On January 10, 2018, the New Jersey Supreme Court decided a case involving the enforceability of mandatory arbitration agreements in consumer contracts. In Kernahan v. Home Warranty Administrator of Florida, the Court held that a mandatory arbitration agreement in a home warranty contract was unenforceable because it lacked mutual assent.
The consumer sued her home warranty administrator and the home warranty administrator moved to dismiss, citing the mandatory arbitration provision in the parties’ contract. The trial court denied that motion and held the arbitration provision was unenforceable. The Appellate Division affirmed the trial court. The New Jersey Supreme Court affirmed the Appellate Division and held that the agreement was too contradictory and confusing to create mutual assent. Continue reading “New Jersey Supreme Court Weighs in on Arbitration Clauses in Consumer Contracts”
On August 1, 2018, the New Jersey Supreme Court held that civil trial courts should look to the factors set forth in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), in assessing the reliability of expert testimony. The opinion—In re: Accutane Litigation—adopted the Daubert factors, but specifically stopped short of declaring New Jersey a “Daubert jurisdiction.”
In the early 1990s, the New Jersey Supreme Court shifted away from the “general acceptance” standard for testing the reliability of scientific expert testimony in civil cases enunciated in Frye v. United States, 293 F. 1013 (D.C. Cir. 1923). It instead endorsed a methodology-based approach. See Landrigan v. Celotex Corp., 127 N.J. 404, 414 (1992); Rubanick v. Witco Chem. Corp., 125 N.J. 421, 447 (1991). The Court reasoned that parties should be permitted to present novel scientific evidence of causation if the trial court acts as a rigorous gatekeeper when reviewing an expert’s reliability and ultimately finds that the expert’s reasoning and methodology are sound. Two years later, in Daubert, the United States Supreme Court also abandoned the “general acceptance” test in favor of a methodology-based approach that entrusted trial courts with the role of gatekeeper. Thus, beginning in the early 1990s, New Jersey state courts considered similar factors to those in Daubert when evaluating expert testimony. Despite these similarities, the New Jersey Supreme Court never formally adopted Daubert or endorsed the factors identified in Daubert for state trial courts to use when performing the gatekeeper role. Continue reading “New Jersey Supreme Court Holds That Daubert Factors Apply to Evaluating Expert Testimony in Civil Cases”
On July 19, 2018, the New Jersey Supreme Court, affirming both the trial court and Appellate Division, decided Serico v. Rothberg (A-69-16). In its decision denying Plaintiff’s attempt to recover her attorney’s fees and costs pursuant to New Jersey’s offer of judgment rule (R. 4:58, et seq.), the Supreme Court relied upon basic principles of contract interpretation and reminded all New Jersey lawyers and parties of the risks of relying upon silence and omission when later enforcing one’s rights.
The offer of judgment rule can be an effective tool to encourage settlement, primarily based on the threat that if the case does not settle, the party rejecting the offer may be forced to pay substantial attorney’s fees and costs. Rule 4:58 provides that if a party extends an offer of judgment which is not accepted and the party obtains a money judgment in an amount that is 120 percent or more of the offer, then the offeror would be entitled to seek their costs of the lawsuit, including attorney’s fees. R. 4:58-2(a). A high-low agreement, unlike the offer of judgment rule, does not encourage settlement, but instead limits parties’ risk at trial. As defined by Black’s Law Dictionary, a high-low agreement is “[a] settlement in which a defendant agrees to pay the plaintiff a minimum recovery in return for the plaintiff’s agreement to accept a maximum amount regardless of the outcome at trial.” Continue reading “New Jersey Offer of Judgment Rule: NJ Supreme Court Holds High-Low Agreement Supersedes Plaintiff’s Offer of Judgment”
The Third Circuit certified to the New Jersey Supreme Court two questions about the interplay between New Jersey’s furniture delivery regulations and the state’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA). In Spade v. Select Comfort Corp., — A.3d —, 2018 WL 1790394 (N.J. Apr. 16, 2018), the court answered. In so doing, it expanded the reach of TCCWNA, which is intended to “prevent deceptive practices in consumer contracts.” Id. at *7. The act prohibits merchants from offering and entering into written contracts with consumers that include “any provision that violates any clearly established right of a consumer or responsibility of a seller … as established by State or Federal law at the time the offer is made or the consumer contract is signed.” Id.Continue reading “Must Consumer Suffer Adverse Consequence in Order to Sue under TCCWNA?”
In Motorworld, Inc. v. William Benkendorf, et al. (A-64-15), the Supreme Court of New Jersey held that a corporation’s release of a debt constituted a fraudulent transfer under the Uniform Fraudulent Transfer Act (“UFTA”), N.J.S.A. 25:2-20 to -34.
In 1998, Morton Salkind arranged for his wife, Carole Salkind, to become the sole shareholder of 19 closely held corporations, including: (i) plaintiff Motorwold, Inc. (“Motorworld”); (ii) Fox Development, Inc. (“Fox”); and (iii) Giant Association (“Giant”). Defendant William Benkendorf was the owner of defendant Benks Land Services, Inc. (“Benks”). In 2004, Morton retained Benks to provide landscaping services to some of the companies owned by Carole, including Fox and Giant, but not Motorworld. Over time, Fox and Giant accumulated a debt to Benks of more than $1 million. Later in 2004, Motorworld loaned Benkendorf and his wife, defendant Gundrun Benkendorf, $600,000 so that the Benkendorfs could resolve a tax issue. Carole transferred $499,999 from her personal account into Motorworld’s account and the Benkendorfs executed a Note, stating that they would pay the principal amount. The Benkendorfs also agreed not to use the Note to offset any monies owed to them by any company owned by Carole, including Fox and Giant. Continue reading “New Jersey Supreme Court Rules That Release of Debt of Closely-Held Corporation in Exchange for Release of Debt by Second Closely-Held Corporation Is a Fraudulent Transfer”
The New Jersey Supreme Court’s decision in NL Industries, Inc. v. State of New Jersey will frustrate the equitable allocation of cleanup costs at sites involving pre-1977 discharges where the State would otherwise qualify as a responsible party. Such a result would be particularly severe considering the high cleanup price tag for many sites predating 1977. Any party involved in or contemplating such a contribution action against the State should be mindful of this decision when determining how best to proceed. This should include determining whether a federal forum and contribution claims under the NJ Spill Act’s federal counterpart, CERCLA, might achieve a better result. Continue reading “The New Jersey High Court Immunizes the State from New Jersey Spill Act Liability for Pre-1977 Discharges”
The New Jersey Supreme Court has adopted Section 142 of the Restatement (Second) of Conflicts of Law (1971) as the test going forward to determine which State’s statute of limitations applies when there is a conflict between those laws. The Court’s opinion in McCarrell v. Hoffmann-La Roche, Inc., No. A-28-15 (Jan. 24, 2017), authored by Justice Albin, “completes the conversion from governmental-interest standard to the Second Restatement” for tort cases. The Court began that conversion in its opinion in P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132 (2008). The Court believes that its holding will “guide judicial discretion toward more predictable and just outcomes.” Continue reading “NJ Supreme Court Adopts Restatement Second Section 142 to Determine Applicable Statute of Limitations”
Blank Rome LLP Partner Adrienne C. Rogove has been appointed by the New Jersey Supreme Court as chair of the Committee on the Unauthorized Practice of Law for the 2017 calendar term. Ms. Rogove previously served as vice-chair of the Committee for the 2015 and 2016 terms.