Gibbons Law Alert

Gibbons Law Alert

Category: General Litigation

New Jersey Supreme Court Limits Emerging “Intertwinement” Theory of Compelling Arbitration

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Posted in General Litigation

On September 9, 2013

The New Jersey Supreme Court, in Hirsch v. Amper Financial Services, LLC ruled that “intertwined” parties and claims alone are insufficient to compel arbitration on grounds of equitable estoppel. The plaintiffs in Hirsch purchased two securitized Med Cap notes worth $550,000 through a financial advisor representing broker-dealer Securities America, Inc. (“SAI”). They ultimately lost their investment after an SEC investigation indicated that Med Cap was a Ponzi scheme. Pursuant to an arbitration clause in their purchase applications, plaintiffs initiated FINRA arbitration proceedings against SAI and the financial advisor. In tandem with their arbitration claims, plaintiffs filed a civil action against their accountant EisnerAmper, LLP—who had recommended the financial advisor—and Amper Financial Services, LLC (“AFS”) of which the financial advisor was managing partner and 50% shareholder. EisnerAmper and AFS impleaded SAI for indemnification and contribution. In response, SAI moved to compel arbitration, despite the fact that plaintiffs had not agreed to arbitrate claims with either EisnerAmper or AFS. EisnerAmper and AFS joined in SAI’s motion to compel arbitration, which the trial court granted.

Delaware Corporations May Enact Bylaws Requiring Litigation to be Venued in Delaware Courts

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Posted in General Litigation

On July 8, 2013

On June 25, 2013, the Delaware Court of Chancery paved the way for the boards of directors of Delaware corporations to amend their bylaws to include forum selection clauses requiring any litigation related to the corporation’s internal affairs to be conducted in Delaware courts. Adopting such provisions is intended to avoid the inefficiency and cost of Delaware corporations having to defend against the same litigation in multiple forums (e.g., both in Delaware and the state of the corporation’s principal place of business, as well as in state and federal court).

Delaware Supreme Court Holds Valid International Forum Selection Clause Dispositive in Determining Jurisdiction

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Posted in General Litigation

On June 11, 2013

In National Industries Group (Holding) v. Carlyle Investment Management LLC, Delaware’s Supreme Court unanimously held that a valid forum selection clause is dispositive in determining which court has jurisdiction over disputes arising under the contract. Even if a foreign corporation is party to the contract, Carlyle holds that any considerations weighing in favor of applying the doctrine of international comity do not override an otherwise valid forum selection clause.

Law Division Holds Unfiled Discovery Protected From Common-Law Right of Access

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Posted in General Litigation

On May 29, 2013

The Law Division in a to-be-published opinion in Drinker Biddle & Reath LLP v. New Jersey Department of Law & Public Safety, Division of Law, recently held that public policy does not favor access to unfiled discovery in public sector litigation under New Jersey’s common-law right of access. Plaintiff filed a complaint in lieu of prerogative writs for failure to comply with the Open Public Records Act, (“OPRA”), and the common-law right of access in refusing to provide plaintiff with copies of unfiled transcripts of expert depositions in environmental litigation brought by the State of New Jersey, Department of Environmental Protection (“NJDEP”). Because the transcripts in their entirety had not been filed with the Court, NJDEP denied plaintiff’s OPRA request on privilege and confidentiality grounds.

New Jersey Appellate Division Takes “Hands-Off” Approach to Contractual Breaches of the Duty of Good Faith and Fair Dealing

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Posted in General Litigation

On May 21, 2013

In Sun Pharmaceutical Industries v. Core Tech Solutions, New Jersey’s Appellate Division affirmed a Trial Court order dismissing plaintiff’s claims that defendants had breached their contractual duty of good faith and fair dealing. The decision is notable because it sheds light on the definition of “good faith” in the context of a preliminary agreement, an area where there is little New Jersey precedent.

Factual Allegations in Superceded Complaint Not Judicial Admissions, But May Be Used for Rebuttal Purposes

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Posted in General Litigation

On April 26, 2013

In West Run Student Housing Associates., LLC v. Huntington National Bank, the United States Court of Appeals for the Third Circuit ruled that, under the liberal policy of allowing amendment under Rule 15, factual allegations made in a superceded complaint are not binding judicial admissions for purposes of a motion to dismiss, but such allegations may be used in the litigation to rebut the plaintiff’s subsequent factual contentions.

Trade Secrets Litigation: DuPont Wins Property from U.S. Subsidiary as Part of its $920M Damages Award Against the Parent

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Posted in General Litigation / Trade Secrets

On April 16, 2013

Kolon USA, Inc., the U.S. subsidiary of South Korea-based Kolon Industries Inc. (“Kolon”), recently was ordered by New Jersey District Court Judge Esther Salas to turn over its property to DuPont as part of DuPont’s efforts to enforce the $920 million damages award that DuPont won against Kolon during a 2011 trade secrets litigation in the Eastern District of Virginia.

New Law Places Stricter Limits on Shareholder Derivative Suits

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Posted in General Litigation

On April 3, 2013

On April 2, 2013, Governor Christie signed A-3123, which revises New Jersey’s law concerning shareholder derivative proceedings under N.J.S.A. § 14A:3-6. According to the New Jersey Corporate and Business Law Study Commission, the purpose of this new law is to preclude derivative lawsuits that impose excessive and unnecessary costs on New Jersey corporations. The law applies to both derivative proceedings brought on behalf of a single shareholder and shareholder class actions against a corporation or its directors that arise out of a breach of duty imposed by New Jersey statutory or common law.

Gibbons Business & Commercial Litigation Department Named the New Jersey Law Journal’s Commercial Litigation Department of the Year

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Posted in General Litigation

On April 2, 2013

The Gibbons Business & Commercial Litigation Department has been named the Commercial Litigation Department of the Year by the New Jersey Law Journal. This marks the publication’s first list of leading litigation departments, which evaluated law firms with a New Jersey presence and significant litigation results in 2012.

Third Circuit: Challenges to Contract’s Validity Must Be Arbitrated, But Challenges to Contract’s Formation May Proceed in Court

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Posted in General Litigation

On March 1, 2013

In its recent decision in SBRMCOA, LLC v. Bayside Resort, Inc., the Third Circuit clarified when challenges to a contract containing an arbitration clause must be arbitrated and when they must be decided by a court. Emphasizing that the relevant distinction is between challenges to a contract’s validity, which are subject to arbitration, and challenges to a contract’s formation, which generally are not, the Court concluded that a claim that a contract was coerced must be arbitrated, but a claim that a contract was beyond a signatory’s authority or ultra vires requires judicial determination.

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