Thursday, May 25, 2017

Undoing “Subtle Misinterpretations of … Longstanding Jurisprudence” Regarding Preliminary Injunctions in the Third Circuit

Reilly v. City of Harrisburg, ___ F.3d ___ (3d Cir. 2017).  This case involved claims by plaintiffs that an ordinance of the City of Harrisburg unconstitutionally deprived them of the ability to protest outside abortion clinics.  The District Court denied a preliminary injunction.  Plaintiffs appealed, asking the Third Circuit to address the ultimate merits of […]

The post Undoing “Subtle Misinterpretations of … Longstanding Jurisprudence” Regarding Preliminary Injunctions in the Third Circuit appeared first on Appellate Law NJ Blog.



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Wednesday, May 24, 2017

Three More Grants of Certification by the Supreme Court

The Supreme Court announced late yesterday that it has granted certification in three more cases.  In the first matter, Serico v. Rothberg, the question presented, as phrased by the Supreme Court Clerk’s office, is “Did plaintiff waive her right to pursue attorney’s fees, pursuant to the offer of judgment rule (R. 4:58-1 to -6), by […]

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Thursday, May 18, 2017

“The Record on Appeal” at the NJSBA Annual Meeting

Today’s seminar, which was sponsored by the NJSBA Appellate Practice Committee, took up the important topic of the record on appeal.  Judge Messano, who headed up the panel, began by stating that the panel hoped actiually to make this topic interesting.  He and the other presenters, who included Judges Lihotz and Cuff (Ret.), as well […]

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Wednesday, May 17, 2017

Foreclosure an Effective Method to Recoup Unpaid Condo Assessments

Foreclosure rates for residential properties continue to drop. Black Knight Financial Services reported that in 2016, the national foreclosure rate dropped by 30 percent. The first quarter of 2017 reports the lowest rate of foreclosure activity since 2006.

As the inventory of foreclosed properties lessens, housing markets will see an increase in value. Owners should start to see home values on the rise.

While foreclosure rates nationwide are the lowest they have been in 11 years, foreclosures in New Jersey remain among the top ten highest in the country. Trenton, Atlantic City, and Philadelphia have some of the highest foreclosure rates in any metro area in the United States. In March 2017, 1 in 497 homes in New Jersey had foreclosure filings.

While New Jersey foreclosure rates are still high in comparison to other states, the foreclosures in New Jersey are being completed in a shorter timeframe than in previous years. Many condominium associations and homeowner associations have seen units in their communities in foreclosure for years. Often times the units are vacant, and the unit owner is delinquent in their maintenance obligations to the associations.

In the past, when the foreclosures took a considerable length of time to complete, communities were stuck with a non-paying unit owner for several years. As the foreclosures are moving more quickly, associations should see more sheriff’s sales taking place, and new, paying owners taking over the delinquent units.

Associations should also recognize that by statute, they have the right to foreclose their assessment liens in the same manner as the mortgagees. If unit owners are not paying their assessments, the association can file a lien against the unit, and foreclose on the lien. Foreclosure is an effective method of getting non-paying unit owners out of the community, especially when other collection methods have not been successful. Associations should consider foreclosures as an option for collections.



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How Can The Answer Be Know Before You Know What The Question Is?

We have all had those cases where any request that we made, big or small, has been rejected by the other side and any requests that our client has made to her/his spouse is similarly rejected.  They don’t agree to informally provide discovery that they will eventually have to provide formally (and then maybe even not then).  They won’t agree to a mediator because you proposed him or her.  They won’t agree to a joint expert, for the same reason.  They wont agree to pay any or the right amount of support.  They won’t agree to parenting time.  They wont agree to the slightest deviations to parenting time.  Post-judgment, when an Agreement says that the parties must agree on something before the other side will have to pay “with consent to not be unreasonably withheld”, they will not agree to anything, nor even make proposals for the other side to agree to.

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This is bad when the litigant’s do this.  It is worse when the lawyers do it, especially when there is no advantage, tactical or otherwise, not to be agreeable.  I have a matter now where the other party simply refuses to answer discovery or do anything whatsoever, and there is no benefit to him in any way, shape or form.  Sometimes you hear “my client wont let me agree to an adjournment” which, quite frankly, is rarely, if ever, should be the basis of denying a reasonable adjournment request.  But all too often, the lawyer becomes the instrument of the client’s bad behavior or general inability to reasonably agree to anything.

I recently heard a story about a party rejecting out of hand a Consent Order providing the relief that he asked for and got, simply because it was drafted by the other attorney.  Instead of getting it done, his attorney said “why did you even bother since he wont sign anything unless I draft it.”  Think about that.  He was willing to cut off his nose to spite his face, and put himself in a more precarious position, simply because of who the messenger was, ignoring the message completely.

This can permeate every part of a case.  How many times have we seen bogus motions to quash of completely discoverable materials (i.e. income information, current bank account information, etc. – i.e. the stuff that you have a duty to update until the end of a case, if requested)?  How many times have we had to file repeated motions to compel or repeated enforcement motions?  How many times has an adversary apologized for taking a ridiculous position forcing you to file a motion rather than forcing their client to do the right thing?

On the rare occasion that the disagreeable person actually makes a settlement proposal that your client agrees to, how many times have you seen the offer be walked back or the deal otherwise go south because the proposal was really made in bad faith and was never expected to be accepted, and the offering party now thinks that the offer was too good if your client actually accepted.

 

Are their any benefits to saying no to everything?  Assuming the clients can pay, maybe the attorneys do ok.   Or do they?  When your reputation is damaged and/or your stature and relationship with your judge and your adversary takes a hit, is it worth it?  For the parties, unless both parties are equally disagreeable, and this happens sometimes, the court eventually figures out who the difficult party is.  Do you want that impression guiding a judge’s substantive or counsel fee decisions.

Now I am not suggesting that you need to agree on everything that the other party says.  There will be good faith disputes and disagreements that will have to be resolved by a judge or arbitrator.  But, in most cases unless there is an emergency or some really good strategic reason, what is the harm in trying to resolve issues, big and small, before just saying “no,”  It doesn’t make you weak, it makes you smart.

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

Connect with Eric: Twitter_64 Linkedin

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Due to Technical Problems With the Third Circuit Website, Deadlines for Today Are Extended Until Tomorrow

The Third Circuit website contains a notice today that “CM/ECF is Unavailable.  There is a problem with the application that is currently being addressed.  Deadlines for Tuesday, May 16, 2017 are automatically extended until Wednesday, May 17, 2017.”

The post Due to Technical Problems With the Third Circuit Website, Deadlines for Today Are Extended Until Tomorrow appeared first on Appellate Law NJ Blog.



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A Guardian of a Child Who Did Not Intervene to Stop Severe Corporal Punishment by the Child’s Mother is Guilty of Abuse and Neglect

New Jerseey Division of Child Permanency & Protection v. J.L.G., ___ N.J. Super. ___ (App. Div. 2015), aff’d o.b., ___ N.J. ___ (2017).  This abuse and neglect case resulted in a 2-1 split in the Appellate Division.  Judge Simonelli, joined by Judge Leone, upheld the ruling of the Family Part that defendant abused a seven-year […]

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Tuesday, May 16, 2017

Rue21 Files for Chapter 11 Bankruptcy

Rue21 Inc. (“Rue21”) filed for Chapter 11 bankruptcy protection in Pittsburgh, PA on Monday (case no. 17-22045-GLT, Western District of Pennsylvania).

This was another bankruptcy filing I saw coming back in January, when I wrote my blog Retailers to Watch for Possible Bankruptcy Filings in 2017. In the bankruptcy petition, the teen fashion retail chain lists more than 1,100 stores in the U.S. and assets and liabilities in the range of $1 billion and $10 billion.

In pre-bankruptcy planning, Rue21 scheduled 400 store closures and entered into a Restructuring Support Agreement, where it expects to continue normal operations throughout the Chapter 11 process. The company could increase the store closures as it evaluates its standing in the bankruptcy case, according to CNBC. The company also reached agreements to obtain up to $125 million in debtor-in-possession (DIP) financing from existing lenders, and up to $50 million in new money term loan DIP financing from a group of its existing term loan lenders, according to Reuters.

The company’s problems stem from high debt of nearly $1 billion, declining foot traffic and generational shopping shifts. Rue21 is the latest in a long line of teen fashion retailers, who have filed for bankruptcy protection. Others include, PacSun and Wet Seal.

If you are a landlord with a Rue21 it is important to know your rights, now. Stark & Stark’s Shopping Center Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the Eastern District of Missouri, District of New Jersey, Southern District of New York, District of Delaware, District of Minnesota and Eastern District of Pennsylvania on a variety of issues. Most recently, our Group has represented landlords and trade creditors in the Payless, Eastern Outfitters (EMS Part 2), EMS, Golfsmith, RadioShack, General Wireless (RadioShack Part 2), Gander Mountain, A&P, Joyce Leslie and Sports Authority Chapter 11 bankruptcy cases.

For more information feel free to contact the author of this blog.



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An Anniversary in Supreme Court Certified Questions

In recent years, acceptance by the Supreme Court of questions certified to it by the Third Circuit Court of Appeals under Rule 2:12A has become somewhat more frequent, though still not a regular occurrence.  Today, May 16, however, is the anniversary of the Court’s first opinion answering a certified question under Rule 2:12A.  Musikoff v. […]

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Could Service of Process Via Facebook Be the Way of the Future?

Ah, technology.  In this modern world, we navigate the roads on our phones instead of a map.  We talk to a cylindrical tube to tell it to order more toilet paper for us, tell us the weather, read us the news, or turn on the lights.  We don’t remember anyone’s phone number because they are all stored for us on our phones.  And we obtain personal jurisdiction over an out-of-state defendant via Facebook.

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The legal world is, perhaps, notorious for its luddite tendencies.  One need only step into any lawyer’s office to see reams of paper everywhere – stacked on the floor (okay maybe that’s just me), piled on the desk, packed into boxes.  But in terms of the use of social media as a mechanism for exercising “long-arm” jurisdiction over a defendant, the law appears to be catching up with modern means of communication as more and more jurisdictions are allowing the use of Facebook and other social media platforms to serve as a form of substituted service.

Personal Jurisdiction = Sufficient Minimum Contacts + Service of Process

For those who didn’t take Civil Procedure, it is important to understand that there are rules (a lot of them!) about who is subject to the jurisdiction of a particular Court.  Every state in the country has the ability to exercise “long-arm” jurisdiction over parties who do not reside within it, but only if certain rules are followed and conditions met.

In order for a New Jersey court to exercise jurisdiction over a person who does not live in this state, that person must have sufficient minimum contacts (a phrase drilled into every first-year law student’s head for all of time) with New Jersey, and must also be properly served with process.  Broadly speaking, the “minimum contacts” test is satisfied if the individual could or should reasonably expect to be brought into court in the state.

Importantly, there are limits on what types of actions a court can exercise its jurisdiction over, and these are based upon the type and scope of the minimum contacts the out-of-state defendant has with the state.  For example, if a PA resident has a car accident in NJ, and the nexus of personal jurisdiction is that the PA resident drove into NJ where the accident occurred, then a New Jersey Court would have jurisdiction over any legal claims arising out of the car accident.  But, if someone wanted to sue the PA resident for some other reason in NJ, there would have to be some other finding of minimum contact related to that cause of action here in NJ.

There also has to be service of process.  The purpose of this requirement is two-fold.  First, service must be reasonably calculated to apprise the party of the pending legal action.  Second, it must allow the party an adequate opportunity to respond.  Simply speaking, under our Court Rules, personal service (i.e. actually delivering the process to the person or a representative) is the preferred form of service.  Under certain conditions, service can also be made by mail.  But then, there is a third option.  If service cannot be made personally or by mail, then it can be made “as provided by a court order, consistent with due process of law.”  In other words, the Court can determine an alternate method of service, so long as this method accomplishes the dual purposes of service of process: the manner of service must be reasonably calculated to let the party know about the pending legal action and the claims against him/her, and must allow the defendant the opportunity to respond.

Recent Court Ruling Approves Service of Process Via Facebook

In a recent published (precedential) decision, K.A. and K.I.A. v. J.L, a New Jersey trial court found that – under the circumstances – service by Facebook would be sufficient to confer personal jurisdiction over the defendant.  In that case, K.A. and K.I.A. were adoptive parents of their son, referred to as “Z.A.”  Z.A.’s biological father had contacted not only Z.A. but also K.A. and other family members (all of whom were NJ residents) on Facebook and had disclosed to Z.A. on Instagram that Z.A. was adopted and told him the identity of his birth mother and the location of his birth.  J.L. also obtained photographs of Z.A. from K.A.’s Facebook page and published them on his own page, holding Z.A. out as his son.  The plaintiff’s commenced an action to enjoin J.L. from holding Z.A. out as his son, to enjoin him from contacting them and Z.A., and to compel J.L. to remove information pertaining to Z.A. that he allegedly published online.

The plaintiff’s attorney sent cease and desist letters to both of the defendant’s last known addresses, which were in Pennsylvania, by certified and regular mail.  Under the Court Rules, this is an acceptable method of service so long as the regular mail is not returned to the sender, and so long as an answer or response is made by the defendant.  In this case, both of the certified mailings were unclaimed and, although the regular mail was not returned, no answer was made by the defendant.

Because the defendant, based upon the conduct forming the basis of the claims against him, was evidently an active Facebook user, the plaintiffs sought permission from the Court to effect substituted service by use of Facebook.

Judge Hansbury found that under the circumstances, such service would meet the requirements to confer personal jurisdiction over the defendant with regard to the claims against him based on the following:

  • Personal Jurisdiction:  Judge Hansbury relied upon a Third Circuit case, Toys R’ Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3d Cir. 2003), which held that a defendant’s intentional interaction with the forum state via the internet is sufficient to confer jurisdiction.  In the case before the Court, the defendant intentionally reached out to various members of the plaintiffs’ family who are NJ residents, using his social media accounts.  Any harm arising from these intentional contacts would clearly be concentrated in NJ.  Therefore, the Court found that it could exercise personal jurisdiction over the defendant by virtue of his intentional contact with the State via the internet.
  • Scope of Personal Jurisdiction:  Because the defendant’s contacts with the state were precisely those that gave rise to the causes of action the plaintiffs pursued against the defendant, the Court found that the scope of its personal jurisdiction over the defendant included these claims, though it acknowledged it did not have personal jurisdiction over the defendant as to any claims unrelated to the alleged contact with the plaintiffs and their family members.
  • Service:  Under the facts of the case, service of process via Facebook would accomplish the dual purposes of the service of process requirements discussed above.  The Court reasoned that because the defendant solely used his Facebook and Instagram accounts as the “conduits of the purported harm,” service via Facebook was reasonably calculated to apprise the defendant of the pendency of the action and afford him an opportunity to respond.  The Court observed that the plaintiffs had demonstrated that the defendant’s Facebook account was active.  Further, the Court noted that Facebook includes a feature that allows the sender of a message to see whether the recipient has opened and received the message, which would indicate whether the defendant was actually notified of the case.

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Limitations on the Use of Facebook to Confer Personal Jurisdiction

It is important to note that Judge Hansbury’s ruling does not mean that service of process via Facebook is acceptable as a primary method of service or even that it is available in every case.  Central to the ruling here is that personal service could not be affected, nor could service by mail.  Moreover, it was due to the particular facts of this case – specifically, that it was evident the defendant had an active Facebook account and that the Facebook account was the primary means of the harm alleged in the case – that caused the judge to believe it would be an appropriate means of substituted service.  However, given the widespread use of Facebook, the ruling suggests that it can be used in other cases as a means of substituted service and is something to keep in mind in cases where out-of-state defendants cannot be served by traditional methods.


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Jessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.



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Monday, May 15, 2017

Divorce Arbitration – How it Works and Why it’s Right

Divorce arbitration is an effective method of dispute resolution which has been recognized by the New Jersey Supreme Court as an alternative to conventional litigation. Given the severe backlog in the New Jersey court system and the difficulty obtaining consecutive hearing dates and receiving timely decisions, more divorcing parties are turning to arbitration to resolve their disputes. As a certified divorce arbitrator, I will describe what arbitration is (and isn’t) and explain how it functions.

First, it is important to distinguish arbitration from mediation. While mediation involves the assistance of a third party “neutral” to encourage and facilitate a resolution, arbitration is akin to litigation on an expedited basis. In other words, at the conclusion of an arbitration hearing the arbitrator renders a decision just as would a judge hearing the case.

Second, the selection of an arbitrator is essential. My recommendation is to utilize a family law attorney who has been certified as a divorce arbitrator by the American Academy of Matrimonial Lawyers in the place of a judge who may have had limited or perhaps no family law experience prior to his or her appointment to the bench. The selection is also critical since the arbitrator’s decision will generally be binding.

Third, the issues that will be arbitrated must be determined. In short, the parties and their attorneys would make this determination in advance, to include arbitration of related non-family law matters. If custody is involved, New Jersey’s inherent jurisdiction over the welfare of children within its borders means that an arbitration decision in this area is subject to review by a court.

Fourth, the protocol of an arbitration hearing is important to consider. For example, should a court reporter be present to transcribe testimony and mark exhibits or will a less expensive means such as audio-recording suffice? Should the Rules of Evidence strictly govern at the hearing or be relaxed? Where will the arbitration take place? Will the arbitrator’s fee be advanced by one party or shared? Will such payment be subject to adjustment by the arbitrator? Needless to say, these and any other questions should be resolved in advance.

Finally, once arbitration commences, the case will proceed with witnesses testifying and documents submitted to the arbitrator consistent with the rules of evidence, as discussed above. At the conclusion of the hearing the arbitrator will advise the parties of a date for issuance of his or her decision, depending on the complexity of the issues involved. The goal of a divorce arbitrator is to render a decision within 30 days, if possible.

In summation, divorce arbitration is a far cry from the “courthouse” experience which is inefficient and difficult to endure. In contrast, presenting the case to a certified divorce arbitrator is more timely and thorough. It is also in the best interests of children who desire a conclusion of their parents’ divorce and a certainty of their future.

Please check this site and other outlets for the dates of upcoming divorce arbitration seminars at Stark and Stark’s New Jersey locations.



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Friday, May 12, 2017

A Relatively Rare Exercise of Original Jurisdiction by the Appellate Division

Royal Tax Lien Services, LLC v. Shuaib, 2017 WL ______ (App. Div. May 11, 2017).  Rule 2:10-5 authorizes an appellate court to exercise “such original jurisdiction as is necessary to the complete determination of any matter on review.”  In comparison to the number of times that parties have asked appellate courts to exercise original jurisdiction, […]

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Wednesday, May 10, 2017

A Redesigned Judiciary Website

Today, the New Jersey Judiciary debuted its new website.  (For some time, there was a link on the prior site that allowed for a sneak peek at the new site).  The address of the site, http://www.njcourtsonline.com, remains the same.  The site has been redesigned with the goal of directing attorneys, members of the public, the […]

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Tuesday, May 9, 2017

Say What? The Second Circuit Establishes a New “Outer-Bounds” Limit to Protected Employee Speech

To say that Facebook and social media have complicated the relationship between employer and employee and, specifically, what an employee can say or do with respect to his/her work, is an understatement. Social media has added a new dimension to analyzing the intersection between employee speech and protected activity under the National Labor Relations Act (the “NLRA”), and the level of protected activity has reached a new low.

A new line has been drawn in the sand, and the “outer-bounds of protected, union-related” activity has been reestablished by the United States Court of Appeals for the Second Circuit. In National Labor Relations Board v. Pier Sixty, LLC,  the Second Circuit was tasked with the challenge of determining to what extent the NLRA protects an employee’s comments on social media and the point at which an employee’s conduct is so “opprobrious” (i.e. abusive, pejorative, obscene, libelous) as to lose the NLRA’s protection.

In laymen’s terms, the question is: How badly can an employee behave and still keep his job if the employee’s behavior is at least loosely tethered to union-related activity? The answer, as explained below, is very badly.

Pier Sixty operates a catering company in New York City. In 2011, many of its service employees sought to unionize. Two days before the election, an employee, in response to what he perceived to be harsh criticism and continued mistreatment by a supervisor, took to Facebook with the use of his iPhone during an authorized work break. He posted: “Bob is such a NASTY M–R F–R don’t know how to talk to people!!!!!! F— his mother and his entire f–ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!” The employee knew that his Facebook friends included coworkers, and that those coworkers would be able to see the post. As expected, news of the Facebook rant made its way back to Pier Sixty which, following an investigation, fired the employee.

The Second Circuit upheld the termination event and protected the employer, right? Not so fast.

Wait – you can drop the f-bomb on your boss (and his family) and keep your job? I repeat: Not so fast. It’s a little more nuanced than that.

First, some ground rules. The NLRA generally prohibits employers from discharging an employee based on that employee’s concerted or union‐related activity. Section 7 provides, in relevant part: “Employees shall have the right to self‐organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection .”

In turn, Section 8(a) reads: “It shall be an unfair labor practice for an employer‐‐ (1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title . . . . (3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.” In other words, employers cannot fire employees who engage in speech protected by the NLRA.

The caveat, of course, is that, at some point, the employee’s conduct is so “opprobrious” that it forfeits NLRA protection.

Thus, in NLRA v. Pier Sixty, the Second Circuit was required to resolve whether an employee’s Facebook post insulting his boss’s mother and encouraging other employees to vote for the union should receive protection under Sections 8(a)(1) and 8(a)(3) of NLRA. Applying the nine-factor “totality of circumstances” test for evaluating an employee’s use of social media, the Second Circuit determined that Pier Sixty failed to show the employee’s behavior was so egregious as to lose the protection of the NLRA.

In making its decision, the Second Circuit rested heavily on the deference afforded to the factual determinations of the National Labor Relations Board following a six-day trial, as well as the specific culture at Pier Sixty (where profanity was somewhat tolerated). The Second Circuit qualified its decision by reiterating that the case sits at the outermost-bounds of protected, union-related activity, and that the test for evaluating “opprobrious conduct” must be “sufficiently sensitive to employers’ legitimate disciplinary interests.”

So, it’s okay to call your boss names in a public forum and you won’t lose your job, right? No, obviously not. Again, it’s more nuanced and fact-specific than that. In NLRA v. Pier Sixty, the Pier Sixty work environment, the employee’s use of Facebook as a medium to vent (but also to communicate with fellow co-workers and at least loosely engage in concerted activity), and the employee’s inclusion of “Vote YES for the UNION!!!!!!!” in his post on the eve of the union election, all factored into the court’s decision.

The point is this. What likely seemed to be a clear cut decision for Pier Sixty – to fire its employee for clear misconduct – obviously was not clear cut… not at all. The Pier Sixty case reminds us that these cases, which are incredibly fact-sensitive, can be tricky and often require careful consideration (if not a phone call to an employment attorney), before any critical decisions are made. Furthermore, the Second Circuit’s ruling serves as a reminder that employers should revisit their social media, cell phone, and disciplinary policies, all of which can come into play under these types of situations.



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Monday, May 8, 2017

Four New Supreme Court Grants of Review: Criminal Law, OPRA, and Self-Critical Analysis Privilege

The Supreme Court announced this morning that it has granted review in four more cases.  Two of them address discovery issues, and two involve criminal matters. In Brugaletta v. Garcia, the question presented, as phrased by the Supreme Court Clerk’s Office, is “Does the absolute privilege of documents developed as part of a hospital’s self-critical […]

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Friday, May 5, 2017

A Violation of a Regulation Can be “Knowing” Even if There is No Judicial Decision Saying So at the Time of the Conduct at Issue

Allstate Ins. Co. v. Northfield Medical Center, P.C., ___ N.J. ___ (2017).  After a bench trial, defendants were found to have violated the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30 (“IFPA”).  The violation arose from defendants’ use of “a practice structure that was designed to circumvent regulatory requirements with respect to the control, ownership, […]

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Thursday, May 4, 2017

A Criminal Justice Reform Act Case for the Supreme Court in September

The Supreme Court announced today that it has granted review in State v. Newman.  The question presented, as phrased by the Supreme Court Clerk’s Office, is “Did the trial court err in granting the State’s motion for pretrial detention, pursuant to the Criminal Justice Reform Act, N.J.S.A. 2A:162-15 to -26; and, if so, did the […]

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Read Before You Click: The Enforcement of Web-Based Restrictive Covenants and Arbitration Agreements Against Employees

When was the last time you clicked a box indicating your agreement to terms of service without actually reading, let alone understanding, the terms and conditions of service? The use of “clickwrap” whereby users of web-based applications memorialize their acceptance of legal agreements by clicking something, like a check box, is commonplace in the digital world. In the employment arena, however, the use of such web-based platforms and click-to-accept legal agreements is relatively new. Still, courts have not hesitated to apply traditional principles of contract law to these agreements and enforce them against unsuspecting and often oblivious employees, so long as the clickwrap agreements are conspicuously displayed on the web-based platform and reasonably communicate the employer’s terms to its employees.

For example, in ADP v. Lynchthe Third Circuit affirmed the District Court’s issuance of preliminary injunctive relief and enforcement of web-based “click to accept” restrictive covenants against two former employees of ADP. The former employees had agreed to the restrictive covenants when they clicked a box accepting the terms and conditions of their stock awards, which terms and conditions included noncompete and nonsolicitation agreements. While employed by ADP, the employees had on separate occasions accepted performance-based incentive stock awards offered by the company. To accept the stock awards, the employees were required to open and access a webpage containing the award documents. The webpage provided: “you must select the checkbox to indicate you have read all associated documents before you can proceed.” The webpage included a checkbox next to the statement, “I have read all the documents below.” Also next to that checkbox was a link to open a 19-page PDF document, which included the stock award plan, award agreement, and subject noncompete agreement. The award agreement specifically conditioned the award upon the employee’s acceptance of the noncompete agreement, which included a 12-month prohibition against (i) joining a competitor of ADP, and (ii) soliciting the business of any current or prospective client of ADP. The employees subsequently resigned from ADP and began working for a competitor. ADP filed suit seeking the enforcement of the noncompete agreement through preliminary injunctive relief. The District Court granted the relief (in part) and enjoined the employees from engaging in competition and soliciting the business of ADP clients and certain prospects.

On appeal, among other things, the employees argued that by checking the box, they did not expressly agree to the terms and conditions set forth therein. The employees emphasized they were never required to check a box expressly agreeing to, accepting or acknowledging the terms. Further, the employees argued they did not recall actually reading the terms and therefore should not be bound by them. Neither the United States District Court for the District of New Jersey nor the Third Circuit Court of Appeals found these arguments persuasive. The courts held that the employees checked various boxes indicating their awareness of the terms and conditions of the agreements, and then they clicked the “Accept Grant” button and entered personal passwords in order to consummate the agreement. Given the web-based clickwrap agreement incorporated a hyperlink to the 19-page PDF document, which set forth the entirety of the parties’ agreement, the courts validated the “click to accept” agreement and enforced the noncompete against the employees.

Similarly, in Singh v. Uber Techs. Inc.,  the United States District Court for the District of New Jersey upheld and enforced an arbitration agreement advanced by the employer, Uber, against its employee. Uber argued that Singh, its employee, was bound by an arbitration clause set forth in a web-based Raiser Software License and Online Services Agreement (the “Raiser Agreement”) Singh accepted electronically when he registered as a driver through the use of the Uber smartphone application. When the employee logged on to the Uber App, he was given the opportunity to review the Raiser Agreement by clicking a hyperlink within the software application. To advance past the screen with the hyperlink and actively use the Uber App, the plaintiff had to confirm that he had first reviewed and accepted the Raiser Agreement by clicking “YES, I AGREE.” Then, after clicking “YES, I AGREE,” he was prompted to confirm that he reviewed and accepted the agreement for a second time.

The court’s decision upholding and enforcing the web-based arbitration agreement between employer and employee rested on many key facts, including:

  • The employee was permitted to spend as much time as needed to review the Raiser Agreement on his smartphone before accepting it;
  • After confirming his acceptance for a second time through the Uber App, the Raiser Agreement was uploaded to the employee’s “driver portal,” where he could access the agreement at his leisure, either online or by printing out a hard copy;
  • The arbitration agreement was displayed conspicuously and prominently on the first page of the Raiser Agreement; and
  • The agreement encouraged the employee to consult with an attorney before agreeing to its terms and conditions.

Additionally, and importantly, the court held that the Raiser Agreement was not a contract of adhesion because, among other things, the arbitration clause set forth in the Raiser Agreement had an opt-out provision. The employee had 30 days from receipt and acceptance of the Raiser Agreement to opt-out of the arbitration provision. By virtue of this opt-out, the arbitration provision actually was not mandatory, but voluntary, and became mandatory only after the 30-day opt-out window closed.

In its enforcement of the arbitration clause, the Court, citing ADP v. Lynch among other controlling precedent, wrote:

“In the internet era, when agreements are often maintained, delivered and signed in electronic form, a separate document may be incorporated through a hyperlink . . .” But, before binding a party to the terms and conditions of a hyperlinked agreement, courts must first look “to whether users were provided with a ‘reasonably conspicuous notice of the existence of contract terms’ and whether the user registered an ‘unambiguous manifestation of assent to these terms.'” Courts must determine whether an online agreement that incorporates a hyperlinked-agreement by reference “generally provide[s] ‘reasonable notice'” such that the terms and conditions of that agreement apply. If this condition is met, a party will be bound by the hyperlinked-agreement, even if that party did not review the terms and conditions of the hyperlinked agreement before assenting to them. “[T]o hold otherwise would contravene the well settled principle that ‘[a] failure to read a contract will not excuse a party who signs it, nor will the party’s ignorance of its obligation.'”

In short, the court held that the plaintiff-employee received reasonable notice as to the existence of the terms and conditions of the hyperlinked Raiser Agreement, which the employee was required to review and “click to agree” before using the Uber App and becoming an Uber driver.

These two recent cases are exemplary in many respects. First, they signal the advent and enforcement of web-based agreements between employers and their employees. Though employees still can expect the (often painful) obligatory HR meeting their first day on the job (during which most HR forms and agreements are signed), these web-based “click and accept” agreements are becoming far more widely used in employment processes, from web-based employment job applications to the use of an employer’s web-based platform or smartphone user application. That “check and click” is not as insignificant as it seems. Employees should read and understand the fine print before checking the box.

Second, as noted above, in their review of these matters, the courts have outlined certain rules of the road employers should follow to withstand scrutiny and maximize the likelihood that their web-based agreements will be validated and enforced. For example, the terms of important agreements should not be hidden in a small scroll box or in a way that downplays or minimizes their importance to the employee. For the employee to be bound by the terms of a web-based agreement, the terms should be displayed as conspicuously and obviously as possible, with the checkbox agreement presented immediately thereafter. Employers seeking advice on best practices or the review of their web-based terms and conditions should consult with an employment attorney.



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Wednesday, May 3, 2017

Probating a Copy of a Will

When an Executor named under a Last Will and Testament seeks to probate the Will of the Decedent, the original copy containing the original signatures of the Decedent must be submitted to the Surrogate’s Office. What happens, however, if the original copy with the original signatures cannot be located? Under such circumstances, the only option may be to seek to probate a copy of the original Will.

In general, if the original document cannot be located and all beneficiaries or potential heirs of the Estate agree to probating a copy, the process can be smoothly completed once a proper application is filed. On the other hand, should a named beneficiary or a potential heir of the Estate challenge the copy of the Will being submitted for probate, then in that event, the resolution may become onerous.

In general, if an original of a Will cannot be located there is a presumption that the original was destroyed by the Decedent, and therefore, was revoked. Once a Will has been revoked or destroyed, either the decedent will be deemed to have died without a Will, or possibly a previous Will can be submitted for probate provided an original document with original signatures exists.

Should a party file an action to probate a copy of the purported Last Will and Testament, this party must rebut the presumption that the original was not destroyed and revoked by clear and convincing evidence. This is a very difficult burden of proof to sustain, as the evidence must clearly and convincingly demonstrate that the original was not destroyed, but instead, was lost and that the Court is justified in probating a copy of the Will.

Any person who opposes probating a copy of a Will may seek to present proof that the Will was in fact revoked. As such, a hearing on the merits before the Court is typically required in contested matters. During an evidentiary hearing, the Court would have to determine whether the copy of the Will should be admitted to probate and whether the legal presumption of revocation has been rebutted by clear and convincing evidence by the proponent of the Will.

As discussed above, should the burden of proof not be met by the proponent of the copy of the Will, then in that event, the Decedent will have deemed to have died without a Will. It is possible, however, if a pre-existing Will exists which contains original signatures that this previous Will could be admitted to probate. As such, seeking to probate a copy of a lost Will can be difficult and costly should a party oppose its admission to probate.

For these reasons, it is suggested that a purported Executor consult with an attorney concerning this technical process when faced with these circumstances.



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“Summertime, Summertime, Sum-, Sum-, Summertime” in the Appellate Division

The Appellate Division schedule of Parts for the period June 19 through September 13 was published today and is available here.  As usual, no judge is on duty for more than one two-week period during the summer.  Except for Part P, the summer Parts all consist of two judges, though “[a] third judge will be […]

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Tuesday, May 2, 2017

Successful Strategies for Preventing and Defending Claims of Sexual Harassment in the Workplace

Despite increased efforts to curb it, sexual harassment in the workplace hasn’t gone away. In fact, news reports of allegations of sexual harassment and lewd behavior lodged against media mogul Bill O’Reilly at Fox News and, separately, against transportation network company Uber, have shined a spotlight on the pervasiveness of sexual harassment in the workplace. As to O’Reilly, several complaints were raised and settled over several years by Fox News before the company asked O’Reilly to leave the network. With respect to Uber, the company allegedly swept “under the rug” several separate claims of sexual harassment made against a particular manager because the manager was a “high performer.” The sad truisms revealed by both the Uber and O’Reilly matters, clearly, are that money talks and rules can be bent (if not broken) for star performers. But there is a silver lining, as important lessons about the correction and prevention of sexual harassment in the workplace can be learned from these two publicly aired situations involving sex discrimination in the workplace.

What should be done when sexual harassment occurs in the workplace? First and foremost, the aggrieved employee (or whistleblower) should bring the improper behavior to the attention of the employer’s upper management, human resources or in-house legal department pursuant to a written grievance procedure. Upon receipt of notice of the claim, the employer should launch an investigation immediately (or as soon as reasonably practicable under the circumstances). Upon completing the investigation, the employer should take appropriate remedial action reasonably calculated to prevent further harassment. This approach serves two important purposes by concomitantly promoting a policy against sex discrimination in the workplace while insulating the employer from liability arising from such claims.

Most courts – at both the state and federal level in New York, New Jersey and Pennsylvania – agree that employers can avert legal exposure, thus creating a safe haven, by “exercising reasonably care to prevent and correct promptly any sexually harassing behavior.” This is accomplished by adopting an effective anti-harassment policy, properly training employees, implementing appropriate grievance procedures for the reporting and handling of claims of misconduct, conducting appropriate investigations, and by employing appropriate remedial measures when a claim of sexual harassment arises.  A general rule has been established that when employers have in place policies and procedures designed to address workplace discrimination and take remedial action in response to a complaint of discrimination, the employer may have protections from vicarious liability for the discriminatory actions of its employees.

In Cavuoti v. New Jersey Transit Corp., the Supreme Court of New Jersey expressed that “[a] company that develops policies reflecting a lack of tolerance for harassment will have less concern about hostile work environment or punitive damages claims if its good-faith attempts include periodic publication to workers of the employer’s anti-harassment policy; an effective and practical grievance process; and training sessions for workers, supervisors, and managers about how to recognize and eradicate unlawful harassment.”  The court went on to say that “a form of safe haven [exists] for employers who promulgate and support an active[] anti-harassment policy.”

This safe harbor protection afforded to employers that implement forceful anti-harassment policies and take prompt objective action in response to complaints of workplace discrimination makes sense. Employers who make a concerted effort to eliminate discrimination and sexual harassment in the workplace should be protected for their efforts, and not punished, particularly when prompt, remedial action is taken by the employer and the inappropriate behavior is mitigated.

This safe harbor, however, is not absolute. As the United States Court of Appeals for the Third Circuit held in Bouton v. BMW of North America, Inc., an employer may avoid liability only if its procedures for investigating and remediating alleged discrimination are sufficiently effective.  The affirmative defense cannot be asserted by employers who fail to implement effective anti-harassment policies (or where the policies exist in name only). In Gaines v. Bellino, the New Jersey Supreme Court held that an employer’s due care is demonstrated through effective grievance procedure, monitoring mechanisms, and through a showing of the employer’s commitment to its policies through consistent practice and implementation. Thus, the employer must engage in appropriate training and monitoring, which are indispensable to the affirmative defense. Additionally, the employer’s investigation must be appropriately conducted and the remedial action reasonably calculated to prevent further harassment. In Vasquez v. Empress Ambulance Service, Inc., the United States Court of Appeals for the Second Circuit reversed the dismissal of the plaintiff employee’s claims against the employer where the employer mishandled the investigation of the plaintiff’s claim of sexual harassment and ultimately terminated the plaintiff’s employment. Even where an employer implements appropriate policies and procedures, follows those procedures in the face of a hostile work environment complaint, promptly investigates and engages in what it believes is appropriate remedial action, as held by the Third Circuit in Knabe v. Boury Corp. – the employer nevertheless may be subject to liability where the investigation is “so flawed that it could not be said that the remedial action was adequate.”  In short, the investigation is not just worth doing, but it is worth doing the right way.

Many of these principles are promulgated by the United States Code of Federal Regulations. Title 29 of the Code of Federal Regulations, Section 1604.11, provides in relevant part:

  • “With respect to conduct between fellow employees, an employer is responsible for acts of sexual harassment in the workplace where the employer (or its agents or supervisory employees) knows or should have known of the conduct, unless it can show that it took immediate and appropriate corrective action.”
  • “An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action.” and
  • “Prevention is the best tool for the elimination of sexual harassment. An employer should take all steps necessary to prevent sexual harassment from occurring, such as affirmatively raising the subject, expressing strong disapproval, developing appropriate sanctions, informing employees of their right to raise and how to raise the issue of harassment under title VII, and developing methods to sensitize all concerned.”

In conclusion, an employer seeking to minimize liability arising from claims of sexual harassment in the workplace should: (1) adopt well-publicized anti-discrimination and anti-harassment policies; (2) implement grievance procedures in order to address claims of discrimination made by its employees; (3) regularly and properly educate and train its employees with respect to such policies and procedures; (4) conduct reasonably immediate, full and thorough investigations of any claims of sexual harassment or hostile work environment, regardless of whether the claim comes to light through the formal grievance procedure; and (5) take prompt, reasonable, necessary and appropriate remedial action with respect to each and every claim. By following these steps and appropriately addressing sexual harassment as it arises in the workplace, an employer can prevent future instances of improper workplace behavior and insulate itself from becoming the next Uber, Fox News or other newsworthy headline.



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Monday, May 1, 2017

An Administrative Regulation, “A Linguistic Morass,” is Invalidated as Arbitrary and Capricious

In re N.J.A.C. 12:17-2.1, ___ N.J. Super. ___ (App. Div. 2017).  Given the deferential standard of review of the validity of regulations promulgated by administrative agencies, it is relatively rare that a court finds such a regulation to be arbitrary and capricious, and therefore invalid.  Today’s opinion by Judge Sabatino, however, does just that, regarding […]

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