Tagged: New Jersey Law

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

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

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...

New Jersey Supreme Court Approves Special Rules for Matters in the Complex Business Litigation Program

New Jersey Supreme Court Approves Special Rules for Matters in the Complex Business Litigation Program

On January 1, 2015, the New Jersey Superior Court implemented statewide the Complex Business Litigation Program (“CBLP”) for complex commercial and construction cases with amounts in controversy exceeding $200,000. Each case in the CBLP is managed by a single judge assigned in each county to handle cases in the program, thus providing each case with individualized case management and a jurist experienced in managing and resolving similar matters. On July 27, 2018, the New Jersey Supreme Court adopted special rules for cases in the CBLP to take effect on September 1, 2018. The current rules in Parts I and IV will continue to apply to CBLP cases, unless contradicted by a new rule. The new rules, largely adapted from rules in the federal courts and other business courts, mainly modify certain aspects of case management, discovery, and motion practice. The more substantial practice changes prompted by the new rules are: Initial Disclosures: Following the federal courts’ innovation of requiring mandatory disclosures, litigants in the CBLP will be required to disclose early in the case: 1) all individuals with knowledge of information that the disclosing party may use to support its claims or defenses, 2) copies or a description of (including...

New Jersey Appellate Division Continues to Hold Sky-High Bar for Arbitration Clauses

New Jersey Appellate Division Continues to Hold Sky-High Bar for Arbitration Clauses

In determining the enforceability of arbitration agreements, the New Jersey Appellate Division recently considered the interplay of the U.S. Supreme Court’s 2017 decision in Kindred Nursing Ctrs. v. Clark and the New Jersey Supreme Court’s 2014 decision in Atalese v. U.S. Legal Services Grp., L.P. In Defina v. Go Ahead and Jump 1, the Appellate Division held that Kindred Nursing did not abrogate the holding in Atalese. In Defina, the plaintiff, a minor, broke his ankle while playing trampoline dodgeball at Defendant’s facility. Plaintiff’s father had signed a document entitled “Participation Agreement, Release, and Assumption of Risk,” which contained the following arbitration provision: If there are any disputes regarding this agreement, I on behalf of myself and/or my child(ren) hereby waive any right I and/or my child(ren) may have to a trial and agree that such dispute shall be brought within one year of the date of this Agreement and will be determined by binding arbitration before one arbitrator to be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. . . . Plaintiffs sued, and the trial court granted Defendant’s motion to compel arbitration. On appeal, the Appellate Division reversed, holding that “the arbitration clause at issue in this...

Feeling the Chill: The Petro Lubricant Decision – Can Correcting an Online Error Hurt You?

Feeling the Chill: The Petro Lubricant Decision – Can Correcting an Online Error Hurt You?

The New Jersey Supreme Court’s recent opinion in Petro-Lubricant Testing Laboratories, Inc. v. Adelman left unanswered significant questions as to what constitutes a republication when corrections or modifications are made to an online publication, thereby retriggering the statute of limitations for defamation. In a 4-3 opinion, the majority established a test for whether a correction or modification is a republication that increases the likelihood that trial courts will deny summary judgment motions, leaving the question of republication for the jury. The practical effect of this will likely be far fewer corrections to online publications for fear of reviving or extending the applicable statute of limitations. Specifically, the majority held that an online article is republished if an author makes a material and substantive change to the original defamatory article. According to the majority: A material change is one that relates to the defamatory content of the article at issue. It is not a technical website modification or the posting on the website of another article with no connection to the original defamatory article. A substantive change is one that alters the meaning of the original defamatory article or is essentially a new defamatory statement incorporated into the original article. It is...

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...

New Jersey Poised to Mandate Across-the-Board Information and Data Security Preparedness

New Jersey Poised to Mandate Across-the-Board Information and Data Security Preparedness

The New Jersey Assembly is considering legislation that will require individuals and businesses that own or license personal information about a New Jersey resident to create and maintain a comprehensive information security program (“ISP”). The bill, A-5206, was introduced by Assemblywoman and Deputy Majority Leader Annette Quijano (D-Union) on November 30, 2017, and referred to the Assembly Homeland Security and State Preparedness Committee. If passed, New Jersey would join other states including Massachusetts (see 201 CMR 17.01 to 17.05) and Rhode Island (R.I. Gen. L. § 11-49.3-2), and sector-specific regulatory schemes including the Gramm-Leach-Bliley Act (16 CFR 314), New York Department of Financial Services Cybersecurity Regulation (23 NYCRR 500), and the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Security Rule (45 CFR 164), that require a written information security program. The bill as currently drafted includes a minimum of 28 data security policies and practices that must be included in any company’s ISP. These include: Designating one or more employees to be in charge of the ISP; Ongoing employee training regarding risks to the security, confidentiality, and integrity of any records containing personal information, and imposing disciplinary measures for violation of ISP rules; Obligating a company to conduct...

New Jersey Appellate Division Holds Consumer Fraud Act Plaintiffs Can Recoup Attorneys’ Fees for Successfully Defending Against Counterclaims 0

New Jersey Appellate Division Holds Consumer Fraud Act Plaintiffs Can Recoup Attorneys’ Fees for Successfully Defending Against Counterclaims

In an issue of first impression, the New Jersey Appellate Division held in Garmeaux v. DNV Concepts, Inc. t/a The Bright Acre that a prevailing plaintiff in a Consumer Fraud Act (“CFA”) case is entitled to recover attorneys’ fees expended to defend an “inextricably intertwined” counterclaim. The to-be-published opinion also reaffirmed that New Jersey does not impose a strict proportionality requirement on attorney fee awards.

New Jersey Supreme Court Holds Denial of Right to Jury Trial Not Within Panoply of Sanctions in a Trial Court’s Arsenal 0

New Jersey Supreme Court Holds Denial of Right to Jury Trial Not Within Panoply of Sanctions in a Trial Court’s Arsenal

Recently, the New Jersey Supreme Court unanimously held that trial courts may not deprive civil litigants of their constitutionally protected right to a jury trial as a sanction for failure to comply with a procedural rule. In Williams v. American Auto Logistics, the pro se plaintiff’s complaint did not include a jury demand, but the defendant’s answer did. The defendant later sought to waive its jury demand, but the plaintiff withheld his consent, which was required by court rules. Notwithstanding the lack of consent, the trial judge granted the request to waive the jury as a sanction against the plaintiff for his failure to provide the pre-trial disclosures required by Rule 4:25-7. The Appellate Division affirmed the trial court’s waiving of the jury as a sanction for the plaintiff’s failure to comply with Rule 4:25-7.

New Jersey Appellate Division Agrees: EIFS is EIFS (Even If Technically It Isn’t) 0

New Jersey Appellate Division Agrees: EIFS is EIFS (Even If Technically It Isn’t)

EIFS litigation is no stranger to New Jersey. EIFS (or “exterior insulation and finish system”) – a popular, post-World War II building system that resembles stucco while simultaneously providing watertight exterior insulation – originated in Europe and migrated to American homes in the late 1960s and early 1970s. According to The New York Times, it was utilized in the construction of “countless homes built in New Jersey,” which meant that the state was deeply affected when it became evident that, installed in a certain way, EIFS trapped water behind its siding and led to crumbling wall sheathing and rampant mold. Nationwide lawsuits ensued and, while a class action settlement was eventually reached with the largest EIFS manufacturer in 2003, New Jersey courts – at every level – returned to EIFS litigation again and again.

Attention Corporate Policyholders: Comply With All the Notice Requirements of Your Insurance Policies When Reporting a Claim or Risk Losing All Available Coverage 0

Attention Corporate Policyholders: Comply With All the Notice Requirements of Your Insurance Policies When Reporting a Claim or Risk Losing All Available Coverage

A recent decision by the New Jersey Supreme Court serves as a strident warning to commercial insureds to make prompt notice of claims under claims-made policies. In Templo Fuente de Vida Corp. v. National Union Fire Insurance Company of Pittsburgh, P.A., the claims-made D&O policy at issue required written notice of a claim “as soon as practicable … and … during the Policy Period.” The insured was served with an underlying complaint on February 21, 2006. It retained defense counsel and filed an answer, but did not provide notice of the claim to its insurer until August 26, 2006 — a delay of six months, yet still within the policy period. The insurer denied coverage for various reasons, including that notice was not provided “as soon as practicable.”