Wednesday, May 27, 2020

Good News for Pop Singers Katy Perry & Ed Sheeran: Copyright Does Not Protect Musical Building Blocks

Last July, a jury ruled that Katy Perry and her co-writers had plagiarized the Christian rap song Joyful Noise by Marcus “Flame” Gray in Perry’s creation of the 2013 hit Dark Horse; Perry was ordered to pay a $2.8 million penalty. The jury verdict was met with wide criticism; one songwriter emphasized that despite the similarities, no one person should be able to own the musical elements as they represent “fundamental aspects of pop music”.[1] The New York Times framed the debate centered around verdicts like the one reached as a “penalty for making use of generic musical elements, like a song’s beats and feel”.[2] Perry and the Dark Horse creative team appealed the ruling, and on March 17, 2020, the Central District of California overturned the jury verdict, relying on the Ninth Circuit’s en banc Led Zeppelin decision.

Proof of copyright infringement requires the plaintiff to show: (1) that they own a valid copyright; and (2) that defendant copied protected aspects of the work. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The second prong of the infringement analysis contains two separate components: “copying” and “unlawful appropriation.” In order to show unlawful appropriation, the plaintiff must show that the works share substantial similarities. Only substantial similarity in protectable expression may constitute actionable copying that results in infringement liability; “it is essential to distinguish between the protected and unprotected material in a plaintiff’s work.” Swirsky v. Carey, 376 F.3d 841, 845 (9th Cir. 2004).

While recognizing that the original selection and arrangement of unprotected elements can be protectable, the Ninth Circuit, in Skidmore v. Led Zeppelin, 952 F.3d 1051, 1079 (9th Cir. 2020), cautioned that a protectable selection and arrangement of musical elements requires more than just picking and choosing a number of unprotectable elements shared by two works that are otherwise dissimilar. The Central District of California ruled that “the signature elements of the 8-note ostinato in Joyful Noise [were] not a particularly unique or rare combination” and that, applying Led Zeppelin, “it is not enough to assert a combination of unprotectable elements without explaining how the elements are particularly selected and arranged”.

Often, where plaintiffs are relying on short phrases and other musical building blocks as the alleged similarities between the works at issue, they attempt to argue that the selection and arrangement of those elements are protectable and have been unlawfully copied. But in certain genres of music, there exists a finite range of available creative choices. In those scenarios, the defendant’s work would have to be “virtually identical” to the plaintiff’s work in order to be substantially similar. Because “the range of protectable expression” in a pop music ostinato comprised of individually unoriginal elements is finite, the combination of unprotectable elements in defendant’s allegedly-infringing ostinato would necessarily have to be “virtually identical” to their counterparts in the plaintiffs’ ostinato in order to be substantially similar. The objective distinctions between Joyful Noise and Dark Horse were clear enough to preclude a finding of the works being virtually identical. Further, the Central District of California cited to the Led Zeppelin decision concerning originality and the protectability of common elements found in music, noting that “building blocks belong in the public domain”.

While Gray still has an opportunity to appeal, it is hard to imagine that the Ninth Circuit will overrule the Central District of California’s findings, as the analysis provided in Led Zeppelin (on which they relied) has already become exceedingly influential.

In fact, the Southern District of New York has adopted the reasoning of Led Zeppelin, at least in part, in a case where pop star Ed Sheeran is alleged to have copied Marvin Gaye’s Let’s Get It On. In that case, Griffin v. Sheeran, 2020 U.S. Dist. LEXIS 52908 (S.D.N.Y. 2020), the court relied on Led Zeppelin in determining that the scope of Gaye’s copyright is limited to what is contained in the deposit copy and has undergone the copyright process; the elements of the sound recordings not included in the deposit copy are thus inadmissible. Time will tell if the Second Circuit will further adopt the reasoning laid out in Led Zeppelin, but it is already obvious that Led Zeppelin will be influential in shaping musical copyright litigation moving forward.

 


  • [1] See https://ift.tt/2OCWbDD
  • [2] See https://ift.tt/2ypv1VC


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Tuesday, May 26, 2020

A Reminder: No change of circumstances? No best interests of the child finding? No change of custody or parenting time..

Last summer, Eliana Baer and Eric Solotoff of our Family Law Department achieved an Appellate Division victory when a trial court’s decision to allow our client’s ex-husband to obtain a custody evaluation without the requisite finding that there had been a change of circumstances.  In that case, the Appellate Division took issue with the trial court’s choice to put the child through a taxing best interests evaluation because there are two elements that must be met before a change of custody or parenting time can occur:  1) a change of circumstances; and 2) a finding that the proposed change of custody or parenting time is in the best interests of the child.  The judge in that case had ordered an inquiry into the second factor vis a vis the best interests evaluation, but had expressly found that there was no change of circumstances warranting a modification.  Without a change of circumstances finding, there should not have been such an inquiry.

A recent unpublished (non-precedential) decision, CSS v. ATE, serves as a reminder that both of these findings must be made before a change of custody and/or parenting time can occur.  In this case, the father claimed to have suffered a physical injury that would prevent him from working, making him available for more parenting time. The father did not present any information about how long his injury would keep him from working or how he might handle recovering from this injury while increasing his childcare responsibilities.  The Court made no findings whatsoever with regard to whether or not the proposed change in the parenting time schedule was in the best interests of the child.  Nevertheless, the trial court increased the father’s parenting time.

The mother appealed.  The Appellate Division found that:

A.T.E. introduced no evidence of changed circumstances other than his testimony that he will have more time off from work while recuperating from an injury.  This alone is insufficient to constitute a change in circumstances.  In addition, the court did not undertake an analysis of the child’s best interests.  No testimony or other evidence was elicited with respect to how a change in custody and parenting would affect the child.

On this basis, the Appellate Division reversed the trial court’s decision.  In doing so, it reminded us that “Custody orders are subject to revision based on the changed circumstances standard,” citing Eaton v. Grau, 368 N.J. Super. 215, 222 (App. Div. 2004).

Modification of an existing child custody order is a “two-step process.”  R.K. v. F.K., 437 N.J. Super. 58, 62 (App. Div. 2014 (quoting Crews v. Crews, 164 N.J. 11, 28 (2000)).  First, a party must show “a change of circumstances warranting modification” of custodial arrangements.  Id. at 63 (quoting Beck v. Beck, 86 N.J. 480, 496 n.8 (1981)).  If the party makes that showing, the party is “‘entitled to a plenary hearing as to disputed material facts regarding the child’s best interests, and whether those best interests are served by modification of the existing custody order.'”  Id. at 62-63 (citation omitted).  Costa v. Costa, 440 N.J. Super. 1, 4 (App. Div. 2015)

These standards are in place because it shouldn’t be easy to disrupt a child routine, lifestyle, and household – and it isn’t.  At least not when the proper benchmarks for modification of custody and parenting time are followed.


headshot_diamond_jessicaJessica C. Diamond is an attorney 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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Friday, May 22, 2020

Second Update: New Jersey Small Business Assistance Grant

As previously posted in our May 16th alert, the New Jersey Economic Development Authority (“NJEDA”) announced an additional $50 million from the federal government to replenish the New Jersey Small Business Assistance Grant program that was established to help those small businesses impacted by COVID-19.

On May 22, the NJEDA board voted to expand the program to provide grants up to $10,000 to qualified businesses and expand eligibility requirements. Additionally, the NJEDA voted to reserve $15 million for businesses in Opportunity Zones.

The NJEDA will reserve $5 million to fund those businesses that were waitlisted from the first round of the program back in April. Applicants from the first round are encouraged to apply for this second round of funding as well.

Eligibility changes:

  1. Increasing the employee cap for business from 10 full time employees to 25 full time employees;
  2. Home-based businesses and sole proprietorships are now eligible to receive the grants; and
  3. Elimination of NAICCScode restrictions, that will make nearly all small businesses eligible.

Application Requirements:

The applicant must certify that:

  1. The applicant was in operation on February 15, 2020;
  2. The applicant business has been negatively impacted by COVID-19; and
  3. The applicant will make best efforts not to furlough or layoff employees.

Applicant will also be required to fill out an affidavit identifying all other previous COVID-19 related funding.

The NJEDA is expected to release the application for the grant program soon. Please check back for more updates.



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Radburn Law Regulations

Effective May 18, 2020, proposed regulations to PREDFDA were adopted and published by the New Jersey Department of Community Affairs, Division of Codes and Standards (DCA).

A Brief History

In July 2017, several amendments to PREDFDA (N.J.S.A.45:22A-43) were signed into law becoming known as the “Radburn Election Law” (P.L.2017, c. 106). These amendments broadly focus on membership voting rights, elections, and by-law amendments. In June 2019, proposed regulations to the Radburn Law were introduced and the public was given a period of time to comment on the proposed regulations. While comments were mixed, there was strong opposition to many of the provisions. The regulations have now been approved and published.

How This Impacts Associations

While the provisions of the Radburn Regulations are substantial, following are the provisions which are most significant and/or most relevant to the majority of community associations:

  • Counting Ballots. All ballot tallying shall occur publicly. [5:26-8.9(h)]. Instead of sending judges off to a side room to count ballots while the annual meeting continues, the counting will have to be done publicly. Boards should talk to legal counsel about policies for coordinating annual meeting business with counting of ballots (or separating them) and to prevent interference with judges doing the counting. This could lead to some very late nights.
  • Inspection of Ballots. Ballots shall be open to inspection by any member of the association for a period of 90 days from the date of the election. [5:26-8.9(h)]. Associations should talk to legal counsel about policies for maintaining and inspection of election materials including electronic materials.
  • Anonymous Voting Required. All ballots shall be cast in an anonymous manner. If the bylaws permit, and the association member consents, a ballot may be cast electronically if it is administered by a neutral third party and anonymity is maintained. [5:26-8.9(h)]. Boards should implement a system that allows for confirmation of member voting which preserves the anonymity of the vote. Most likely this means a double envelope system. Even votes cast electronically must maintain anonymity.
  • Write In Candidates. The ballot shall include space for write-in candidates for as many seats as are up for election. In the event a write-in candidate receives sufficient votes to be elected but is not eligible, such candidate shall not be deemed to have been elected. If this results in a vacancy on the board, the eligible candidate receiving the next highest number of votes shall be deemed to have been elected. [5:26-8.9(k)(l)] Associations with double ballot procedures – where a run-off election is required if there are more than twice the number of candidates as seats – should anticipate increased delays and costs associated with this requirement.
  • Sample Meeting Ballot Must be Provided with Notice of Meeting. The election meeting notice shall contain a copy of the ballot. [5:26-8.9(l)] In addition to an absentee ballot and proxy, associations will now have to include a meeting ballot marked “Sample” with the notice of meeting. Showing great optimism in its Response to Public Comment, the DCA stated that “because each document would be clearly labeled, it should not be difficult for association members to differentiate among proxies, absentee ballots, and a sample of the in-person ballot.”
  • Notice of Good Standing Before Member Meeting. A minimum of 30 days prior to the election, the association shall notify residents who are not in good standing. Such notice shall state the reason why the resident is not in good standing. The notice shall state that residents have the right to contest the board’s determination by requesting Alternative Dispute Resolution. Residents shall be allowed to rectify their standing up until five business days prior to the election date. [5:26-8.9(l)] Associations must work with legal counsel to ensure that these notices are appropriate under applicable law based on the status of the collection matter (especially those in collection with the attorney).
  • Board Representation by Affordable Owners. When affordable units, in accordance with the New Jersey Fair Housing Act, N.J.S.A. 52:27D-304, represent a minority of units in the development, the bylaws shall reserve a seat or seats on the executive board for election by owners of affordable units. [5:26-8.10(a)] It is unclear how the DCA will interpret this provision and communities should consult with their attorneys for further discussion. It will certainly add confusion to the election process for these communities.
  • Board Voting Procedure. The board shall provide a brief explanation of the basis for and cost entailed in the matter that is the subject of any binding vote and include the explanation in the minutes for the meeting. [5:26-8.12(a) This requirement will change how many boards approve agenda items. Keep in mind that the explanation should be brief and may need to be reviewed by legal counsel before finalizing the minutes.
  • Notice of Board Meetings. [5:26.12(b)(c)(g)(h)] There are many changes to these provisions which must be carefully reviewed by boards and managers. Adequate notice has been increased from at least 48 hours to 7 days (with exceptions for emergent meetings). The manner of giving notice has changed as well. In addition to posting the open meeting schedule for the year, adequate notice of each noticed meeting must be given. No longer are associations required to send notice of open board meetings to two publications: The notice shall be prominently posted in at least one place on the property that is accessible to all owners at all times; ii. The notice shall be posted on the association’s website and included in any association newsletter; or iii. The notice shall be personally provided to each member or designee by mail, hand-delivery, or electronic means. The notice shall be filed with the board member designated as responsible for administering association business. It shall be maintained by the executive board for a period of two years.
  • Voting at Closed Board Meeting. A vote taken at a closed meeting shall not be binding. If the matter requires a binding vote, it shall be taken at a subsequent open meeting in a manner that does not disclose any confidences. If the closed meeting is to be part of an open meeting, the closed portion shall be convened either before the open portion or at the end of the open meeting portion of the agenda.[5:26-8.12(e)] As an example, if the board agrees at a closed meeting to terminate the building superintendent, it would make that binding vote in the open meeting in some vague way that does not “disclose any confidences”. What could go wrong? Boards approving confidential matters – including assessment collection – should discuss appropriate language for these votes (and the minutes) with legal counsel in advance.
  • Recording Meetings. If a meeting is recorded electronically, a written record shall be taken of the matters addressed and the matters voted on. Association members shall have access to the electronic recording, as well as the written record, including the right to make a copy of electronic or written records. [5:26-8.12(f)] Most attorneys advise against recording meetings but boards and managers continue to do so. Those who do must be aware of this provision and consult with legal counsel about existing policies to destroy such recordings after approval of the minutes.
  • Fines for Noncompliance. [5:26-8.14(e)] The regulations state that the DCA may levy and collect fines against associations and board members. While the DCA advises that it will exercise restraint in levying fines and will only levy them against those who refuse to comply, all boards must be concerned about this authority.

Where Do We Go from Here?

Again, these are just some of the more relevant and/or surprising provisions of which most community associations must be aware. Some of the DCA interpretations are unclear and others may be impermissible regulations and subject to challenge. There are many more provisions which may impact your association. Board members and managers should consult with legal counsel to ensure they are noticing and running meetings in accordance with these new Radburn Law regulations.

The Radburn Regulations, with comments, can be viewed here.

The Community Association team at Stark & Stark will continue to monitor the impact of these newly adopted regulations on associations and keep you posted on any developments. If you have any questions on how this affects your scheduled board elections, please contact Chris Florio, Esquire at cflorio@stark-stark.com or 609-895-7335 or Mary Barrett, Esq., at mbarrett@stark-stark.com, or 609-219-7408.



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For Custody Jurisdiction, The Facts, Not Agreements, Matter More

In Orr v. Johnson, an unpublished decision (meaning not precedential), the Appellate Division reviewed a jurisdictional issue between two parents – one living in New Jersey and one living in Virginia – and whether the written agreement between them was conclusive of jurisdiction under the Uniform Child Custody Jurisdiction Enforcement Act (“UCCJEA”).  Because the trial court did not determine whether New Jersey was the “home state” under the UCCJEA, the Appellate Division reversed and remanded the matter.  An agreement alone is not determinative of jurisdiction under the UCCJEA.

In this case, the parties entered a Custody and Parenting Time Agreement in February 2018, which designated the father as the parent of primary residence and the mother as the parent of alternate residence, with both parties sharing joint legal custody.  The agreement also provided that “jurisdiction shall lie in the State of New Jersey” with the mother’s parenting time to be “arranged and agreed upon by both parties.”

The parties engaged in significant litigation starting in April 2018, when the father filed an emergent ex-parte application with the court, stating the mother had not returned the parties’ son after the mother’s parenting time ended eleven days prior.  In father’s application, he requested the court enforce the parties’ Custody and Parenting Time Agreement and order the mother to return their son back to New Jersey.  On April 11, 2018, the court granted father’s relief that he had primary residential custody of the child and ordered the mother to bring the child back immediately.  The court set a return date for April 18, 2018.  The mother argued that because the child was born in Virginia, received his immunizations in Virginia, was enrolled in daycare in Virginia and resided in Virginia, Virginia was the home state and not New Jersey.  She also argued that paternity was never established and the reason the parties entered in the Custody and Parenting Time Agreement was so the child’s father could “cancel a year-long care contract.”   On April 18, 2018, the court determined that New Jersey had jurisdiction and awarded the father “temporary sole, legal and physical custody.”  A paternity test was also ordered and the mother was ordered to return the child to the father.  The parties were to return for a subsequent hearing in May 2018.

In the interim, the mother filed a motion requesting to modify the court’s April 18, 2018 order and also filed an emergent application, declaring Virginia had jurisdiction and returning the parties’ son to her.  There, the mother claimed that she was forced to the sign the Custody and Parenting Time Agreement and that the father was emotionally abusive.  The mother claimed the child had spent 263 nights in Virginia as opposed to only 100 nights in New Jersey.  The mother also attempted to file a stay pending an appeal and file an application in Virginia.  The court denied the emergent application, finding that her requests could await the May 30, 2018 hearing.

On May 30, 2018, before a different Family Part judge, the court entered a paternity order between the father and the parties’ child with parenting time with the mother.  The court assumed that the prior judge based jurisdiction upon the parties’ Custody and Parenting Time Agreement.  Specifically, the court stated that whether the mother believed there was a “jurisdictional dispute”, she submitted voluntarily to New Jersey.  The court determined that the April 18, 2018 Order to be a “final order” under the UCCJEA and therefore, New Jersey had continuing and exclusive jurisdiction of the child.  The parties also attended another hearing in September 2018, where the parties were ordered to attend custody and parenting time mediation.

The mother, once again, filed an application in October 2018, seeking to modify the April 11, 2018 and April 18, 2018 Orders, to change custody, relocate to Virginia, and that New Jersey should relinquish jurisdiction as the “Agreement was not determinative of the court’s subject matter jurisdiction.”  Father opposed the application and the court heard the applications in January 2019 before a third Family Part judge.  The court found that based upon the May 30, 2018 order, the court found the child had spent significant time in New Jersey and the Agreement stated that New Jersey was the child’s home state.  The court also found that the first judge entered an order relating to custody based upon the parties’ agreement, which was neither appealed nor was relief from the order sought.  The court ordered that the parties would have joint legal and residential custody of the child and alternate parenting time month to month.

In a subsequent order, the court clarified that the parties’ agreement was being enforced and the father was deemed the “primary residential custodian of the child.”  The court found the agreement was unambiguous, that the parties voluntarily entered into the agreement, and did not find the mother’s arguments that she was coerced credible.  The mother subjected herself to the jurisdiction by raising the paternity issue, and the mother should have known an action could have been instated in New Jersey given the language of the agreement.  Under the UCCJEA, the court found that the child had not lived with either parent for six months consecutively before the New Jersey action was commenced.  Additionally, the court found that while either New Jersey or Virginia could have been deemed the child’s “home state”, based upon the intent of the parties in entering the agreement, New Jersey was the “home state” for jurisdiction.

The purpose of the UCCJEA is to avoid jurisdictional disputes in favor of cooperation between the states.  There are two parts of the UCCJEA: an initial custody determination (the first custody order) and a modification of a custody determination (any determination made subsequent to the first custody order).  Here, the issue was whether New Jersey made an initial custody determination order and providing New Jersey with subject matter jurisdiction.

To determine whether a state can make an initial custody determination, the court must evaluate what is the “home state” of the child.  A child’s “home state” is the “state in which a child lived with a parent or a person acting as a parent for at least six consecutive months immediately before the commencement of a child custody proceeding” – this also includes a temporary absence from the state.  Once a state who has jurisdiction to make an initial custody determination enters an order, that state has continuing and exclusive jurisdiction over the matter.  However, if there is no home state, New Jersey may exercise jurisdiction if: “no other court has home-state jurisdiction, or a court with home-state jurisdiction declines to exercise it,” and two other factors are present:

(a) the child and the child’s parents, or the child and at least one parent or a person acting as a parent have a significant connection with the State other than mere physical presence; and

(b) substantial evidence is available in this State concerning the child’s care, protection, training and personal relationships.

N.J.S.A. 2A:34-65(a)(2).  Here, the trial court did not make a determination of whether New Jersey was the home state for the child.  Rather, the trial court found that either New Jersey or Virginia could be the child’s home state.  The trial court therefore relied upon the agreement between the parties to determine jurisdiction, because either state could have been the home state.

The Appellate Division found that the trial court erred in relying upon the agreement as a basis for jurisdiction.  An agreement determining jurisdiction is only a factor if a court is deciding whether to decline jurisdiction as an inconvenient forum.  The trial court could have determined New Jersey had jurisdiction based upon the significant connection and substantial evidence tests as outlined under  N.J.S.A. 2A:34-65(a)(2).  The Appellate Court reversed the May 30, 2018 Order and remanded for a hearing as to whether there was a significant connection to either New Jersey or Virginia and whether there is substantial evidence relating to the child’s care, protection, training and personal relationships in Virginia or New Jersey.

If you are experiencing a multi-state custody, or other family-related, issue Fox Rothschild has the benefit of offices throughout the country to assist in your multi-jurisdictional dispute.  We can garner the experience of these attorneys to provide you with the knowledge and support in such complex matters.  We can assist you in evaluating these jurisdictional issues prior to commencing an application and drafting an agreement relating to the care and custody of your child.

 


Sofia M. Ucles, Associate, Fox Rothschild LLP   Sofia M. Ucles is an attorney in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Sofia at (973) 548.3349 or SUcles@foxrothschild.com



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Thursday, May 21, 2020

The Labeling Paradox: Navigating Between Hemp, Hemp Extract, and CBD Products

Even though the Food and Drug Administration (“FDA”) has come out against the sale of CBD-infused foods and dietary supplements, a cursory search for “CBD” on Amazon reveals a plethora of hemp extract and hemp oil products, including gummies, tinctures, creams, and capsules. Because of the FDA’s prohibition on the sale of CBD-infused foods and beverages and the recent shift in federal law to legalize hemp and hemp products, manufacturers and marketers alike have latched on to the buzzwords “hemp” and “hemp extract” to sell CBD products. But, from a consumer’s perspective, what is the difference between a 1000mg, 50,000mg, and a 400,000mg product? Most likely, not a whole lot.

Hemp-food products (like milk and oil) have been sold in grocery stores for decades. These products are typically made from the seeds of the hemp plant, contain no CBD or THC, and therefore, are specifically excluded from the definition of “marijuana,” which remains a prohibited Schedule 1 drug. While “hemp” is a plant, with seeds, stems, and flowers, “CBD” is a specific compound derived from hemp flower.

The explosion of the CBD industry and lack of clarity/inconsistent regulatory framework has resulted in misleading and mislabeled products dominating the space. For example, Amazon maintains that CBD products are banned from being sold on its marketplace; however, one can find and purchase thousands of “hemp extract” or “hemp oil” products.

Consumers equate “hemp extract” and “hemp oil” with CBD, but do not realize these products are made from hemp seed oil, not from hemp flower, and as such contain virtually zero CBD or any other therapeutic cannabinoid compound.

The FDA and DEA have perpetuated this misconception by motivating authentic CBD manufactures to use vague/gray-area terms like “hemp extract” or “hemp oil” in order to avoid enforcement actions. And while consumers can find authentic CBD products labeled as “hemp extract” or “hemp derived,” consumers would need to look and understand the ingredients listed and the claimed dosage amounts.

There are tens of thousands of CBD and hemp brands operating across the US. While many are trying to play by the rules and release quality products with clear, transparent labels, there are many who are content misleading customers regarding the nature and contents of their products in order to make a profit. The proliferation of the CBD wholesale market (extractors, bio-mass dealers, white-labelers, etc.) means that more often than not there are a dozen plus individuals and organizations in the supply-chain between the cultivated hemp and the end consumer. Naturally, this creates opportunities for abuse and deception: many well-intended retailers and brands think they are selling a high quality, CBD-rich product, but the capsules and vials they sling are likely filled with nothing more than hemp-flavored olive oil.

As for best practices, consumers should look for Certificates of Authenticity and ask for lab reports in order to be confident in the products they are buying. Do not be fooled by claims of high potency (500,000 mg, etc.), but rather pay attention to the list of ingredients and look for information pertaining to the nature, quality, and source of the hemp used.

This blog was co-authored with Jacob Sky, Co-Founder of Sky & Wyatt, a hemp and CBD tea company operating out of Boulder, Colorado. Jacob holds degrees in Public Policy and Behavioral Psychology from Harvard University.



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The Modern Family Now Falls Under The Scope Of The Domestic Violence Act In New Jersey

The issue in the published trial court decision, S.C. v. J.D., reviewed what is a “household member” under the Prevention of Domestic Violence Act (“PDVA”) pursuant to N.J.S.A. 2C:25-17 to -35.  The plaintiff, “Samantha”, filed a temporary restraining order against her half-sibling, “Jake”, alleging assault and terroristic threats.  The two share the same father.  Jake filed a motion to dismiss, arguing that jurisdiction had not been established under the PDVA.  Jake claimed that his “sporadic relationship” of sharing weekends, holidays, and an occasional family vacation was insufficient to establish jurisdiction.  The trial court set a hearing to determine jurisdiction in March 2019.

Jake’s parents were divorced and established a custodial arrangement for Jake under a marital settlement agreement (“MSA”).  Under the MSA, Jake’s mother had “custody” of Jake, but Jake’s father had “free and liberal visitation . . . as often as possible.”  Jake’s mother obtained a final restraining order against Jake’s father, wherein Samantha’s mother would supervise Jake and his father’s parenting time.  Samantha’s mother was also designated as Jake’s driver during parenting time with his father.  Until college, Samantha lived with her mother and father.  Jake and Samantha would spend time together with their father, Samantha’s mother, and Samantha’s brother consistently during the school year and summer breaks.  While Jake attended a different school district than Samantha, the two had a meaningful and “substantially integrated sibling relationship . . . not dissimilar from siblings in a singular household.”  Jake was not a mere sporadic visitor, but a part of the family.

The PDVA is meant to assure “victims of domestic violence the maximum protection from abuse the law can provide.”  N.J.S.A. 2C:25-18.  The law is meant to be read liberally, but “[t]he PDVA specifies jurisdictional relationships that must exist.”  The PDVA defines a “victim of domestic violence” as “any person who is 18 years or older . . . who has been subjected to domestic violence by . . . any other person who is a present household member or was at any time a household member.”  N.J.S.A. 2C:25-19(d) (emphasis added).

The PDVA was amended in 2015 to include prior household members.  The analysis shifted from the amount of time that passed since the parties shared a household to whether the current conflict arose from the parties’ prior domestic relationship.  See N.G. v. J.P., 426 N.J. Super. 398, 411 (App. Div. 2012).  Even prior to the 2015 amendment, the term “household member” had been construed liberally.  See e.g., S.P. v. Newark Police Dep’t, 428 N.J. Super. 210 (App. Div. 2012) (boarders in a rooming house who shared bathroom, kitchen, and communal appliances); S.Z. v. M.C., 417 N.J. Super. 622 (App. Div. 2011) (unrelated tenant); Hamilton v. Ali, 350 N.J. Super. 479 (Ch. Div. 2001) (college suitemates).

Judge Aquaviva found that the facts give rise to the notion of a modern family.  The fact that Jake’s primary residence was at his mother’s and his alternate residence was at his and Samantha’s father, does not mean Jake cannot be a part of two households under the PDVA.  Jake spent meaningful and significant parenting time with Samantha and their father as a family under one household.  To state that Jake is not a member of Samantha’s “household” would undermine the purpose of the PDVA and the public policy of assuring minor children of “frequent and continuing contact with both parents after the parents have separated or dissolved their marriage”.  N.J.S.A. 9:2-4.  Under Jake’s argument, a child of separated or divorced parents could only file a restraining order against one set of step-siblings, but not the other if he only has one “household” under the PDVA.  Therefore, the Appellate Court found that the PDVA must be extended to include “modern, blended households.”  Jurisdiction had been established and the trial court could resume the final restraining order hearing.


Sofia M. Ucles, Associate, Fox Rothschild LLP   Sofia M. Ucles is an attorney in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Sofia at (973) 548.3349 or SUcles@foxrothschild.com

 



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Wednesday, May 20, 2020

Third Circuit Rules Class Action Wage Claim Should be Arbitrated Under Franchise Agreement

In a recent opinion, the Third Circuit ruled that an arbitrator, not a state or federal judge, should decide claims raised by workers alleging that they were mischaracterized as “independent contractors” in violation of the New Jersey Wage Payment Law (“WPL”), N.J.S.A. § 34:11-4.1 et seq.

By way of background, Defendant, Coverall North America Inc. (“CNA”) is an entity that sells commercial cleaning services. It operates a franchise business system through geographically designated territories. Defendant, Sujol, LLC is a master franchisee that owns one of these territories and has the right to sell franchises using CNA’s trademarks and operating system. Sujol entered into separate agreements with plaintiffs, Richardson and Silva to operate cleaning businesses.

In 2017, plaintiffs filed a putative class action suit in the Superior Court of New Jersey, alleging that their relationship with Sujol violated the WPL. Plaintiffs alleged that they were misclassified as independent contractors, improperly charged for jobs, and unlawful deductions were taken from their wages. CNA and Sujol removed the matter to the District Court of New Jersey and then moved under Section 3 of the Federal Arbitration Act to stay the proceedings in favor of arbitration.

The Third Circuit partially reversed a district court decision, which allowed some claims to proceed in court and sending other claims to an arbitrator to resolve arbitrability issues. The Court applied a two-step process to evaluate the arbitration clause in the agreements: a) whether there is a valid agreement to arbitrate; and b) whether that agreement covers the dispute at issue.

The Court ruled in favor of defendants’ position. Incorporation of the American Arbitration Association (“AAA”) rules in Silva’s arbitration clause “constitutes clear and unmistakable evidence that the parties agreed to delegate arbitrability.” Silva’s agreement states “all controversies, disputes or claims between Coverall . . . and Franchisee . . . shall be submitted promptly for arbitration” and that “[a]rbitration shall be subject to . . . the then current Rules of the [AAA] for Commercial Arbitration.”

The court rejected plaintiffs’ argument that relying on incorporated rules is unreasonable in agreements involving “unsophisticated parties.” Adopting that argument would amount to disregarding the “clear and unmistakable” standard the court was required to follow. As a result, the Third Circuit reversed and remanded this issue to the District Court.

As for plaintiff, Richardson, the court reversed and remanded the District Court’s finding that CNA, as a third party beneficiary of the agreement between Sujol and Richardson, could not enforce the underlying arbitration clause. The court noted that some of the issues concerning Richardson were raised for the first time on appeal and others only arose before the District Court in a cursory manner. The District Court was in the best position to decide these issues in the first instance.

This decision represents a victory for parties to a franchise agreement, who seek to enforce their right to privately arbitrate disputes instead of engaging in state or federal court litigation.



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Tuesday, May 19, 2020

PPP Loan Forgiveness Application Released

The Small Business Administration (SBA) recently published the borrower application to request loan forgiveness for a Paycheck Protection Program loan (PPP Loan). The form and instructions inform Borrowers how to apply for forgiveness of their PPP Loans, consistent with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Borrowers can apply for forgiveness at the conclusion of the eight-week covered period, which begins with the disbursement of their loans. Borrowers can find the PPP loan forgiveness application here and submit it to their Lender.

The SBA is expected to issue regulations and guidance to further assist Borrowers as they complete their applications, and to provide Lenders with guidance on their responsibilities. For now, the application provides Borrowers with expectations on how to calculate their PPP Loan forgiveness amount. Below are a few highlights from the application:

  • Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
  • PPP loan forgiveness is calculated from Borrower’s use of the loan during the Covered Period. The Covered Period is the 8-week period starting the PPP Loan Disbursement Date, which is the date the Borrower received the loan proceeds from the Lender.
    • For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”). For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20. Borrowers who elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.” However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this application to “the Covered Period” only.
  • Borrowers must disclose if they have received a PPP Loan in excess of $2 million. As noted in earlier guidance, the SBA will conduct an audit of Borrowers who received a PPP Loan in excess of $2 million to ensure the Borrower in good faith made the certification that “[c]urrent economic uncertainty makes th[e] loan request necessary to support the ongoing operations of the Applicant . . . . taking into account [the Borrower’s] current business activity and ability to access other sources of liquidity sufficient to support [the Borrower’s] ongoing operations in a manner that is not significantly detrimental to the business.”
  • Borrowers must certify that:
    • The amount of forgiveness sought was used to pay eligible payroll costs and eligible nonpayroll costs (including, business mortgage interest payments; business rent or lease payments; or business utility payments) and only 25% of the amount requested was used for nonpayroll costs;
    • That the amount requested does not exceed eight weeks’ worth of 2019 compensation for an owner-employee or self-employed individual/general partner, capped at $15,385 per individual;
    • That the amount requested includes applicable reductions due to decreases in the number of full-time equivalent employees (FTE) and salary/wage reductions.
  • Full-time equivalent refers to employees working at least 40 hours or a group of employees accumulating 40 hours. The guidance creates a simplified method to accumulate FTEs: each employee working at least 40 hours shall be counted as 1 FTE, and those working under 40 hours counted as 0.5 FTE.
  • The application provides a safe harbor for FTE employee reduction: Specifically, the Borrower is exempt from the reduction in loan forgiveness based on FTE if both of the following conditions are met: (1) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and (2) the Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.
    • Borrowers should note that the SBA added an additional exemption to a reduction in FTE employees to Borrowers who have made a good-faith, written offer to rehire workers that was declined.
  • The application requires a Borrower to submit detailed documentation to support their loan forgiveness application and requires retention of that documentation for six years from when the loan is forgiven or repaid in full.

Borrowers should review the application carefully and contact their attorney or accountant for review before submitting it to their Lender.



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Saturday, May 16, 2020

Update: New Jersey Small Business Assistance Grant

The New Jersey Economic Development Authority (“NJEDA”) launched the New Jersey Small Business Assistance Grant program wherein the NJEDA allocated $5 million to the program to provide grants up to $5,000 to small businesses in retail, arts, entertainment, recreation, accommodation, food service, and other services — such as repair, maintenance, personal, and laundry services — and nonprofits to stabilize their operations and reduce the need for layoffs or furloughs during the COVID-19 pandemic. You can see our original post regarding the program here.

Unfortunately, the program ran out of funds within hours of opening the application portal. However, on May 15th, 2020, Governor Murphy announced an additional $50 million from the federal government is expected to replenish the program to help those small businesses impacted by COVID-19.

More details are to come, but it is expected that the backlog of applicants that applied in the first wave will receive the first bite of the additional funds. The NJEDA is also expected to broaden the eligibility requirements of the New Jersey Small Business Assistance Grant program.

We will continue to provide you with updates as we learn more.



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Thursday, May 14, 2020

Construction Contracts During a Pandemic

In the current economic climate, due to the pandemic that has enveloped our nation, a contractor needs to make certain that the contractual terms of a construction contract properly address the issues which they might face during this highly unusual situation.

Hopefully the economy and our way life return to normal sooner, rather than later, however, there is much uncertainty at this time. That is why it is important that a contractor pay close attention to the clauses of a proposed construction agreement and make appropriate revisions, if necessary, to protect their company.

While most contracts have force majeure provisions, a review of these provisions often reveals that they do not encompass situations like the pandemic that is occurring. As such, it is suggested that unambiguous language be inserted which qualifies the pandemic as a force majeure event. In the absence of such a revision, a party to the contract could be held accountable for delay in completing the contract, which might subject them to liquidated damages or other penalties provided for under the agreement.

It is also important when setting the construction schedule that close attention is paid to excusable delay outside of the control of the contractor. Obviously, the easiest delay to address is when the state has shut down all construction activities – with the exception of emergency construction activities. On the other hand, the contractor must be aware that there is likely to be significant delay in permitting and inspections once construction resumes. A large number of projects starting up at the same time will likely overwhelm the state or local officials. As such, the contractor should be careful to ensure that the contract provides an appropriate allowance for such delay which is not its fault, nor within its control due to the current situation. This allowance should carry over and result in an amendment to the scheduled completion date in order to avoid any liquidated damages or other damages.

Finally, and perhaps most importantly, the contractor should pay close attention to the financial viability of any company or entity for whom it is performing construction services, either during or after the pandemic. As a contractor, you cannot let the owner get out in front of you, or it may become difficult to collect payment. Further, the tighter control that a contractor maintains over its receivables, the more likely the project is to be profitable when nearing completion. This is especially important during or after this pandemic, as an owner’s finances are likely to be stretched thin and financing could be pulled by a bank while the project is still in process.

This article cites only some of the concerns that a contractor may experience during or after the current pandemic. It is suggested that if the contractor has concerns that they review the appropriate contractual language with their counsel prior to entering into such agreement. Further, if issues arise during the performance of the contract, those issues should be addressed immediately, rather than later, to prevent the project from turning sour.



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Divorce in NJ During COVID-19: Think Collaboratively

Recent weeks have caused us all to endure changes and challenges. This is particularly true in states like New Jersey, which is among the hardest hit states by the COVID-19 Pandemic. Those who no longer wish to be with their spouse or partner are faced with unique challenges.

We all find ourselves in the “new normal” of social distancing, mandatory “shelter in place” orders, working remotely, or newly unemployed. Spouses who find themselves working remotely or recently unemployed may find that staying together in the same residence 24 hours a day for weeks may accelerate or emphasize any issues present in a marriage.

What is one to do if they realize that they no longer wish to remain married to their partner? This is a good question, since the Family Courts in New Jersey are all operating remotely for the time being, and are largely hearing only truly emergent matters via telephone conferences or Zoom.

There is an alternative to traditional divorce litigation that is perfectly suited for the present circumstances: Collaborative Divorce. Collaborative Divorce is a more civil and amicable approach than traditional divorce litigation, and is usually a less expensive option. It is a “team” approach, with the parties gathering a group of professionals to assist them in the break up or divorce rather than having the “battle of the experts,” which often happens in traditional divorce litigation.

In a Collaborative Divorce, both parties hire family law attorneys that have been specifically trained in Collaborative Divorce. Collaborative Divorces may also involve non-party participants who are not attorneys, which are experts in their fields. These individuals may provide helpful insight on different topics. These types of experts include:

  • Divorce Coach
  • Financial Neutral
  • Mortgage Expert

After Collaborative Attorneys are hired, they will usually choose a Divorce Coach, who is a mental health professional, to join the parties’ team of professionals to help them navigate through the process. Typically, both parties meet with the Divorce Coach (either separately or together) prior to the first Collaborative meeting to give the divorce coach some information as to their family dynamic and background. This helps the Divorce Coach recognize any potential issues during the Collaborative meetings. Under more usual circumstances, these meetings too would be in person, but are now being performed virtually.

After the parties meet with the Divorce Coach, the first Collaborative Team meeting is scheduled. At that meeting, the parties review and sign a written Participation Agreement in which the parties agree not to go to Court to reach a resolution of the issues in their divorce. Instead of going to Court, the parties and their Collaborative Attorneys, as well as any other professionals deemed necessary, meet at a series of meetings with the goal of resolving all of the issues in their case. These meetings are typically in-person meetings, but can easily be done via virtual meeting platforms such as Zoom or Microsoft Teams. Once an agreement is reached, the attorneys simply apply to the Court for the actual dissolution of marriage.

There is an additional benefit to the Collaborative Law, too: the parties retain control over the timing of the process. In other words, the parties—not the Court—decide when the next meetings will be scheduled; therefore, they set the pace of their Collaborative Divorce.

In a time where virtually all litigated cases are at a standstill, Collaborative Divorce is an ideal option for parties that wish to resolve their differences and ensure their divorce is proceeding during the time when the Courts are only handling emergent matters, or will be backlogged after they re-open.

If you are considering a divorce, but are concerned about the timeline of same due to the COVID-19 pandemic, you should consider a Collaborative Divorce. We have a team of Collaboratively trained attorneys within our Family Law Department who are available to consult with you.



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Alienating Your Kids from Their Other Parent May Cost Your Kids Big When it Comes to Child Support and College.

Here in New Jersey, divorced parents are generally obligated to contribute to the college education expenses for their un-emancipated children.  In virtually every marital settlement agreement where there are un-emancipated children (the agreement the parties to a divorce enter into in resolution of all of their financial and/or parenting time issues), there is some sort of agreement as to how college will be paid for.  Sometimes, it is very general and simply states that the parties’ respective contributions shall “abide the event,” and sometimes it is detailed and specific as to how much each party will contribute.  Virtually always, it should indicate that both parties will take part in the college selection process.

In a recent unpublished Appellate Division decision, Weinman v. Weinman, the trial Court declined to enforce an agreement that called for the parties to each contribute to their children’s college education expenses based on their financial circumstances at the time the children went to college.  In this case, the mother of the children had engaged in a years-long campaign of parental alienation, from the time of the divorce (when the children were infants) all the way through high school.  While claims of alienation are often disputed and can sometimes be hard to prove, in this situation the alienation was well-documented by not only the Father, but many professionals that had been enlisted by the Court over the years to try to help the family, to no avail.  The Court found that, sadly, the Mother’s alienation efforts were a success.  The children adamantly rejected any sort of meaningful relationship with their father, excluded him from their lives, ridiculed him and his new wife, and refused to spend time with him.  As to college specifically, they chose not to involve him in their college selection decisions and rebuffed his advice and other attempts to be involved in the process.  The only knowledge he had about the college search were perfunctory e-mails from the Mother regarding what schools the children were applying to, and requests for payment for college testing and other related expenses.

The trial judge found that the children were “beyond the sphere of influence” of their father and, therefore, emancipated effective on their 18th birthdays, and terminated the Father’s child support obligation as of that date.  This, in and of itself, is an interesting issue.   Normally, in New Jersey, child support continues for the child while he or she is in college (though it is usually adjusted to account for college costs).  Arguably, even if the Court did not require the Father to pay for college, it could have continued child support.  The law is well settled that child support is a parent’s obligation regardless of the quality of the relationship.  That the judge made the finding that the children were over 18 years old and “beyond the sphere of influence” was critical to determining that they were actually emancipated and no longer entitled to support.

As to college, the judge did not enforce the parties’ agreement on this issue, a decision which the Appellate Division upheld.  Referencing the Moss v. Nedas case and the Ricci case that I previously wrote about on this blog, the Court found that circumstances had changed since the entry of the MSA which made it unfair to enforce.  Namely, the campaign of alienation and resulting rejection of the Father by the children made it inequitable to require the Father to contribute to the children’s college education expenses.  The Court then engaged in an analysis of the Newburgh v. Arrigo factors (I wrote about these on our blog here), the analysis the Court must engage in to determine when there is no prior agreement.  One of these factors is “the child’s relationship to the paying parent, including mutual affection and shared goals as well as responsiveness to parental advice and guidance.”

Given the findings of alienation and the many efforts the Father made to be involved in the college decision (including offering parental advice and being baldly rejected by the child), the Court found that the Newburgh factors did not merit the Father’s contribution to college.  While the Mother argued, on appeal, that the trial judge placed too much emphasis on this factor.  The Appellate Division disagreed, finding that emphasis on this factor was not an abuse of discretion – a ruling which suggests that this factor may be elevated in importance in such severe cases of parental alienation and rejection by the child.


headshot_diamond_jessicaJessica C. Diamond is an attorney 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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Wednesday, May 13, 2020

New Guidance Posted Regarding PPP Loan Certification

On April 23, 2020, the Small Business Administration (“SBA”) posted FAQ #31 concerning the Paycheck Protection Program (“PPP”), stating in relevant part that borrowers should review their application to assess their economic need for a PPP loan. Specifically, borrowers should determine if in good faith they can make the certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

The SBA stated that borrowers must make this certification in good faith, taking into account their current business activity, as well as their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.

Additionally, the SBA provided that borrowers that applied for a PPP loan and repaid the loan in full by May 7, 2020 will be deemed by the SBA to have made the required certification in good faith.

On May 6, 2020, the SBA extended the deadline to return the loans to May 14th, and promised to issue guidance concerning the borrower certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Below is a summary of the SBA’s guidance on the foregoing certification issued May 13, 2020:

  • Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. The SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.
  • Borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances. The SBA has previously stated in FAQ #39 that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by the SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If the SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request (including whether the borrower had access to adequate sources of liquidity), the SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from the SBA, the SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. The SBA’s determination concerning the certification regarding the necessity of the loan request will not affect the SBA’s loan guarantee.


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Appellate Division Clears Up the Alimony Statute Application for Early Retirement in Pre-Amendment Cases

The Appellate Division recently published a decision, Amzler v. Amzler, making it precedent setting on the use of the new alimony statute in a case of a payor’s early retirement, where parties entered into an alimony agreement prior to its enactment in September 2014.  While 2014 may feel like years ago because it was, its relatively recent in the life of law.  This means that we do not have much precedent-setting law on how to interpret each aspect of the statute.  Amzler gives us some new precedent for cases in which alimony was finalized prior to the updated statute and the obligor later seeks to terminate alimony based upon retirement prior to reaching his/her full retirement age.

Specifically, subsection (j) of the statute addresses retirement in three (3) subparts:

  1. The obligor’s rebuttable presumption for the termination of alimony when the obligor retires at full retirement age;
  2. The obligor’s burden of proof by a preponderance of the evidence to show that prospective or actual retirement is in good faith when the obligor seeks to retire before reaching full retirement age;
  3. Retirement applications filed in cases where the parties’ final alimony terms were entered prior to the updated statute.

In Amzler, the parties entered into their divorce agreement, complete with alimony terms, in 2009, which is prior to the updated alimony statute.   Plaintiff/obligor worked for PSE&G where he was required to go up and down descending ladders and use various hand tools.   The parties agreed that Plaintiff would pay Defendant permanent alimony in the amount of $21,600.28 per year,  based on Plaintiff’s income of $110,000 and Defendant’s imputed income of $35,000.  They also included a provision that prohibited modifications to alimony in the event of “1) [t]he voluntary reduction in income of either party; 2) [a]ny voluntary increase or decrease in each party’s cost of living; [and] 3) [t]he dissipation of the assets received by either party as and for equitable distribution.”  This is known as an Anti-Lepis provision because Lepis is the case that allows for alimony modifications in the event of changed circumstances and this provision prohibits such modifications in certain circumstances, which you can read about in a prior blog post.

Plaintiff retired in  2017 at age 59 due to medical problems that prevented him from being able to perform his job duties(i.e.: he could not continue to perform the physical work of going up/down the ladder and the like).  Plaintiff was entitled to his full PSE&G pension benefits at the time of his retirement and Defendant received her share per the equitable distribution agreement.  Plaintiff believed that he and Defendant would receive more money from the pension upon retirement as compared to applying for disability benefits.

Defendant filed to enforce the obligation and Plaintiff filed to terminate same based upon his retirement.  The court scheduled a plenary (evidentiary) hearing.  Plaintiff retained a vocational (employability) expert and met with a rheumatologist to prove his inability to work.  Both parties and Plaintiff’s vocational expert testified at trial.

While Plaintiff’s expert testified that he cannot work in his historical position given his medical issues, he could work as a security guard or autoparts delivery person to allow “freedom of movement” but his income would likely be lower and without benefits.  In response to the Court’s inquiries, the expert testified that Plaintiff would not qualify for a transfer at PSE&G.  However, Plaintiff did not actually apply for any such transfers.

Following the hearing, the Court terminated Plaintiff’s alimony obligation based on subsection (j)(2) as to early retirement rather than (j)(3) as to agreements entered prior to the updated alimony statute.  The Appellate Division reversed for this and other reasons.

In reversing the trial court’s decision, the Appellate Division cited back to Landers, which can be reviewed in our prior blog post.  Basically, the Appellate Divisions in Landers found that j(1) exclusively applies to alimony terms entered after the statute modification date (9/2014) based on the legislature’s intent even though such language is not explicitly found within j(1).    The Appellate Division applied the same logic here:

We now consider subsection (j)(2). Like subsection (j)(1), when read in isolation, subsection (j)(2) appears to apply regardless of whether the order or agreement creating an alimony obligation was established before or after the 2014 amendments.  However, when construed with the entirety of subsection (j), as in Landers, we conclude that the Legislature intended subsection (j)(2) to apply only to orders or agreements established after the 2014 amendments became effective. There is no sound basis to depart from our reasoning in Landers, as this construction conforms to the Legislature’s intent in enacting subsection (j).  Indeed, to hold otherwise would seriously undermine the ability of parties to rely on the otherwise binding agreements entered into under their MSAs based on the law in effect at the time of their entry. (internal citations omitted) (emphasis added).

Given that the Appellate Division clearly determined that the Court utilized the wrong section of the statute, it likewise determined that the Court did not review all relevant factors as now required by j(3).  Specifically, j(3) requires the Court to consider the ability of the Defendant/obligee to have saved adequately for retirement, which the Court did not have to do in its analysis under j(2).  While Plaintiff tried to argue that the Court already did so based on factor (j)(2)(g), which is Defendant’s financial independence,  the Appellate Division did not buy it.  The factors are different and require different review and findings.

The Appellate Division also found that the Court failed by not reviewing the Anti-Lepis position in terms of how it impacts the requested termination.  Specifically, either party’s voluntary reduction of income is not a change of circumstance warranting modification of alimony per the parties’ agreement.  Here, Plaintiff voluntarily retired at age 59.  He experienced medical issues that prevented him from continuing in his current position, but he could have possibly worked in another field in order to supplement his income, as testified by his own expert.  Thus, the Court needs to review whether the Anti-Lepis provision impacts the requested termination given the potential that Plaintiff’s retirement could be deemed a voluntary reductions of income.

If this case does not settle, it will be interesting to see if the trial court’s decision changes based upon the updated review under subsection j(3) and the Anti-Lepis provision.  While the subsections are alike in many ways, the key aspect the differentiates j(1) and j(2) as compared to j(3) is the  trial court’s obligation to review obligee’s ability to save for retirement, which the Appellate Division points out here.  Keep in mind that this does not mean whether they did save for retirement, but whether they had an ability to do so.  This is especially interesting in a case where virtually all of the obligee’s net worth stems from equitable distribution.  The updated alimony statute specifically states: “When a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the court shall not consider income generated thereafter by that share for purposes of determining alimony.”  Stay tuned…


Lindsay A. Heller is a partner 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.

Lindsay A. Heller, Associate, Fox Rothschild LLP



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