Gibbons Law Alert

Gibbons Law Alert Blog

Timing Is Everything: SDNY Limits Relief for Plaintiffs Prematurely Seeking Serious ESI-Related Sanctions Under Rule 37(e)(2)

On June 3, 2021

In DoubleLine Capital LP v. Odebrecht Finance, Ltd., the Southern District of New York issued a decision with important implications regarding the timing of spoliation motions and imposition of e-discovery sanctions under Federal Rule of Civil Procedure 37(e)(2). The decision highlights the challenges litigants face when seeking relief under this provision and, in particular, satisfying the onus to establish an “intent to deprive” the opposing party of deleted discovery. As this blog has previously discussed, the sanctions available under this subsection are available only in “egregious cases,” require a high evidentiary bar, and are highly dependent on timing and the proper development of a factual record. In this securities fraud case, the plaintiffs sought a mandatory adverse inference based on the claim that the defendants destroyed encryption keys needed to access the “MyWebDay” platform, an internal “shadow” accounting system used to track illicit bribe payments, which they contended contained evidence essential to the litigation. Despite ultimately admitting to destroying the encryption keys, the defendants argued that it was too early in discovery for the court to impose sanctions. Specifically, the defendants argued that spoliation sanctions would be inappropriate because the plaintiffs “have not (and cannot) demonstrate that the lost information cannot be replaced in discovery, and therefore have not shown that any relevant facts ‘have...

IRS Issues Guidance on an Employee’s Reduction in Hours and Involuntary Termination of Employment to Qualify for the 100 Percent COBRA Premium Subsidy

by Steven H. Sholk

Posted in Employee Benefits / Family Leave / Federal Legislation / Insurance / Sick Leave

On June 2, 2021

The American Rescue Plan Act of 2021 enacted on March 11, 2021 (the “Act”) provides a federally-funded, 100 percent subsidy for the premiums for COBRA continuation coverage from April 1, 2021 to September 30, 2021 for assistance eligible individuals. On May 18, 2021, the IRS issued Notice 2021-31, which provides comprehensive guidance on all aspects of the subsidy. The Notice is in the form of 86 questions and answers and spans 41 single-spaced pages. This news alert focuses on the guidance dealing with the two events that trigger entitlement to the subsidy: a reduction in hours and an involuntary termination of employment. The guidance on reduction in hours is found at Q&A 21 to 23, and on involuntary termination of employment at Q&A 24 to 34. Definition of Assistance Eligible Individual The Act defines an assistance eligible individual as an individual who: Is a qualified beneficiary for a period of COBRA continuation coverage that includes the months between April 1, 2021 and September 30, 2021; Is eligible for COBRA continuation coverage due to a reduction in hours or an involuntary termination of employment other than for gross misconduct; and Elects COBRA continuation coverage. Other COBRA qualifying events, such as a voluntary termination of employment, a child’s aging out of dependent status, or divorce, do not...

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

by Gibbons P.C.

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

by Gibbons P.C.

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

by Gibbons P.C.

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

by Gibbons P.C.

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...

Don’t Jump the Gun: The Northern District of California Compels the Production of Litigation Hold Letters, Holding Duty to Preserve Not Terminated When Related Lawsuits Were Resolved

by Gibbons P.C.

Posted in E-Discovery: Legal Decisions and Court Rules

On May 13, 2021

In Thomas v. Cricket Wireless, LLC (“Thomas II”), Judge Tse of the Northern District of California compelled the production of defendant Cricket Wireless LLC’s litigation hold letters, despite the defendant’s privilege and relevance objections. The court compelled the production of such letters to allow the plaintiffs to investigate and possibly prove whether the defendant had engaged in spoliation of evidence in Thomas II and two similar class actions that were brought against the defendant. While the duty to preserve potentially relevant documents is generally terminated at the conclusion of a litigation, Thomas II reminds us that this duty may continue even after a related litigation is dismissed. The plaintiffs in Thomas II filed a putative class action alleging the defendant engaged in false advertisement related to its 4G/LTE coverage services. The defendant had already been sued in two prior lawsuits. In May 2015, different plaintiffs filed suit against the defendant on nearly identical claims in Barraza v. Cricket Wireless, LLC (“Barraza”) before Judge Alsup. Barraza was resolved when both named plaintiffs accepted the defendant’s offer of judgment for the full value of their claims. At a hearing before the dismissal, Judge Alsup asked whether there was “any scenario under which the merits of the case could come back to life” and whether there was “any kind...

Class Action Dismissal Highlights Limits to the “Picking Off” Exception to Mootness

by Michael A. Conforti

Posted in Class Action Defense

On May 12, 2021

The District of New Jersey recently dismissed a putative class action lawsuit against Capital One Bank, finding the plaintiff’s recovery during the suit of the full amount of damages sought mooted her claim. The would-be class representative, plaintiff Ellen Fensterer, sued Capital One Bank to recover funds used to purchase British Airways flight tickets. After COVID-19 imposed travel restrictions and caused the flights to be canceled, Fensterer sought recovery of $4,906.31 in expended funds and rewards points. Neither British Airways nor Capital One Bank provided Fensterer’s requested refund, causing Fensterer to file a putative class action against Capital One Bank—and not British Airways—for recovery of the funds. Then, during the pendency of the lawsuit, British Airways issued the full refund sought by Fensterer, and Capital One Bank processed that refund and credited Fensterer’s account. Because a non-party ultimately provided the exact remedy sought, the District of New Jersey applied the general rule of mootness, rather than the “picking off” exception, and accordingly dismissed Fensterer’s claim. The “picking off” exception prevents the loophole that would otherwise allow Capital One Bank (or any defendant) to simply buy off the named plaintiff’s claims before class certification, thereby preventing class certification indefinitely, causing piecemeal litigation, and undermining the purpose of class action litigation generally. But that did not happen...

District Courts Now Split on Whether Provision in TCPA is Unconstitutional

by Gibbons P.C.

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...

Gibbons Attorneys’ Offshore Wind Article Published by ABA’s Section of Environment, Energy, and Resources Quarterly Magazine

by Gibbons P.C.

Posted in Environmental and Green Issues

On April 30, 2021

“New Jersey’s Plan to Become the National Capital of Offshore Wind,” authored by Gibbons environmental attorneys Susanne Peticolas and Christopher Cavaiola, appeared in the Spring edition of Natural Resources and Environment, the quarterly magazine of the ABA’s Section of Environment and Energy Resources. New Jersey’s Governor Phil Murphy and his administration have made combating climate change a key priority in the State since his election. Governor Murphy has unveiled arguably his most ambitious plan to date, introducing plans in June that would make New Jersey the hub of the eastern seaboard’s offshore wind industry. The article explores how Governor Phil Murphy plans to do this and examines the relevant state and federal policy and legal implications of same. Click here [Link 1] to read the article.