Gibbons Law Alert Blog

The Risks of “Failed” Spoliation Efforts: The Southern District of New York Finds Severe Sanctions Available Under Rule 37(b)(2) and Inherent Authority for “Incompetent Spoliators”

We have previously blogged on the controversy regarding whether a court may still sanction a party for spoliation of ESI pursuant to its inherent authority following the amendments to Rule 37(e). But what happens when the attempted spoliation ultimately fails because the discovery is located and produced often after much unnecessary effort and expense by the requesting party? Abbott Laboratories v. Adelphia Supply USA involved just such a situation. The court’s decision reinforced that even when spoliation efforts are ultimately unsuccessful, and therefore Rule 37(e) does not apply because information is not “lost,” sanctions remain available under Rule 37(b)(2) and the court’s inherent authority to address litigant misconduct, including outright fraud on the court. This decision confirms that where improperly withheld documents are ultimately produced courts can “nevertheless exercise inherent authority to remedy spoliation under the circumstances presented.” CAT3, LLC v. Black Lineage, Inc., No. 14 Civ. 5511, 2016 WL 154116 (S.D.N.Y. Jan. 12, 2016). Plaintiffs Abbott Laboratories, Abbott Diabetes Care Inc., and Abbott Diabetes Care Sales Corp. (collectively “Plaintiffs”) filed a motion for case-ending sanctions against Defendants H&H Wholesale Services, Inc. (“H&H”), Howard Goldman, and Lori Goldman (collectively the “H&H Defendants”) based on electronic discovery-related violations of Federal Rule of Civil Procedure 37. The court referred Plaintiffs’ motion to the Honorable Magistrate Judge Lois...

Non-Consensual “Quick Peek” Revisited: FRE 502(d) Cannot Be Used to Compel Production of Potentially Privileged Information Without a Privilege Review

The District Court for the District of Columbia recently confirmed that FRE 502(d) orders cannot be used to force a responding party to produce potentially privileged documents without the opportunity to first review them. In doing so, the court found that such an order would not only violate the producing parties’ right to determine in the first instance how it reviews and produces, but would potentially compel the production of privileged information and thus would constitute “an abuse of discretion.” In Equal Employment Opportunity Commission v. George Washington University, the EEOC filed a discrimination action on behalf of a former executive assistant against defendant, George Washington University, alleging that defendant’s former athletic director treated the former executive assistant less favorably compared to her male co-worker, a former special assistant. The discovery dispute concerned four requests for production of documents served by plaintiff: three seeking thousands of emails from the work accounts of defendant’s former athletic director and his two assistants; and one seeking information related to workplace complaints against the former athletic director. Defendant argued that plaintiff’s requests were overbroad and unduly burdensome—that is, that compliance with the requests would impose costs that were “not proportional to the needs of the case,” under the proportionality dictates of FRCP 26. By its decision, the court resolved...

Permit Extensions: Looming Deadline and Best Practices

The period within which to register development approvals for tolling or extension under the Permit Extension Act of 2020 (“Act”) concludes on October 8, 2020. Permits and approvals which are not timely registered by that date may expire without receiving the benefit of tolling afforded by the Act. We have detailed both the Permit Extension Act of 2020 and the recently published notices from various state agencies on our website. While the language of the Act as adopted, and the accompanying notices from the various state agencies, are not fully consistent with respect to what approvals are required to be registered, we wanted to pass along two key suggestions regarding how to best take advantage of the Act: Register All Approvals. We suggest to err on the side of registering all approvals – this means not only State agency permits, but also municipal land use approvals, agreements for sewerage capacity, water permits, construction permits, plan endorsements under the State Planning Act, and any approval for permits related to any development application. While the statutory language seemed to suggest that it was only state level permitting that would be subject to registration, it appears that NJDEP will be serving as a database and repository for all approvals – not just those of state agencies – and...

New Jersey Supreme Court Confirms Enforceability of Arbitration Agreements Concerning Transportation Workers Under the NJAA

In Colon v. Strategic Delivery Solutions, LLC and Arafa v. Health Express. Corp., plaintiffs contracted with corporate defendants to provide transportation and delivery services as independent contractors and signed arbitration agreements governing the terms and conditions under which they were to provide services. The agreements at issue explicitly referenced the Federal Arbitration Act (“FAA”), but neither referenced the New Jersey Arbitration Act (“NJAA”). In both cases, plaintiffs brought claims in New Jersey Superior Court asserting they were misclassified as independent contractors and alleging violations of wage payment and wage hour laws, and in both cases, defendants sought to compel arbitration and dismiss the lawsuits. Both trial courts granted the respective employers’ motions to dismiss the claims and compel arbitration, and plaintiffs appealed these decision to the Appellate Division of the New Jersey Superior Court. As detailed in a prior blog post, in June 2019, different panels of the Appellate Division issued divergent holdings concerning the appeals. The Colon panel observed that both the FAA and NJAA “favor arbitration” as a way to resolve disputes, and that the NJAA “governs all agreements to arbitrate” entered into on or after January 1, 2003 (with limited exceptions that did not apply). It further found that the FAA “does not occupy the entire field of arbitration” and, therefore, the...

New Jersey Governor Signs Environmental Justice Legislation

On September 18, 2020, New Jersey Governor Phil Murphy signed legislation intended to address the disproportionate environmental and public health impacts of pollution on overburdened communities. The legislation, versions of which have been proposed several times over the past decade, imposes additional requirements on companies seeking permits for new or expanded facilities under a variety of environmental statutes. It also requires the New Jersey Department of Environmental Protection (NJDEP) to evaluate how the proposed permitted activities would impact those communities determined to be “overburdened” under the new law. Earlier this summer, marking the “Juneteenth” anniversary of the emancipation of slaves in the United States, Governor Murphy had indicated his support for the legislation, which some environmental advocates have dubbed the “holy grail” of the environmental justice movement. Although critics of the law raised concerns about its effect on manufacturing and business investment in New Jersey, the bill passed the state legislature in late August, with votes of 49-28-1 in the state Assembly and 21-14 in the state Senate. The types of facilities covered by the new law include certain power plants, incinerators, sewage treatment plants, solid waste facilities, and landfills, as well as other facilities deemed to be “major sources of air pollution” (as determined by the federal Clean Air Act). Governor Murphy stated that,...

Susanne Peticolas Elected to Serve as President of the Justice Stewart G. Pollock Environmental American Inn of Court

Susanne Peticolas, a Director in the Environmental Department at Gibbons P.C., has been elected to serve as President of the Justice Stewart G. Pollock Environmental American Inn of Court (“Pollock Inn”) for the 2020-2022 term. The Pollock Inn is named for former Justice Stewart G. Pollock, who sat as an Associate Justice on the Supreme Court of New Jersey from 1979 to 1999 and was the author of numerous landmark environmental cases, including NJDEP v. Ventron. The Pollock Inn is one of only two American Inns of Court focused on environmental law. Previous Pollock Inn presidents include retired Judge Deanne Wilson of the New Jersey Superior Court, former NJDEP Commissioner Jerry English, and Stephanie Brand, Director of the New Jersey Division of Rate Counsel. On being introduced as the new Pollock Inn president, Ms. Peticolas commented, “I am honored to be selected by my Inn colleagues to lead this wonderful organization, and I am humbled to follow in the footsteps of such extraordinarily talented predecessor presidents. I am committed to carrying on their legacy of leadership and promotion of the goal of the Inn – to foster the highest levels of professionalism through example, education, and mentoring.” The American Inns of Court organization grew out of discussions in the 1970s among the American members of...

District Court Rejects the Concept of Unilateral “Relevance Redactions” but Stresses the Importance of Discovery Confidentiality Orders to Address Commercially-Sensitive Information

In a recent decision, a Washington District Court illustrated the challenges parties face when they are in possession of responsive documents also containing highly confidential irrelevant information. The court stressed that, as a general rule, a party is not permitted to unilaterally redact information solely on the basis of relevance, and parties should consider seeking to enter into comprehensive ESI discovery protocols and discovery confidentiality orders allowing for the redaction of irrelevant information included in otherwise responsive documents, particularly where the parties will be exchanging highly confidential information in discovery. In Corker v. Costco Wholesale, plaintiffs initiated a class action suit against a number of coffee wholesalers, distributors and retailers under the Latham Act for false designation of origin. In discovery, plaintiffs sought the sale volume and pricing for the particular blend of coffee at issue sold by the defendants. Instead of producing the spreadsheet containing this information in the native excel format, one defendant first produced documents summarizing the contents of the spreadsheet and then, after plaintiffs objected to this disclosure, a 2,269-page static PDF of the spreadsheet redacting information related to coffee blends not at issue in the litigation that the defendant considered highly confidential. Plaintiffs moved to compel the production of the spreadsheet in the native form as kept in the ordinary...

USDOJ Legal Memo Clarifies Department’s Policy on Using Federal Judgment Fund to Settle Superfund Cases

A U.S. Department of Justice legal memo, obtained under the Freedom of Information Act by Bloomberg Law, has clarified and restated the Department’s strict policy against using the federal Judgment Fund to settle Superfund cases in which the federal government is a Potentially Responsible Party (PRP). The memo states that the federal government can settle its liability by payments from the Fund only if the settlement is “final” – that is, there are no contingencies or future payments due. Many Superfund settlements do not meet that standard, since they typically include reopeners, “pay-as-you-go” arrangements, or provisions for additional funding if the remedy proves more expensive than originally estimated. As Gibbons Director David J. Freeman told Bloomberg Law, “It’s not a favorable development for the program, or for making progress on settlements in general, for the government to be taking such a hard line on this.” This policy will likely result in making it more difficult to achieve settlements at sites where the federal government is a PRP.

Second Circuit Holds Injunctive Class of Past Purchasers Not Certifiable Under Rule 23(b)(2)

The Second Circuit recently resolved a conflict among district courts, holding that past purchasers of a product are ineligible for class certification under Rule 23(b)(2) because not all class members would benefit from injunctive relief. Specifically, explained the Court, it is unlikely a purchaser will buy the allegedly deceptive product again, and if they do, they do so with the knowledge of the alleged deception. In Berni v. Barilla S.p.A., plaintiffs initiated a class action alleging that defendant intentionally sold its pasta in misleading boxes that concealed non-functional “slack-fill,” i.e., excessive empty space in the box. The parties reached a settlement, agreeing that defendant would include a minimum “fill-line” on its boxes, to indicate how much pasta was in the container, and a disclaimer that the pasta is sold by weight and not by volume. Neither party challenged the settlement; however, an absent class member objected, arguing that the group of past purchasers could not be certified under Rule 23(b)(2) because past purchasers were ineligible for injunctive relief. The district court disagreed and certified the injunctive class and approved the settlement. The objector appealed. The Circuit Court vacated the district court’s order granting approval of the settlement class, reasoning that injunctive relief was not proper for the group of past purchasers and, thus, the group...

Third Circuit Reverses Denial of Class Certification: Holds Ascertainability Satisfied Even with Gaps in Records

On September 9, 2020, a split panel of the Third Circuit issued a precedential opinion in Hargrove v. Sleepy’s LLC, reversing the denial of class certification because the district court “misapplied” the Circuit’s ascertainability case law and was “too exacting” when it “essentially demanded” that plaintiffs identify the class members at the certification stage. The circuit court also determined that the district court erroneously applied the motion-for-reconsideration standard to plaintiffs’ renewed motion for class certification, and held that courts should apply “the usual Rule 23 standard.” In Hargrove, the plaintiffs, delivery drivers, brought an employee misclassification suit alleging that defendant misclassified them as independent contractors, rather than employees, and thus violated several New Jersey labor laws. The district court denied class certification, twice, on the ground that the ascertainability requirement was not satisfied. In denying plaintiffs’ renewed motion for certification, the Court held that plaintiffs’ proposed class was “not ascertainable because the records kept by Sleepy’s regarding the identity of the drivers lacked critical information.” The plaintiffs sought leave to appeal pursuant to Rule 23(f), and the Third Circuit granted their request. First, the circuit court addressed the split among the district courts, both in and out of the Third Circuit, on the issue of the standard that applies to renewed motions for class certification....