CATHERINE COSTA VS. TOTAL REHAB & FITNESS (L-3548-14, CAMDEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0598-17T4

CATHERINE COSTA,

Plaintiff-Appellant,

v.

TOTAL REHAB & FITNESS
and JOHN MARMAROU,

Defendants-Respondents.
____________________________

Submitted January 9, 2019 – Decided June 5, 2019

Before Judges Nugent and Reisner.

On appeal from Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-3548-14.

Law Offices of Leo B. Dubler, III, LLC, attorneys for
appellant (Leo B. Dubler, III and Mark R. Natale, on
the briefs).

Capehart & Scatchard, PA, attorneys for respondents
(Ralph R. Smith, III, on the brief).

PER CURIAM
 Plaintiff, Catherine Costa, appeals from the Rule 4:6-2(e) dismissal for

failure to state a claim of her original complaint's first count, which alleged a

violation of the Conscientious Employee Protection Act (CEPA), N.J.S.A.

39:19-1 to – 14. She contends her CEPA allegation — that Total Rehab &

Fitness and its principal, John Marmarou, terminated her employment after she

complained to Marmarou he was not paying her a full wage — stated a CEPA

claim. Although we conclude plaintiff's complaint failed to state a CEPA claim

because it did not identify the law, rule, regulation, or public policy defendants

allegedly violated, we also conclude the trial court erred by dismissing the

complaint with prejudice. Generally, a Rule 4:6-2(e) dismissal should be

granted without prejudice to file an amended complaint. We reverse and remand

to permit plaintiff to file an amended complaint within twenty days of the date

of this decision.

This action's procedural history is somewhat tangled. Plaintiff

commenced this action in September 2014 when she filed a complaint and

purported to plead two causes of action against defendants. The complaint's first

count purported to state a CEPA claim. The complaint's second count purported

to state a cause of action under the New Jersey Law Against Discrimination

(LAD), N.J.S.A. 10:5-1 to -42.

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 Defendants filed a motion to dismiss the complaint pursuant to Rule 4:6-

2(e) for failure to state a claim upon which relief could be granted. The trial

court granted the motion and dismissed the CEPA claim with prejudice but

dismissed the LAD claim without prejudice to plaintiff's right to file an amended

complaint within twenty days.

Rather than file an amended complaint, in February 2015 plaintiff filed a

notice of appeal. The trial court's order was interlocutory; it did not dispose of

all claims against all parties but instead provided that plaintiff could amend her

complaint and pursue the LAD claim. The appeal was eventually dismissed

because it was interlocutory. In March 2015, the trial court granted plaintiff's

motion to amend her complaint.1

The parties apparently engaged in discovery and eventually settled the

claims pled in the amended complaint. In August 2017, they filed a stipulation

of dismissal with prejudice, which stated among other things, "[t]he matter in

difference . . . having been amicably adjusted by and between the parties with

regards to the claims raised by [p]laintiff in her Amended Complaint, it is hereby

1
The parties have not included a copy of the amended complaint in their
appellate appendices. In their brief, defendants assert the amended complaint
did not allege an LAD claim, but rather alleged common law causes of action
not pled in the original complaint.
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stipulated and agreed that the same be and is hereby dismissed with prejudice

and without costs against either party."

Following the filing of the stipulation, plaintiff filed a notice of appeal

from the "[o]rder entered on August 28, 2017]." There was no order; only the

parties' stipulation. 2 Nonetheless, because defendants have not opposed the

appeal based on the deficiency in the notice of appeal, we address the merits of

that provision of the trial court's January 2, 2015 order dismissing with prejudice

the first count of plaintiff's original complaint alleging a CEPA claim.

The complaint's first count alleged plaintiff worked as an occupational

therapist for Total Rehab & Fitness for five months from April 2013 until she

was terminated in September 2013. According to the complaint, plaintiff

"signed an employment contract that had a scaled compensation system,

depending on how many patients visited [her] during the week." The complaint

alleges she was "frequently not paid commensurate with the scale in her

employment contract."

2
Subject to some exceptions not applicable to this case, appeals as of right from
trial courts to the Appellate Division "may be taken . . . from final judgments."
R. 2:2-3(a). However, a judgment or order entered with the consent of each
party is not appealable. Winberry v. Salisbury, 5 N.J. 240, 255 (1950).

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 The complaint details the pay periods when plaintiff claims she was

shorted. For the three pay periods ending June 22, July 6, and July 20, she was

paid $97.15, $193.07, and $192.31, respectively, less than her contractual rate.

She notified Marmarou of the shortages, and he agreed to pay the difference, but

he said her employment contract had to be reworded and she was misinterpreting

it. Contrary to his representation, he did not pay her the difference.

During the two pay periods in August, plaintiff received $192.32 and

$385.23 less than her contractual rate. She notified Marmarou and said she

wanted the current paycheck corrected, as he had not paid her any of the overdue

amounts. He gave her a check for part of what he owed, but for the first pay

period in September, which ended September 14, she received a paycheck for

$576.16 less than she was due under her employment contract. In a September

18 email, plaintiff notified Marmarou and requested preventative measures be

implemented, as a pattern of increasing shortages had developed.

Marmarou responded in an email he sent the same day. The complaint

alleges it was clear from Marmarou's email he "was angry at [plaintiff's]

legitimate complaint of his illegal pay practices, and he intended to retaliate

against her for it." He accused plaintiff of being "demanding" and said he was

"not comfortable" with the way she addressed him. He wrote, "In all honesty I

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pay you very well and you come off very demanding in these emails." The

complaint asserts, "It was clear that Marmarou felt that since he paid [plaintiff]

well, he could withhold part of her salary and get away with it." Marmarou's

email ended with this: "I will talk to you about this tomorrow but I am not happy

with this email."

When they met the next day, Marmarou terminated plaintiff's

employment. Plaintiff alleged in her complaint that she "was terminated in

retaliation for her legitimate complaints about Marmarou and Total Rehab's

illegal pay practices." She further alleged Marmarou also retaliated against her

by misleading her about, and trying to revoke, her health care benefits.

Plaintiff asserted in the complaint that Marmarou fired her because she

complained about "illegal wage theft" in violation of CEPA. The complaint did

not identify any law, rule, regulation, or public policy defendants allegedly

violated, and did not mention the Wage Payment Act, N.J.S.A. 34:11-2 to – 67

(the Wage Act). During oral argument on defendants' motion to dismiss,

however, plaintiff argued defendants had violated the Wage Act.

The trial court determined that to be actionable under CEPA, an

employee's complaint to an employer must concern a public harm. According

to the trial court, "[t]he complained of activity must have public ramifications,

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and the dispute between the employer and the employee must be more than a

private disagreement." The court concluded that plaintiff's complaints about

shortages in three paychecks involve "a purely personal and private dispute,

insufficient to meet the elements of a CEPA claim." We disagree.

Motions to dismiss under Rule 4:6-2(e) "should be granted only in rare

instances and ordinarily without prejudice." Smith v. SBC Commc'ns, Inc., 178

N.J. 265, 282 (2004). This standard of review "is a generous one." Green v.

Morgan Props., 215 N.J. 431, 451 (2013).

[A] reviewing court searches the complaint in depth and
with liberality to ascertain whether the fundament of a
cause of action may be gleaned even from an obscure
statement of claim, opportunity being given to amend if
necessary. At this preliminary stage of the litigation
the Court is not concerned with the ability of plaintiffs
to prove the allegations contained in the complaint. For
purposes of analysis plaintiffs are entitled to every
reasonable inference of fact. The examination of a
complaint's allegations of fact required by the
aforestated principles should be one that is at once
painstaking and undertaken with a generous and
hospitable approach.

[Printing Mart-Morristown v. Sharp Elecs. Corp., 116
N.J. 739, 746 (1989) (citations omitted).]

Nonetheless, a court must dismiss a complaint if it fails "to articulate a

legal basis entitling plaintiff to relief." Sickles v. Cabot Corp., 379 N.J. Super.

100, 106 (App. Div. 2005). "[A] pleading should be dismissed if it states no

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basis for relief and discovery would not provide one." Rezem Family Assoc.,

LP v. Borough of Millstone, 423 N.J. Super. 103, 113 (App. Div. 2011).

Our review of a trial court's order dismissing a complaint under Rule 4:6-

2(e) is plenary. Gonzalez v. State Apportionment Comm'n, 428 N.J. Super. 333,

349 (App. Div. 2012). We apply the same standard as the trial court. Malik v.

Ruttenberg, 398 N.J. Super. 489, 494 (App. Div. 2008).

CEPA enumerates in N.J.S.A. 34:19-3 the employee actions it protects:

An employer shall not take any retaliatory action
against an employee because the employee does any of
the following:

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, including any violation
involving deception of, or misrepresentation to, any
shareholder, investor, client, patient, customer,
employee, former employee, retiree or pensioner of the
employer or any governmental entity, or, in the case of
an employee who is a licensed or certified health care
professional, reasonably believes constitutes improper
quality of patient care; or

(2) is fraudulent or criminal, including any activity,
policy or practice of deception or misrepresentation
which the employee reasonably believes may defraud
any shareholder, investor, client, patient, customer,

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employee, former employee, retiree or pensioner of the
employer or any governmental entity;

b. Provides information to, or testifies before, any
public body conducting an investigation, hearing or
inquiry into any violation of law, or a rule or regulation
promulgated pursuant to law by the employer, or
another employer, with whom there is a business
relationship, including any violation involving
deception of, or misrepresentation to, any shareholder,
investor, client, patient, customer, employee, former
employee, retiree or pensioner of the employer or any
governmental entity, or, in the case of an employee who
is a licensed or certified health care professional,
provides information to, or testifies before, any public
body conducting an investigation, hearing or inquiry
into the quality of patient care; or

c. Objects to, or refuses to participate in any activity,
policy or practice which the employee reasonably
believes:

(1) is in violation of a law, or a rule or regulation
promulgated pursuant to law, including any violation
involving deception of, or misrepresentation to, any
shareholder, investor, client, patient, customer,
employee, former employee, retiree or pensioner of the
employer or any governmental entity, or, if the
employee is a licensed or certified health care
professional, constitutes improper quality of patient
care;

(2) is fraudulent or criminal, including any activity,
policy or practice of deception or misrepresentation
which the employee reasonably believes may defraud
any shareholder, investor, client, patient, customer,
employee, former employee, retiree or pensioner of the
employer or any governmental entity; or

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 (3) is incompatible with a clear mandate of public
policy concerning the public health, safety or welfare
or protection of the environment.

Thus, a plaintiff must allege four elements to state a CEPA claim: (1) the

plaintiff reasonably believed the employer's conduct violated a law, a regulation

or a clear mandate of public policy; (2) the plaintiff performed "whistle-blowing

activity" as defined in CEPA; (3) an adverse employment action has been taken

against him or her; and (4) the whistle-blowing activity caused such adverse

employment action. See Kolb v. Burns, 320 N.J. Super. 467, 476 (App. Div.

1999). A judge determining the sufficiency of a pleading purporting to state a

CEPA claim must not overlook that CEPA does not require that the activity

complained of actually violates a law or regulation, only that the employee has

a reasonable belief that such is the case. Dzwonar v. McDevitt, 177 N.J. 451,

464 (2003).

The Wage Act mandates that "[e]xcept as otherwise provided by law,

every employer shall pay the full amount of wages due to his employees at least

twice during each calendar month, on regular pay days designated in advance

by the employer" (emphasis added). N.J.S.A. 34:11-4.2. "No employer may

hold or divert any portion of an employee's wages" unless withholding falls into

one of the categories enumerated in N.J.S.A. 34:11-4.4. Ibid.

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 The allegations in plaintiff's original complaint, liberally construed under

the standard for reviewing a motion to dismiss under Rule 4:6-2(e), would have

stated a violation of the Wage Act and in turn a violation of CEPA. Contrary to

the trial court's apparent understanding, a plaintiff need not allege a violation of

both a statute and a matter of public policy to state a CEPA cause of action. Our

Supreme Court has explained, "[c]onsistent with CEPA's broad remedial

purpose, we are satisfied that the Legislature did not intend to hamstring

conscientious employees by requiring that they prove in all cases that their

complaints involve violations of defined public policy." Estate of Roach v.

TRW, Inc., 164 N.J. 598, 610 (2000). The Court added, "[n]eedless to say, all

laws and regulations are imbued with the public interest." Ibid.; accord,

Dzwonar v. McDevitt, 177 N.J. 451, 464 (2003).

Although plaintiff did not specifically allege a violation of the Wage Act

in her original complaint, she so contended during oral argument and could have

amended the complaint to do so. Consequently, the court should have granted

the motion to dismiss the CEPA claim without prejudice and permitted plaintiff

to amend the complaint, as the court did with respect to the LAD claim. Smith,

178 N.J. at 282. Accordingly, we reverse that portion of the trial court's order

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dismissing with prejudice the count in plaintiff's original complaint alleging a

CEPA claim. Plaintiff shall file an amended complaint within twenty days.

We note that "the institution of [a CEPA] action . . . shall be deemed a

waiver of the rights and remedies available under any other contract, collective

bargaining agreement, State law, rule or regulation or under the common law."

N.J.S.A. 34:19-8. Because the parties have not raised the issue on appeal, and

because the parties have not included plaintiff's amended pleadings, we do not

address whether plaintiff's election to proceed with other causes of action

constitute a waiver of her CEPA claim. That issue, if appropriate, can be

addressed on an appropriate record before the trial court.

Reversed and remanded. We do not retain jurisdiction.

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