Are you in Madonna’s world of "time go[ing] by so slowly" or is your summer speeding along? Things have been speeding along for us at HKMP ramping up new matters and working existing files as we pursue the best resolutions for our clients.
The courts certainly have not shown any signs of a summer lull. Given the volume of opinions, we have focused on a number of notable published cases from across the federal and state landscape: the New Jersey Supreme Court holding the New Jersey Arbitration Act applies in the absence of the Federal Arbitration Act, federal and state cases dealing with class action certification with aggregate damages expert testimony and class counsel fees, the New Jersey Supreme Court holding that the Products Liability Act does not subsume a Consumer Fraud Act claim alleging expressive or affirmative misrepresentations, a lengthy opinion tackling admissibility of expert testimony in ovarian cancer cases, and adoption of the equitable “made-whole” doctrine, and accrual of a claim and notice under the Tort Claims Act at the heart of a legal malpractice case.
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.
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PUBLISHED/PRECEDENTIAL DECISIONS |
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Arafa v. Health Express Corp., __ N.J. __ (2020)
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The New Jersey Supreme Court addressed in consolidated appeals whether the disputed arbitration agreements in employment contracts would be enforceable under the New Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -36, if they are exempt from the Federal Arbitration Act (FAA), 9 U.S.C. § 1. The Court held that “the NJAA applies in the absence of the FAA and that the arbitration agreements at issue are enforceable under the NJAA if the FAA does not apply.”
Plaintiffs were contract employees conducting truck driving and delivery duties for the defendants. Plaintiffs filed class action complaints against their respective employers alleging failure to pay overtime wages and improperly withholding monies. Defendants moved to dismiss and compel arbitration. Plaintiffs argued they were transportation workers for purposes of the FAA and exempt from arbitration.
The Supreme Court noted the NJAA applied, even if not expressly invoked in the agreements, unless preempted by the FAA. The Court noted the FAA lacked any express preemption provision, as noted by the U.S. Supreme Court, as its preemption concerns are for state rules that facially discriminate against arbitration. Since the NJAA’s application would not discriminate against arbitration it did not render the arbitration agreements unenforceable. Further, the court found that plaintiffs’ statutory wage claims were covered by their arbitration agreements as the agreements were enforceable since plaintiffs knowingly and voluntarily waived their ability to proceed as a class.
Thus, the parties in both cases were not exempt from arbitration and their arbitration agreements were enforceable. As to one case, the agreements were enforceable under the NJAA. As to the other class action, the arbitration agreements were enforceable under either the FAA or the NJAA as to be determined on remand by the trial court in resolving a factual question of whether the employees in that case were transportation workers engaged in interstate commerce.
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In re: Suboxone Antitrust Litigation, __ F.3d __ (3d Cir. 2020)
In this recent Third Circuit decision, the Court affirmed class certification rejecting the appeal by the defendant, Indivior, Inc., formerly Reckitt Benckiser Pharmaceuticals. Direct purchasers of Suboxne claimed that defendant engaged in anti-competitive practices to prevent a generic form of the drug from entering the market prior to the expiration of Suboxone tablets’ seven-year exclusivity period, Reckitt produced a new dissolving film version of Suboxone which was granted its own exclusivity period. Purchasers alleged this coincided with a campaign to suppress demand for Suboxone tablets and promote demand for the new film product.
In support of class certification, purchasers presented expert testimony premised upon Reckitt documents reflecting its national Suboxone strategy and economic tablet pricing analysis. The expert also provided aggregate damages testimony based upon the difference between the actual prices charged for brand Suboxone tablets and film and the price class members would have paid for generic and non-Reckitt-brand versions using Reckitt data and economic modeling. The District Court found the expert’s lack of allocation of damages across class members was insufficient to defeat certification
The Third circuit affirmed finding: (1) common evidence would be used to assess Reckitt’s conduct (allegedly “raising prices, withdrawing tablets from the market, providing rebates only for film, disparaging the safety of tablets, and delaying the generics’ entry by filing a citizen petition and not cooperating in the REMS process”) which was to be assessed in its totality rather than each act individually; (2) predominance was satisfied despite the absence of individualized damages determinations because of common liability questions as the purchasers’ “theory of injury and damages is provable and measurable by an aggregate model relying on class-wide Data”; and (3) defendant’s challenges to the proposed class representative were merely speculative challenges that the class representative was disengaged from the litigation and that conflicts could arise between class members and class counsel.
Seigelstein v. Shrewsbury Motors, Inc., __ N.J. Super. __ (App. Div. 2020)
In this recent decision, the Appellate Division overturned an order reducing class counsel’s hourly rates based on irrelevant and inappropriate factors. Plaintiffs filed this class action alleging defendants violated the Consumer Fraud Act in the sale and leasing of motor vehicles by charging unlawful fees and failing to itemize the documentary fees charged to plaintiff and all others similarly situated.
Defendant challenged the counsel fee application as unreasonably high and misleading. Defendants asserted that this matter involved claims against a single dealership and class counsel’s lead attorneys were redundantly involved in the same work resulting in extravagant fees. Despite defendant’s assertions, class counsel provided numerous certifications in support of their fees, referencing dozens of prior class actions where their hourly rates were deemed appropriate. The trial court judge agreed with defendant’s contentions, citing four unpublished court decisions as well as relying on the court’s personal experience to come to the conclusion that counsel fees must be reduced.
The Appellate Division reversed noting that Rule 1:36-3 specifically proscribes consideration of personal experience and unpublished opinions in determining the appropriateness of attorney’s fees.
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CONSUMER FRAUD/PRODUCTS LIABILITY |
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Sun Chem. Corp. v. Fike Corp., __ N.J. __ (2020)
In a recent decision of the Supreme Court of New Jersey, the Court responded to a question of law certified by the Third Circuit concerning whether a Consumer Fraud Act (CFA) claim could be partially or exclusively based upon a claim that may also be actionable under New Jersey’s Products Liability Act (PLA). The plaintiff had purchased an explosion isolation system from defendant to prevent and contain potential explosions in their new dust collection system. On the first day of operation, however, the system caught fire and actually caused an explosion through the ducts of plaintiff’s facility, injuring seven employees. Plaintiff’s complaint included a single count under the Consumer Fraud Act, alleging defendant made several oral and written misrepresentations about the system.
The Supreme Court answered the certified question in the affirmative. The Court reasoned that, irrespective of the nature of the damages, a CFA claim alleging express misrepresentations–fraudulent misleading, and other unconscionable commercial practices – is not mutually exclusive to, and may be brought in the same action as a PLA claim premised upon product manufacturing, warning or design defects. It is the nature of the claims brought, not the damages sought, that the Court found dispositive of whether the PLA precludes a separate cause of action. Thus, the PLA does not bar a CFA claim alleging express or affirmative misrepresentations.
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Carl v. Johnson & Johnson, __ N.J. Super.__ (App. Div. 2020)
The Appellate Division reversed the trial court’s grant of summary judgment in favor of defendants finding the trial court improperly suppressed the opinions of plaintiffs’ experts. Plaintiffs sought damages for development of ovarian cancer allegedly caused from their use of defendant’s baby powder. The trial court barred plaintiffs’ causation experts following a Rule 104 hearing held pursuant to Kemp ex. rel. Wright v. State, 174 N.J. 412, 427 (2002).
The Appellate Division reversed finding the plaintiffs’ experts' opinions “were based on sound methodology applied to data upon which experts in their field may reasonably rely” creating a genuine issue of material fact for trial. The trial court abused his discretion in “select[ing] defendants’ scientific methodologies over plaintiffs’”. Whether under prior law or current law per In re: Accutane, 234 N.J. 340 (2018), the trial court erred in numerous respects suppressing plaintiffs’ experts’ opinions including: delving into an assessment that cohort studies were categorically more credible than case-control studies, imposing a relative risk factor as a threshold for reliability of an epidemiological study, demanding plaintiffs’ experts develop their own studies to support their hypotheses rather than relying upon other experts’ work, and requiring plaintiffs’ experts to disprove the defense experts’ causation theories.
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City of Asbury Park v. Star Insurance Company, __ N.J. __ (2020)
New Jersey has adopted the equitable “made-whole” doctrine, pursuant to which an insurer cannot assert a subrogation right until the insured’s injuries have been fully compensated. In City of Asbury Park v. Star Ins. Co., the New Jersey Supreme Court, answering a certified question from the Third Circuit Court of Appeals, concluded that the made-whole doctrine does not apply to an insured’s policy obligation to pay a self-insured retention (SIR) or deductible.
The case involved an employee of a city fire department who suffered significant injuries during the course of employment. The city’s workers’ compensation coverage included a $400,000 SIR. The city paid the full amount of the SIR, and the workers’ compensation insurer made additional payments. The employee then brought a liability suit against a third party. The liability action settled for an amount more than $400,000 less than the workers’ compensation liens of the city and the insurer. The insurer maintained that because of the policy’s SIR obligation, the full amount of the settlement proceeds attributable to the compensation liens belonged to the insurer. The city contended that the made-whole doctrine required that $400,000 of the lien proceeds be paid to the city to reimburse its SIR payment.
The New Jersey Supreme Court found that the equitable made-whole doctrine remained subject to the express terms and provisions of the insurance policy. The Court concluded that, if an insured could recover its SIR payment, the policy effectively would be transformed into one without an SIR, which would result in a windfall to the insured. Therefore, if a policy unambiguously provides an insurer with an insured’s rights to recovery against third-party tortfeasors when an insurer makes payment under the policy, the made-whole doctrine does not require that the insured’s SIR payment be reimbursed first.
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LEGAL MALPRACTICE/JOINT TORTFEASORS/TORT CLAIMS ACT |
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McNellis-Wallace v. Hoffman, __ N.J. Super. __ (App. Div. 2020)
In a recent opinion, the Appellate Division considered whether a subsequent attorney was liable for contribution under the Joint Tortfeasors Contribution Law and common law indemnification in a legal malpractice suit that plaintiff filed against her original attorney. This matter arose from an allegedly botched surgical procedure following which plaintiff retained the defendant to pursue a malpractice action. Defendant determined a Notice of Claim under the Tort Claims Act (TCA) must be served but due to an intra-office misunderstanding, a Notice of Claim was only served as to the hospital where the procedure was performed, not the surgeon and his practice. After almost two years expired, the defendant attorney informed plaintiff his firm would not pursue this matter on her behalf, at which point plaintiff retained the third-party defendant as counsel. Subsequent counsel pursued the claim and the doctor and his practice were dismissed for plaintiff’s failure to provide a timely Notice of Claim.
Plaintiff ultimately sued her original counsel for legal malpractice and the defendant filed a third party complaint sounding in contribution under the Joint Tortfeasors Contribution Act and common law indemnification against the subsequent counsel arguing plaintiff was not on notice of the doctor’s status as a public employee until the third party defendant was handling the case. Thus, original counsel argued that subsequent counsel was a joint tortfeasor for not thereafter filing a proper Notice of Claim. The third party defendant moved to dismiss the third party complaint which was denied as the trial court found plaintiff was not on notice of the doctor’s status as a public employee until the third party defendant was handling the case.
The Court found on the basis of long-standing interpretation of the TCA, that plaintiff's claim accrued on the date of her surgery (regardless of specific knowledge of the doctor’s employment status) and the time to provide a notice of claim expired before subsequent counsel took over the case. Thus, the court reversed the trial court and granted the motion dismissing the third party complaint.
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Attorney Advertising Disclaimer: This publication is designed for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship in a particular matter. |
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New Jersey * New York * Pennsylvania |
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