Vol. 1, Issue 6
June 26, 2020
As Third Eye Blind once asked, “How’s it Going to Be”? What will the world look like when we make it to the other side of these uncertain times? The justice system is making its best efforts to answer those questions.
Privacy and consumer protection issues continue to receive focus from New Jersey’s highest court. The New Jersey Supreme Court held that establishing a case of intrusion on seclusion in right to privacy claims can be based on reasonable inferences drawn from circumstantial evidence. The Court also recently indicated it will hear argument on the rejection of class certification for claims alleging P.C. Richard & Son LLC exposed customers to identity theft and credit card fraud based upon information captured on customers’ receipts. See Case No. 084257 granting petition for certification of Point I from judgment in A-002662-18.
Also on the horizon, the New Jersey Supreme Court will consider appellate rulings on insurance coverage for New Jersey Transit Corp. involving potentially hundreds of millions of dollars for Superstorm Sandy damage. See Case No. 083801 granting petition for certification of the judgment in A-1026/1027-17.
The New Jersey Appellate Division affirmed decisions compelling arbitration in cases involving commercial loans and in a legal malpractice action. Discussion of how the New Jersey Arbitration Act could provide procedures to inform the provisions and compel their enforcement is notable for parties considering the language in their own arbitration provisions, as always, the courts focused on the power of plain language.
Weighing in on the increasingly popular tactic of snap removals , a federal magistrate judge remanded a matter back to state court thwarting a defendant medical device manufacturer’s removal on the basis that service upon the defendant’s registered agent prior to removal rendered the defendant properly joined and served.
Other topics include: personal jurisdiction in a defamation case; affirming application of the statute of limitations in a construction defect case ; and a U.S. District Judge dismissing a personal injury suit finding no liability on the part of a franchisor and lessor of a convenience store.
We hope these cases are of interest. As always, we appreciate the chance to catch up with you and we hope you enjoy this edition of HKMP’s Case Alerts.
Friedman v. Martinez , __ N.J. __ (2020)
The New Jersey Supreme Court held that establishing a case of intrusion on seclusion in right to privacy claims can be based on reasonable inferences drawn from circumstantial evidence. The case arose out of the discovery that a janitor at an office building had been hiding video-recording devices in the women’s bathrooms and locker room for several months. Defendants moved for partial summary judgment arguing certain plaintiffs could not demonstrate an invasion of privacy without proof that they were captured on video. The trial court granted summary judgment, observing proof of a wrongful act must be shown to defeat defendant’s motion. The Appellate Division reversed, holding plaintiffs can maintain a cause of action for intrusion upon seclusion without proof their images were actually captured. Defendants appealed to the Supreme Court arguing the record could not support that plaintiffs had used a bathroom at the time a camera was placed there. The Supreme Court held a victim does not have to present direct evidence of being secretly recorded; victims just need to show they used an area reasonably expected to be private while a recording device was concealed. The actual recording can go to the issue of damages.
Still, the matter was reversed and the trial court’s order granting summary judgment was reinstated because there was insufficient evidence in the motion record to demonstrate, directly or inferentially, that the dismissed plaintiffs used bathrooms with cameras in them during the relevant time period
Allstate Lending Group, Inc. v. The Gran Centurions, Inc. , Nos. A-3018-18T1/A-3827-18T1/A-4524-18T1 (N.J. Super. Ct. App. Div. June 23, 2020) (per curiam)
In an unpublished decision, the New Jersey Appellate Division affirmed orders compelling arbitration in three appeals involving common parties and claims over the funding and payment of three commercial loans totaling $2.65 million. The Appellate Division found the provision defined the arbitral forum since it stated arbitrations would take place before a mutually agreed upon retired California judge or justice, and, absent agreement being reached, there was a process for selecting a sole arbitrator. As a matter of law, the New Jersey Arbitration Act (the Act), N.J.S.A. 2A:23B-1 to -36, provided the applicable arbitration procedures as the parties opted not to waive the Act’s requirements, so they elected and agreed to be bound by the Act's provisions. The Act's provisions “sufficiently informed the parties about the ‘rules and procedures’ applicable to the arbitrations such that the parties were ‘[]familiar with the rights that replaced judicial adjudication.’” Further, the provision in each agreement had plain, bolded language in all caps that the parties were waiving the right to have a trial. The agreements also explained the differences between an arbitration and a court proceeding, and the absence of a right to a jury trial in arbitration. The Appellate Division deemed this a “clear and unambiguous [statement] that the [person signing the agreement] is waiving [the] right to sue or go to court to secure relief” as required under case law. The court also reiterated the sophisticated nature of the parties to these commercial agreements. Last, the court noted that third parties lacked standing to assert claims challenging another party’s arbitration agreement.
Raia v. CohenReznick LLP , No. A-1365-19T1 (N.J. Super. Ct. App. Div. June 22, 2020) (per curiam)
In an unpublished decision, the New Jersey Appellate Division declined to disturb an order compelling arbitration in a legal malpractice action. The underlying case involved claims of malpractice in connection with estate planning services provided by the defendant law firm. The engagement letter included an arbitration provision and the defendant filed a motion to compel arbitration, which was granted by the trial court. On appeal, the panel recognized that arbitration is “fundamentally a matter of contract” and the engagement letter included a “separate paragraph, and its terms clearly and unambiguously mandate arbitration for ‘any dispute, controversy, or claim arising out of or relating to this agreement (including disputes regarding the breach, termination, validity or enforceability of this agreement)’” and identified the forum, terms, and manner for arbitration. Further, plaintiffs’ claims that the arbitration provision, delegation clause, and other portions of the engagement letter were unconscionable were within the broad scope of the letter’s arbitration provision and, thus, an insufficient basis to defeat defendant’s motion.
Jackson v. Howmedica Osteonics Corp., CIV.A.2:19-cv-18667-JMV-JBC (D.N.J. June 15, 2020) (Clark, U.S.M.J.)
The magistrate judge granted plaintiff’s motion to remand rejecting defendant’s attempt to vest jurisdiction in the District Court through a snap removal as the judge found that defendant’s removal was improper under the forum defendant rule, 28 U.S.C. § 1441(b) which bars removal to federal court based upon diversity jurisdiction if a case is filed in a state court in which a “properly joined and served” defendant is a citizen. Plaintiff’s suit was one of many alleging personal injuries from a component manufactured by the defendant for artificial hip replacement systems. Plaintiffs filed in state court in New Jersey and served defendant’s registered agent prior to defendant removing the cases. However, in several cases, plaintiffs also attempted service on the defendant at its corporate headquarters. Plaintiffs alleged the process server was kept waiting while the defendant filed papers to remove their suits. Defendant’s registered agent did not provide copies of the initial pleadings to defendant until after it had effected removal.
Defendant argued service upon its designated-service agent prior to defendant filing for removal was not “properly joining and serving” a defendant under the forum defendant rule. The judge found this argument was not supported by Encompass Ins. Co. v. Stone Mansion Rest. Inc ., 902 F.3d 147, 152 (3d Cir. 2018) which recognized a defendant may use pre-service mechinations to remove a case that it otherwise could not remover under the forum defendant rule. Defendant’s argument also was not supported by Tucci v. Hartford Fin. Servs. Grp., Inc ., 600 F. Supp. 2d 630, 631 (D.N.J. 2009) addressing service upon a statutory agent and Section 1446(b) requiring the agent provide a copy of the initial pleading to the defendant for the time for removal to run. Thus, the judge found service upon defendant’s registered agent rendered it properly joined and served rendering defendant’s subsequent removal improper under the forum defendant rule.
Wade v. Dempsey , No. A-3236-18T4 (N.J. Super. Ct. App. Div. June 19, 2020) (per curiam)
The Appellate Division affirmed the trial court’s dismissal of a complaint alleging defamation due to lack of personal jurisdiction over the defendant, a California resident. Plaintiff’s complaint arose out of a phone call made by defendant – a California resident – to his mother, a Florida resident, who was visiting the plaintiffs – defendant’s sister and her husband – at the couple’s New Jersey home at the time of the phone call. Plaintiffs’ filed a complaint against defendant in the New Jersey Superior Court, Law Division, alleging defamation and defamation per se based on defendant’s statements during the call.
There was no evidence in the record defendant has any other connection to New Jersey. Defendant moved to dismiss the complaint for lack of personal jurisdiction. No party asked for discovery on the motion, and the court took no testimony. The trial court concluded that the single phone call to NJ did not constitute sufficient minimum contacts to establish personal jurisdiction. The Appellate Division affirmed. Defendant’s statements were made outside of a commercial context, to a nonresident temporarily present in the State, and were not designed to interfere with the exercise of a statutory right or suit pending in this State, and were, in the Appellate Division’s opinion “interfamily communications.” There was no evidence in the record that defendant would have reasonably anticipated being haled into a New Jersey court, and exercising jurisdiction over the defendant would not comport with fundamental notions of fair play and substantial justice.
Riva Pointe at Lincoln Harbor Cond. Assoc., Inc. v. Tishman Construction Corp ., No. A-3568-18T2 (N.J. Super. Ct. App. Div. June 15, 2020) (per curiam)
In an unpublished decision, the Appellate Division affirmed dismissal of plaintiff’s construction defect claims as barred by the statute of limitations. In October 2012, plaintiff filed its first lawsuit alleging defective construction causing water infiltration into condominium units and common areas. Plaintiff served an expert report from September 2008 identifying the alleged negligence of each defendant. After the court ordered deadline, plaintiff served a supplemental report raising new issues, opinions, and conclusions and increasing plaintiff’s claimed damages by nearly $8 million. The court prohibited plaintiff from using any opinions contained in its supplemental expert report which were unnecessary to rebut the testimony of defense experts. Plaintiff then filed a second lawsuit for construction defects referenced in the first action.
In the first action, the judge found plaintiff knew or should have known it had a viable cause of action for construction defects when plaintiff’s expert issued its report in September 2008. Notably, the judge also barred plaintiff’s liability expert from testifying since he was not produced for deposition. Lacking a liability expert, the first action was dismissed with prejudice. The second action was dismissed without prejudice while the first action appeals were pending. The judge found the second action was duplicative of the first action so there was no jurisdiction to proceed.
A second judge reinstated the second suit. However, adjudicating motions to dismiss, a third judge concluded that plaintiff’s allegations in the second action were duplicative of the first action. He too concluded that plaintiff’s cause of action accrued as of September 2008, so plaintiff’s claims were time barred by the statute of limitations relying upon The Palisades At Fort Lee Condo. Ass'n, Inc. v. 100 Old Palisade, LLC , 230 N.J. 427, 454 (2017). The Appellate Division found plaintiff’s argument that the second suit raised new claims as unavailing and declined to disturb the third judge’s ruling that the second action was barred by the statute of limitations based upon the September 2008 accrual date and the holding in Palisades .
Knight v. Weber, No. A-4448-18T1 (N.J. Super. Ct. App. Div. June 24, 2020) (per curiam)
In an unpublished decision, the New Jersey Appellate Division vacated judgment in favor of defendants and remanded for a new trial in a medical malpractice action. Plaintiff alleged defendant doctors' recommendations to undergo cardiac catheterization and the performance of the procedure deviated from the accepted standards of care because it was not medically necessary. Plaintiff contended defendants’ negligence proximally caused a mechanical dissection of his aorta leading to a heart attack and the need for emergency bypass surgery. Defendants denied negligence and argued plaintiff’s injuries were due to his pre-existing condition. However, defendants conceded plaintiff suffered a mechanically induced acute dissection of his right coronary artery causing his heart attack, emergency surgery, and damaged the heart. Despite this concession, the trial judge rejected plaintiff’s argument per Ponzo v. Pelle , 166 N.J. 481 (2001) that the jury should not consider causation and should immediately move to damages if they found a deviation from standards of care. The trial judge gave a pre-existing condition charge, pursuant to Scafidi v. Seiler , 119 N.J. 93 (1990) as requested by defendants based on plaintiff's history including, in part, hypertension, high cholesterol, familial history of premature coronary artery disease, smoking, and prior heart attack. The jury returned a verdict that defendants deviated from the standard of care in recommending the procedure but that it did not increase the risk of harm posed by plaintiff’s pre-existing condition so judgment of no cause for action was entered in favor of defendants. Plaintiff later moved for a new trial and in reviewing the record, the judge found the jury verdict sheet which revealed that the jury had, nonetheless, continued to complete the form apportioning liability between the defendants and entering an award of damages. Plaintiff’s motion for a new trial was still denied given the unwavering verdict rendered by the jury in court of no increase of the risk of harm caused by the defendants’ deviation s.
On appeal, first, the Appellate Division found that a new trial was warranted since the verdict sheet evidenced a finding of proximate cause and an award of damages discovered well after the jury was discharged, so there was no means for the court to clarify the confusion. Second, the trial court did not err in charging the jury under Scafid i and asking the jury to assess defendants' alleged negligence in light of plaintiff's pre-existing condition. The court found plaintiff had sought out defendants with the express purpose of altering or delaying the outcome of his pre-existing heart condition and there was sufficient evidence to show the cardiac catheterization was recommended and performed to treat his pre-existing condition. Third, the court distinguished Ponzo since the issue in this case was whether the alleged deviation increased the risk of harm posed to plaintiff due to his cardiac condition, not just whether the mechanical dissection would or would not have occurred but for the alleged negligence. Thus, the jury was properly asked a specific interrogatory regarding plaintiff’s pre-existing condition and the judge properly denied plaintiff’s motion per Ponzo . Fourth, the trial court did not err in declining to use a special interrogatory regarding damages for alleged post-traumatic stress disorder separate from plaintiff’s other injuries. Last, the trial court properly barred informed consent evidence defendants wished to submit since plaintiff abandoned that claim and defendants were otherwise permitted to testify about their thought processes/considerations in recommending plaintiff undergo the procedure..
Boutahli v. 7-Eleven, Inc ., CIV.A.1:16-cv-01186-JHR-JS (D.N.J. June 18, 2020) (Rodriguez, U.S.D.J.)
The Federal District Court of New Jersey recently held that the franchisor and lessor of a convenience store could not be held liable for personal injuries because they do not qualify as “possessors of land.” Plaintiff, an employee of 7-11, was assaulted and shot by several individuals during a robbery. Plaintiff sued the franchisor and the lessor of the premises arguing that they each had a duty of care to prevent him from being harmed while on the job. The court noted that in order for a defendant to bear such a duty, it must be determined that the defendant is a “possessor of land” under the Restatement of Torts. The court reasoned that the proper test is whether and to what extent a defendant retains control of the premises. In this case, it was determined that the franchisee was responsible for all day-to-day operations, employee training and supervision, and full managerial authority. Accordingly, the court held that the franchisor, 7-11, did not maintain a significant degree of control over the premises and therefore did not owe any duty to plaintiff as a possessor of land. Because the lessor maintained even less control than the franchisor, the court held that the lessor likewise did not have a duty. However, the court made clear that whether a franchisor owes a duty to the franchisee’s employees or customers continues to require a case by case analysis determined by the level of control each franchisor maintains. 
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