Gibbons Law Alert

Gibbons Law Alert

Category: General Litigation

New Jersey Chancery Division Determines Insurance Agents are Not Franchises for Purposes of the New Jersey Franchise Practices Act

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Posted in General Litigation

On February 10, 2012

New Jersey insurers and insurance agents must be aware that agents are not entitled to the broad protections of the New Jersey Franchise Practices Act (“NJFPA”) pursuant to a recent Chancery Division decision in DeLuca v. Allstate Insurance Co., in which the Court held that insurance agents do not meet the definition of a “franchise.” The Court thus concluded that Allstate Insurance Company was free to terminate its agents pursuant to the terms of their respective agency agreements, which permitted termination with or without cause.

Agree or Else: Delaware Adopts Revised Default Standards for Discovery

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Posted in General Litigation

On February 9, 2012

Effective December 8, 2011, the U.S. District Court for the District of Delaware revised its Default Standard for Discovery, Including Discovery of Electronically Stored Information (“ESI”). This third version of the Revised Default Standards contains some new provisions that apply to the discovery of ESI absent agreement by the parties or court order. The Revised Default Standards also set a detailed schedule for the initial exchange of discovery in patent litigation, and reinforce the Court’s expectation of cooperation among the parties and proportionality in the preservation, identification and production of relevant information. Some of the highlights and practical points of the Revised Default Standards are as follows:

Bankruptcy Court Service of Process Rules Set Traps for the Unwary

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Posted in General Litigation

On February 6, 2012

The Supreme Court’s decision in Stern v. Marshall has generated renewed focus on what types of cases and claims can be resolved in an adversary proceeding in the bankruptcy courts, and what types of cases will have to be resolved in the federal district courts. The resulting shift should serve as a reminder that, while the Federal Rules of Bankruptcy Procedure governing adversary proceedings are similar to and modeled on the Federal Rules of Civil Procedure, there are significant differences. For example, because the Bankruptcy Rules regarding service of process may result in a shorter time within which a defendant must respond, corporations must remain mindful of these differences and avoid relying upon the more well-known Federal Rules.

New Jersey Framework for Analyzing Attorneys’ Fee Awards, Including Contingency Fee Enhancements, Unchanged

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Posted in General Litigation

On February 2, 2012

Last week, the New Jersey Supreme Court reiterated that lawyers who represent clients on a contingency basis in disputes brought under New Jersey laws that permit the recovery of attorneys’ fees can recover an additional fee “enhancement” pursuant to the framework the Court set forth nearly 20 years ago in Rendine v. Pantzer, 141 N.J. 292 (1995) . The decision, Walker v. Guiffre, Case Nos. 72-10, 100-10 (N.J. Jan. 25, 2012), is noteworthy for businesses that all too frequently must weigh the risk of paying their opponents’ attorneys’ fees when deciding whether to settle disputes – particularly those companies that wishfully thought the reins on contingency fee enhancers might be tightened in light of two recent decisions by New Jersey appellate courts.

Third Circuit Enforces Arbitration Provision in Consumer Contract Where Designated Arbitral Forum is Unavailable

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Posted in General Litigation

On January 30, 2012

In a matter of first impression, the Third Circuit in Khan v. Dell Inc. held that the Federal Arbitration Act requires the appointment of a substitute arbitral forum where the forum designated by the parties is unavailable and the designation of that particular (unavailable) forum was not integral to the arbitration provision. The case stemmed from alleged design defects in a Dell computer purchased by plaintiff Khan. Dell’s Terms and Conditions of Sale included an arbitration provision which provided that any dispute between Khan and Dell “SHALL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION ADMINISTERED BY THE NATIONAL ARBITRATION FORUM (NAF)” and that “this provision shall be governed by the Federal Arbitration Act 9 U.S.C. sec. 1-16 (FAA).” The arbitration provision did not designate a replacement arbitrator in the event that NAF was unavailable.

Third Circuit Holds That Plaintiffs Lack Standing to Sue for Data Breach Where Alleged Harm is Only Speculation That Personal and Financial Information May Be Misused

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Posted in General Litigation

On January 3, 2012

The Third Circuit in Reilly v. Ceridian Corp. affirmed the district court’s dismissal of a putative class action against payroll processing company Ceridian for a data breach, holding that the plaintiffs lacked standing because their alleged injuries were too speculative. In December 2009, an unidentified hacker breached Ceridian’s Powerpay system and potentially gained access to personal and financial information belonging to approximately 27,000 employees at 1,900 companies. It was unknown, however, whether the hacker read, copied, or understood the data. Two individual plaintiffs filed suit on behalf of all individuals whose information was exposed in the security breach, alleging that they (1) had an increased risk of identity theft, (2) incurred costs to monitor credit activity, and (3) suffered emotional distress.

Southern District of New York Implements Pilot Program to Govern Pretrial Procedures in Complex Civil Cases

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Posted in General Litigation

On December 22, 2011

The Judicial Improvements Committee of the Southern District of New York issued a report for a Pilot Project Regarding Case Management Techniques for Complex Civil Cases (the “JIC Report”) in October 2011. The pilot project is designed to run for 18 months and apply to certain matters designated as complex civil cases. The “complex civil case” designation applies to class action lawsuits, multi-district litigation actions, stockholder suits, most product liability cases, antitrust suits, patent and trademark suits, securities cases, environmental matters and cases involving the constitutionality of state statutes. Although many Southern District of New York judges already had individual procedures in place similar to those implemented by the JIC, some of the more novel aspects of this pilot project are described below.

Lack of Standing and Choice-of-Law Rules Doom Nationwide Consumer Fraud Class Action Against BMW

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Posted in General Litigation

On November 23, 2011

On October 31, 2011, in Nirmul v. BMW, the District Court for the District of New Jersey dismissed a nationwide class action against BMW asserting claims under the New Jersey Consumer Fraud Act (“NJ CFA”), concluding, essentially, that none of the three plaintiffs had a standing to sue. The complaint alleged that the high pressure fuel pump in BMW’s N54 turbo engines had a known defect and that BMW failed to disclose this fact to purchasers throughout the country.

Negotiated Sale of Customized Computer to Sophisticated Business Is Not a Sale of “Merchandise” Within the Meaning of the New Jersey Consumer Fraud Act

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Posted in General Litigation

On November 15, 2011

New Jersey courts have long held that businesses may assert claims under New Jersey’s Consumer Fraud Act (“CFA”) in appropriate circumstances. See Hundred E. Credit Corp. v. Schuster. Whether a business is entitled to assert a CFA claim typically turns on the specific facts of the case and whether the transaction at issue constitutes a “sale of merchandise” within the meaning of the CFA. See N.J.S.A. § 56:8-2. In Princeton Healthcare System v. Netsmart New York, Inc., the Appellate Division confronted this precise issue in holding that Princeton Healthcare, a sophisticated business entity, was not entitled to assert a CFA claim against Netsmart arising out of the sale and implementation of a customized computer system.

Fee Awards Under New Jersey Consumer Fraud Act Permitted Despite Failure to Show Ascertainable Loss at Trial

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Posted in General Litigation

On November 8, 2011

Defense attorneys, beware: your client’s technical violation of the New Jersey Consumer Fraud Act may result in its having to pay the plaintiff’s lofty legal bill despite the plaintiff’s failure to demonstrate any injury. The New Jersey Appellate Division recently held that plaintiffs who show a technical violation of the NJCFA but fall short of demonstrating an ascertainable loss at trial may still be entitled to counsel fees.

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