Gibbons Law Alert

Gibbons Law Alert

Category: General Litigation

Third Circuit Concludes that Tying Arrangement Does Not Violate New Jersey’s Truth-in Consumer Contract, Warranty, and Notice Act

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Posted in General Litigation

On July 12, 2012

The New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act (the “NJ Warranty Act”) prohibits a seller from offering to consumers any warranty containing a provision that violates a “clearly established legal right” under state or federal law. The Third Circuit analyzed the scope of this “clearly established legal right” in its July 2, 2012 opinion in McGarvey v. Penske Auto Group and suggested that a warranty will be upheld absent a blatant violation of law.

Third Circuit Affirms Dismissal of Off-Label Marketing Actions Against Schering for Lack of Standing

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Posted in Class Action Defense / General Litigation

On May 31, 2012

In a consolidated appeal pitting a putative class of third-party payors of drugs prescribed for uses not approved by the Food and Drug Administration, and a putative class of individual patients prescribed such drugs, against Schering-Plough and affiliated entities, the Third Circuit in In re Schering-Plough Corp. Intron/Temodar Consumer Class Action affirmed the district courts’ dismissals of both actions for lack of standing. The Third Circuit held that both plaintiffs, who brought federal and state statutory and common law causes of action, failed to allege a plausible nexus between Schering’s allegedly illegal marketing campaign and the doctors’ decisions to prescribe various drugs for unapproved uses.

Third Circuit Affirms Bankrupt Asbestos Defendants’ Transfer of Insurance Recovery Rights to Personal Injury Trusts Notwithstanding Insurance Policies’ Anti-Assignment Provisions

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Posted in General Litigation / Insurance

On May 18, 2012

The U.S. Court of Appeals for the Third Circuit, in its May 1, 2012, decision in In re: Federal-Mogul Global, Inc. held that asbestos defendants who file Chapter 11 petitions and seek to resolve their asbestos-related liabilities through the creation of a personal injury trust under Section 524(g) of the Bankruptcy Code may transfer their rights under their liability insurance policies to the trust notwithstanding the policies’ anti-assignment provisions.

Third Circuit Rules that Car Manufacturers’ Wholesale Price Increases Designed to Recover Warranty Costs to Dealers is Consistent with New Jersey Franchise Protection Act

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Posted in General Litigation

On May 4, 2012

The Third Circuit’s to-be-published opinion in Liberty Lincoln-Mercury, Inc. v. Ford Motor Company, confirms that the New Jersey Franchise Protection Act, N.J.S.A. § 56:10-1 to § 56:10-31, permits motor vehicle franchisors to use permissible cost-recovery systems to recoup the increased cost of reimbursing New Jersey motor vehicle dealers under the Act, but also clarifies that such a cost-recovery system must allow individual dealers to retain the ability to mitigate the increased costs imposed.

New Jersey Appellate Division Holds That the Entire Controversy Doctrine Does Not Reach Tangentially-Related Claims Pending in Another Court, Despite Common Facts

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Posted in General Litigation

On April 30, 2012

In Alpha Beauty Distributors, Inc. v. Winn-Dixie Stores, Inc. the New Jersey Appellate Division reversed a trial court’s dismissal of an action under the Entire Controversy Doctrine, finding that the dismissed action was not part of the same “core controversy” as a related federal-court proceeding. Plaintiff Alpha Beauty Distributors is owned by Bebert Azran. After purchasing Alpha from Noel and Reid Kleinman, Azran discovered fraud and breaches of fiduciary duty, and sued the Kleinmans in Federal District Court on behalf of himself and Alpha . The federal action centered on allegations that the Kleinmans had damaged Alpha and Azran “through a course of self-dealing and conversion of corporate assets.” Among other things, the federal complaint alleged that the Kleinman’s had given certain of Alpha’s customers improper credits, but it did not encompass any claims against such customers for the improper credits.

Ninth Circuit Reverses Itself, Withdraws Opinion Which Held that Magnuson-Moss Warranty Act Prohibits Mandatory Arbitration in Warranties

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Posted in Class Action Defense / General Litigation

On April 19, 2012

As reported in an earlier post in September 2011, the Ninth Circuit in Kolev v. EuroMotors West/The Auto Gallery held that the Magnuson Moss Warranty Act (“MMWA”) “precludes enforcement of pre-dispute agreements . . . that require mandatory binding arbitration of consumer warranty claims.” The Ninth Circuit’s ruling would have prohibited manufacturers and distributors of consumer products from attempting to take advantage of the Supreme Court’s recent pro-arbitration rulings, including AT&T Mobility v. Concepcion, involving MMWA consumer warranty claims. According to the original majority opinion in Kolev, to the extent the MMWA precludes arbitration clauses, class waivers in such clauses, which Concepcion rendered immune from invalidation under state laws, would thus likewise be unenforceable in MMWA actions, providing a complete end-run around Concepcion.

New Jersey Appellate Division Limits Application of Parol Evidence Rule in Fraudulent Inducement Cases and Finds that Unsophisticated Fraud Claimant Can Only Be Charged With His Actual Knowledge

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Posted in General Litigation

On April 17, 2012

In a to-be-published opinion in Walid v. Yolanda for Irene Couture, Inc., the New Jersey Appellate Division reaffirmed and clarified the scope of the fraudulent inducement exception to the parol evidence rule. The court also clarified the level of knowledge to be imputed to a contracting party when assessing the reasonableness of that party’s reliance on the alleged misrepresentations.

New Jersey Appellate Division Finds That a Demand for Arbitration or Mediation Constitutes the “First-filed” Action for Comity Purposes

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Posted in General Litigation

On March 15, 2012

In CTC Demolition Company, Inc. v. GMH AETC Management / Development, LLC, et al., the Appellate Division recently found in a to-be published opinion that a party’s demand for contractually-mandated arbitration or mediation may constitute the “first filed” action for purposes of a comity analysis. The “first filed rule” typically surfaces where parties have engaged in a “race to the courthouse,” filing similar lawsuits in different jurisdictions that they perceive to be most friendly to their cause. Based on traditional principles of comity, the rule provides that “a New Jersey court should not interfere with a similar, earlier-filed case in another jurisdiction that is capable of affording adequate relief and doing complete justice,” Sensient Colors, Inc. v. Allstate Ins. Co., but allows for certain exceptions, such as where “the presence of special equities may lead a court to disregard the traditional deference paid to the first-filed action.”

Victory for Accountants: Accountant Third-Party Liability Based on Third-Party’s Access to Accountants’ Work Product Arises Only When Accountant is Explicitly Informed at Outset of Engagement that Third Party Will Rely on Accountant’s Work

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Posted in General Litigation

On March 12, 2012

The New Jersey Supreme Court recently held in Cast Art Industries, LLC v. KPMG LLP that the scope of accountant liability contained in the Accountant Liability Act, N.J.S.A. 2A:53A-25(b)(2)(a), is restricted to clients and third parties who the accountant knew at the start of engagement would have access to the accountant’s work product. N.J.S.A. 2A:53A-25(b)(2) identifies three circumstances when an accountant may be liable to a third party, including when the accountant “knew at the time of the engagement by the client, or agreed with the client after the time of the engagement” that the accountant’s work product would be made available to the third party. The Appellate Division held that an accountant retained to conduct an audit could be liable to a third party who received and relied on the audit so long as the accountant knew at some point during the engagement that the third party would rely on the audit.

The Southern District of New York and the District of Delaware Restore Order to a Chaotic Post-Stern Landscape

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Posted in General Litigation

On March 7, 2012

Recently, the Southern District of New York and the District of Delaware have issued Amended Standing Orders resolving some of the uncertainty arising from the Supreme Court’s ruling in Stern v. Marshall last term by expressly permitting bankruptcy courts to hear and issue proposed findings of fact and conclusions of law in those matters where they lack the constitutional authority to issue final judgments.

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