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Don’t Sleep on Service of Process: The Middle District of Pennsylvania Denies Motion to Remand Because Plaintiffs Could Not Justify Out-of-State Service via Certified Mail

On March 8, 2021

A recent decision from the United States District Court for the Middle District of Pennsylvania emphasizes the importance of meticulous adherence to the rules governing service of process. In Fox v. Chipotle, the plaintiffs’ failure to properly serve an out-of-state corporation via certified mail – where the plaintiffs’ service of process did not utilize the restricted delivery option offered by the United States Postal Service – resulted in the denial of the plaintiffs’ motion to remand and the associated loss of any tactical advantage the plaintiffs may have believed to exist in litigating their class action in state court instead of federal court. The plaintiff filed a class action complaint against Chipotle in the Court of Common Pleas of Allegheny County of Pennsylvania asserting violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1, based on claims that Chipotle was “shortchanging” customers who made cash payments. Chipotle is a Delaware corporation with a principal place of business in California, and the plaintiffs’ motion to remand focused on the sufficiency of the plaintiffs’ attempts to serve Chipotle as an out-of-state defendant via certified mail, pursuant to Pennsylvania Rule of Civil Procedure 403. In particular, the plaintiffs claimed to have served Chipotle by certified mail at its corporate headquarters in...

Third Circuit Affirms That CFA and PLA Claims Can Coexist Independently

by Caroline E. Oks and Yolanda J. Bromfield

Posted in Class Action Defense

On March 4, 2021

We recently blogged about a New Jersey Supreme Court decision in which the court held that claims under New Jersey’s Consumer Fraud Act (CFA) may be brought in the same action as claims under the Products Liability Act (PLA). In a follow-up to that case, the Third Circuit in Sun Chemical Corporation v. Fike Corporation and Suppression Systems, Inc. applied the New Jersey Supreme Court’s guidance on the interplay between the CFA and PLA. The Third Circuit affirmed in part and reversed in part a District Court judgment, finding that some of the claims were “absorbed by the PLA” and some could be brought independently pursuant to the CFA. Sun sued defendant Fike under the CFA for alleged misrepresentations related to Sun’s purchase of an explosion-suppression system. Sun alleged that Fike “misrepresented various aspects of the suppression system in its pre-purchase conversations” and that Fike was therefore liable for injuries and property damages suffered by Sun from an explosion that occurred at Sun’s facility. The District Court of New Jersey determined that Sun’s CFA claims were precluded and absorbed by the PLA because “Sun was seeking damages because various features of the suppression system failed and that failure caused personal injury to Sun’s employees.” The CFA, the District Court reasoned, could not be used to...

New Jersey Supreme Court Decision Explains Requirements to Assert Statutory Good Faith Defense to Wage and Hour Claims

by Gregg Settembrino and Elizabeth Cowit

Posted in Wage and Hour

On March 4, 2021

The New Jersey Supreme Court recently ruled that employers could not rely on determinations made by subordinate employees of the New Jersey Department of Labor and Workforce Development (“Department”) to support a “good faith” exemption from New Jersey’s overtime pay mandates, instead finding such determinations must come from either the Commissioner of the Department or the Director of the Division of Wage and Hour Bureau. In Elmer Branch v. Cream-O-Land Dairy, the plaintiff Elmer Branch, a truck driver, filed a putative class action lawsuit against his employer Cream-O-Land Dairy (“Cream-O-Land” or “the defendant”) for payment of overtime wages under the New Jersey Wage and Hour Law (WHL). The plaintiff claimed that he, along with other “similarly situated truck drivers” employed by the defendant, were eligible for overtime pay at 1½ times their regular hourly wage. Cream-O-Land asserted two principal arguments in defense of the lawsuit: (1) it is exempt from the overtime requirements of the WHL because it is a “trucking industry” employer (and thus required to pay employees only 1½ times the minimum wage as opposed to 1½ times the employees’ regular rate of pay); and (2) it relied in “good faith” on certain prior determinations made by the Department finding that Cream-O-Land qualified as a “trucking industry employer” under the WHL and, therefore,...

Breaking Bankruptcy News: Subchapter V Debt Limit Extension

by Brett S. Theisen

Posted in Bankruptcy / Restructuring

On March 2, 2021

On February 25, 2021, Sen. Richard Durbin (D-IL) and Sen. Charles Grassley (R-IA), the Chair and Ranking Member of the U.S. Senate Judiciary Committee, respectively, announced the introduction of a bipartisan bill that will provide continued relief to businesses impacted by the ongoing COVID-19 pandemic. The bill, referred to as the COVID-19 Bankruptcy Relief Extension Act, would extend for an additional year—to March 27, 2022—certain bankruptcy-related provisions originally enacted into law in March 2020 as part of the Coronavirus Aid, Relief, and Economic Stabilization Act (“CARES Act”). Under the CARES Act passed on March 27, 2020, Congress increased to $7.5 million the debt limits for debtors seeking relief under the recently-enacted Subchapter V of chapter 11 of the Bankruptcy Code. 11 U.S.C. §§ 1181-1195 (Subchapter V, enacted in 2019 through the Small Business Reorganization Act, streamlined chapter 11 cases for businesses with non-contingent, secured, and unsecured debts totaling less than $2,725,625. By proceeding under Subchapter V of the Bankruptcy Code, a debtor may, among other things, solicit disclosure and confirmation in a single-step confirmation process, make use of expedited filing deadlines, and retain equity ownership without those equity holders satisfying the “new value” exception to the absolute priority rule under 11 U.S.C. § 1129(b)). If passed, the COVID-19 Bankruptcy Relief Extension Act will ensure that...

Legislature Cleans Up After Morristown Hospital

by Russell B. Bershad

Posted in Legislation Updates / Real Estate

On March 1, 2021

The legislative response to Morristown Hospital, Assembly Bill 1135, became law on February 22, 2021. Morristown Hospital, a Tax Court case decided in 2015, stripped Morristown Hospital of its property tax exemption. The case dealt at length with the modern reality that many nonprofit hospitals include for-profit operations within their walls, including private practice groups and ancillary facilities like restaurants and shops. The Tax Court found that, among other reasons, the hospital’s for-profit operations vitiated its property tax exemption in its entirety. The case put in question the realty tax-exempt status of almost every nonprofit hospital in the state and, by extension, the tax exemption of many educational, religious, and charitable institutions which, similarly to hospitals, combine nonprofit and for-profit uses. Morristown Hospital injected uncertainty regarding nonprofits’ property tax exemptions and spawned litigation. After much debate among competing factions, including municipalities on one side and nonprofits on the other, the legislature has finally acted to bring clarity to the landscape. The new law provides for nonprofit hospitals to pay community service contributions based on the number of licensed beds in a given hospital, or a flat, per-day rate for satellite emergency care facilities. However, if the hospital or satellite emergency care facility has previously entered into a voluntary agreement with a municipality, the hospital or...

“Accidentally” Destroying Years of Text Messages Is No Defense to Spoliation Sanctions

by Brielle A. Basso

Posted in General Litigation

On March 1, 2021

The New York Supreme Court recently granted a defendant spoliation sanctions, in the form of an adverse inference instruction, against the plaintiff for the “accidental” destruction of years’ worth of text messages from the plaintiff’s cellphones. In Iacovacci v. Brevet Holdings, LLC, the plaintiff was terminated from his employment with the defendants in October 2016, through a letter that referred to “possible litigation” and requested that the plaintiff “preserve … electronically stored information (‘ESI’) relating” to the defendant’s business, “includ[ing] all emails, text messages, … and the like, … [including] material on a phone.” Several days after receiving the termination letter, the plaintiff filed a wrongful termination and breach of contract action, and the defendants filed an answer with counterclaims alleging misappropriation of the defendants’ documents, breach of fiduciary duty, and self-dealing. Thereafter, a years-long discovery dispute ensued. The defendants served several requests for documents, including text messages, but the plaintiff objected to the demands as irrelevant and overbroad, and in March 2018, the plaintiff filed a motion for a protective order. In May 2018, the court ordered the plaintiff to produce cellphone and electronic calendar records as requested by the defendants, and at a status conference in December 2018, the court, again, directed the plaintiff to produce the text messages within 30 days. Finally,...

A Look at Governor Murphy’s Fiscal Year 2022 Budget Proposal

by Michael D. DeLoreto

Posted in State Legislative and Budget Matters

On February 24, 2021

Against the backdrop of the COVID-19 pandemic and an upcoming election in which the governorship and all 120 seats of the Legislature are on the line, Governor Murphy presented his Fiscal Year 2022 Proposed Budget through a virtual address. Unveiling a $44.8 billion spending plan, the Governor proposed no tax increases, a full payment to the pension system, new initiatives, and a significant surplus. Projected Revenues The Governor estimates total revenue in FY 2022 of $47.2 billion, due in large part to the FY 2021 revenues exceeding projections, which provides an opening balance for FY 2022 of $4.9 billion. The Administration also estimates a 2.4 percent growth in total revenue during FY 2022. Revenues are not based on any increases in tax rates or new taxes and do not account for any additional federal assistance to the State from a new stimulus package. Proposed Appropriations Total appropriations of $44.8 billion are $3.6 billion more than the prior fiscal year’s, an increase of 8.8 percent. The two largest expenses in the Proposed Budget are pre-K – 12 education ($18.1 billion) and the full Actuarially Determined Contribution (ADC) pension payment ($6.4 billion). These two items by themselves account for 55 percent of the State’s total spending. Other significant appropriations include: $2.6 billion to the State’s higher education...

New Jersey Supreme Court Relaxes Moratorium and Allows Some Commercial Landlord-Tenant Cases to Proceed

by Howard D. Geneslaw and Kevin W. Weber

Posted in Transactional Real Estate and Leasing

On February 22, 2021

Much has been written about the need for moratoria on evictions, at both the federal and state levels, in order to avoid widespread displacement of residential tenants. Indeed, one of Governor Murphy’s very first Executive Orders – issued on March 19, 2020, just ten days after he declared a State of Emergency – was to halt all residential evictions until two months after the State of Emergency ends. Of course, the State of Emergency continues today, and thus the residential eviction moratorium also continues with no immediate end in sight. Early on during the COVID-19 crisis, as a companion to the Governor’s Executive Order, the New Jersey Supreme Court authorized the temporary suspension of all landlord-tenant trials (both residential and commercial) as of March 16, 2020. While residential and commercial landlords could continue to file complaints to get “in the queue,” those cases could not advance to trial, and the Landlord-Tenant Court backlog today is in the tens of thousands. Some commentators predict hundreds of thousands of eviction complaints may be filed in New Jersey when the pandemic ends. While much attention has been given to the residential eviction crisis, far less has been written about the impact of lengthy moratoria on both commercial landlords and tenants, whose cases are filed identically to residential matters...

Avoiding Unnecessary Costs: Court Reminds Parties to Narrowly Tailor Discovery Requests

by Kevin H. Gilmore

Posted in General Litigation

On February 16, 2021

As previously highlighted by this blog, discovery is best effectuated through cooperation by the parties in a litigation. A baseline to cooperation is adhering to the discovery rules set forth in the Federal Rules of Civil Procedure. The Supreme Court of Idaho recently issued a reminder to parties that discovery requests must be narrowly tailored in proportion to the needs of the litigation and that serving overly broad discovery requests is not a court-approved negotiation tactic. Further, prior to seeking court intervention, the parties should cooperate in an effort to resolve any discovery disputes by meeting and conferring with sincerity. In Oswald v. Costco Wholesale Corp., the plaintiff was struck by a car and pinned against another car in one of the defendant’s parking lots, causing significant and permanent injuries. The plaintiff sued the defendant, alleging the parking lot was unsafe in its design and construction. In discovery, the plaintiff propounded extremely broad discovery requests, requesting that the defendant disclose “on a nationwide basis any incident [involving] a vehicle impacting anything.” In turn, the defendant sought a protective order asserting the discovery requests were overly broad and unduly burdensome. The court agreed with the defendant, stating that the plaintiff inappropriately used the “hearing as a sort of negotiation whereby the court is expected to replace...

NJDEP Extends Some Deadlines for Remediation Activities

by Gibbons P.C.

Posted in Environmental and Green Issues

On February 12, 2021

In light of the disruptions created by the COVID-19 pandemic, the New Jersey Department of Environmental Protection (NJDEP) has again extended certain deadlines (or, in the language of the relevant statutes and regulations, timeframes) for the completion of various remediation activities at contaminated sites. On February 1, 2021, NJDEP issued a Notice of Rule Waiver/Modification/Suspension pursuant to Executive Order No. 103, which was issued on March 9, 2020. It follows similar notices issued on April 24, 2020 and August 17, 2020. The new notice extends some regulatory and mandatory timeframes reached during the effective period of Executive Order 103 for a total of 455 days (including the prior 270-day extensions), with corresponding extensions of subsequent timeframes. For remediations subject to the statutory timeframes in N.J.S.A. 58:10C-27 and -27.1, requiring completion of the remedial investigation by May 7, 2014 or May 7, 2016, it extends the timeframe for completing the remedial action from May 6, 2021 to May 6, 2022. Parties seeking to benefit from the extensions must have retained a licensed site remediation professional (LSRP). While surely not among the most significant effects of the pandemic, these changes in remediation timeframes are among the hardest to follow. Parties conducting (or even simply monitoring) remediation projects, their counsel, and their LSRPs would do well to keep...