him that if the terms of the Operating Agreement were not restored they would exercise the constructive termination clauses in their contracts and notify regulators of what they perceived to be ACBB’s malfeasance in managing BITS. Plaintiffs’ Brief at 13. Plaintiffs allege that over the course of approximately the next two years, they had several more conversations with Evans, where Evans acknowledged their concerns and asked for time to convince the ACBB Board to make the requested changes. Id. Plaintiffs said they repeatedly asked to speak to the ACBB Board about the issue. Plaintiffs allege Daniels also met with another ACBB Board Member on March 1, 2013, where he “express\[ed\] his position that ACBB had violated his Employment Agreement and the terms of the LONO, and that Plaintiffs would seek regulatory review of ACBB’s actions if they were not permitted an audience with ACBB’s Board to address their concerns.” Plaintiffs’ Brief at 15. Plaintiffs also had a conference call with Evans and two other members of the ACBB Board where they “reiterated their threats to contact the regulators”. Plaintiffs’ Brief at 15. On April 4, 2013, Plaintiffs notified ACBB and Evans that they would be exercising the constructive termination clauses of their employment agreements. Defendants’ Exhibits I & J. They continued to receive their regular salary payments until May 9, 2013, when Plaintiffs were notified by letter that ACBB and BITS would accept their assertion of constructive termination of employment. Defendants’ Exhibits FF & GG. They received payments pursuant to the constructive termination clause dated May 8 or May 9, 2013. Id. In an effort to comply with mandatory arbitration clauses in their Employment Agreements which Plaintiffs believed were binding on this dispute, Plaintiffs submitted a demand for arbitration in December 2013. In January 2014, Defendants filed a Petition to Stay Arbitration in the Cumberland County Court of Common Pleas, arguing that the dispute was not in fact covered by the arbitration agreement. The Petition was stayed; 5 Plaintiffs timely appealed. While that appeal was pending, they filed a Writ of Summons initiating the instant suit on April 14, 2014. Defendants filed the instant Motion for Summary Judgment on March 18, 2016. Plaintiffs filed an Answer in Opposition on May 5, 2016. Both sides submitted briefs in support of their positions. Oral argument was heard on June 3, 2016. DISCUSSION The standard for granting summary judgment in Pennsylvania is well-settled. Summary judgement is proper where: 1) there is no genuine issue of material fact as to a necessary element of the cause of action, or 2) where, after the completion of discovery relevant to the motion, the party who will bear the burden of proof at trial has failed to produce evidence of the facts essential to his cause of action. Pa.R.C.P. 1035.2. The burden is upon the moving party to establish the nonexistence of a genuine issue of material facts. Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 468-69 (Pa. 1979). Where the non-moving party bears the burden of proof on an issue, he may not rely on the pleadings in order to survive summary judgment. Myers v. Penn Traffic Co., 606 2.2d 926, 928 (Pa. Super. 1992). The record must be viewed in light of the most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Marks v. Tasman, 589 A.2d 205, 206 (1991). Summary judgment may only be granted where it is clear and free from doubt that the moving party is entitled to summary judgment as a matter of law. Fine v. Checcio, 879 A.2d 850, 857 (2005). In the instant case, the pleadings are closed and all discovery relevant to the motion had been completed. Viewing the record in the light most favorable to the nonmoving party, Defendants have not established that it is clear and free from doubt that they are entitled to summary judgment on the whistleblower claim. Defendants have established they are entitled to summary judgment on the unjust enrichment claim. 6 A. WHISTLEBLOWER CLAIM 1.Choice of Law Analysis Indicates New Jersey’s CEPA Applies Defendants argue Plaintiffs’ claim fails under a choice of law analysis, contending 5 the Pennsylvania “whistleblower” statute, 43 P.S. §1423 et seq, not New Jersey’s, N.J. Stat. § 34:19-1 et seq, should apply in this case. The Pennsylvania Whistleblower Statute in operation in this case does not protect employees of private businesses. Because Plaintiffs bring their claim based on occurrences while they were employees of a private business, if the Pennsylvania law applies, summary judgment should be granted. However, New Jersey’s law does apply to employees of private businesses. Under that statute, Plaintiffs’ claim would not necessarily be subject to automatic dismissal. Therefore, a choice of law analysis is necessary. Choice of law analysis utilizes choice of law rules of the forum state. Sheard v. J.J. De Luca Co., 92 A.3d 68, 76 (Pa. Super. 2014). Because Pennsylvania is the forum state, Pennsylvania choice of law principles apply. There are two necessary steps. First, the court must decide if an actual conflict exists. If a conflict does exist, the Courts use a flexible conflicts methodology, which combines the significant relationship test and the government interest test. See, Kuwait & Gulf Link Transport Co., et al., v. John Doe, et al., CCCP 2012-2810, 12-14 (2012) (In Re: Petition to Transfer Venue for Forum Non Conveniens Of Defendants Agility DGS Holdings, Inc., Agility Defense & Government Services, Inc., and Agility International, Inc., September 4, 2012, Hess, P.J.) Actual conflict exists where applying the law of one state would impair the interests of another state. Where state statutes are superficially in conflict, but applying the law of one state would not actually impair the interest of the other state, then there is a false conflict. Budget Rent-A-Car Systems, Inc. v. Chapell, 407 F.3d 166, 170 (3d Cir. 2005) citing Jejeune v. Bliss-Salem, Inc., 85 F.3d 1069, 1071 (3d. Cir. 1996) and Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 n15 (3d. Cir. 1991) . “The first step in a choice 5 (prior to 2014 amendment) 7 of law analysis under Pennsylvania law is to determine whether a conflict exists between the laws of competing states. If no conflict exists, further analysis is unnecessary.” Budtel Associates, LP v. Continental Casualty Co., 915 A.2d 640, 643 (Pa Super 2006). In Budget Rent-A-Car Sys., Inc. v. Chappell, the Third Circuit found a false conflict where one state’s law clearly did not apply, but the other state’s law did. “If Michigan’s \[statute\] does not apply to this case, then only New York has an interest in applying its law and this case would be a ‘false conflict.’ New York law would clearly apply.” Budget Rent-A-Car Sys., Inc. v. Chappell, 407 F.3d 166, 176 n.8 (3d Cir. 2005). It is true the courts have found that New Jersey’s CEPA and Pennsylvania’s Whistleblower statute are in conflict in certain instances because CEPA is much broader in scope. See Berrodin, 2004 U.S. Dist. LEXIS 20411, 2004 WL 2260671, at *2; Ballinger v. Delaware River Port Authority, 800 A.2d 97, 105-06 (N.J. 2002) (finding CEPA broader than Pennsylvania's Whistleblower laws in a case where plaintiff sued the Delaware River Port Authority for wrongful termination). However, Ballinger is distinguishable from the instant case. In Ballinger, supra, the plaintiff who sought protection under CEPA was an employee of the Delaware River Port Authority, a bi-state agency created by compact between Pennsylvania and New Jersey. The court found that where a bi-state agency is created by compact, common law applies, and the statute of one state can only control if it is substantially similar to complementary or parallel legislation of the other state. The plaintiff could not have brought suit under either state’s whistleblower law. Defendant’s claims in the instant case present a false conflict. There is no dispute that Plaintiffs both worked for BITS, a private company, in New Jersey. BITS and ACBB were incorporated in Pennsylvania, and ACBB operates in Pennsylvania. CEPA’s application is not limited, however, only to employees of companies organized in New Jersey. CEPA is broader such that it protects employees who work in New Jersey, regardless of where their employer was organized or is primarily located. Pennsylvania’s Whistleblower law simply does not protect employees of private businesses. New Jersey’s law might offer the Plaintiffs relief; Pennsylvania’s definitely will not. The 8 Defendant, then, asks this Court to find a true conflict where Pennsylvania’s absence of protections for employees of private companies “conflicts” with New Jersey’s explicit protections for those employees. In accord with the reasoning in Budget Rent-A-Car Sys., Inc. v. Chappell, supra, this Court will not reach that conclusion. Furthermore, if there were a true conflict of law, a cursory application of the false conflicts methodology commands that New Jersey’s law be applied. The first part of the flexible conflicts methodology is determining “which state had the most significant contacts or relationship with the \[particular issues at hand\].” Budtel Associates, LP v. Continental Casualty Co., 915 A.2d 640, 643 (Pa Super 2006). Defendant argues Pennsylvania has the most significant relationship because BITS and ACBB were both incorporated in Pennsylvania, and Jon Evans worked for ACBB in Pennsylvania. However, the record is clear that Plaintiffs normally worked in New Jersey, where the BITS offices were located. While certain conversations took place at meetings in Philadelphia , and ACBB and Jon Evans directed Plaintiffs and BITS from Mechanicsburg/Camp Hill, PA, BITS operated in New Jersey and any actions taken by Defendants were directed at BITS and Plaintiffs’ regular course of work, which took place in New Jersey. New Jersey clearly had the most significant contact with Plaintiffs and BITS. Manifestly, New Jersey has a stronger governmental interest, the second prong of the flexible conflicts methodology. Again, Pennsylvania’s Whistleblower statute does not apply to employees of private companies, while CEPA does, and this Court cannot find one state’s absence of explicit protection outweighs another state’s explicit affirmative protection. In Budget Rent-a-Car Systems, Inc. v. Chappell, 407 F.3d 166, 176 n.8 (3d Cir. 2005), a case where the court had to resolve possible conflict between Michigan and New York law, the court reasoned, “If Michigan’s \[statute\] does not apply to this case, then only New York has an interest in applying its law and this case would be a ‘false conflict.’ New York law would clearly apply. Budget Rent-a-Car Systems, Inc. v. Chappell, 407 F.3d 166, 176 n.8 (3d Cir. 2005). The language here implicates a false conflict analysis but it also incorporates analysis of governmental interest. Where 9 one state’s law does not apply, but another’s state’s does, the state whose law applies has the greater interest. Thus, even if the Pennsylvania Whistleblower Law and New Jersey’s CEPA do in fact present a true conflict in this case, New Jersey has a greater interest under the flexible conflict methodology and New Jersey law should apply. 2. Plaintiffs Have Established a Prima Facie Claim Under CEPA To establish a prima facie claim under CEPA, an employee must prove: 1) the employee engaged in protected activity, 2) his employer subsequently took adverse action against him; and 3) a causal link exists between his protected activity and his employer's adverse decision. Schlichtig v. Inacom Corp., 271 F. Supp. 2d 597, 612, (D.N.J. 2003) (internal citations omitted). Defendants argue Plaintiffs have failed to establish any of the three elements. Defendants argue Plaintiffs were not employees of ACBB or Jon Evans, that they did not engage in a protected activity, that there was no adverse action taken against them, and, even if there was, no nexus existed between the Plaintiffs’ activities and the adverse employment actions. Defendants also argue that if the other elements of the claim were met, the action was not filed within the applicable statute of limitations. a. Plaintiffs and Defendants had an Employer-Employee Relationship Defendants argue Plaintiffs were not “employees” of ACBB or Jon Evans because they “performed services for and received wages and other enumeration from BITS”, not ACBB, “pursuant to their respective employment agreement with BITS.” Defendant’s Brief at 25. Plaintiffs counter that Jon Evans and ACBB exerted a very high degree of control over BITS as a whole and Plaintiffs individually, such that though Plaintiffs were CEO and CFO, respectively, of BITS, they worked under the control and direction of ACBB. Under CEPA, an “employer” is “any individual partnership, association, corporation or any person or group of persons acting directly or indirectly on behalf of or in the interest of an employer with the employer’s consent…” N.J.S.A. 34:19-2. An “employee” is defined as, “Any individual who performs services for and under the 10 control and direction of an employer for wages or other remuneration." N.J.S.A. 34:19-2. The corporate entity that signs an employee’s paycheck is not necessarily the only “employer” a plaintiff has. See, Massarano v. New Jersey Transit, 948 A.2d 653, 664- 665 (N.J. Super. 2008) (Finding a plaintiff was not automatically disqualified from CEPA protection when she brought suit against New Jersey transit, even thought she was contracted by Gateway, because it was clear that New Jersey Transit supervised and controlled her employment.) An individual defendant, like Defendant Evans, may be considered an employer under CEPA where he acts with the authorization of the employer and exercises control over the employee. Espinosa v. Continental Airlines, 80 F.Supp.2d 297, 306 (D.C.N.J. 2000). Though Plaintiffs were, respectively, the CEO and CFO of BITS, and compensated under the terms of their Employment Agreements with BITS, the record shows they worked under the control and direction of ACBB and Jon Evans. As noted, Evans was the “Managing Member” of BITS and ran the “Managing Member’s Executive Committee, which meet weekly or bi-monthly and exerted substantial influence over BITS operations. Ex. FF at ¶12 -18. Per the Operating Agreement, The business and affairs of \[BITS\] shall be managed by its Managing Member…the Managing Member shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the LLC, to make all decisions regarding those matters and to perform any and all other acts and activities customary or incident to the management of the LLC’s Business. Exhibit E, Operating Agreement §10. Evans also had “the exclusive power to appoint any person to \[officer positions for BITS\], or from time to time, create, such officers of the LLC, who shall serve at the exclusive pleasure of the Managing Member.” Operating Agreement, §20. The Managing Member’s Executive Committee (MMEC) was comprised of five members, three of whom were ACBB executives. See, Defendant’s Brief at 9. Evans and the MMEC controlled decision making and business operations at BITS. They received weekly or bi-weekly reports from Dalvi and or Daniels and gave them to-do lists for completion; Daniels and Dalvi could not make business purchases, 11 hire staff, or set budgets without approval of Evans and the MMEC. Defendant’s Exhibits K, Dalvi. Dep. Tr.; Defendant’s Exhibit I, Daniels Dep. Tr.; Defendants’ Exhibit FF, Daniels Affidavit. When BITS moved premises to a different rented office space, Daniels had to seek approval of Evans and the ACBB Board of directors before signing the lease. Exhibit FF, Daniels Affidavit. Importantly, the record shows Plaintiffs did not have the power or authority to correct wrongdoing. Plaintiffs did not have the power to change the BITS Operating Agreement. They could not undo what they saw as malfeasance; they had to ask Evans to convince the ACBB Board of Directors to do so. Finally, where the Defendants argue that Plaintiffs could not be employees of ACBB because they were paid or compensated by BITS, their argument is unsupported 6 by case law. See Massarano, 948 A.2d 653 (N.J. Super. 2008). In light of the foregoing, the record establishes that the relationship between Plaintiffs and Defendants may be characterized as an “employer-employee” relationship under New Jersey law. The Defendants are not entitled to summary judgment on this point. b. Plaintiffs Have Alleged They Were Engaged in a Protected Activity Defendants argue Plaintiffs have not alleged they were engaged in the type of whistleblowing activity CEPA protects. Protected activities under CEPA include instances where an employee: a.Discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer, or another employer, with whom there is a business relationship, that the employee reasonably believes: 1)is in violation of a law, or a rule or regulation promulgated pursuant to law…; 2)is fraudulent or criminal …; b.Objects to, or refuses to participate in any activity, policy, or practice which the employee reasonably believes: 1)Is in violation of law, or a rule or regulation promulgated Pursuant to law …; 2) Is fraudulent or criminal …: N.J.S.A. 34:9-3. 6 There is a note of disingenuousness to Defendants’ argument on this point where Plaintiffs were compensated under terms set by Defendants. 12 Specifically, Defendants alleges Plaintiffs’ claims fails because Plaintiff have failed to establish they had an objectively reasonable belief the conduct they threatened to report was in violation of established law or policy. Defendants argue that Plaintiffs merely threatened to ask for a “review” of the changes made to the BITS operating structure, without going into details about exactly which actions they thought would violate exactly which regulations or laws. Defendants’ Brief at 8-9. Defendants further allege the LONO obtained from the Pennsylvania Department of Banking does not constitute a “‘law, rule, or regulation promulgated pursuant to law,’ nor do its contents ‘constitute a clear mandate of public policy.” See, Defendants’ Brief at 25-26. Plaintiffs argue that they engaged in exactly the type of activity CEPA intends to protect, because their threats to ask the Pennsylvania Department of Banking to review the changes to BITS’ operating structure might reveal wrongdoing or fraud, and because they were forced to exercise their constructive termination options because they did not want to continue working with BITS under the changed distribution/shares structure. The courts of New Jersey have reasoned that CEPA is a remedial statute, and “should be construed liberally to effectuate its important social goal.” Abbamont v. Piscataway Twp. Bd. Of Educ., 650 A,2d 958, 971 (N.J. 1994); D'Annunzio v. Prudential Ins. Co. of America, 927 A.2d 113, 119, (N.J. 2007) (providing that, as broad, remedial legislation, the statute must be construed liberally). The Courts have articulated that CEPA does not provide protection for employees “who simply disagree with the lawful policies, procedures, or priorities of the employer.” Hitesman v. Bridgeway Inc., 63 A.3d 230, 238 (N.J. Super. Ct. App. Div. 2013), aff’d 93 A.2d 306 (N.J. 2014). The court has ruled it is important for a party to identify an authority in one or more of the enumerated categories (law, rule, or regulation promulgated pursuant to law). Hitesman, 93 A.3d at 238-239. The reporting employee’s belief must be a reasonable one. Battagli v. United Parcel Service, Inc., 70 A.3d 602, 626 (N.J. 2013). The decisive question, then, is not whether Defendants actually engaged in activities, policies or practices, that constituted 13 “a violation a law, or a rule or regulation promulgated pursuant to law” or was “fraudulent or criminal”, but whether Plaintiffs had an objectively reasonable belief that Defendants were doing so. Mehlman v. Mobil Oil Corp., 291 N.J. Super 98, 123 (N.J. Super. 1996). It is clear from the record that all parties involved found it necessary to obtain the LONO before officially forming BITS. Plaintiffs Daniels and Dalvi credibly alleged they believed the various changes to the Operating Agreement were in contravention of the LONO. Defendants do not dispute changes were made; they simply argue that the changes were not a violation of any type of law, regulation, or policy. Defendants focus on whether the LONO is actually a law, rule, or regulation promulgated pursuant to a law. However, this Court cannot read into CEPA a requirement that potential whistleblowers be required to recite chapter and verse of the law or policy they believe is being violated, or even be able to correctly identify the ultimate authority that would eventually be responsible for investigating the wrongdoing. A Plaintiff is not required to show that the relevant legal authority or public policy actually would be violated if all the facts alleged are true. Hitesman, 93 A.3d at 238. Indeed, such a requirement would likely have a deterrent effect that would undermine the statute. The purpose of CEPA is to protect employees who are willing to come forward and report an employer’s potential wrongdoing. As Defendants point out, Plaintiffs notified them that they (Plaintiffs) intended “to go to the regulators…and ask for a complete review of the letters of non- objection, all of the related materials… \[see\] if the regulators believed that ACBB and Mr. Evans kept their promises in the letters of non-objection and operated BITS in accordance with the operating agreements that was submitted in 2005.” Defendants’ Exhibit C, Daniels Dep. Tr. 254:9-16, cited in Defendant’s Brief at 8. A “complete review” could certainly have serious consequences for ACBB/BITS. Plaintiff Dalvi testified that they were also concerned the changes might allow for a conclusion that the shareholders were being defrauded. Plaintiff’s Exhibit II, Dalvi Dep. Tr. 30:22-33:22. 14 Plaintiffs’ belief that ACBB/BITS would be held to the standard set out in the LONO was not unreasonable. Under the circumstances, it strains credibility to accept Defendants’ argument that Plaintiffs did not have a reasonable belief they were threatening to report a violation of law, statute, or regulation. At the very least, as Plaintiff argues, there are disputed questions of material fact as to exactly what kind of law, rule, or regulation Plaintiffs believed were being violated. Therefore, Plaintiffs are not entitled to summary judgment on this point. c. Plaintiffs Have Sufficiently Alleged They Suffered an Adverse Employment Action Defendants argue Plaintiffs did not suffer an “adverse employment action” because they resigned before they could be fired. Plaintiffs were informed they would be terminated on March 26, 2013, with an effective termination date of September 30, 2013. Defendants’ Exhibits G & H. However, on April 4, Plaintiffs informed BITS they were exercising their right to constructive termination, effective April 5, 2013. Defendants’ Exhibits I & J. Therefore, Defendants argue, there was no “retaliatory action” because Plaintiffs resigned. Defendants’ argument is incorrect. Plaintiffs exercised their constructive termination clause after they were notified they were going to be terminated. This court cannot imagine how such circumstances would not be considered an adverse employment action. To the extent Defendants argue there was no nexus between Plaintiffs’ engaging in the protected action and the adverse employment action – in other words, that there was no retaliation – that is a disputed question of material fact. Question of facts are for the jury to resolve. Defendants are not entitled to summary judgment on this point. d. Plaintiffs’ Claims Are Not Barred by the Statute of Limitations Defendants argue in the alternative that Plaintiffs filed their claim outside the applicable statute of limitations. Defendants’ Brief at 21. Defendants allege the one year statute of limitations as prescribed by CEPA began to run on April 5, 2013, the effective date of Plaintiffs’ resignation under the constructive termination clause, and because they did not file their Writ of Summons until April 14, 2014, their claim is barred by the 15 statute of limitations. Defendants’ Brief at 23. Importantly, Defendants continued to pay Plaintiffs bi-weekly salary until May 9, 2013 when Defendants notified Plaintiffs they would accept Plaintiffs’ constructive employment termination. We find Plaintiffs’ claim is not barred by the Statute of Limitations. The last date of employment was the last date Plaintiffs and Defendants had a business relationship. Plaintiffs termination was not final and effective until Defendants accepted their notice of constructive termination on May 9, 2013, as evidenced by the fact they paid Plaintiffs until then. See Daniels v. Mutual Life Insurance Co., 773 A.2d 718, 720-21 (N.J. Super. 2001) (finding CEPA claim accrues on date when employee’s termination is effective). Until Plaintiffs were actually terminated, Defendants’ “seemingly final decision may have been reconsidered and perhaps reversed.” Id. at 721. Therefore, the one-year statute of limitations ran on May 9, 2014. B. UNJUST ENRICHMENT CLAIM Plaintiffs allege Defendants were unjustly enriched where Plaintiffs built BITS into a valuable corporate enterprise, but were denied the rewards they had been promised when they entered into the venture – namely, distribution of shares of BITS’ net income after BITS became successful. Defendants counter that any benefits conveyed on them by Plaintiffs were indirect, and Plaintiffs do not have standing to bring a claim for unjust enrichment. The parties dispute that Plaintiffs conferred a benefit on the Defendants and that Defendants appreciated the benefit. Plaintiffs argue they conveyed a benefit on Defendants where they built BITS into a valuable income-generating subsidiary for the benefit of ACBB, while Defendants argue ACBB has yet to recover all of its initial 7 investment. Furthermore, Defendants argue that Plaintiffs cannot invoke unjust 7 By the time Plaintiffs left or were forced out of the company, ACBB had invested $6.9 million in BITS; BITS generated net income in the amount of approximately $1.7 million in 2014, a portion of which was distributed to ACBB via its ownership shares. 16 enrichment where they were compensated under the terms of their Separation Agreements. To prevail on a claim of unjust enrichment, a party must prove all of the following: 1) the plaintiff conferred a benefit on the defendant, 2) the defendant appreciated such a benefit, and 3) the defendant accepted and retained the benefit under such circumstances that it would be inequitable for the defendant to retain the benefit without payment of value. Styer v. Hugo, 619 A.2d 347, 350 (Pa. Super. 1993). The most significant element of the doctrine is whether the enrichment of the defendant is unjust; the doctrine does not apply simply because the defendant may have benefited as a result of the actions of the plaintiff. Id. Furthermore, where unjust enrichment is found, the law implies a quasi-contract which requires the defendant to pay to plaintiff the value of the benefit conferred. Schenck v. K.E. David, Ltd., 666 A.2d 327, 328-329 (Pa. Super. 1995). In other words, the defendant makes restitution to the plaintiff in quantum meruit. Id. at 329. Unjust enrichment does not apply where there is a contract between the parties. Third National Bank & Trust Co. of Scranton v. Lehigh Valley Coal Company. 353 Pa. 185, 193 (Pa. 1945). Following a thorough review of the record, the briefs of the parties, and caselaw, we agree with Defendants that they are entitled to summary judgment as the Plaintiffs have failed to meet the requirements to bring this claim. The Plaintiffs were compensated, even upon leaving, according to the terms of their Employment Agreements. Plaintiffs have not adduced evidence that they have been directly injured by Defendants unjustly. Any indirect injury Plaintiffs claim here, as employees of BITS (and under the control of ACBB), by the conduct of Defendants is not sufficient to meet out a claim for unjust enrichment. See Hill v. Ofalt, 85 A.3d 540 (Pa. Super. 2013). As such, Defendants have established they are entitled to summary judgment as a matter of law. 17 CONCLUSION In conclusion, we find that there is a false conflict of law between Pennsylvania’s whistleblower statute and New Jersey’s CEPA law. We further find that if there were a true conflict of law, analysis of the instant facts under the false conflicts methodology commands that New Jersey’s CEPA law be applied. Following review of the record, we discern that Plaintiffs have established a prima facie claim under CEPA, and, accordingly Defendants’ Motion for Summary Judgment on this point will be denied. Plaintiffs have not, however, met out a claim for unjust enrichment as any benefit conferred on Defendants was indirect and a product of the contractual relationship between BITS and ACBB. Accordingly, the unjust enrichment claim will be dismissed. BY THE COURT, ________________________ Christylee L. Peck, J. Jack Meyerson, Esq. Laura Siegle, Esq. MYERSON & O’NEILL 1700 Market Street, Suite 3025 Philadelphia, PA 19103 Attorneys for Plaintiffs Michael Crocenzi, Esq. Kathryn E. Peters, Esq. GOLDBERG KATZMAN 4250 Crums Mill Road Suite 301 Harrisburg, PA 17112 Attorneys for Defendants 18