New Jersey Supreme Court Confirms Employee Can Be Criminally Prosecuted For Theft of Employer Documents

In its recent landmark ruling in State v. Saavedra, the New Jersey Supreme Court ruled that a former school board employee who was pursing discrimination and retaliation claims against the school could be criminally prosecuted for removing confidential school documents she claimed would aid her in pursuing those legal claims. This decision was somewhat of a surprise in light of the court’s 2010 ruling in Quinlan v. Curtiss-Wright Corp., that an employee’s theft and use of confidential personnel documents to assist her discrimination lawsuit against her employer was protected activity under the New Jersey Law Against Discrimination (LAD).

The upshot if these two rulings is that while an employee who steals corporate documents may not necessarily be fired for doing so, they might be subject to criminal prosecution under certain circumstances.

The Facts: Ivonne Saavedra was a clerk for the North Bergen Board of Education (the Board) who filed suit against the Board alleging discrimination and retaliation claims in violation the LAD and the Conscientious Employee Protection Act (CEPA). During discovery, Saavedra produced over 350 documents, including original and copies of confidential documents in violation of Board policies. Many of the documents contained sensitive educational and medical information about students, information that the Board was prohibited from disclosing to third parties by federal and state law. The Board notified the Hudson County prosecutor who in turn secured an indictment against Saavedra for official misconduct and theft. Saavedra efforts to dismiss the indictment were unsuccessful at the trial and appellate level, and the Supreme Court affirmed.

The Court’s Holding: The Supreme Court rejected Saavedra’s claim that the indictment violated the anti-discrimination provision of the LAD, CEPA and the court’s prior holding in Quinlan because she took the documents for lawful use in her employment discrimination action against the Board. The court noted that the Quinlan decision did not involve a criminal proceeding, and further, rejected Saavedra’s argument that the decision “legalized the right of employees to take confidential documents as a protective measure” when prosecuting discrimination claims under the LAD, adding that “employers legitimately expect. . . that they will not be required to tolerate acts amounting to self-help or thievery.” Rather, Quinlan announced a following seven factor test to determine whether an employee’s theft of documents was protected activity under the LAD: 1) how the employee came into possession of the documents; 2) what did the employee do with the documents; 3) what is the employers interest in keeping the documents confidential; 4) did the disclosure violate company policy on confidentiality; 5) what were the circumstances of disclosure; 6) what was the reason for stealing the documents rather than lawfully seeking them in discovery; and 7) what effect will sanctioning of the employee’s behavior have upon the remedial purposes of the LAD and the balancing of the employer’s and the employee’s legitimate rights.

Although the Court declined to dismiss the criminal indictment against Saavedra, it cautioned that the same evidence could nevertheless be used to establish that the theft of documents in fact constituted protected activity under the LAD under the Quinlan test, which in turn could be used to support a justification defense in the criminal proceeding.

The Take Away: Although the Saavedra decision may appear to be a retrench from Quinlan, employers should not read the opinion so broadly. First, the opinion may be limited to its facts because in that case the employee was a public servant who stole highly confidential student information, including medical documents protected from disclosure by law, not run-of-the-mill corporate personnel documents like those at issue in Quinlan which would be far less likely to prompt criminal action by a prosecutor. Employers should consider whether the circumstances of each case warrant a criminal prosecution.

In addition, while employees must now consider the prospect of prosecution before deciding to steal corporate documents, employers who discipline employees for theft of documents still face the possibility of civil litigation claiming that the theft was LAD- protected activity under the Quinlan seven-factor test. Guidance from employment counsel should be sought before undertaking a decision to terminate or criminal prosecute an employee for theft of corporate documents.