Gibbons Law Alert

Gibbons Law Alert

Tagged: Contracts

Lack of Actual Notice Does Not Defeat Policy Exclusion When Insurer Made Sufficient Efforts to Provide Clear and Direct Notice of New Exclusion to Policyholder

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Posted in Insurance

On October 15, 2012

The recent decision in MDC Acquisition Co. v. North River Insurance Co., serves as a reminder of the impact that clear and direct notice of policy changes will have on the scope of available insurance coverage. Although rendered by the Northern District of Ohio, the decision is based upon generally accepted legal principles that apply in most jurisdictions and is noteworthy for both insurers and policyholders.

United States District Court for the District of New Jersey Finds Franchisee’s Felony Conviction is Not a Valid Basis for Immediate Termination of a Franchise Agreement Under the New Jersey Franchise Practices Act When the Crime is Not “Directly Related to the Business Conducted Pursuant to the Franchise”

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Posted in General Litigation

On August 9, 2012

All franchisors and distributors should be aware of a June 27, 2012, decision in which the United States District Court for the District of New Jersey reaffirmed the New Jersey Franchise Practices Act’s (“FPA”) strong policy of protecting the rights of franchisees and limiting a franchisor’s ability to terminate a franchise agreement without first providing 60 days written notice — even in the face of a franchisee’s felony conviction — so long as that conviction is not “directly related to the business conducted pursuant to the Franchise.” In International House of Pancakes, LLC, et al. v. Parsippany Pancake House Inc., Civil Action No. 12-03307 (WJM) (MF), the District Court denied International House of Pancakes’ (“IHOP”) request for a preliminary injunction enforcing IHOP’s termination of Defendant Parsippany Pancake House, Inc.’s (“Pancake House”) franchise and prohibiting Pancake House from continued use of IHOP’s logos and other marks. IHOP terminated the franchise, effective immediately, after learning that Pancake House’s president and majority owner pleaded guilty to the crime of endangering the welfare of a minor, and admitted during his plea hearing to having engaged in sexual conduct with a minor, a felony. IHOP ended Pancake House’s franchise based upon language in the franchise agreement providing for immediate termination if the franchisee is convicted a felony. Pancake House countered that the...

Failure to Strictly Comply With the Express Terms of the Notice Provisions in a Claims-Made Insurance Policy Will Forfeit Available Coverage

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Posted in Insurance

On April 26, 2012

The Third Circuit’s recent decision in Atlantic Health System Inc. v. National Union Fire Insurance Company of Pittsburgh confirms the importance of strictly following the notice requirements of a claims-made policy and the relevance of the parties’ course of prior and subsequent performance on the ultimate interpretation of allegedly ambiguous policy terms and conditions. In this case, the failure to strictly comply with the notice requirements resulted in AHS retaining liability for more than $2 million of defense costs and settlement payments.

Consent to Class Arbitration: What is the Meaning of “Silence?”

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Posted in Class Action Defense

On April 24, 2012

In Stolt-Nielsen S.A. v. Animal Feeds International Corp., the United States Supreme Court held that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” As the parties in Stolt-Nielsen stipulated that their arbitration “agreement was ‘silent’ in the sense that they had not reached any agreement on the issue of class arbitration,” the Court ruled that the arbitrator could not infer the parties’ consent to class arbitration solely from the fact of their agreement to arbitrate, or failure to preclude it.

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.”

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.

NLRB Rules That Class Action Waivers in Employment Agreements Violate the NLRA

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Posted in Employment Agreements

On January 17, 2012

On January 3, 2012, The National Labor Relations Board issued its decision in, D.R. Horton, Inc. Case No. 12-CA-25764. This is a significant decision for all employers as it prohibits the use of class action waivers in employment arbitration agreements. Specifically, the Board held that arbitration agreements that contain provisions that prohibit employees from filing joint, class or collective claims addressing their wages, hours or other working conditions against their employer, in any forum, violate Section 8(a)(1) of the National Labor Relations Act (NLRA).

Can a USERRA Claim Be Released as Part of a Separation Agreement?

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Posted in Employment Agreements

On June 27, 2011

In the most recent issue of the New Jersey Labor & Employment Quarterly, Kelly Ann Bird and Zeenat Basrai analyze whether an employee can release claims under the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) as part of a separation agreement. The scant caselaw construing USERRA has resulted in confusion over whether USERRA claims can be waived, and if so, what language a waiver must include to be enforceable. The article discusses practical steps employers can take to protect themselves from an employee bringing a USERRA claim after signing a separation or settlement agreement, such as drafting the waiver using clear and unambiguous language and giving the employee sufficient time to review and consider the agreement before signing it.

Recent New Jersey Appellate Division Case Reminds Employers to Carefully Draft Written Communications to Employees Regarding Leaves of Absence

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Posted in Family Leave

On June 17, 2011

The New Jersey Appellate Division’s recent decision in Lapidoth v. Telcordia Techs., Inc., 2011 N.J. Super. LEXIS 103 (App. Div. June 9, 2011) serves as an important reminder that an employer must exercise care in communications with employees regarding leaves of absence to avoid unintended contractual obligations, even when the employer has complied with its statutory obligations.

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