Category: General Litigation

New Jersey Appellate Division Holds Rescission of Contract Also Rescinds Agreement to Arbitrate Contractual Disputes

New Jersey Appellate Division Holds Rescission of Contract Also Rescinds Agreement to Arbitrate Contractual Disputes

In a recent published opinion, the New Jersey Appellate Division held that an arbitration provision will not survive rescission of the contract in which it is contained unless the parties expressly agree otherwise, and that the issue is properly decided by the trial court and not the arbitrator. This opinion marks one more step in New Jersey’s evolving landscape regarding questions of arbitrability. In Goffe v. Foulke Management Corp., the panel considered two actions consolidated on appeal. Both actions involved consumers who attempted to purchase cars from two separate dealerships. Both consumers signed some of the initial paperwork (which contained an arbitration provision), accepted possession of the vehicle, but returned the vehicles after a few days for different reasons. When their respective security deposits for the vehicles were withheld, they each brought suit claiming wrongful conduct on the part of the dealerships. The defendant dealerships successfully moved to dismiss, asserting that plaintiffs were contractually required to arbitrate their pleaded claims. Plaintiffs appealed. After determining that issues of fact as to whether valid sales contracts had been formed and were enforceable should have prevented dismissal of the actions, the Appellate Division addressed whether the arbitration provisions in the contracts were rescinded...

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...

Delaware Supreme Court Gives Preclusive Effect to Federal Court  Dismissal of Derivative Suit for Failure to Show Demand Futility

Delaware Supreme Court Gives Preclusive Effect to Federal Court Dismissal of Derivative Suit for Failure to Show Demand Futility

In its highly anticipated opinion in California State Teachers’ Retirement System v. Alvarez, the Delaware Supreme Court unanimously affirmed the dismissal of a group of Delaware shareholders’ derivative actions, holding that a previous dismissal by a federal court for failure to plead demand futility precluded other shareholders from pursuing additional derivative actions so long as the other shareholders were adequately represented in the earlier suit. Following the New York Times 2012 exposure of Wal-Mart executives’ alleged mishandling of bribery allegations, Wal-Mart shareholders brought derivative suits in the Western District of Arkansas and the Delaware Court of Chancery. In May 2015, the Arkansas court dismissed the case before it, because the shareholders had failed to adequately plead demand futility. Prompted by the Arkansas dismissal, the Delaware Court of Chancery initially dismissed the Delaware action, but, after some ping-ponging back and forth between the Court of Chancery and the Delaware Supreme Court, the Court of Chancery issued a supplemental opinion, recommending that the Supreme Court adopt a rule proposed in EZCORP Inc. Consulting Agreement Deriv. Litig., which held that constitutional Due Process permits a derivative suit to have a preclusive effect on a subsequent derivative suit only if the plaintiff in the first...

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...

Slow Down You’re Moving Too Fast: Third Circuit Directs District Court to Resolve Motion to Compel Arbitration Before Motion to Dismiss

Slow Down You’re Moving Too Fast: Third Circuit Directs District Court to Resolve Motion to Compel Arbitration Before Motion to Dismiss

In a recent decision, the Third Circuit made it abundantly clear that a motion to compel arbitration must be decided before a Rule 12(b)(6) motion to dismiss. Joshua Silfee filed a lawsuit against ERG Staffing Service, his former employer, in the Middle District of Pennsylvania, claiming the company’s payroll policies violated state law because workers were required to use a fee-carrying debit card. ERG filed a motion to compel arbitration pursuant to Section 4 of the Federal Arbitration Act, asserting that the arbitration agreement between Silfee and ERG’s payroll vendor precluded the suit against ERG. ERG also filed a Rule 12(b)(6) motion to dismiss Silfee’s complaint based on the merits of his state law claims against the company. The district court decided to delay consideration of ERG’s motion to compel arbitration and denied the company’s motion to dismiss the case. ERG appealed. The Third Circuit concluded that the district judge erred in delaying the arbitrability inquiry, explaining that arbitrability is a “gateway” issue and that, after a motion to compel arbitration is filed, a court “must refrain from further action until it determines arbitrability.” The Third Circuit noted that “[t]he seeds of the District Court’s confusion may have been sown...

Third Circuit Clarifies Focus of Preliminary Injunction Standard

Third Circuit Clarifies Focus of Preliminary Injunction Standard

Describing its precedent as “confus[ing]” and “inconsistent,” the Third Circuit recently clarified the test for deciding whether to issue a preliminary injunction. Since the 1970’s, courts in the Third Circuit have decided preliminary injunction applications based upon the following factors: (1) the likelihood of success on the merits; (2) whether the movant will be irreparably harmed in the absence of relief; (3) the possibility of harm to others from grant or denial of the relief; and (4) the public interest. However, courts differed as to how these four factors should be applied. In Reilly v. City of Harrisburg, the Third Circuit shed light on how these factors are to be weighed and, at least in part, who bears the burden on each. The Third Circuit held that a movant seeking a preliminary injunction bears the burden of “meet[ing] the threshold for the first two ‘most critical’ factors.” To satisfy the first prong, the movant “must demonstrate that it can win on the merits” by showing that its chances of success are “significantly better than negligible but not necessarily more likely than not.” To satisfy the second prong, however, the movant must show “that it is more likely than not 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.

Wrap Up of United States Supreme Court’s 2016-17 Term

Wrap Up of United States Supreme Court’s 2016-17 Term

With the close of the United States Supreme Court’s 2016-17 term, we offer this wrap up of the term’s most important business and commercial cases (excluding patent cases): Kindred Nursing Ctrs, L.P. v. Clark: The Supreme Court continued its full-throated support of arbitration agreements, again rejecting a state supreme court’s effort to apply an ostensibly arbitration-neutral rule of law to invalidate an arbitration agreement. In Kindred, the Kentucky Supreme Court held that an arbitration agreement signed by an attorney-in-fact under a broad power of attorney was invalid because the power of attorney did not expressly give the attorney-in-fact the right to waive the principal’s right to a jury trial. According to the Kentucky Supreme Court, to grant an attorney-in-fact the authority to waive a “fundamental constitutional right,” a power of attorney must grant that authority expressly and unambiguously. Because the right to access the courts and the right to a jury trial are such “fundamental constitutional rights” and because the power of attorney did not expressly and unambiguously waive them, the attorney-in-fact was not authorized to agree to arbitrate the principal’s claims, and no enforceable arbitration agreement was created. The Supreme Court found that the Kentucky Supreme Court’s facially arbitration-neutral...

U.S. Supreme Court Requires Schools to Provide a Special Needs Student More Than a “De Minimis” Education

U.S. Supreme Court Requires Schools to Provide a Special Needs Student More Than a “De Minimis” Education

On March 22, 2017, the United States Supreme Court handed down a unanimous ruling in Endrew F., et al. v. Douglas County School District RE-1. In a decision that will have far-reaching implications in the area of special education, the Court held that the Individuals with Disabilities Education Act (“IDEA”) “requires that students with disabilities be provided with an educational program that is reasonably calculated to enable a child to make progress appropriate in light of the child’s circumstances.” In 1982, the Supreme Court determined in Board of Ed. of Hendrick Hudson Central School Dist., Westchester Cty. v. Rowley that the IDEA requires that every child be provided with a free and appropriate public education (“FAPE”). The Rowley Court did not, however, adopt a standard for determining whether a child is receiving a sufficient educational benefit to satisfy this mandate. Rather, the Court stated that a child has received a FAPE if the Individual Education Plan (“IEP”) provides an education program “that is reasonably calculated to enable the child to receive educational benefits,” and otherwise limited its analysis to the facts of the Rowley case. Endrew F., an autistic child, was enrolled in a public school and educated pursuant to...

The Power of New York’s Borrowing Statute

The Power of New York’s Borrowing Statute

On October 11, 2016, the Supreme Court of New York, Appellate Division, First Department, decided 2138747 Ontario, Inc. v. Samsung C&T Corp., et al., which serves as a reminder to attorneys that New York’s borrowing statute applies even where the parties agreed to a New York choice-of-law provision. The borrowing statute, CPLR 202, provides that, when a non-New York resident sues on a cause of action accruing outside New York, the complaint must be filed timely under the statute of limitations of both New York and the jurisdiction where the cause of action accrued. The statute’s underlying objective is to prevent forum shopping by nonresident plaintiffs. In Ontario, the plaintiff, a corporation formed under the law of Ontario, Canada, was a creditor of SkyPower Corporation, a bankrupt Canadian renewable energy developer. SkyPower’s bankruptcy trustee assigned to the plaintiff all of its claims against the defendants. The plaintiff then sought damages against the defendants for a breach of a nondisclosure and confidentiality agreement (NDA), which contained a broad New York choice-of-law provision. The plaintiff’s complaint was untimely under Ontario’s two-year statute of limitations but was timely under New York’s six-year statute of limitations. The trial court found that Ontario’s two-year statute...