Gibbons Law Alert

Gibbons Law Alert

Tagged: Motions to Dismiss

Refusal to Wear a Face Mask May Leave You Constitutionally Unprotected

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Posted in Appellate / General Litigation

On February 29, 2024

Is there a constitutional free speech right to refuse to wear a face mask in public indoor spaces during a recognized public health emergency? The Third Circuit Court of Appeals recently determined there is not, as part of a precedential decision in the consolidated cases of Falcone v. Dickstein, et al. and Murray-Nolan v. Rubin, et al. The Third Circuit addressed the First Amendment issue in the Murray-Nolan case. Specifically, the issue the court confronted was whether, during the COVID-19 pandemic, plaintiff Gwyneth Murray-Nolan, an “advocate for parental choice in masking children at school,” was protected under the First Amendment in her refusal to wear a mask during a Board of Education (“BOE”) meeting, despite the BOE’s mask requirement and the Governor’s Executive Order mandating that New Jersey schools require the use of face masks. (The Falcone case, though likewise arising from an individual’s opposition to a mandatory masking policy, was decided on different grounds.) The plaintiff’s refusal to wear a mask was intended by her as a silent protest against the BOE’s masking policy and its lack of action to unmask children in schools. While the court recognized that the First Amendment protects some conduct in some settings, the court held that the refusal to wear a mask failed to satisfy the constitutional standard...

New Jersey Enacts Anti-SLAPP Legislation

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Posted in General Litigation

On September 13, 2023

Lawsuits filed to intimidate or punish those who are engaged in constitutionally protected activity by, in effect, suing them into submission or silence through the prospect of expensive and time-consuming litigation are commonly referred to as strategic lawsuits against public participation (SLAPP). On September 7, 2023, Governor Murphy signed New Jersey’s first anti-SLAPP legislation, which is designed to thwart such lawsuits by providing a process for early dismissal of these suits and an award of costs and counsel fees to a prevailing moving party. New Jersey now joins 32 other states that have enacted some form of anti-SLAPP legislation. The legislation applies to a civil cause of action against a person based on the person’s: (1) communications during a legislative, executive, judicial, administrative, or other governmental proceeding; (2) communications on an issue under consideration or review by such a body; or (3) engagement in any other activity that is protected by the First Amendment freedoms guaranteed by the United States Constitution or New Jersey Constitution and that relates to a matter of public concern. Modeled after the Uniform Public Expression Protection Act (UPEPA), the New Jersey legislation: permits a SLAPP defendant to file an early application for an order to show cause to dismiss the cause of action in whole or in part establishes a...

An Anti-SLAPP Bill That Packs a Powerful Punch

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Posted in General Litigation

On October 14, 2022

Strategic lawsuits against public participation (SLAPP) are lawsuits intended to intimidate or punish those engaged in constitutionally protected activity by, essentially, suing them into submission or silence through the prospect of costly and time-consuming litigation. Thirty-two states have enacted some form of anti-SLAPP legislation designed to weed out these cases and, in most instances, provide for dismissal of such actions early in the process. New Jersey is not one of those states. That may soon change. State Senate Bill S2802, the Uniform Public Expression Protection Act (the “Act”), and its Assembly counterpart, A4393, were introduced in June 2022 and provide an expedited process for dismissal of SLAPP actions. The legislation is modeled after the Uniform Public Expression Protection Act (UPEPA) drafted by the National Conference of Commissioners on Uniform State Laws and approved and recommended by it in 2020 for enactment in all states. The Act would apply to a civil cause of action against a person based on the person’s (1) communications during a legislative, executive, judicial, administrative, or other governmental proceeding; (2) communications on an issue under consideration or review by such a body; or (3) engagement in any other activity that is protected by the First Amendment freedoms guaranteed by the United State Constitution or New Jersey Constitution and that relates to...

Fourth Time’s a Charm: The Third Circuit Reverses Dismissal of Trade Secrets Complaint and Clarifies Pleading Standard

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Posted in Appellate

On June 29, 2021

The Third Circuit issued a precedential decision in Oakwood Laboratories LLC v. Bagavathikanun Thanoo et al. that clarified the pleading requirements for trade secrets misappropriation claims under the Defend Trade Secrets Act, 18 U.S.C. § 1836(b) (DTSA). In that decision, the Third Circuit held that the Third Amended Complaint was “so factually detailed that, on appeal, we conclude it easily meets the pleading requirements of the Federal Rules of Civil Procedure and pertinent substantive law.” Earlier, the District Court for the District of New Jersey had dismissed four of Oakwood Laboratories LLC’s (“Oakwood”) complaints on the grounds that each complaint was not specific enough to support a claim. The District Court dismissed Oakwood’s Third Amended Complaint (its most recent attempt), because it did not show precisely how defendants misappropriated Oakwood’s trade secrets, but noted that Oakwood did plead facts sufficient to identify its trade secrets and support the information’s protected status. Oakwood appealed, and the Third Circuit reversed. Oakwood alleged that defendants Aurobindo Pharma U.S.A. and its subsidiaries misappropriated Oakwood’s trade secrets regarding microsphere technology when Aurobindo hired an Oakwood employee who specializes in this technology, Dr. Bagavathikanun Thanoo, and relied on a memorandum provided for the limited purpose of exploring a business opportunity to develop Aurobindo’s own microsphere technology. In reversing the District Court’s...

District of New Jersey’s Dismissal of Securities Class Action Reiterates Significant Hurdles to Sufficiently Pleading Scienter

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Posted in Securities

On February 8, 2019

A decision last week from the District of New Jersey is the latest of several recent decisions from the District and the Third Circuit making clear that securities fraud plaintiffs face a high bar in pleading an inference of scienter strong enough to withstand a motion to dismiss. In In re Electronics For Imaging, Inc. Securities Litigation, Plaintiffs brought a securities fraud class action alleging that Electronics For Imaging, Inc. (EFI), and two of its executives, violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. According to Plaintiffs, Defendants falsely assured investors in a Form 10-K and Form 10-Q (and accompanying Sarbanes Oxley certifications) that EFI’s internal controls over financial reporting were functional and effective—including by asserting that those controls had been reviewed, evaluated, and improved. A subsequent press release and amendments to the Form 10-K and Form 10-Q identified material weaknesses in EFI’s internal controls. Plaintiffs filed suit in the wake of a drop in EFI stock price that occurred after the press release was issued. Defendants moved to dismiss for failure to sufficiently plead scienter. In support of scienter, Plaintiffs alleged that Defendants’ record keeping practices so egregiously violated generally accepted accounting principles that Defendants either: (i) lied when they asserted they had previously reviewed and evaluated...

New Jersey Federal Court Holds that Cryptocurrency Allegations Sufficiently Alleged a “Security” Subject to ’33 Act Registration Requirements

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Posted in Securities

On December 17, 2018

In Solis v. Latium Network, Inc., Susan D. Wigenton, a United States District Judge in the District of New Jersey, held that a class action plaintiff adequately alleged that a particular cryptocurrency was a “security” subject to the registration requirements of the Securities Act of 1933 and, by extension, the regulatory strictures of the Securities Exchange Act of 1934. Solis alleged that Latium operates a blockchain-based, crowdsource tasking platform, which allows users to create tasks, find people to complete the tasks, and then verify completion of the tasks according to specified standards. Users of the platform pay for the completed tasks using Latium X tokens, Latium’s proprietary cryptocurrency, which can be used only on Latium’s platform. Solis also alleged that, to raise money for the platform, Latium offered its tokens for sale to the public in exchange for U.S. dollars or the cryptocurrency Ether. The sale was conducted in several stages, with the cost of a token increasing with each successive stage. When marketing the tokens, Latium stressed the limited quantity of tokens to be issued and characterized its tasking platform, particularly in tandem with the tokens, as a “unique investment opportunity.” Solis purchased $25,000 in Latium X tokens and later sued Latium in a class action, alleging that the Latium X tokens are “securities”—specifically...

Third Circuit Relies on Spokeo to Shed Light on What is Needed For Article III Injury-in-Fact Standing

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Posted in General Litigation

On October 16, 2018

In Long v. SEPTA, the Third Circuit considered whether and when a violation of a statute is a standing-conferring injury-in-fact satisfying the Constitution’s “case or controversy” requirement. At issue in Long was whether the plaintiffs, who were denied employment by SEPTA when background checks disclosed disqualifying criminal histories, could sue SEPTA for failing to provide them with copies of their rights under the Fair Credit Reporting Act (FCRA) and copies of their background consumer reports before being denied employment, both of which are required by FCRA. The district court dismissed the complaint, stating that the plaintiffs did not allege a “concrete injury in fact,” because the alleged FCRA violations were “bare procedural violations.” On appeal, the Third Circuit affirmed the dismissal of the claim based on SEPTA’s failure to provide the plaintiffs notice of their FCRA rights. The Court held that, because the plaintiffs understood their rights well enough to bring the suit, they were not injured by SEPTA’s failure to give them notice of those rights and, therefore, lacked standing to pursue the claim. But the Third Circuit reversed the dismissal of the claim based on SEPTA’s failure to provide copies of the plaintiffs’ consumer reports. The Third Circuit applied the two tests “for whether an intangible injury can be . . . concrete”...

Recent ERISA Preemption Decision in District of New Jersey Marks Departure from Prior Precedent

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Posted in Insurance

On October 15, 2018

In Glastein v. Aetna, Inc., et al., the U.S. District Court for the District of New Jersey, departing from several recent decisions in the District, denied Defendant Aetna, Inc.’s motion to dismiss a medical provider’s claim for reimbursement of insurance benefits on the ground that such claim was preempted by ERISA. Glastein, an out-of-network orthopedic surgeon, allegedly performed a medically necessary surgery for an Aetna-insured patient. Prior to the surgery, Glastein secured a written authorization for the service from Aetna. Glastein later billed Aetna $209,000, allegedly the “normal and reasonable” charges for the procedure. Aetna did not pay any portion of the charged amount. Glastein sued Aetna, alleging several state common law claims, including breach of contract, promissory estoppel, accounting, and fraudulent inducement. After removing the action from the Superior Court of New Jersey to the District of New Jersey, Aetna moved to dismiss Glastein’s complaint under Federal Rule of Civil Procedure 12(b)(6). Defendant’s sole argument for dismissal was that Plaintiff’s state-law causes of action were expressly preempted by ERISA’s “express preemption” provision, under which ERISA preempts state laws where the state law refers to an ERISA plan or has an impermissible connection with an ERISA plan. In support of its preemption argument, Aetna cited to several recent decisions where the District dismissed complaints alleging...

In Affirming Dismissal of Putative Securities Class Action, Third Circuit Provides Important Guidance for Evaluating Sufficiency of Scienter Allegations

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Posted in Securities

On October 4, 2018

A recent precedential decision from the Third Circuit may make it more difficult for putative securities class actions to withstand motions to dismiss and provides useful guidance for district courts in making the often difficult determination whether a complaint adequately pleads the strong inference of scienter necessary to sustain a federal securities fraud claim. In In re Hertz Global Holdings, Inc., certain pension funds brought a securities fraud class action alleging that Hertz Global Holdings, Inc. and certain of its current and former executives violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Plaintiffs’ complaint relied heavily on a financial restatement Hertz issued with its fiscal year 2014 Form 10-K, which corrected errors to Hertz’s 2011, 2012, and 2013 financial statements. According to the restatement, Hertz had overstated its pre-tax income by a total of $215 million and its net income by a total of $132 million during the three-year period. The restatement explained that “an inconsistent and sometimes inappropriate tone at the top was present under then existing senior management” which “resulted in an environment which in some instances may have led to inappropriate accounting decisions and the failure to disclose information critical to . . . effective review.”  Plaintiffs alleged that the restatement constituted an admission that...

Enough Said: Southern District of New York Decision Reiterates Limits of Disclosure Obligations Under Securities Laws

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Posted in Securities

On April 17, 2018

The Southern District of New York’s recent decision in Employees Retirement System of the City of Providence v. Embraer S.A. may provide useful guidance for companies struggling with disclosure obligations in the midst of ongoing investigations into potential unlawful conduct. Defendant Embraer, S.A., a Brazilian aircraft manufacturer, made a series of disclosures regarding external and internal investigations into potential U.S. Foreign Corrupt Practices Act (FCPA) violations. Specifically, in November 2011, Embraer disclosed investigations by the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) and advised that it had retained outside counsel to conduct an internal investigation. Although the company repeatedly warned that it may be required to pay substantial fines or incur other sanctions, it also stated early in the investigation that it did not believe there was a basis to estimate reserves or quantify any loss contingency. In July 2016, Embraer announced that settlement negotiations with the DOJ and SEC had progressed to a point warranting recognition of a $200 million loss contingency. Nearly three months later, the company announced a settlement that included a fine of over $107 million and disgorgement of nearly $84 million in profits. On December 13, 2016, Employees’ Retirement System of the City of Providence filed an amended class action complaint alleging violations of Securities Exchange Act...

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