Gibbons Law Alert

Gibbons Law Alert Blog

A Dangerous Game of Hide the Ball: District Court Grants Sanctions and Reopens Discovery for Failure to Disclose Photographs and Videos of Accident Scene

Posted in E-Discovery: Legal Decisions and Court Rules

On July 6, 2023

A recent decision from the District of New Jersey reminded attorneys and litigants of the importance of complying with discovery obligations under Federal Rule of Civil Procedure 26. Indeed, the court imposed sanctions, just short of dismissal, on the plaintiff and his counsel for failure to produce nearly 100 photographs and videos of the accident scene at the center of the litigation. In Reilly v. The Home Depot U.S.A., Inc., a product liability action, the defendants sought dismissal of the complaint as a discovery sanction for the plaintiff’s late production of 81 photos and three videos that the plaintiff’s counsel took in July 2020 of the house where the plaintiff fell and the ladder that was the subject of the lawsuit. Throughout discovery, the plaintiff did not produce the photos and videos and he did not include any reference to them in a privilege log. Moreover, the plaintiff implicitly represented in discovery responses that no such additional photos or videos even existed. The defendants did not learn of the photos and videos until the plaintiff’s counsel took the deposition of a fact witness and presented the witness with a photo – one that was not produced in discovery – of the interior of the home where the accident occurred, and the witness testified that the...

I’m Sorry, Motion Denied: Washington District Court Rejects Second Try at Class Action Suit Over Amazon Alexa’s Collection of Voice Data

by William C. Martinez

Posted in Privacy Class Actions

On June 27, 2023

In June 2022, a group of plaintiffs brought a putative class action against Amazon.com (“Amazon”) alleging the company violated several statutory and common law rights through its use of voice data collected through Alexa, its digital assistant software. After the court granted Amazon’s motion to dismiss, the named plaintiffs moved for leave to file an amended complaint. On March 29, 2023, in James Gray and Scott Horton v. Amazon.com, et. al., the United States District Court for the Western District of Washington denied the motion, concluding the plaintiff’s proposed amended complaint (PAC) failed to allege new material facts. The PAC alleged that Amazon failed to disclose to its consumers that it would use the data collected from the voice recordings made by Alexa devices for the purposes of targeted advertising. Accordingly, the plaintiffs asserted, as they had done previously, that Amazon: (1) breached the implied covenant of good faith and fair dealing; (2) violated Washington’s Consumer Protection Act (CPA) and Personality Rights Act (PRA); and (3) violated common law privacy rights. The court dismissed the plaintiffs’ implied covenant claim because the PAC “merely repeat[ed] the same arguments the Court ha[d] already rejected.” For example, the court previously rejected the plaintiffs’ argument that Amazon’s terms and conditions failed to inform them of Amazon’s use of their...

Three Large Chemical Companies Agree to Historic PFAS Settlement

by Andrew T. Alessandro

Posted in Environmental and Green Issues

On June 12, 2023

Three large American chemical companies, The Chemours Company, DuPont de Nemours, Inc., and Corteva, Inc., recently announced a massive $1.185 billion settlement deal over complaints about the emerging toxic chemicals of concern known as Per- and Polyfluoroalkyl Substances, or PFAS as they are more commonly referred to. PFAS are synthetic chemicals nicknamed “forever chemicals” because they are persistent and resistant to degradation. They have been used in a wide variety of everyday products and are found in detergents, non-stick pans, stain-resistant and waterproof fabrics, fragrances, drugs, disinfectants, pesticides, and fire-fighting foam. According to a joint statement issued by the three companies and a corresponding question and answer addendum, the $1.185 billion total will be distributed to a so-called “water district settlement fund.” The rate that each company will contribute is consistent with a January 2021 Memorandum of Understanding reached between the companies, in which Chemours agreed to a 50-50 split of qualified expenses with both DuPont and Corteva. Under the settlement, Chemours will pay half (approx. $592 million), and DuPont (approx. $400 million) and Corteva (approx. $193 million) will contribute the remaining 50 percent to the fund. As part of the settlement agreement, the three companies do not admit fault in the cases and deny the allegations. Once the settlement is finalized, which the parties...

Reminder to Alcoholic Beverage Licensees: Annual TTB Filing Due July 1, 2023

by Howard D. Geneslaw

Posted in Liquor Licensing

On June 9, 2023

Businesses that sell or serve alcoholic beverages, such as liquor stores, grocery stores, bars, and restaurants, not only must obtain the appropriate retail license within the jurisdictions in which they operate, but are also subject to Alcohol Dealer Registration with the Alcohol and Tobacco Tax and Trade Bureau (TTB) within the U.S. Department of the Treasury. This often overlooked registration requirement must be satisfied prior to commencement of alcoholic beverage sales, and any changes in the ownership of the business, business locations, and certain other information must be disclosed annually in a filing that is due July 1. The registration requirement arises from Title 26 of the United States Code (specifically, Subtitle E, Chapter 51 of the Internal Revenue Code) and applies to any “dealer,” which is defined in 27 CFR § 31.1 as “[a]ny person who sells, or offers for sale, any distilled spirits, wines, or beer.” Thus, retail dealers include liquor stores, restaurants, bars, private clubs, fraternal organizations, grocery stores, supermarkets, hotels, sports stadiums, caterers, trains, aircraft, and vessels. Wholesalers and importers are also included within the definition of “dealer.” Subject to certain exceptions, both retail dealers and wholesale dealers must comply with the applicable registration requirements. Registration entails filing TTB Form 5630.5d before engaging in business and on or before July 1...

U.S. Supreme Court Significantly Limits Scope of Federal Government’s Jurisdiction Under the Clean Water Act

by Paul R. Recupero

Posted in Environmental and Green Issues

On June 6, 2023

On Thursday, May 25, 2023, the U.S. Supreme Court handed down a decision in Sackett v. EPA, a closely watched case concerning the jurisdictional reach of the federal government’s ability to regulate sources of pollution under the Clean Water Act (CWA). Specifically, the Court addressed the test for determining whether wetlands are “waters of the United States” within the scope of the CWA. The CWA prohibits the discharge of pollutants into “navigable waters,” which the CWA defines as “the waters of the United States.” The definition has been the subject of numerous cases and interpretations, most recently in the 2006 Supreme Court decision in Rapanos v. United States, which created multiple tests for what constituted “waters of the United States.” The majority in Sackett has created a single, much narrower test. The background of Sackett v. EPA dates back to 2007, when plaintiffs Michael and Chantell Sackett began backfilling their property with dirt and rock, about 300 feet from Priest Lake. The Sacketts received a notice from the U.S. Environmental Protection Agency (EPA), which instructed the Sacketts to stop work because of the presence of wetlands protected by the CWA, which bars the discharge of pollutants, including rocks and sand, into “waters of the United States.” The EPA reasoned that the wetlands on the Sacketts’...

Caught in the Sauce: Papa John’s Founder’s Failure to Preserve ESI in Cellphones Leads to Curative Sanctions Despite Initial Preservation Efforts

by Michael V. Caracappa

Posted in Legal Decisions & Court Rules

On June 1, 2023

Practitioners and litigants alike largely understand that they must preserve evidence related to anticipated litigation. One potential pitfall, however, lies in the continuing nature of that obligation. Generally, a litigant’s duty to preserve evidence continues despite, for example, the collection of relevant documents or the imaging of devices containing relevant information. These principles were illustrated in a cautionary opinion by the Honorable Colin H. Lindsay, United States Magistrate Judge for the United States District Court for the Western District of Kentucky, in Schnatter v. 247 Grp., LLC, No. 3:20-3 (BJB) (CHL), 2022 WL 2402658 (W.D. Ky. Mar. 14, 2022). The case arose in the wake of Forbes Magazine publishing an article detailing a leaked conference call between the founder of Papa John’s, John H. Schnatter, and a marketing agency, during which Schnatter made racially charged comments. Within a week of publication, Schnatter was out as Chairman of Papa John’s and the University of Louisville announced it would rename the then Papa John’s Cardinal Stadium. Schnatter immediately retained counsel to assist in his separation with Papa John’s and explore potential affirmative claims. On July 25, 2018, just two weeks after the Forbes article was published, Schnatter’s own counsel sent him a Litigation Hold Notice. The Notice outlined his document preservation responsibilities, including suspending any automatic destruction...

District of New Jersey Grants Motion to Dismiss Inequitable Conduct Counterclaim and Strike Affirmative Defenses

by Charles H. Chevalier and Christine A. Gaddis

Posted in Patent

On May 19, 2023

In 2109971 Ontario Inc. d/b/a Xcella Furniture v. Best Deals Discount Furniture LLC, the United States District Court for the District of New Jersey recently granted plaintiff 2109971 Ontario Inc.’s (“Xcella Furniture”) motion to dismiss defendant Best Deals Discount Furniture’s (“Best Deals”) counterclaim for inequitable conduct as well as strike 29 of Best Deals’s affirmative defenses. The underlying case relates to Best Deals’s alleged infringement of a design patent related to articles of furniture. With respect to the inequitable conduct counterclaim, the district court found that Best Deals had failed to apply the correct legal standard for evaluating such a claim, which is that set forth in the Federal Circuit’s decision in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326 (Fed. Cir. 2009). The district court noted that under Exergen, inequitable conduct “‘must be pled with particularity under Rule 9(b),’” which requires that the pleading “‘identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.’” Id. at *5 (quoting Exergen, 575 F.3d at 1326-28). Best Deals, relying on cases from the District of Delaware that pre-dated Exergen, had argued that it needed only to “‘allege that there has been relevant prior art and acts sufficient to allege fraud.’” Id. at *4. The district court...

District of New Jersey Citing Litigation Tactics Orders Related Hatch-Waxman Cases to Be Tried Together

by Charles H. Chevalier and Christine A. Gaddis

Posted in Patent

On May 17, 2023

In Corcept Therapeutics, Inc. v. Teva Pharmaceuticals USA, Inc., the United States District Court for the District of New Jersey recently ordered that two separate, but related, Hatch-Waxman cases must be tried together. The cases involve patents covering plaintiff Corcept Therapeutics, Inc.’s (“Corcept”) KORLYM® product for the treatment of Cushing’s syndrome. Each case involves two patents, all of which involve methods of treatment involving mifepristone. Defendant Teva Pharmaceuticals USA, Inc. (“Teva”), citing the similarities between the patents and issues in the two matters, submitted to the district court a proposed stipulation of judgment whereby the parties agreed that the outcome in the first case would govern the outcome in the second case. Corcept would not sign the stipulation. While it agreed that the validity issues between the two matters were identical, it disagreed that the infringement issues were the same and argued that the second matter would require additional discovery. The district court agreed with Teva, stating “Corcept’s decision to belatedly file [the second action] was of its own making and at its own peril.” (ECF No. 239 at 1.) And, the district court rejected Corcept’s argument that the case could have been resolved faster had Teva filed a declaratory judgment action when the patents in the second matter issued (the second set of patents...

Southern District of California Strikes Defendant’s Invalidity Theories and References for Failing to Comply With District’s Patent Local Rules

by Charles H. Chevalier and Christine A. Gaddis

Posted in Patent

On May 16, 2023

In Taction Technology, Inc. v. Apple Inc., the United States District Court for the Southern District of California recently granted plaintiff Taction Technology, Inc.’s (“Taction”) motion to strike portions of defendant Apple Inc.’s (“Apple”) amended invalidity contentions. The case is a patent infringement action that addresses the distinctions between discovery under the Federal Rules of Civil Procedure and contention disclosure requirements under a district’s local patent rules. In Taction, following the district court’s claim construction order, Apple served “Post Claim Construction Amended Invalidity Contentions” in which it alleged for the first time that two prior art references anticipate the asserted claims of two of the patents-in-suit and that the same prior art references satisfy a claim limitation at issue. Taction filed a motion to strike the two new prior art references. Apple raised multiple issues in opposition. First, Apple argued that the motion was not timely because it was not brought within the period to raise discovery disputes in the court’s case management order. The court rejected that argument because, in the Southern District of California, a challenge to a party’s infringement or invalidity contentions is not a “discovery dispute.” Second, Apple argued that the motion should be denied because it merely “supplemented” its invalidity contentions, as is allowed by Patent Local Rule 3.6. The...

Appellate Division Affirms: Binding Dispute Resolution Provisions in Standard AIA Construction Contracts Are Enforceable

by Leonardo A. Di Stasio

Posted in Construction

On May 10, 2023

In a recent unpublished opinion, the New Jersey Appellate Division held that an agreement to arbitrate set forth in the binding dispute resolution provision in a standard form American Institute of Architects (AIA) construction contract between a condominium association and contractor was enforceable. The binding dispute resolution provision appears in the AIA standard form as a series of checkboxes in which the parties may select arbitration, litigation, or another dispute mechanism by placing an “X” in one of the boxes. The AIA standard form also contains language that applies if the parties have selected arbitration as the method of binding dispute resolution, including the rules for conducting that arbitration and finalizing an award. Arbor Green Condo. Ass’n, Inc. v. Start 2 Finish Restoration & Bldg. Servs., LLC et al. arose out of Start 2’s alleged deficient workmanship under a construction contract to restore two buildings damaged by a storm, which resulted in Arbor Green terminating the contract. Start 2 subsequently filed two construction liens and two demands for arbitration (one for each building) in accordance with the selected dispute resolution method in the parties’ AIA form agreement. Arbor Green failed to answer the demands for arbitration, resulting in awards in Start 2’s favor. Start 2 then filed two orders to show cause and verified complaints that...