Gibbons Law Alert

Gibbons Law Alert

Category: General Litigation

Third Circuit Clarifies Standard for Assessing Preliminary Injunctions

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Posted in General Litigation

On July 24, 2024

On July 15, the Third Circuit issued a precedential opinion in Delaware State Sportsmen’s Association v. Delaware Department of Safety & Homeland Security that has the potential to alter the standard district courts apply when evaluating motions for preliminary injunctions. In a lawsuit challenging Delaware’s ban on assault weapons and extended magazines, the court held that the group challenging the law had not met the requirements for issuing a preliminary injunction, emphasizing that injunctions “were and still are extraordinary relief” reserved for “exceptional cases.”  It noted that injunctions, often “granted hurriedly and on the basis of very limited evidence,” themselves can inflict harm. And it concluded that “[a]ffidavits drafted by lawyers are poor substitutes for discovery, live testimony, and cross-examination.” Finally, the Third Circuit highlighted that “forecasting the merits [of a lawsuit] risks prejudging them,” as preliminary relief can “freez[e] first impressions in place.” With these principles in mind, the court reiterated that preliminary injunctions “should be granted only in limited circumstances” – to preserve the parties’ relative positions until a trial on the merits can be held, thereby ensuring that the court “can still grant an adequate remedy” or “render a meaningful judgment.” The court contrasted this purpose with issuing a preliminary injunction “just to prevent harm,” which is not an injunction’s “paramount purpose,” and...

“Pharma Bro” Avoids the Most Serious Adverse Inference Sanction for Spoliating Evidence Under Rule 37(e)

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Posted in General Litigation

On May 29, 2024

In an opinion out of the Southern District of New York addressing alleged spoliation of ESI, Judge Denise Cote found that the plaintiffs – the Federal Trade Commission and a collection of states – only sufficiently established half of their spoliation claims sought against defendant Martin Shkreli. Shkreli, aka “Pharma Bro,” and his business partner, Kevin Mulleady, launched Vyera in 2014. The plaintiffs alleged that in November 2017 Vyera entered into several anti-competitive agreements, including exclusive supply agreements, with a company preparing to seek FDA approval for the manufacture of the active ingredient in one of Vyera’s branded drug products. The plaintiffs sought sanctions under Rule 37(e) against Shkreli, alleging he failed to preserve messages on two cellphones despite receiving a litigation hold in late 2015. The first phone – a company-issued phone – was allegedly used by Shkreli to communicate about issues relevant to the case. When Shkreli’s attorney sent the company phone to be forensically imaged in April 2020, it was discovered that it had been factory reset (i.e., wiped) sometime in 2016 or 2017. While neither Shkreli nor Vyera produced communications from this phone, Vyera represented that company-issued phones were backed up to iCloud. The second was a contraband phone Shkreli appeared to have possessed while in prison. A Vyera executive testified...

NJ Supreme Court Holds That Hospital’s Medical Staff Bylaws Do Not Create Implied Duties of Good Faith

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Posted in General Litigation

On April 24, 2024

Pursuant to New Jersey Department of Health regulations, New Jersey hospitals must implement bylaws to govern the hospital’s medical staff. Those bylaws typically address the qualifications and procedures for being admitted to the hospital’s medical staff and often include a right to a hearing and other procedural protections for a physician who has been denied privileges to the hospital. Though it has long been resolved that a physician may compel a hospital to comply with the procedures set forth in its bylaws, it was less clear whether a hospital’s bylaws created a contract between the hospital and its medical staff, which in turn would give rise to an implied duty of good faith and fair dealing, as well as a right to monetary damages for breach of contract. In Comprehensive Neurosurgical, P.C. v. Valley Hospital, the New Jersey Supreme Court resolved this open issue, holding that a hospital’s bylaws do not amount to a contract and thus do not, without more, give rise to implied duties or monetary damages. The Supreme Court, however, also recognized that an implied contract, which itself would include an implied duty of good faith, can arise from the course of dealings between a hospital and a physician group. In Comprehensive Neurosurgical, a group of neurosurgeons that held longstanding privileges at Valley...

Refusal to Wear a Face Mask May Leave You Constitutionally Unprotected

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Posted in Appellate / General Litigation

On February 29, 2024

Is there a constitutional free speech right to refuse to wear a face mask in public indoor spaces during a recognized public health emergency? The Third Circuit Court of Appeals recently determined there is not, as part of a precedential decision in the consolidated cases of Falcone v. Dickstein, et al. and Murray-Nolan v. Rubin, et al. The Third Circuit addressed the First Amendment issue in the Murray-Nolan case. Specifically, the issue the court confronted was whether, during the COVID-19 pandemic, plaintiff Gwyneth Murray-Nolan, an “advocate for parental choice in masking children at school,” was protected under the First Amendment in her refusal to wear a mask during a Board of Education (“BOE”) meeting, despite the BOE’s mask requirement and the Governor’s Executive Order mandating that New Jersey schools require the use of face masks. (The Falcone case, though likewise arising from an individual’s opposition to a mandatory masking policy, was decided on different grounds.) The plaintiff’s refusal to wear a mask was intended by her as a silent protest against the BOE’s masking policy and its lack of action to unmask children in schools. While the court recognized that the First Amendment protects some conduct in some settings, the court held that the refusal to wear a mask failed to satisfy the constitutional standard...

NJ Appellate Division Holds That Residency of Party Making First Contact in Long-Term Business Relationship Is Not “Jurisdictionally Dispositive”

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Posted in General Litigation

On February 28, 2024

Personal jurisdiction over an out-of-state defendant cannot be based on the unilateral acts of an in-state plaintiff. Instead, a New Jersey court may assert jurisdiction over a defendant only if that defendant “reached out” to New Jersey in some meaningful way. Consequently, when an out-of-state defendant is sued by an in-state plaintiff alleging a breach of contract, the court will often look to see which party initiated the contractual relationship when deciding whether it has jurisdiction over the defendant. In a recent published opinion, however, the New Jersey Appellate Division clarified that, depending on the particular facts of a matter, jurisdiction may be asserted over an out-of-state defendant even when an in-state plaintiff initiated the relationship. In Allure Pet Products, LLC v. Donnelly Marketing & Development LLC , the plaintiff, a New Jersey-based supplier of pet products, telephoned the defendant, a Utah-based organizer of trade shows, in 2011 to request booth space for a biennial trade show planned for 2012. The agreement was consummated, and the plaintiff exhibited at the 2012 trade show. In 2013, the defendant mailed to the plaintiff a “special offer” to renew its booth space for the 2014 show. The plaintiff accepted the offer and exhibited at the 2014 show. The same pattern held for the 2016 and 2018 shows: The...

New Jersey’s Consumer Data Privacy Statute – What You Need to Know

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Posted in General Litigation

On January 31, 2024

On January 16, 2024, Governor Murphy signed S332 into law, making New Jersey the 13th state to enact legislation designed to protect the personal data of its residents. The law will become effective next year, on January 15, 2025, and imposes various obligations on a person or entity (designated as either a “controller” or a “processor”) that collects, discloses, processes, or sells the personal data of New Jersey consumers. The statute establishes various rights for New Jersey residents with respect to their own personal data and also provides consumers with the ability to opt out of disclosure and sale of their personal data in certain circumstances. Finally, the Division of Consumer Affairs has the authority to develop rules and regulations necessary to effectuate the purposes of the statute, and the Attorney General has sole and exclusive enforcement authority. The scope of S332 signed by the Governor was expanded significantly from prior versions. As late as December 17, 2023, the bill only applied to a person or entity that operated “any service provided over the Internet that collects and maintains personally identifiable information from a consumer.” The law enacted less than one month later, however, is not limited to collection of data over the internet; it applies to all “personal data” regardless of how it is...

Corporate Counsel Is Not Your Counsel: Communications Between Shareholders and Corporation Counsel Are Not Necessarily Privileged

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Posted in General Litigation

On January 11, 2024

You founded, own, and run your company. So, it is natural to assume that your company’s lawyer is your lawyer, right? While the assumption may be natural, the courts are firm in differentiating an attorney’s responsibilities to a corporation versus an individual shareholder. One who disregards this distinction may find that communications believed to be confidential and privileged are subject to discovery in later litigation. “A lawyer employed or retained to represent an organization represents the organization as distinct from its directors, officers, employees, members, shareholders or other constituents.” NJRPC 1.13(a). Shareholders of a closely held corporation are no exception to this rule and are not entitled to any presumption of privilege distinct from the corporate entity. The New Jersey Appellate Division recently emphasized this point in Royzenshteyn v. Pathak, where two shareholder-owners of a closely held corporation unsuccessfully appealed a trial court order that compelled production of allegedly privileged communications between the plaintiffs and corporate counsel. In Royzenshteyn, the plaintiffs retained corporate counsel for a transaction that transferred majority ownership of their corporation to the defendants. That transaction was completed in 2015. Soon thereafter, the parties’ relationship soured, and, in 2018, the plaintiffs retained new counsel to file a lawsuit that challenged the 2015 transaction. During discovery, the plaintiffs asserted attorney-client privilege over communications...

Is “Per Se” Getting in the Way? Use of That Term in Defamation Law

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Posted in General Litigation

On December 7, 2023

The twin branches of defamation consist of libel and slander. Libel is defamation by written words or by the embodiment of the communication in some tangible or physical form. Slander consists of the communication of a defamatory statement by spoken words or transitory gestures. Although attorneys, and even courts, sometimes refer to “defamation per se” as a third category of defamation, such reference is incorrect as it misunderstands the term “per se” in the defamation context. Properly understood in the context of slander, the phrase “per se” refers to four highly specific accusations that have traditionally been considered so clearly damaging to reputation that the damage element of the tort is deemed satisfied by the very utterance of the words: (1) accusing another of having committed a criminal offense (2) accusing another of having a loathsome disease (3) accusing another in a way that affects his/her business, trade, profession, or office (4) accusing a woman of being unchaste As to categories (3) and (4), the New Jersey Appellate Division later recharacterized them, respectively, as “accusing another of engaging in conduct, or having a condition or trait, incompatible with his or her business” and “accusing another of having engaged in serious sexual misconduct.” In the context of libel, “per se” refers to a writing that is...

Of All People…: DC District Court Hits Experienced Litigator Defendant With Terminating Sanctions for Failure to Preserve

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Posted in E-Discovery: Legal Decisions and Court Rules / General Litigation / Litigation Preparedness and Strategies

On October 5, 2023

In yet another cautionary tale displaying how seriously attorneys and clients must take discovery obligations, United States District Court Judge Beryl A. Howell entered a very rarely imposed default judgement against famed former U.S. Attorney and Mayor Rudy Giuliani for failure to preserve discovery in a defamation suit. Judge Howell’s opinion in Freeman, et al. v. Giuliani represents a blunt condemnation of discovery gamesmanship that is part of a growing number of cases that impose the most severe sanctions for failure to comply with preserving electronic evidence. In 2021, plaintiffs Ruby Freeman and Wandrea’ ArShaye Moss brought suit against defendant Giuliani for defamation, intentional infliction of emotional distress, civil conspiracy, and punitive damage claims. In response to the plaintiffs’ first set of discovery requests, Giuliani – an attorney for over 50 years – served an “initial production of 193 documents [that was] largely a single page of communications, blobs of indecipherable data, a sliver of the financial documents.” After the plaintiffs’ repeated inquiries into his preservation efforts and the court’s intervention, Giuliani issued a sworn declaration providing that his only preservation effort was turning off the auto-delete function on a nondescript list of devices and social media and email accounts. Given Giuliani’s admitted “preference to concede plaintiffs’ claims rather than produce discovery in this case,”...

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