Receiver of a Defrauded Entity May Initiate Arbitration Even if Entity’s Shareholders Will Ultimately Benefit From Any Recovery

Interactive Brokers, LLC v. Barry, ___ N.J. Super. ___ (App. Div. 2018).  This final post of 2018 features an opinion issued today by Judge Currier.  The case arose out of a Ponzi scheme perpetrated by a hedge fund founded by Peter Zuck called Osiris Fund Limited Partnership.  “Osiris operated through the securities trading platform of […]

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For the New Year, More Police in More Than 100 Towns Around NJ

Police around the state will continue their push of the 'Drive Sober or Get Pulled Over' campaign through New Years Day. They'll be conducting sobriety checkpoints and saturation patrols in a concentrated effort to reduce the amount of drunk drivers on the road celebrating the coming new year. Throughout the country roughly 10,000 people die annually due to incidents involving drunk driving. In NJ specifically 20% of car related fatalities involve drunk driving. The state is seeking to be proactive in curbing that number.

The New Year’s Resolution Divorce

For many divorce attorneys, the busy season starts after the first of the year. For the last several years, I have posted on the phenomenon of the New Year’s Resolution Divorce. For whatever reason, this post has struck a chord and has been both well received and cited by other bloggers. As such, given that the new year is near, I thought I would share that piece again, updated slightly for the new year.

Over the years, I have noted that the number of new clients spikes a few times of the year, but most significantly right after the new year. Before writing this article for the first time, out of curiosity, I typed “New Years Resolution Divorce” into Google and got 540,000 results in .29 seconds. There are even more results when you do the same search now. While not all of the search results are on point, many were extremely interesting. It turns out that my intuition about this topic was right and that there are several reasons for it.

One article on Salon.com put divorce up there with weight loss on New Years resolution lists. Also cited in this article was that affairs are often discovered around the holidays. Another article linked above attributed it to “new year, new life”. Another article claimed that the holidays create a lot of pressures at the end of the year that combine to put stress on people in unhappy or weak relationships. Family, financial woes, etc. associated with the holidays add to the stress. Turning over a new leaf to start over and improve ones life was another reason given. This seems to be a logical explanation for a clearly difficult and perhaps heart wrenching decision.

In my experience, people with children often want to wait until after the holidays for the sake of the children. There is also the hope, perhaps overly optimistic, that the divorce will be completed by the beginning of the next school year. These people tend to be in the “improving ones life” camp.

So as divorce lawyers, we hope to avoid or at least resolve in advance the holiday visitation disputes that inevitably crop up, then relax and enjoy the holiday as we await the busy season to begin.

In the last several years, the phenomena started early for us and many other attorneys. We were contacted by more people in December in the last few years than in any years in recent memory. In some recent years, the calls started in November at a pace more robust than in prior years. Moreover, we have heard of more people telling their spouse it “is over” before the holidays this year. I suspect that in some, it was the discovery/disclosure of a new significant other or perhaps pressure being exerted by that person that was the cause. In other cases, the person just didn’t want to wait until the new year to advise their spouse.

For those who divorce in 2019, they will be the first to test the new tax laws eliminating the deductibility of alimony.  They may also be facing a slowing economy.  Bad economies historically mean more divorces, either because of the stress it creates or because one or both parties is being opportunistic.

Whatever the reason, we await those who see 2019 as a chance for happiness or a fresh start. Happy New Year?!?!

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Eric 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.

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A New Jersey Divorced Parent’s Guide to Paying for College

With the costs of college ballooning out of control, determining which of the divorced parents will pay for what percentage of a child or the children’s college has evolved into high stakes litigation that is on par with questions such as equitable distribution and alimony.   With the federal tax law changes regarding deductability and taxability of alimony and the year end rush to finalize agreements,  I experienced settlement discussions abruptly end last week because of this very issue.  This question has been addressed many times but New Jersey’s judiciary and was most recently considered in the unpublished appellate decision of Landre v. Landre, A- 5080-16T1.

The defendant-wife in Landre had filed a post-judgement motion to enforce a Matrimonial Settlement Agreement (MSA) that required the plaintiff-husband to contribute to their oldest child’s college expenses based on a pro-rata calculation of the parties’ income percentage for contributing.  The trial court granted the motion, and plaintiff appealed.

The parties had two children and were divorced in 2002. The MSA, incorporated into the judgment of divorce, addressed college expenses for the children. The MSA contemplated both parents would be involved in the college selection process and established the parties’ contribution to college expenses would be calculated on a pro rata basis.  The MSA established the following regarding the payment of college expenses:

“The parties recognize their obligation to contribute to the cost of their children’s post-high school education should the child demonstrate an aptitude for and an interest in same. The parties shall consult in advance with regard to post-high school education for their children. During the child’s senior year in high school, the parties shall communicate, in writing, concerning the child’s choices for post-high school education. In the event that either party does not approve of any institution to which the child seeks to make application, such disapproval shall be given in writing, with the reasons set forth, 30 days prior to the application deadline. If such disapproval is not set forth in writing, with the accompanying specific reasons for such disapproval, then there shall be a presumption that both parents agree to contribute to the cost of any and all institutions to which the child applies and is accepted, according to the terms of this Agreement. In no event, however, shall either party act in such an unreasonable manner as to prohibit the child from applying to any such institution.

The parties shall contribute to the cost of the child’s post high school education on a pro rata basis, in accordance with their respective earned and unearned incomes at the time the child is accepted into the institution. The parties’ obligation to contribute to the cost of post high school education shall apply only after exhausting all loans, grants, scholarships, the value of the UGTMA accounts that then exist for the benefit of the children, and any other sources of financial aid to which a child might be entitled.”

In opposition to defendant’s motion to enforce the MSA regarding the oldest child’s college expenses, plaintiff argued that defendant (1) did not include him in the child’s college selection process; and that (2) he should receive a credit for scholarships and financial aid that the child had declined from other universities that were not offered by the school that was eventually chosen.

The trial judge held he was “not making a decision about which school the child should attend,” and limited his decision to the percentage contribution of each parent for college expenses.  The judge determined it was undisputed that each party anticipated contribution toward the expense, and hence, the court was not undertaking a determination of whether contribution was warranted in the first instance.  Therefore, a decision based on the factors in Newburgh v. Arrigo, 88 N.J. 529 (1982) was not necessary (see below).  The trial judge further ruled that a court may take certain principles in Newburgh into consideration in making a determination, but the question of whether a parent should be compelled to contribute requiring application of the factors were not before the court.

Unfortunately for the trial court judge, the Appellate Division disagreed and ruled that the Newburgh factors should have been applied, even in cases where the property settlement agreement, or judgment of divorce, or MSA, as in this case addressed college contributions. See Gotlib v. Gotlib, 399 N.J. Super. 295, 310-11 (App. Div. 2008).

Newburgh states that a parent’s obligation for the cost of postsecondary education depends upon the expectations and relevant abilities of the child and the parents considering all relevant factors, including:

(1)       whether the parent, if still living with the child, would have contributed toward the costs of the requested higher education;

(2)       the effect of the background, values and goals of the parent on the reasonableness of the expectation of the child for higher education;

(3)       the amount of the contribution sought by the child for the cost of higher education;

(4)       the ability of the parent to pay that cost;

(5)       the relationship of the requested contribution to the kind of school or course

of study sought by the child;

(6)       the financial resources of both parents;

(7)       the commitment to and aptitude of the child for the requested education;

(8)       the financial resources of the child, including assets owned individually or held in custodianship or trust;

(9)       the ability of the child to earn income during the school year or on vacation; (10) the availability of financial aid in the form of college grants and loans;

(11)     the child’s relationship to the paying parent, including mutual affection and shared goals as well as responsiveness to parental advice and guidance; and

(12)     the relationship of the education requested to any prior training and to

the overall long-range goals of the child.

[Id. at 545.]

The Appellate Division stated that “when making a decision regarding the obligation of a parent to contribute to college expenses, the judge has “an obligation under Newburgh and N.J.S.A. 2A:34-23(a) to consider all the enumerated factors” and should not base its decision on any single factor. Gotlib, 399 N.J. Super. at 309 (quoting Raynor v. Raynor, 319 N.J. Super. 591, 617 (App. Div. 1999)).

Because the trial judge did not apply the Newburgh factors in the trial decision, the Appellate Court remanded to the trial court.

The Appellate Court also ruled that the “plaintiff’s interpretation of the MSA [was] flawed.”  The MSA did not require scholarships or financial aid from other schools be considered in determining plaintiff’s contribution to college expenses. The MSA required that the child accept all “loans, grants, scholarships,” and “any other sources of financial aid” at the school he or she decides to attend.  The Appellate Court determined that the financial aid offered by the two unselected schools should be considered on remand as a factor in determining plaintiff’s contribution toward the oldest child’s college expenses.

The Appellate Court further ruled that in addition to the Newburgh factors in determining contribution toward college costs, there are additional equitable considerations that may be taken into account.  The Appellate Court identified one such consideration as whether there are younger siblings of relatively close age who are likely to attend college at the same time as the older sibling. In such circumstance, the family court may consider a reasonable financial plan, which fairly allocates present and future funding resources among all of the children, rather than exhausting all resources on the oldest child who happens to attend college first. Black, 436 N.J. Super. at 134. On remand, the Appellate Court stated that in analyzing the resources of the parents and the amount they can pay toward the oldest child’s education, it is appropriate for the judge to consider the parties will likely need funds available in the immediate future to pay college expenses for both children simultaneously.

As demonstrated in Landre, who pays for college when parents are divorced is not an easy question and will likely be different in each case based on facts and circumstances.

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Sandra C. Fava is a partner in the firm’s Family Law Practice, resident in its Morristown, NJ office. You can reach Sandra at 973.994.7564 or sfava@foxrothschild.com.

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Trial Judges Have Discretion to Replay Counsel’s Summations Upon a Jury’s Request

State v. Brown, ___ N.J. Super. ___ (App. Div. 2018).  Deliberating jurors often request that trial testimony be read back to them.  As Judge Sabatino noted n his opinion in this case today, the Supreme Court has held that “absent some unusual circumstance, those requests should be granted.”  But what is to be done when […]

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Equitable Distribution of Restricted Stock in a Divorce

M.G. v. S.M., ___ N.J. Super. ___ (App. Div. 2018).  As Judge Mawla stated in his opinion in this case today, “[i]ncreasingly, executive compensation has been achieved through means other than salary and retirement assets.”  Today’s opinion relates to one of those means: the award of stock options.  The specific issue was how such options […]

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Third Circuit Developments: Open During Government Shutdown; Losing Judge Vanaskie as of January 2, 2019

As stated in a notice on the Third Circuit’s website, that court “is open during the Government Shutdown.  Oral arguments will be heard as scheduled.  All filing deadlines must be met.  CM/ECF will remain operational.” The notice goes on to state that “Federal government agencies are expected to timely respond to emergency or expedited motions […]

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Construction Lien Law’s “Signatory-Requirement Amendments” Do Not Apply Retroactively

Diamond Beach, LLC v. March Associates, Inc., ___ N.J. Super. ___ (App. Div. 2018).  Judge Fasciale’s opinion in this construction case today dealt with a narrow issue projected by a fourth-party plaintiff, Sloan & Company, Inc.  That issue was whether 2011 amendments to two sections of the Construction Lien Law, N.J.S.A. 2A:44A-6(a)(1) and 2A:44A-8, which […]

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An Anniversary in Supersedeas Bond Law

There are very few cases that discuss Rules 2:9-5 or 2:9-6, the rules dealing with supersedeas bonds.  One of those cases, Courvoisier v. Harley Davidson of Trenton, Inc., 162 N.J. 153 (1999), was decided on this date in 1999. In that case, plaintiff was badly injured in a motorcycle accident.  He sued Harley Davidson of […]

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The 1,500th Post- Making up a December Deficit

A major Appellate Division argument, appellate briefing, and other work has interfered with keeping up with the courts during December.  So it’s time for one of this blog’s periodic “catch-up” posts.  Here, in summary, is some of what the Supreme Court, the Appellate Division, and the Third Circuit have done in the past several weeks. […]

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As 2018 Winds Down, the Supreme Court Adds Six More Cases

The Supreme Court announced that it has granted certification in six more cases as 2018 is coming to a close.  As is often the case, the new appeals represent a smorgasbord of subject matters, including shareholder rights, pensions, CEPA, criminal law, and a marital/estates matter. In Supreme Court docket number order, the first case is […]

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Cinnabon ‘No-Poach’ Lawsuit Moves Forward

A former Cinnabon employee in Washington can now move forward with a proposed antitrust class action suit over the company’s allegedly anticompetitive “no-poaching” agreements. These agreements are alleged to prevent franchises from hiring away workers from other Cinnabon franchises, thereby eliminating wage competition.

The plaintiff, a former Cinnabon franchise employee, had argued that Cinnabon’s arrangements prevented franchises from hiring away workers from other Cinnabon franchises, and as a result eliminated wage competition that could drive up employee salaries and benefits, and amounted to a “per se” violation of the Sherman Act. The plaintiff further argued that this “per se” violation deserved the ‘quick look’ treatment, and required no weighing of anticompetitive and procompetitive effects in the search for an unreasonable trade restraint, a just showing that the conduct occurred.

In a motion to dismiss, Cinnabon Franchisor SPV LLC’s argued that the chain and its franchises should be considered one entity, not multiple entities as required under the Sherman Act.

The Washington state federal judge rejected Cinnabon franchise’s motion to dismiss, but in his decision the judge also imposed the “rule of reason” analysis on the plaintiff.

Under the “rule of reason” standard, the plaintiff must prove that the Cinnabon franchise’s alleged agreements’ anticompetitive effects outweighed their procompetitive benefits and justifications. In his statement, the judge said “…the plaintiff has alleged sufficient facts in support of her claims. The plaintiff acknowledges that she has failed to allege sufficient facts to support a full rule of reason analysis.”

The judge cautioned that the plaintiff “does so at her own risk (and perhaps those she seeks to represent if she is unable to prevail under a ‘quick look’ rule of reason analysis.”

The judge also concluded that the plaintiff had sufficiently shown an “agreement, conspiracy, or combination” between multiple entities as required under the Sherman Act.

‘Quick look’ rules occur when even an observer with only a “rudimentary understanding of economics” applying the rule of reason could find that the conduct would have anticompetitive impacts on markets and customers.

According to the judge, the plaintiff had not yet met the burden of showing the anticompetitive effects of Cinnabon’s no-poaching agreements to observers with rudimentary economic understanding.

These no-poaching agreements within fast food franchises have come under heavy scrutiny in the last several months, after probes by state and federal antitrust officials. Those probes have already yielded a number of settlements between companies including Buffalo Wild Wings, McDonald’s, Jimmy John’s, Cinnabon, and Arby’s, and state attorney general offices.

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2017-18 Supreme Court and Appellate Division Statistics

The Annual Report of the New Jersey Courts for the court year 2017-18 has been published and is available here.  The Report is full of useful information about the judiciary at all levels and is well worth reading in full. As relevant to appellate practice, the report contains some summary figures regarding the activities of […]

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Durational Limits of Protective Orders Under the Sexual Assault Survivor Protection Act

In a recent decision approved for publication, the New Jersey Appellate Division reversed a trial court’s findings that the Sexual Assault Survivor Protection Act, N.J.S.A. 2C:14-13 to -21 (SASPA), could afford protection to victims of sexual assault whose attacks took place prior to the effective date of the Act in 2015.  In so holding, the court reversed the entry of a final protection order to a victim of sexual violence, who was assaulted in 2005, ten years prior to the enactment of SASPA.

The case of R.L.U. v. J.P. illustrates this principle.  In this case, the defendant pled guilty to endangering the plaintiff in 2005, when she was eleven years old.  He was sentenced to three years of jail time and parole for life.  In 2017, he interacted with the plaintiff at the convenience store where she worked and verbally threatened her.  A few days later, he appeared at the glass window of the plaintiff’s job and stared at her for five seconds before walking away.  The plaintiff applied for a temporary order of protection pursuant to SASPA.  A final protective order was then entered, after a hearing at which the trial court heard credible testimony that the defendant had intercourse with the plaintiff in 2005.  Relying upon that assault as the predicate act, the trial court entered a final order of protection pursuant to SASPA.

The Appellate Division reversed, albeit unwillingly, finding it was “constrained” to hold that SASPA was not intended to be applied retroactively.  Explaining the history and purpose of SASPA, the Court identified its purpose to extend protection from domestic violence to those individuals who do not meet the requirements of the Prevention of Domestic Violence Act (PDVA), but are victims of sexual violence.  The PDVA is the primary avenue by which an individual can obtain a protective (otherwise known as restraining) order in New Jersey.  However, to qualify as a “victim” under the PDVA, one must be a spouse, former spouse, co-parent, or person with whom the defendant had a dating relationship.  Accordingly the PDVA does not protect persons subject to sexual violence in a random encounter or in less than dating relationship.

To bridge this gap, SASPA provides that any person alleging to be a victim of nonconsensual sexual contact, sexual penetration or lewdness (or an attempt thereof) who is not a protected victim under the PDVA, may apply for a protective order under SASPA.  However, the entry of a final protective order under SASPA requires a finding of nonconsensual sexual contact, penetration or lewdness and the possibility of future risk to the safety or well-being of the victim.  Importantly, words, threats or harassment is not enough.

Here, the trial court relied upon the predicate act of intercourse with the plaintiff in 2005.  The appellate court reversed, finding that this act could not constitute the predicate act as it occurred prior to SASPA’s enactment in 2015.  The court relied upon the absence of any legislative intent that SASPA was designed to apply retroactively and the fact that the PDVA is similarly applied prospectively.

It is important to understand the different laws which protect victims of domestic violence and know that SASPA is a fairly new law which broadens the category of victim who may seek protection from such acts of abuse.  However, victims whose offenders are more akin to a stranger must be cognizant of the durational limits imposed by SASPA.  That being said, any new acts of sexual violence may give rise to a basis for a protective order under the Act and anyone who is unfortunately a victim of such violence should be aware of the legal rights and protections to which they are entitled.

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Katherine A. Nunziata is an associate in the firm’s Family Law practice, based in the Morristown, NJ office. You can reach Katherine at (973-548-3324) or at knunziata@foxrothschild.com.

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Counting the Miles (And Other Hidden Assets in Divorce)

It is well known that when parties divorce, there will be an equitable distribution of the marital assets and debts that the parties acquired during the marriage. Many people also know that it rarely matters whose name that the asset or debt was acquired in.

I cannot stress enough that the preparation of a financial statement, or a Case Information Statement, is perhaps the most important step of the entire divorce process. Getting bank balances and mortgage payoff statements is easy, and tasks that no one thinks twice about. However, there are other assets, or benefits in a marriage that are easily overlooked, and can result in an inequity to a spouse if not considered.

Most of us have a credit card (or two, or three) that accumulate miles which can be traded in for airline tickets, hotel points, or some ability to trade points for something of value.

In some families, the ability to accumulate miles is enhanced by the ability of a spouse to use a credit card for work and seek reimbursement from an employer. This results in one spouse attaining the ability to travel which may not be available to the other spouse after the divorce is over. It can also result in an inequity when one parent has the ability to take children on vacations using miles which the other parent does not have.

If one party has a significantly higher income, they will undoubtedly have the ability to have credit cards with higher credit limits, or more credit cards which further boosts the ability to accumulate these miles and in a significant way, enhance that party’s post-divorce lifestyle.

Compiling a history of miles as well as the family’s use of the miles throughout the marriage is something that litigants should be doing when preparing a case. A successful argument for additional support based in lifestyle may turn on the ability to show the past practices of the parties in use of the miles. Moreover, this may impact responsibilities of parents for expenses for children of college age. If one parent has access to miles when a child is at college far away, should this not be a consideration when determining responsibility for travel expenses for holidays and summer breaks?

In addition to the points and miles mentioned above, timeshares are an important asset to consider. All too often, the resale value of a timeshare is far less than what was paid for it, so it is overlooked. However, the fact remains that the value of being able to use the week in the Caribbean still holds value, particularly for a former spouse who might not otherwise be able to take two children on the type of vacation experienced during the marriage.

There are also employment benefits that should be considered. Many jobs provide long term employees with insurance benefits for life after meeting a certain length of employment. If one spouse will have insurance costs and the other will not post-divorce, this needs to be considered as well.

Money that people owe a party is another category that is often overlooked. Countless times a family loans money to a relative and it is forgotten when in the midst of a divorce, or assumed the debt will never be paid. Just because collection is iffy doesn’t mean it should be overlooked.

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As the Year Comes to a Close, Expect A Bigger Police Presence on the Roads

For many the holiday season is the happiest time of year. Family and friends come together to celebrate another year's passing. While there's nothing wrong with enjoying the festivities. Some will inevitably be getting a little too holly jolly and then getting behind the wheel of a car. This is in part why alcohol related accidents increase as much as 10% during the holiday season.

Judge John J. Gibbons (1924-2018)

Retired Third Circuit Judge John Gibbons died yesterday.  He was 94 years old. Judge Gibbons was nominated to the Third Circuit Court of Appeals by President Nixon in December 1969 and was confirmed by the Senate twelve days later.  He was a member of that court until he retired from the bench in 1990.  From […]

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Five New Cases for the Supreme Court

The Supreme Court announced on Friday that it has granted certification in five more cases.  Those matters run the gamut from criminal cases to tort cases to a long-running consumer class action. The class action is Little v. Kia Motors America, Inc.   The question presented in that appeal, as phrased by the Supreme Court Clerk’s […]

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Obtaining Cannabis Insurance Coverage: What Plant-Touching Businesses Can Expect

Risk management is important for any business let alone a startup in a developing industry, but it takes on a whole new meaning for cannabis companies looking to make their mark on the burgeoning cannabis market. As more and more states go green and join the mounting number of sovereigns that permit, tax, and regulate medical and adult-use marijuana, the need for cannabis related banking, insurance, and real estate continues to grow.

As any cannabis entrepreneur and operator knows, the business is risky, capital intensive, and presents many unforeseen challenges. Proper and adequate insurance coverage and risk management is therefore paramount in such an uncertain, undulating industry.

Success favors the well prepared. It would behoove those looking to enter the legal cannabis marketplace to work with attorneys and insurance brokers who are familiar with the particulars of available insurance coverage and the idiosyncratic needs and risks of the cannabis business, whether it be a grow operation, a processing facility, or a retail dispensary.

Common coverages such as products liability, commercial general liability, property, and errors and omissions exist for cannabis insureds, however, they come in all different types, shapes, forms, and effects. Horror stories abound about carriers issuing high premium insurance policies to cannabis producers and distributors that through the fine print and labyrinthine endorsements and exclusions do not provide coverage for vital components of the operation such as crops, machinery, and goods in transit.

Therefore, it is critical to understand the extent and scope of the offered insurance coverage as well as to develop and implement a risk assessment and management plan to identify potential risks and to minimize losses.

Holly DeLorenzo, a Senior Business Insurance Broker with the Hardenbergh Insurance Group (“HIG”), specializes in placing insurance coverage for licensed operators as well as procuring coverage for those applying for licenses and those who provide goods and services to plant-touching businesses in New Jersey, Pennsylvania, and New York.

“Products liability coverage can be very expensive for newly established operators with no track record,” according to Ms. DeLorenzo who has placed encompassing coverage for one of the six vertically integrated Alternate Treatment Centers in New Jersey as well as for three hopeful applicants waiting for the NJ Department of Health’s decision on the latest round of license applications.

“There are carriers and providers out there that will write comprehensive ‘seed to sale’ insurance packages for licensed operators,” says DeLorenzo who indicated that an insurance package for a vertically integrated operation can be pricey.

What makes the Hardenbergh Insurance Group different than other insurance brokers is their focus on risk management services and recommendations as part of the overall insurance package and strategy. “We learn the client’s business and the particular risks associated with that business in order to assess weaknesses and to make recommendations about improvements that can result in lower premiums and less exposure,” says DeLorenzo referring to HIG as “not your typical insurance agents.”

Different businesses in different states have varying insurance needs and can have widely different goals and abilities to manage fluctuating degrees of risk attendant to their respective businesses. Therefore, DeLorenzo does not take a “one-size fits all” approach, but rather carefully picks and chooses coverages from primary, excess, and surplus line carriers that will give clients the most comprehensive, practical coverage available for their specific business and target markets.

Be prepared to provide a lot of detailed information about your business, your financials, your real estate, and your team. Cannabis insurance applications are grueling, lengthy, and require meticulous attention to detail and transparency. The more accurate information and details you provide, the less wiggle room the carrier will have to disclaim coverage for any potential misstatements, misrepresentations, and material omissions in the application.

For growers and producers, having a rigorous testing program or a testing lab partner/vendor are important factors that impact the underwriting process. Likewise, security, documentation, and employee training will be important considerations for insuring dispensaries.

Obtaining insurance coverage is only half of the battle: putting that insurance to work or obtaining the benefits of that insurance in the event of a claim or loss is the other half. With the dichotomy of federal and state law, the increase in coverage dispute case law in more mature markets such as California, Colorado, and Oregon, and the scarcity of cannabis “experts,” cannabis related insurance claims and liability suits are rather complex and protracted.

Having experienced, knowledgeable legal counsel is therefore extremely important in order to properly and cost-effectively make insurance claims and defend against realized and potential liability suits. Our weathered attorneys at Stark & Stark have the industry knowledge, experience, and tactical wherewithal to advise and represent cannabis clients in insurance coverage disputes, liability lawsuits, and liability prevention planning. Click here for more information on how we can help you.

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Shades of Gray: Color Marks Can Never Be Inherently Distinctive

In a precedential Trademark Trial and Appeal board (TTAB) decision, the Board held that an applied-for trademark consisting of multiple colors on product packaging, without any distinct shape, pattern or design, can never be inherently distinctive. See In re Forney Industries, Inc., Serial No. 86269096 (September 10, 2018). Applicant Forney Industries, Inc. sought to register a color scheme on the Principal Register, consisting of a black banner above a yellow to red color gradient for use on the product packaging of its various metal hardware and other small welding tools.

The Trademark Examining Attorney refused registration of the mark for lack of inherent distinctiveness under Sections 1, 2 and 45 of the Trademark Act, 15 U.S.C. §§ 1051, 1052 and 1127. Inherently distinctive marks range in degree of strength, but in all cases enable consumers to differentiate one source’s good or service from another. The spectrum of inherently distinctive marks ranges from carrying no meaning other than identifying the source of the good or service to alluding to, but not explicitly describing, an aspect of the good or service it is used in connection with.

Not only did the Trademark Examining Attorney refuse this color scheme on the basis of lack of acquired distinctiveness—the examining attorney went on to conclude that a color scheme mark like this could never be inherently distinctive. The TTAB affirmed, finding that color marks consisting of multiple colors applied to product packaging – as opposed to products – are not capable of being inherently distinctive.

Applicant first disputed the classification of its applied-for mark as a “color mark” choosing instead to characterize it as a “distinctive design and layout of colors on its packaging that functions as a ‘symbol.’” The TTAB, however, found it to be a color mark because the application did not designate a specific shape, pattern, or design to the mark and it appeared in various shapes and shading on applicant’s product packaging.

Applicant asserted that the color layout was akin to the color marks that received registration in previous cases. The TTAB treated the applied-for mark as a “packing backer card” and found that no prior precedent established that a color scheme on a packing backer card—without any distinctive shape or shading—could be inherently distinctive. It distinguished the matter from Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, and In re Owens-Corning Fiberglas Corp., 774 F.2d 1116, where the courts did grant trademark protection to color marks, for two reasons. The colors at issue in Qualitex and Owens-Corning were applied to the actual product, not the product packaging, and they involved marks consisting of a single color. The TTAB contemplated whether color marks of multiple colors on product packaging could escape the prior rule that color marks could never be inherently distinctive and found that they could not.

Notably, the Board also distinguished the matter from In re Gen. Mills IP Holdings II, LLC, 124 USPQ2d 1016, where the TTAB held that a color applied to a product or its packaging could suffice as a trademark, but it could never be inherently distinctive as a source indicator. They did so on the basis that Forney Industry’s applied-for mark was a color mark, not a product packaging trade dress mark. Finally, the TTAB agreed with the examining attorney’s holding that “the use of color in product packaging can be inherently distinctive . . . only if specific colors are used in combination with a well-defined shape, pattern, or other distinctive design.” And because here, applicant sought registration when there was no such consistent shape, pattern, or discerning design accompanying its mark, the applicant could not establish an inherently distinctive trade dress.

While certain types of product packaging may be inherently distinctive source indicators, a color mark, that is, a mark consisting of color alone — whether applied to a product or its packaging — is not among them. Precedent makes clear that a particular color on a product or its packaging can never be inherently distinctive and may only be registered on a showing of acquired distinctiveness. Here, Applicant did not bring a Section 2(f) acquired distinctiveness claim, and therefore, was refused registration. Although product packaging, unlike product design and shape, is capable of being inherently distinctive and registrable on the Principal Register without a showing of acquired distinctiveness, this principle did not apply to the analysis of Applicant’s mark, which is a color mark, not a product packaging trade dress mark.

The use of color in product packaging can be inherently distinctive (so that it is unnecessary to show secondary meaning) only if specific colors are used in combination with a well-defined shape, pattern, or other distinctive design. A color scheme or palette, in and of itself, cannot be inherently distinctive. Thus, even though a color mark consisting of colors applied to product packaging cannot be inherently distinctive, it may only be registered on the Principal Register upon adequate proof of acquired distinctiveness.

For established businesses, this means that a color scheme on product packaging can be registered by showing that the color combination has acquired distinctiveness over time in that consumers have come to associate the colors with that particular company’s products or services. For newer businesses that do not yet have the track record to show acquired distinctiveness, they should only apply for registration if their color scheme has a uniform size, shape, or other distinct aspect on the product packing.

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Due Process for Domestic Violence Defendants

A new domestic violence decision, M.D.C. v. J.A.C., not only confirms that defendants in a domestic violence proceeding are entitled to due process, but also goes a step further by asking the Supreme Court’s Family Practice Committee to determine whether the should require judiciary staff and law enforcement to inform and review with defendants the allegations against him/her, as well as what to expect at a Final Restraining Order (“FRO”) hearing.  In the manual’s present form, such explanations are only required for the plaintiff.  This suggested update confirms that each party is entitled to reciprocal due process and to be informed of their rights to present evidence, testimony and witnesses, as well as to seek adjournments if additional time is needed to prepare his/her case.

In M.D.C., the trial court treated the defendant in a particularly egregious manner during an FRO hearing in which it entered an FRO against the defendant.  Although the plaintiff had the opportunity to present her witness, the trial court did not offer the defendant an adjournment when her only witness (her mother) was unavailable on the trial date, nor did the court advise the defendant of his right to seek such adjournment when she explained her witness’ unavailability.  Additionally, while the plaintiff was given the time to present her testimony and even “prompted”by the court to testify about prior acts of domestic violence outside of the four corners of the complaint, the trial court repeatedly disrupted the defendant’s cross-examination of the plaintiff and required the defendant to limit her questions to the domestic violence complaint.  Ultimately, the defendant ended her cross-examination out of frustration.  This is especially material because the FRO was entered in part on credibility determinations that the defendant was precluded from exploring without justification.  Finally, although it seems the plaintiff was able to present her case in the manner desired with assistance from the trial court, the trial court precluded the defendant from introducing photographic and video evidence, which the defendant claimed refuted the plaintiff’s testimony, without making any findings on the record to support this preclusion.

The Appellate Division reviewed the long-standing history of a defendant’s due process rights in New Jersey domestic violence cases and, in part, general litigation, including, without limitation,  (1) a defendant’s due process are violated when he/she is denied the right to cross-examine, which is the “most effective device known to our trial procedure for seeking the truth”; (2) courts should advise pro se litigants of their right to seek an adjournment to call necessary witnesses and the failure to offer and/or grant the adjournment violates due process; (3) the failure to consider evidence without any reason for doing so is also a due process violation; and, (4) while plaintiffs seeking an FRO may amplify their allegations of prior domestic violence history, they must amend the complaint in order to place defendants on notice of such allegations and afford them an opportunity to prepare a defense.

In light of all due process violations in this case, it should come as no surprise that the defendant here is using his soapbox to enhance the rights for all defendants in due process cases.  From a practice standpoint, having interned in the domestic violence courts of Essex County while in law school and then observing such hearings as a law clerk in Union County, and now appearing often in such courts throughout northern New Jersey, it is undeniable that a significant amount of these hearings occur between pro se litigants on one or both sides.   If the plaintiffs are the only party who are advised in advance of their rights and how to conduct themselves at an FRO Hearing, a defendant can argue that the plaintiffs are automatically receiving the upper hand at trial.  Although the domestic violence defendant is not facing a criminal conviction (at least at the FRO Hearing), the defendant’s rights are severely impacted by having an FRO entered, including having their name on a national registry that can impact future employment, support obligations, custody and parenting time determinations, prohibitions from carrying/owning weapons that were legally procured, which can also impact employment, etc.  Criminal defendants are required to be advised of their rights and, perhaps, so too should a domestic violence defendant.

It will be interesting to see if the Manual is in fact updated.  Stay tuned…  Either way, if you are representing yourself, whether you are the plaintiff or the defendant, make sure to inform the court of any true impediments you may have to begin trial on a date provided, such as calling a witness or procuring evidence, prepare a thorough cross-examination of the other party’s witnesses and insist on your right to explore credibility and all issues raised by that witness on direct, and have your evidence pre-marked and a proffer ready to explain to the court why it should be entered.  This does not guarantee success, but it will help with a fair chance.

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Lindsay A. Heller is an associate in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.

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Opposing an Application to Modify or Terminate Alimony Upon Retirement? Be Ready to Address Your Ability to Have Saved Adequately for Retirement.

In the wake of the September 10, 2014 amendments to N.J.S.A. 2A:34-23, the legislature clarified the circumstances under which an alimony payor’s obligation can be modified or terminated due to the obligor’s intended or actual retirement.  Under the statute as amended, when faced with an obligor’s application to modify or terminate alimony due to good faith retirement, the Court must consider the question of the alimony recipient’s ability to save for his or her own retirement.  As discussed In the new unpublished (non-precedential) Appellate Division decision Stansbury v. Stansbury, this question is given much greater weight in pre-Amendment cases (i.e. in cases that were decided or agreements that were entered into prior to September 10, 2014).

For post-Amendment cases, there is a rebuttable presumption that if a payor retires at “good faith retirement age” (defined as the age at which (s)he would be entitled to receive full Social Security Retirement benefits), then alimony shall terminate unless the recipient can show by a preponderance of the evidence and for good cause shown that alimony should continue (either in full or in a reduced amount).  In making that determination, the court must consider eleven (11) factors, one of which is the ability of the recipient to have saved adequately for retirement.  See N.J.S.A. 2A:34-23(j)(1).  This factor is listed along with the ten other factors, in no order of importance, with no emphasis whatsoever.

But for pre-Amendment alimony awards (like the Stansburys’), the statute does not just list the obligee’s ability to save for retirement as one of many on a list of factors to be balanced and considered.  Instead, it absolutely mandates and even elevates this criteria first and foremost among the others:

When a retirement application is filed in cases in which there is an existing final alimony order or enforceable written agreement established prior to the effective date of this act, the obligor’s reaching full retirement age as defined in this section shall be deemed a good faith retirement age.  Upon application by the obligor to terminate or modify alimony, both the obligor’s application to the court and the obligee’s response to the application shall be accompanied by current Case Information Statements or other relevant documents as required by the Rules of Court, as well as the Case Information Statements or other documents from the date of entry of the original alimony award and from the date of any subsequent modification.  In making its decision, the court shall consider the ability of the obligee to have saved adequately for retirement as well as the following factors in order to determine whether the obligor, by a preponderance of the evidence, has demonstrated that modification or termination of alimony is appropriate:

(a)  The age and health of the parties at the time of the application;

(b)  The obligor’s field of employment and the generally accepted age of retirement for those in that field;

(c)  The age at which the obligor becomes eligible for retirement at the obligor’s place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;

(d)  The obligor’s motives in retiring, including any pressures to retire applied by the obligor’s employer or incentive plans offered by the obligor’s employer;

(e)  The reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;

(f)  The ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part time or work reduced hours;

(g)  The obligee’s level of financial independence and the financial impact of the obligor’s retirement upon the obligee; and

(f)  Any other relevant factors affecting the parties’ respective financial positions.

N.J.S.A. 2A:34-23(j)(3) (emphasis added).

In Stansbury, the Defendant had a permanent alimony obligation but, at the age of 72 (well past good faith retirement age), he was looking to retire and made the appropriate application, which the Plaintiff opposed.  Eliciting certain facts from the parties’ respective certifications that accompanied their motions (and, reasonably, hoping to avoid the time and expense of a trial for two litigants with modest means and of a senior age), the judge addressed each of the factors listed above, including the question of the Plaintiff’s ability to save for retirement.  She found that – based on what the Plaintiff certified about a recent health issue and about her income and budget set forth on her Case Information Statement – it was “unlikely” that the Plaintiff had been able to save for retirement.  Based on this assumption and on the remaining factors, the trial judge declined to terminate the Defendant’s obligation and instead reduced it.

The Defendant appealed, arguing that – having failed to conduct a hearing – the trial judge did not have sufficient evidence to make the assumption that the Plaintiff did not have the ability to save for retirement.  In fact, on the question of what had happened to the Plaintiff’s share of Defendant’s pension awarded to her in equitable distribution, the trial judge had essentially taken a guess that the Plaintiff had liquidated her share of that marital asset and spent it while she was not working due to her recent illness, or else re-invested it.  There was no testimony in the record from the Plaintiff herself as to what she had done with this money.  The Appellate Division found that the trial judge’s failure to make findings after a hearing as to the issue of the Plaintiff’s ability to save for retirement was an error, and remanded the matter to the trial court, instructing that:

The hearing should require plaintiff to come forward with evidence that she saved for retirement to the extent she was able to do so, and how plaintiff disposed of her share of defendant’s pension.

The case makes clear that for pre-Amendment alimony awards in particular, trial judges not only have to consider this factor, but must give it great weight.   Therefore, litigants opposing retirement applications in pre-Amendment cases should be prepared to address this in great detail.   Additionally, the Appellate Division’s instruction to the trial court quoted above in the Stansbury case certainly suggests that whether an obligee has actually saved for retirement is not the important thing that courts must consider in these applications, but rather whether the recipient COULD HAVE saved for retirement based on his/her income, assets inclusive of equitable distribution, and the alimony received.  In other words, fiscal irresponsibility on the part of the obligee shouldn’t bar the obligor from making a successful application.

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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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Things You May Not Realize About Domestic Violence

Not many topics invoke the sort of emotional response that domestic violence does. For both those accused of the crime and those who are the accusers this will be one of the most emotionally charged moments of their life. Having an experienced attorney, can help guide  you down this treacherous path, with guidance and insight.