Gibbons Law Alert

Gibbons Law Alert

Author: Gibbons P.C.

Eighth Circuit Rules That Plaintiff Can File Motion to Strike Class Action Without Waiving Right to Compel Arbitration

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Posted in Class Action Defense

On July 15, 2021

In Donelson v. Ameriprise Financial Services, Inc., the Eighth Circuit reversed and remanded a district court’s decision that had denied both a motion to strike class action allegations and a motion to compel arbitration. The plaintiff was invited to create an Ameriprise account by defendant Sachse, who worked as a broker and investment advisor at defendant Ameriprise. The two met over lunch, where Sachse brought, and filled out himself, a copy of the account application. After the account application was signed, but not read, by the plaintiff, it was alleged that Sachse “badly mishandled [Plaintiff’s] investment account.” The plaintiff brought suit alleging violations of § 10(b) and § 20(a) of the Securities Exchange Act and Rule 10b-5, as well as breach of fiduciary duty under 15 U.S.C. § 80b-6, and, after finding other Sachse clients who had experienced similar problems with their accounts, sought to represent them in a Rule 23(b)(2) class action. The defendants moved to strike the class action allegations and to compel arbitration, which the district court denied. The defendants appealed. On appeal, the court addressed the question of whether the defendants waived their right to arbitrate when they simultaneously moved to strike the class action allegations. The court found that they had not. Ultimately, the court determined that when the defendants...

Inviting Scrutiny: “Obstructionist” Conduct Leads to District Court Ordering Forensic Examination of Defendant’s Cell Phone

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Posted in General Litigation

On June 23, 2021

Courts have been authorizing forensic experts to conduct examinations of electronic devices for decades. However, we have noticed a recent uptick of district courts ordering the appointment of an independent forensic expert to create images of and forensically examine cell phones to ensure the preservation and production of relevant electronic data particularly where the party in control of the evidence has been less than forthcoming in their discovery obligations. The District Court for the Southern District of Florida is one of the latest courts to order such a remedy, granting plaintiff’s motion to compel a forensic examination and ordering that an independent expert “mirror image and/or acquire all data present on Defendant’s cell phone.”

No, That Doesn’t Settle It: U.S. Supreme Court Clarifies Which Types of Settlements Trigger CERCLA Contribution Rights

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Posted in Environmental and Green Issues

On June 1, 2021

The complex and overlapping nature of the three different routes to recovering cleanup costs under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) has bedeviled courts for decades. This month, in Territory of Guam v. United States, the U.S. Supreme Court answered one very narrow question: What kind of a settlement with the government gives a settling party the right to bring an action for contribution against a non-settlor?

“The Death Penalty Lives”: Magistrate Judge Recommends Entry of Default Judgment After Defendants Manipulate and Permanently Delete Electronic Data

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Posted in General Litigation

On May 20, 2021

This blog has previously discussed cases in which district courts considered and sometimes ultimately entered the so-called sanctions “death penalty” – a default judgment order of terminating sanctions, pursuant to Rule 37(e)(2), as a result of a party’s destruction of evidence. Recently, a U.S. District Court for the Southern District of Texas magistrate judge recommended granting terminating sanctions, i.e., default judgment, after finding that the defendants “delayed discovery, manipulated electronic data, and permanently deleted a significant amount of electronic data.” The magistrate judge noted that the deletions that occurred required the user to “go into the bowels of the system, requiring advanced knowledge,” and the electronic data was deleted “within days” of an agreed upon preliminary injunction. In Calsep Inc. v. Intelligent Petroleum Software Solutions, LLC, the plaintiffs alleged misappropriation of trade secrets after their employee, one of the defendants, left their employment and allegedly downloaded the plaintiffs’ trade secret information to a personal device. According to the plaintiffs, the former employee then used the trade secret information with the other defendants to develop oil and gas industry software to compete with the plaintiffs’ software. The plaintiffs attempted to obtain discovery, including specifically the defendants’ “source code control system, which ordinarily contains the complete, auditable, and accurate history of the creation and evolution of software...

NJDEP Amends Site Remediation Standards

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Posted in Environmental and Green Issues

On May 19, 2021

Via a New Jersey Register notice published on May 17, 2021, the New Jersey Department of Environmental Protection (NJDEP) has amended the remediation standards that govern all cleanups in the state. It is the most sweeping revision of the standards since they were first adopted in 2008. NJDEP proposed the amendments in April 2020 and held a virtual public hearing on July 21, 2020. During an extended public comment period, NJDEP received more than 270 public comments on its proposal. The proposal itself was preceded by a series of stakeholder sessions stretching back to 2014. The rulemaking makes significant changes to the remediation standards, including: The creation of separate residential and non-residential soil remediation standards for the ingestion-dermal and inhalation exposure pathways; formerly, the applicable standard was the more stringent of the two, but now both pathways will need to be considered. The adoption of new soil remediation standards for the migration to groundwater exposure pathway, replacing the former site-specific approach based on NJDEP guidance with enforceable standards. The adoption of new standards for soil leachate (for the migration to groundwater exposure pathway) and indoor air (for the vapor intrusion exposure pathway); the vapor intrusion standards replace the former screening levels based on NJDEP guidance. The tightening of some standards and the loosening of others....

Show Me the Study: New Jersey Appellate Division Reverses Verdict in Talcum Powder Tort Case Because Causation Testimony of Plaintiffs’ Experts Had No Scientific Basis

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Posted in Environmental and Green Issues

On May 14, 2021

Whether in environmental litigation (as we reported here) or in tort cases, expert testimony is often required to explain complex scientific concepts and, crucially, to establish a causal connection between exposure to a given substance and an adverse health or environmental effect. In its recent decision in Lanzo v. Cyprus Amax Minerals Company, the New Jersey Appellate Division reminded litigants of the importance of the court’s “gatekeeping” function when it tossed out a nine-figure judgment because the trial court had admitted testimony from the plaintiffs’ experts that lacked a proper scientific basis. The appellate court also held that the trial court had erred when it denied the motion for a separate trial of one defendant who was likely harmed by an adverse inference instruction that was required because of another defendant’s spoliation of important evidence. The plaintiffs, a husband and wife, had sued Johnson & Johnson Consumer Inc. (JJCI), Imerys Talc America, Inc. (Imerys), and a large number of other defendants in 2016, alleging that the husband had contracted mesothelioma from his use of JJCI’s talcum powder products. Imerys had acquired a business that supplied talc to JJCI in 2011. The key issues in the case were whether the talc used by JJCI contained asbestos, which is known to cause mesothelioma, and whether certain other...

District Courts Now Split on Whether Provision in TCPA is Unconstitutional

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Posted in Class Action Defense

On May 11, 2021

Earlier this year, we wrote about Lindenbaum v. Realgy, a decision from the U.S. District Court for the Northern District of Ohio, which dismissed the plaintiff’s “robocall” class action under the Telephone Consumer Protection Act (TCPA), based on the Supreme Court’s 2020 holding that a statutory exception for automated calls to collect government debts was unconstitutional. Because 47 U.S.C. § 227(b)(1)(A)(iii) was unconstitutional at the time of the alleged violations, the district court determined that it lacked subject matter jurisdiction and dismissed the lawsuit. Lindenbaum is currently on appeal before the Sixth Circuit (No. 20-4252). On March 18, 2021, the ACLU joined the fight by filing an amicus brief in support of the defendant, arguing that the defendant cannot be held “liable under a discriminatory statutory scheme that punishes only disfavored speakers.” Since Lindenbaum, the Middle District of Florida, in Hussain v. Sullivan Buick-Cadillac-GMC Truck, Inc., also held that this provision in the TCPA is unconstitutional. Similar to Lindenbaum, the plaintiff in Hussain alleged that she received pre-recorded phone calls and voicemails from the defendants without her consent. The defendants sought dismissal of the plaintiff’s complaint, alleging that the TCPA was unconstitutional and unenforceable during the time the phone calls were made, due to the unconstitutional provision. The Middle District of Florida, relying on Lindenbaum...

“It Wasn’t My Fault”: Court Rejects Attempts by Client and Attorney to Duck Responsibility and Sanctions Both Jointly

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Posted in E-Discovery: Legal Decisions and Court Rules

On April 6, 2021

This blog has previously discussed the importance of cooperation among parties in a litigation to effectuate a comprehensive discovery framework; however, a recent decision from the District Court for the Northern District of California exemplifies the importance of joint responsibility and collaboration between attorneys and their clients when dealing with e-discovery matters, including preservation, collection, and production of electronically stored information (ESI). In a case that ultimately settled and involved both foreign and domestic parties, the court granted a motion for monetary sanctions pursuant to its inherent authority and Rule 37, after finding that the plaintiff’s discovery misconduct “not only forced [defendant] to incur additional attorneys’ fees but … also forced the court to expend considerable resources beyond what was necessary.” Because both the plaintiff and its former counsel “failed in their responsibilities,” the court imposed sanctions jointly and severally against them. In Optrics Inc. v. Barracuda Networks Inc., the plaintiff, a Canadian engineering firm, filed suit in August 2017 against the defendant, an American company, “bringing trademark, contract, and other claims stemming from allegedly unfair and deceptive business practices by [defendant] during the parties’ thirteen-year business relationship.” Beginning in June 2019, discovery disputes and “discovery violations” by the plaintiff plagued the litigation. In February 2020, “with discovery still mired in disputes,” the parties stipulated...

Amateur Hour Is Over! DR Distributors LLC Offers Crash Course on the Importance of E-Discovery Compliance

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Posted in General Litigation

On March 29, 2021

In DR Distributors, LLC v. 21 Century Smoking, Inc., et al., United States District Judge Iain D. Johnston issued a scathing 256-page opinion, dropping the proverbial hammer on the defendant and its counsel for repeated and egregious e-discovery failures – a veritable Keystone Kops series of discovery errors and misrepresentations spanning several years. The court imposed sanctions pursuant to Federal Rules of Civil Procedure 26(g) and 37, as well as monetary sanctions, and required the defendants’ former counsel to participate in continuing legal education on electronically stored information (ESI). In sum, Judge Johnston put all attorneys on notice that it “is no longer amateur hour” for attorneys grappling with e-discovery – compliance is not merely “best practices,” but required under the Rules, and courts will address incompetence accordingly. The dispute arose from alleged trademark infringement claims involving electronic cigarettes with confusingly similar marks. The case was initiated in 2012 and assigned to Judge Johnston in 2014, who immediately held a case management conference. At this conference, the court asked counsel if litigation holds were issued, and defense counsel neglected to inform the court that no litigation holds had been issued at that point. Defense counsel also affirmatively stated that the defendant, Brent Duke, the principal of 21 Century Smoking, was generally knowledgeable about ESI, including...

Sez Who? Appellate Division Questions Expert’s Qualifications to Testify in Spill Act Case

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Posted in Environmental and Green Issues

On March 18, 2021

New Jersey’s Spill Compensation and Control Act (“Spill Act”) makes dischargers of hazardous substances, as well as persons “in any way responsible” for the discharged hazardous substances, liable in contribution to a person who remediates the discharge. Since the statute’s enactment in 1976, courts have often been called on to define limits on the category of parties who can be held responsible, especially the vague sub-category of persons “in any way responsible.” In its recent unpublished decision in Dorrell v. Woodruff Energy, Inc., the Appellate Division held that a supplier could not be held liable as a person “in any way responsible” simply for delivering fuel to the site in question. Reviewing the evidence presented in the trial court about another defendant’s potential liability, the court provided important guidance for both plaintiffs and defendants on the appropriate role of expert witnesses in Spill Act cases. The plaintiff, Sandra Dorrell, owned a store in Alloway Township. When she sought to sell the property, she discovered petroleum contamination in the soil and groundwater. She filed suit in 2011 to seek contribution from the parties she considered responsible for the contamination: Woodruff Energy, Inc. (“Woodruff”), Gulf Oil Limited Partnership (“Gulf”), and Chevron U.S.A. Inc. (“Chevron”), Gulf’s successor. The case had been to the Appellate Division once already, resulting...

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