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SCOTUS to Have the Last Word on “Wholly Groundless” Standard for Delegation of Arbitrability

SCOTUS to Have the Last Word on “Wholly Groundless” Standard for Delegation of Arbitrability

If the parties to an arbitration agreement have agreed that an arbitrator should decide whether a dispute is arbitrable, the question of arbitrability should be decided by an arbitrator. But who should decide arbitrability when the suggestion of arbitrability is so frivolous as to be wholly groundless? Should the party resisting arbitration be required to arbitrate arbitrability before seeking judicial relief? The United States Supreme Court will soon decide. According to the United States Supreme Court, questions of arbitrability are “undeniably . . . issues for judicial determination”—“unless the parties clearly and unmistakably provide otherwise.” Thus, when contracting parties have clearly and unmistakably agreed that an arbitrator must decide questions of arbitrability, the parties’ dispute should be sent to an arbitrator in the first instance to determine whether the dispute is arbitrable. Some circuits, however, provide exception to this rule where the argument for arbitrability is “wholly groundless.” In such instances, the parties’ dispute can proceed directly to court without a stop at an arbitrator’s desk. The Fifth Circuit initially adopted this rule in Douglas v. Regions Bank, and most recently applied it in Archer and White Sales Inc. v. Henry Schein, Inc. In Archer, a dental-equipment distributor sued its...

Gibbons Attorneys Author Article Featured in New Jersey Law Journal

Gibbons Attorneys Author Article Featured in New Jersey Law Journal

Frederick W. Alworth and Jonathan S. Liss, Directors in the firm’s Commercial & Criminal Litigation Department, published the following article in the June 18 issue of the New Jersey Law Journal, after a recent decision by the New Jersey Superior Court Appellate Division made it more difficult for shareholders to challenge corporate actions in New Jersey. Is this part of a trend toward making New Jersey more business friendly? The full article can be found here.

Third Circuit Affirms the Dismissal of a Putative Class Action against TD Bank for Failure to Meet Pleading Requirements

Third Circuit Affirms the Dismissal of a Putative Class Action against TD Bank for Failure to Meet Pleading Requirements

Last month, the Third Circuit upheld the dismissal of a putative class action against TD Bank, finding that plaintiffs’ conclusory allegations lacked sufficient evidence and failed to satisfy Rule 9(b)’s heightened pleading standard for claims that sound in fraud. In MZL Capital Holdings, Inc. et al. v. TD Bank, N.A. et al., two account holders with TD Bank filed a proposed class action accusing the Bank of obscuring its exchange rates and improperly charging an embedded fee for converting foreign currency, thereby defrauding its customers in violation of the New Jersey Consumer Fraud Act. Shortly thereafter, plaintiffs amended their complaint to add claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of numerous other state consumer-protection laws. TD Bank moved to dismiss plaintiffs’ claims for failure to state a claim, and the District Court granted TD Bank’s motion, dismissing all of plaintiffs’ claims. On appeal, the Third Circuit affirmed the district court’s decision, concluding that plaintiffs’ claims were inadequately pled. At the outset, the Court re-affirmed the basic principle that claims brought under the Consumer Fraud Act sound in fraud and therefore must comply with Rule 9(b)’s particularity requirement. The Third...

Third Circuit Awards $10 Million to Plaintiff on Summary Judgment in Recent RICO Case

Third Circuit Awards $10 Million to Plaintiff on Summary Judgment in Recent RICO Case

The Third Circuit recently affirmed a summary judgment in favor of a plaintiff for more than $10 million in damages on federal and state RICO claims. In the process, the court shed light on what evidence shows an “intent to defraud a financial institution” as required to establish bank fraud. In Liberty Bell Bank v. Rogers, et al., a bank sued an individual and entities he owned and controlled, alleging, among other things, violations of the federal and New Jersey RICO statutes. The bank alleged that the defendants developed a scheme through which they fraudulently obtained loans from the bank and further defrauded it by making payments on the loans using a check-kiting scheme. On a motion for summary judgment – in response to which the individual pro se defendant failed to file a responsive statement of material facts, thereby enabling the court to deem certain facts admitted – the district court entered summary judgment in favor of the bank, holding the defendants jointly and severally liable to the bank for more than $10 million, plus attorneys’ fees and costs. The defendants appealed, and the Third Circuit affirmed. In particular, the court affirmed the district court’s finding that defendants had...

Gibbons Ranked Best Law Firm and Best Lobbying Firm in Inaugural NJBIZ Reader Rankings

Gibbons Ranked Best Law Firm and Best Lobbying Firm in Inaugural NJBIZ Reader Rankings

Gibbons P.C. has been selected as the best law firm and the best lobbying firm in New Jersey in the inaugural NJBIZ Reader Ranking Awards. The Reader Rankings were compiled through an online survey seeking the best of the best in a wide range of categories and subcategories. According to NJBIZ, “The publication of the 2017 Reader Rankings by NJBIZ is our way of recognizing the regard our readers have for the businesses in their communities. What makes the companies listed here distinct is the devotion they inspire among our region’s business leaders.” Gibbons has been recognized by numerous organizations and publications for the firm’s work on behalf of clients, including being named among the New Jersey Law Journal’s Litigation Departments of the Year, earning the top overall honors in 2014, as well as recognition for the practice areas of class actions (2017), products liability (2016), and commercial litigation (2013). The Gibbons Government Affairs Department has ranked as the #1 lawyer-lobbying firm in New Jersey for nine consecutive years, according to the New Jersey Election Law Enforcement Commission In addition, the firm and Gibbons attorneys are also consistently recognized in annual client-review publications such as the Chambers USA Guide to...

Do You Like What You’re Reading? Rate Our Blog: The ABA Journal’s “Web 100” Award

Do You Like What You’re Reading? Rate Our Blog: The ABA Journal’s “Web 100” Award

Thank you for visiting the Gibbons Business Litigation Alert blog! Content on our site, authored by members of the Gibbons Business & Commercial Litigation Department, provides timely analysis and discussion on legal and business developments within the vast litigation arena. How are we doing? To review our blog and nominate the Gibbons Business Litigation Alert for this year’s ABA Journal’s “Web 100” award, please visit abajournal.com/blawgs/web100 and share why you are a “fan” of our site (Please note: the voting process closes on Sunday, July 30). Thank you in advance for your support.

California Supreme Court’s McGill Decision Creates Confusion Over the Enforceability of Arbitration Clauses That Limit Public Injunctive Relief

California Supreme Court’s McGill Decision Creates Confusion Over the Enforceability of Arbitration Clauses That Limit Public Injunctive Relief

In McGill v. Citibank, N.A., the California Supreme Court unanimously held that arbitration clauses that waive the right to seek public injunctive relief in any forum are contrary to public policy and therefore unenforceable under California law. The decision is significant, as it potentially limits the type of the relief that is subject to arbitration. It also raises questions regarding the Federal Arbitration Act’s (“FAA”) preemption of California’s so-called Broughton-Cruz rule, which holds that agreements to arbitrate claims for public injunctive relief under the California’s Consumers Legal Remedies Act (“CLRA”), unfair competition law (“UCL”), or the false advertising law are unenforceable in California. Overall, however, the case raises more questions regarding the enforceability of arbitration clauses than it resolves. Plaintiff Sharon McGill (“McGill”) opened a credit card account with Citibank, N.A. (“Citibank”) and purchased a “credit protector” plan (“Plan”) for a monthly premium, which deferred certain credit balances when a qualifying event, such as unemployment, occurred. Although McGill’s original credit card agreement did not contain an arbitration provision, Citibank sent McGill notices in 2001 and 2005 which stated that all claims were subject to arbitration, regardless of the remedy sought, and waived the cardholder’s right to bring any claims on...

New Jersey Federal Court Relies on Spokeo to Dismiss FACTA Class Action For Failure to Allege Concrete Harm 0

New Jersey Federal Court Relies on Spokeo to Dismiss FACTA Class Action For Failure to Allege Concrete Harm

The U.S. District Court for the District of New Jersey recently relied on the U.S. Supreme Court’s opinion in Spokeo v. Robins to grant a Rule 12(b)(1) motion to dismiss a statutory violation-based class action complaint for failure to allege a concrete injury. In Kamal v. J. Crew Group Inc., et al. the Court concluded that the plaintiff lacked standing to sue under the Fair and Accurate Credit Transactions Act (“FACTA”) because, as in Spokeo, the claims were based on a purely statutory injury, i.e., the plaintiff did not allege a “concrete and particularized” injury.

Third Circuit Sets Framework for Numerosity Inquiry and Lists Factors to Consider When Determining “Whether Joinder would be Impracticable” Under Rule 23(a)(1) 0

Third Circuit Sets Framework for Numerosity Inquiry and Lists Factors to Consider When Determining “Whether Joinder would be Impracticable” Under Rule 23(a)(1)

One of the prerequisites for class certification under Rule 23(a) is that “the class is so numerous that joinder of all members is impracticable,” which is commonly referred to as the “numerosity” requirement. Notably, Rule 23(a)(1) is “conspicuously devoid of any numerical minimum required for class certification.” For the first time, the Third Circuit has “provide[d] a framework for district courts to apply when conducting their numerosity analyses” in a recent precedential opinion. Defendants opposing class certification must be aware of this framework, particularly since numerosity is an often overlooked prerequisite yet may provide ample grounds for defeating certification in certain actions.