Gibbons Law Alert Blog

NJ Seeks to Expand Reach of the Spill Act in PCB Contamination Suit Against Monsanto and Others

On August 4, 2022, the New Jersey Department of Environmental Protection (NJDEP) issued a press release announcing a lawsuit of sweeping, breathtaking scope against Monsanto, Solutia, and Pharmacia ─ all linked to the original Monsanto (“Old Monsanto”), which reorganized its businesses into three separate corporations in the late 1990s ─ seeking natural resource damages (NRDs) for polychlorinated biphenyl (PCB) contamination across the entire state of New Jersey. Old Monsanto formerly operated a large industrial facility in Bridgeport, an unincorporated community in Logan Township, Gloucester County, New Jersey (the “Bridgeport Site”). In addition to the claims for statewide PCB contamination, the complaint seeks NRDs and other relief in connection with the Bridgeport Site. The suit alleges the three defendants contaminated the area in and around the Bridgeport Site through discharges of many chemicals, including PCBs, over decades of operations at that site. PCBs are a class of toxic synthetic organic chemical compounds that enter the environment by escaping their intended applications, passing into water bodies, sediment, and soils. In a statement announcing the suit, Acting Attorney General Matthew J. Platkin said that “PCBs contamination has harmed natural resources and threatened the health of humans and wildlife in every corner of New Jersey . . . includ[ing] many environmental justice communities ─ communities throughout our State that...

Artificial Intelligence System Cannot Be Listed as Inventor

On Friday, the Federal Circuit held that the Patent Act requires an inventor to be a natural person, in response to a patent applicant who alleged that an artificial intelligence system was the inventor of a patent application. Thaler v. Vidal, No. 2021-2347, 2022 WL 3130863 (Fed. Cir. Aug. 5, 2022). The patent applicant, Stephen Thaler, asserted that he develops and runs artificial intelligence systems that generate patentable inventions. Mr. Thaler then sought patent protection through two patent applications and listed the artificial intelligence system as the inventor. After the U.S. Patent and Trademark Office (USPTO) denied the patent applications for failure to identify a valid inventor, Mr. Thaler and the USPTO adjudicated the matter in the U.S. District Court for the Eastern District of Virginia. The District Court found that the Patent Act requires an inventor to be a natural person. Thaler v. Hirshfeld, 558 F. Supp. 3d 238, 249 (E.D. Va. 2021), aff’d sub nom. Thaler v. Vidal, No. 2021-2347, 2022 WL 3130863 (Fed. Cir. Aug. 5, 2022). In affirming the District Court’s decision, the Federal Circuit first indicated that it need not perform an “abstract inquiry into the nature of invention or the rights, if any, of AI [artificial intelligence] systems.” Rather, the court began and ended on the “applicable definition in...

Dialing It In: E.D.N.Y. Denies Motion to Compel Production of Cell Phone for Forensic Examination Upon Mere “Speculation” That Metadata Was Deleted or Altered

This blog has previously noted the recent uptick of district courts authorizing forensic experts to conduct examinations and forensic imaging of cell phones to ensure the preservation and production of relevant electronic data. While we have discussed recent cases that have ordered such forensic imaging, such examination is not appropriate in every case and courts must continue to keep such “drastic” and “intrusive” discovery measures in check. In this regard, the District Court for the Eastern District of New York recently denied a defendant’s motion to compel the plaintiff to produce, for forensic examination, a cell phone that recorded videos already produced by the plaintiff in native format.

New Jersey Appellate Division Finds No Ascertainable Loss Where a Plaintiff Never Used a Product and Made Hypothetical Allegations of Loss

On May 31, 2022, the Appellate Division in Hoffman v. Pure Radiance, Inc. affirmed the trial court’s order granting summary judgment for a defendant and dismissing the plaintiff’s Consumer Fraud Act (CFA) claims because the plaintiff could not show that he suffered an ascertainable loss where he never used the product and his allegations were not supported by facts. In this putative class action, serial plaintiff Harold Hoffman sued defendant Pure Radiance, Inc., alleging that it falsely marketed a hair growth product. Specifically, Pure Radiance advertised that its product Re-Nourish could help an individual regrow “a thick, full head of hair, even after years of balding” and was “the world’s first and only hair loss solution that revives dead hair follicles” to regrow hair “in just 30 days.” The advertisement also showed a before-and-after picture of a man’s head, with the before picture showing a balding head and the after picture showing a full head of hair. Based on this advertisement, Hoffman purchased the product and then, after researching the product but before ever trying it himself, filed a proposed class action alleging, among other things, that the ad contained material misrepresentations and that he suffered an ascertainable loss by reason of his purchase of the product for $108.90. Significantly, Hoffman did not receive the...

No Property Damage, No Claim for Business Interruption: New Jersey Appellate Division Affirms Dismissal of Six COVID-19 Business Loss Claims

In a recent decision, the New Jersey Appellate Division held that six businesses were not entitled to insurance coverage for losses sustained when they were forced to close or limit their operations as a result of Executive Orders (“EOs”) issued by Governor Phil Murphy to halt the spread of COVID-19. This ruling follows the general trend nationally in which courts have rejected claims by insureds for business interruption losses incurred due to government orders related to the spread of COVID-19. The decision arose from the consolidated appeals of six businesses that reported losses as a result of the EOs and sued their insurance companies, alleging they improperly refused to cover the plaintiffs’ insurance claims for business losses sustained due to the issuance of the EOs. All six suits were dismissed with prejudice at the trial level pursuant to Rule 4:6-2(e) for failure to state a claim, because the plaintiffs’ business losses were not related to any “direct physical loss of or damage to” covered properties as required by the terms of their insurance policies. The Appellate Division affirmed all six dismissals and further concluded that the losses were not covered under “their insurance policies’ civil authority clauses, which provided coverage for losses sustained from governmental actions forcing closure or limiting business operations under certain circumstances.”...

Third Circuit Holds That Non-Signatory Medical Practices Were Bound by Arbitration Agreements Entered Into by Practices’ Purchasing Agents

In In re Rotavirus Vaccines Antitrust Litigation, Merck Sharp & Dohme Corp. secured a victory in the Third Circuit, which held in a precedential decision that the plaintiffs’ antitrust bundling claims must be arbitrated. The medical practice plaintiffs contracted with “Physician Buying Groups” (PBGs) that arranged for the purchase of Merck’s vaccines at a discount through the drugmaker’s loyalty program. The matter involved two sets of contracts. The first set, between Merck and the PBGs, entitled participating PBG members to discounts if they purchased a threshold quantity of vaccines from Merck. These contracts contained an arbitration provision. The second set of contracts, between the PBGs and the medical practice plaintiffs, gave the plaintiffs discounts on Merck vaccines for enrolling in the PBGs. Thus, the PBGs operated as middlemen: the plaintiffs bought their vaccines directly from Merck but received discounts for belonging to PBGs. The plaintiffs were not parties to the contracts between Merck and the PBGs; as such, the plaintiffs did not sign on to the relevant arbitration provisions. The District Court for the Eastern District of Pennsylvania held that the PBGs did not have authority to bind the plaintiffs to the arbitration agreements, in part because the plaintiffs were not aware of those agreements. Reversing, the Third Circuit held that the PBGs, as agents,...

Legislative Update: NJ Legislature Passes Proposed Legislation Extending Outdoor Dining to 2024

On June 29, the New Jersey Legislature unanimously passed Bill S2364 ScaAa (2R), which would extend the outdoor dining and drinking privileges allowed under P.L. 2021, c.15, from November 30, 2022 to November 30, 2024. As amended, the bill would extend by two years, until 11:59 P.M. on November 30, 2024, the time period during which certain restaurants, bars, distilleries, and breweries would be allowed to use a public sidewalk or outdoor spaces which they own or lease and are located either on or adjacent to their business premises as an area for the purpose of conducting food and beverage sales. Current law authorizing such uses expires on November 30, 2022. The bill would also provide that the use of tents, canopies, umbrellas, tables, chairs, or other fixtures be deemed a permitted use for the time period from the first day of April through the close of business on November 30 for each additional year in which this law is in effect. Any administrative rule or regulation that limits the use of these fixtures to 180 days or less would be inapplicable during the effective time of the law. Any administrative rule or regulation governing the use of outdoor fixtures on private or public property, or right of way designated by a municipality, between the...

Parties’ Obligations Under the Federal Rules “Reign” Supreme and Render Language in ESI Protocol Unnecessary

In Raine Group v. Reign Capital, the Southern District of New York highlighted parties’ affirmative obligations under Federal Rules of Civil Procedure 26 and 34 when conducting ESI searches and determining the identities of custodians and locations of relevant documents or information. In particular, the court emphasized that an agreement regarding keyword search terms should work in “tandem” with the responding party’s independent and inherent obligations to search for and produce documents that are “reasonably accessible, relevant, and responsive within the meaning of Rule 34.” The court also made clear that parties have a fair degree of autonomy in determining what is “reasonable” under Rules 26 and 34. In this trademark infringement case, the plaintiff, a merchant bank with more than 100 employees, objected to certain provisions proposed by the defendant, a two-person real estate firm, in the parties’ ESI protocol and proposed search terms. After the parties’ failure to reach a resolution, the court intervened. The court ruled that the defendant’s proposed language regarding the parties’ search obligations in the ESI protocol was unnecessary, given the scope of Fed. R. Civ. P. 26 and 34, and because the provisions were overbroad. Specifically, the defendant’s proposal including the following provisions: “The parties also acknowledge that, apart from this ESI protocol, each party has an independent...

Increasing Patent Damage Awards with Pre-Judgment Interest

In VLSI Technology LLC v. Intel Corporation, the United States District Court for the Western District of Texas recently awarded pre-judgment and post-judgment interest on a jury’s damage award in a patent infringement case. An issue examined by the court was whether the patentee was entitled to pre-judgment interest during periods in which the patentee did not own the patent. The defendant argued that since the patentee only acquired the patent rights in December 2018 and was not formed as an entity until 2016, pre-judgment interest from 2013 would be a windfall. The court dismissed this argument and indicated that the patentee “acquired the Asserted Patents and is therefore entitled to all the rights associated with patent ownership, including the rights to collect damages and interest from infringers.” The court then awarded pre-judgment interest beginning on the date of infringement (i.e., 2013) to the date of judgment. In support of this holding, the court cited the Federal Circuit’s decision in Energy Transp. Grp., Inc. v. William Demant Holding A/S, 697 F.3d 1342, 1358 (Fed. Cir. 2012) stating that “award of pre-judgment interest is the rule, not the exception.” The court also noted that there was no exceptional circumstances such as an undue delay in filing the lawsuit that would warrant denying pre-judgment interest in this...

NJDEP Issues Rule Proposal Implementing Environmental Justice Legislation

On June 6, 2022, the New Jersey Department of Environmental Protection (NJDEP) issued its proposed rule (“Rule Proposal”) implementing regulations under the groundbreaking Environmental Justice Law (“EJ Law”) signed by Governor Phil Murphy in September of 2020, which we reported on at that time. The EJ Law requires the NJDEP to evaluate the environmental and public health impacts of certain facilities on vulnerable communities (referred to as Overburdened Communities (“OBCs”)) when reviewing certain permit applications. We also reported that on October 22, 2020, the NJDEP began the public process of developing regulations to implement the requirements under the EJ Law. The Rule Proposal was the culmination of an extensive and lengthy public process that included numerous meetings with various stakeholders. The next step is a 90-day public comment period expiring on September 4, 2022, during which time the NJDEP will hold four public hearings in the month of July. In the EJ Law, the Legislature had determined that all residents of the state of New Jersey, regardless of income, race, ethnicity, color, or national origin, have a right to live, work, learn, and recreate in a clean and healthy environment. The Legislature further found that the OBCs have been, and continue to be, subject to a disproportionately high number of environmental and public health stressors,...