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Gibbons Law Alert Blog

Appellate Division Holds Settlement Reached at Voluntary Mediation Is Unenforceable in the Absence of a Signed Written Settlement Agreement

On April 6, 2023

In Willingboro Mall, Ltd. v. 240/242 Franklin Avenue, LLC, a case decided 10 years ago, the New Jersey Supreme Court upheld the confirmation of an oral settlement agreement that was made at a court-ordered mediation session. The court announced, however, that “going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.” In a recent, to-be-published decision, the Appellate Division held that Willingboro’s “broad, bright-line rule” requiring a signed written settlement agreement extends to voluntary mediations, too. The new case, Gold Tree Spa, Inc. v. PD Nail Corp., involved a dispute over the plaintiffs’ sale of two nail salons to the defendants. After the plaintiffs filed suit, the parties voluntarily agreed to mediation, resulting in the mediator’s creation of a draft settlement agreement. Several hours after the mediation ended, one of the plaintiffs decided she did not want to settle and refused to sign the agreement. The defendants moved to enforce the settlement, and the plaintiffs responded that they would honor the settlement agreement only if certain contingencies regarding an assignment of the lease of one of the salons could be met. The defendants then contacted the mediator to finalize the settlement agreement and circulated the lease assignment and related documents. The plaintiffs raised issues...

Fifth Circuit Affirms District Court’s Grant of a Motion to Strike Class Allegations

by Gibbons P.C.

Posted in Class Action Defense

On April 5, 2023

The Fifth Circuit Court of Appeals recently affirmed the grant of a pre-discovery motion to strike class allegations. In Elson v. Black, 14 women from seven states sought to bring a putative class action against the defendant companies, alleging that the defendants falsely advertised its FasciaBlaster product. Specifically, the plaintiffs alleged that the FasciaBlaster had been falsely advertised as a product that would eliminate cellulite, help with weight loss, and relieve pain. The district court, in a three-sentence opinion, struck the class allegations, finding that the class failed to establish commonality. The next day, the district court dismissed the remainder of the plaintiffs’ claims in their entirety. While the Fifth Circuit Court of Appeals found the district court opinion to be “inappropriately brief,” it agreed that the class could not be certified, nor could the plaintiffs establish their claims of fraud. However, the appellate court reversed and remanded the district court’s ruling dismissing two plaintiffs’ express warranty claims, finding that the court failed to apply the law of a specific jurisdiction. The appellate court held that the class could not be certified under Rule 23(a)’s commonality requirement and Rule 23(b)(3)’s predominance requirement. First, the plaintiffs’ claims were governed by different states’ laws, and the plaintiffs were unable to meet their burden establishing that “such differences...

Delaware’s “Freedom of Contract” Approach to Non-Compete Agreements – Even Between Sophisticated Parties in the Sale-of-Business Context – Has Its Limits

by Christopher Viceconte and Leonardo A. Di Stasio

Posted in General Litigation

On March 29, 2023

Non-compete agreements have recently gained a new round of attention with the Federal Trade Commission’s (FTC) proposed rule that would effectively ban employers from imposing non-competes (albeit not in certain sale-of-business scenarios). While lawyers and businesses wait to see whether the FTC rule materializes, the nation’s most prominent business court – the Delaware Court of Chancery – recently issued two decisions demonstrating limits to its contractarian approach to restrictive covenants. Interestingly, both cases arose in the sale-of-business context, in which the court has traditionally enforced relatively broad restrictive covenants negotiated by sophisticated parties. In HighTower Holding, LLC v. Gibson (Vice Chancellor Will, Feb. 9, 2023), the court refused to enforce the parties’ Delaware governing-law provision and, instead, after performing a choice-of-law analysis, applied Alabama law to invalidate the non-compete. In Intertek Testing Services NA, Inc. v. Eastman (Vice Chancellor Will, Mar. 16, 2023), the court found a non-compete provision that prohibited the defendant from competing “anywhere in the world” to be unreasonably broad and, therefore, unenforceable. Delaware governing law provision rejected HighTower Holding, LLC v. Gibson. HighTower, a Delaware limited liability company, purchased a majority interest in an Alabama-based wealth advisory firm owned by Gibson, a licensed financial advisor, and other individuals. As part of the sale, Gibson and his former partners signed a protective agreement...

Appellate Division Holds Plaintiffs Can State a Claim Under New Jersey’s CFA and TCCWNA Statutes Where an Advertised Discount Is Alleged to Be Illusory

by Caroline E. Oks

Posted in Class Action Defense

On March 22, 2023

A recent split decision from the New Jersey Appellate Division called into question whether the “ascertainable loss” requirement for pleading a claim under the New Jersey Consumer Fraud Act (NJCFA) is the same as the “aggrieved consumers” requirement under the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). Without deciding that question, the court found that the pleading sufficiently alleged both in asserting that the defendant inflated its prices to offer an illusory discount. The plaintiffs alleged that the defendant, SPARC Group LLC, falsely advertised clothing at two of its Aeropostale stores as being discounted from a higher price when the clothing allegedly had never been sold in those stores at the higher price. The plaintiffs asserted that this “markup to markdown” practice violates both the NJCFA, the TCCWNA, and the common law. The trial judge dismissed the complaint for failure to state a claim and largely rested her decision on a determination that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed. The majority noted some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The New Jersey Supreme Court has held that an “ascertainable loss” must be “quantifiable and measurable” and not “hypothetical or illusory,” while the...

New Appellate Division Decision Highlights Limited Scope of Review of Arbitration Awards

by Christopher P. Anton

Posted in General Litigation

On March 8, 2023

In a recent to-be-published opinion, the New Jersey Appellate Division held that parties may not agree to expand the scope of judicial review of an arbitral award in an arbitration agreement governed by the Federal Arbitration Act (FAA), which does not permit courts to vacate or modify awards for errors of fact or law. The case, Strickland v. Foulke Management Corp., arose out of the plaintiffs’ purchase of a used car from the defendant. The parties executed an arbitration agreement, which provided that it was governed by the FAA except as provided elsewhere in the agreement. The agreement also stated that the arbitrator should render a decision only in conformity with New Jersey law and that a court may reverse the award based on “mere errors of New Jersey law.” The defendant repossessed the vehicle after the plaintiffs missed several monthly payments. The plaintiffs filed an arbitration demand asserting violations of the New Jersey Consumer Fraud Act and other state and federal statutes, as well as common law fraud. Following an arbitration hearing, the arbitrator entered an award dismissing all of the plaintiffs’ claims, finding that the claims were barred by contractual limitations periods contained in the arbitration agreement and other purchase documents and also that they lacked merit. The plaintiffs sought to vacate the...

New Policy From DOJ Offers Predictability and Incentives to Self-Report Misconduct

by Gibbons P.C.

Posted in Environmental and Green Issues

On March 7, 2023

Representatives of the United States Attorney’s Office (USAO) announced on February 22, 2023, the immediate implementation of a new Voluntary Self-Disclosure Policy. This new policy was created in response to a September 2022 memorandum from the Deputy Attorney General, which requested that each component of the Department of Justice (DOJ) review its policies on corporate voluntary self-disclosure and revise or create a formal written policy that incentivizes such self-disclosure. The stated intention of the new policy is to provide transparency and predictability to companies and the defense bar concerning the benefits, and potential outcomes, in cases where companies voluntarily self-disclose misconduct, fully cooperate with the government, and remediate the misconduct in a timely and appropriate manner. In general, the policy requires that: (1) the disclosure of misconduct is made voluntarily (not to include instances where there is a pre-existing obligation to disclose, e.g., by regulation or contract); (2) the disclosure be made prior to an imminent threat of disclosure, prior to the misconduct being publicly disclosed, and within a reasonably prompt time after the company becomes aware of the misconduct; and (3) the disclosure includes all relevant facts concerning the misconduct that are known to the company. The incentives created by this new policy are significant and include the following: Absent the presence of aggravating...

GoodRx Fined $1.5 Million for Disclosure of Users’ Personal Information to Third Parties Without Notice or Consent

by John T. Wolak and William C. Martinez

Posted in E-Commerce / Privacy and Data Security / Privacy Class Actions / Regulatory Counseling and Departmental Action

On February 23, 2023

On February 1, 2023, the Federal Trade Commission (FTC) filed a “first of its kind” enforcement action under the FTC’s Health Breach Notification Rule, 16 CFR Part 318, which offers several useful takeaways for all companies that collect and process a consumer’s personal information – not just companies that handle health-related data. The FTC’s proposed order seeks to impose a $1.5 million civil penalty against GoodRx, a digital health platform, for sharing the sensitive personal health and other information of millions of GoodRx users with various advertising platforms, including Facebook and Google, and failing to report these disclosures to consumers. According to the FTC complaint, GoodRx collects sensitive personal information from users and represents that it will treat users’ information in accordance with its privacy policies. Since at least 2017, the GoodRx privacy policy specifically stated that GoodRx “would never disclose personal health information to advertisers or any third parties.” Yet for several years, GoodRx allegedly violated these promises “by sharing information with Advertising Platforms, including Facebook, Google and Criteo, about users’ prescription medications or personal health conditions” and “did so without notice to users, and without obtaining consent.” In addition, GoodRx monetized the personal health information it collected through the creation of advertising campaigns on Facebook and Instagram that targeted GoodRx users. In August...

Express Waiver of Rights in Arbitration Provisions Called Into Question by Recent New Jersey Appellate Decision

by Leonardo A. Di Stasio

Posted in Appellate

On February 21, 2023

In an opinion issued on February 8, 2023, the New Jersey Appellate Division carved out an exception to the New Jersey Supreme Court’s requirement in Atalese v. U.S. Legal Services Group, L.P. that arbitration provisions must contain clear and unambiguous waiver-of-rights language, holding that Atalese does not apply to sophisticated commercial parties with relatively equal bargaining power. An agreement that the County of Passaic entered into with Horizon Healthcare Services, Inc. contained a dispute resolution provision simply stating that “the parties shall submit the dispute to binding arbitration under the commercial rules of the American Arbitration Association.” After the trial court granted Horizon’s motion to compel arbitration based on this provision, the county appealed, arguing that the arbitration clause was unenforceable because it lacked an express waiver of access to the courts, as required by Atalese. The Appellate Division affirmed, relying on section 2 of the Federal Arbitration Act, which provides that a written arbitration provision “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” That provision, the Appellate Division reasoned, requires courts to apply standard contract principles, including “notions of unconscionability,” in order to determine whether mutual assent to the arbitration clause exists, thus rendering the arbitration clause enforceable. Importantly, whether such assent...

Proposed Nationwide FTC Ban on Non-Compete Clauses: UPDATE – Virtual Public Forum Scheduled for February 16, 2023

by Leonardo A. Di Stasio and Zachary L. Miller

Posted in General Litigation

On February 14, 2023

As we recently reported, in January 2023, the Federal Trade Commission (FTC) announced a proposed nationwide ban on non-compete clauses. The proposed rule would restrict employers from enforcing all existing and future non-compete agreements with their employees. The FTC announced that it will host a free and open public forum on Thursday, February 16, 2023, from 12 p.m. to 3 p.m. EST, examining the proposed rule and providing the public (workers and business owners) with an opportunity to ask questions, express concerns, and share their past experiences with non-competes. Attendees may register to speak at the forum on the FTC’s website. Registration to speak is on a first come, first served basis. Details about the forum and registration may be found here. The public may also submit written comments on the proposed ban through March 20, 2023, at Regulations.gov. Interested parties should monitor the situation accordingly and consider contacting the firm if they have questions about the proposed rule or seek guidance ahead of the forum and comment period deadline.

New Enforcement Rules for New York City Environmental Remediation Programs

by Matthew J. Sinkman

Posted in Development/Redevelopment / Environmental and Green Issues

On February 13, 2023

Owners and developers of sites enrolled in New York City’s environmental remediation programs should be aware of new enforcement rules. The rules provide for new reporting requirements and strengthened enforcement mechanisms and penalties. Background About New York City Environmental Remediation Programs The New York City (NYC) Mayor’s Office of Environmental Remediation (OER) manages NYC’s Voluntary Cleanup Program (VCP) and E-Designation Program (EDP). Under the VCP, environmental site investigations and remediations are conducted with OER oversight. After a site is remediated, OER issues a notice of completion (NOC), which provides that NYC “shall not take or require any further investigatory or remedial action” at the site.[1] The New York State Department of Environmental Conservation (NYSDEC) is also unlikely to require further action at sites with NOCs, pursuant to a Memorandum of Agreement between NYSDEC and OER.[2] NOCs may be assigned to third parties, such as the purchaser of a site that has been cleaned up.[3] The VCP also provides other benefits, including hazardous waste fee exemptions and monetary grants. By contrast to the VCP, the EDP is a mandatory program. It applies to specific sites given “E-Designations” or similar Restrictive Declarations because of potential contamination or other issues identified during a zoning action. For instance, sites previously zoned only for manufacturing that have been rezoned to...