Trzaska v. L'Oreal USA, Inc.

Steven Trzaska (plaintiff) worked for L’Oreal USA, Inc. (L’Oreal) (defendant) in New Jersey as the head in-house patent attorney who oversaw the patent team and the vetting of new patent applications. L’Oreal had a quota system requiring a certain number of patent applications for new products to be filed with the United States Patent and Trademark Office (USPTO) each year. When L’Oreal subsequently implemented a new policy designed to enhance the quality of patent applications it received, the patent team received fewer applications. Trzaska became concerned that, to meet the annual quota, he might have to submit patent applications to the USPTO that he did not think were patentable. As an attorney, Trzaska was subject to rules of professional conduct that prohibited attorneys from submitting patent applications in bad faith. Trzaska reported his concern to management, saying he would not submit frivolous applications. Management responded by offering Trzaska two different severance packages, which he could either accept or keep working. Trzaska rejected both packages and was then fired. Trzaska sued L’Oreal and parent company L’Oreal, S.A. (defendant) for retaliatory termination under New Jersey’s Conscious Employee Protection Act (the act), which prohibited employers from firing an employee following disclosure of an employer’s unlawful activity or the employee’s refusal to engage in an activity the employee reasonably believed would break a rule or law in violation of public policy. Trzaska alleged that L’Oreal had implicitly directed him to disregard ethical standards and fired him for refusing to violate rules of professional conduct. L’Oreal, S.A., moved for dismissal. A district court dismissed Trzaska’s claim, holding that rules of professional conduct were not a sufficient basis for a claim under the act, and that even if they were, Trzaska had failed to allege an actual violation of a law or public policy and included no evidence in his pleadings that L’Oreal instructed him to disregard ethical standards. Trzaska appealed. At oral argument, Trzaska’s lawyer acknowledged that L’Oreal never had instructed Trzaska to submit frivolous patent applications.