Gibbons Law Alert

Gibbons Law Alert

Tagged: Contracts

Governor Murphy Signs Bill Making Nondisclosure Provisions Unenforceable and Against Public Policy

by

Posted in Discrimination / Employment Agreements / Restrictive Covenants

On March 19, 2019

On Monday, March 18, 2019, Governor Phil Murphy signed Senate Bill No. 121, which makes nondisclosure provisions in employment contracts or settlement agreements that are intended to conceal the details of claims of discrimination, retaliation, or harassment unenforceable and against public policy in New Jersey. Section 1 of the new law warns that a “provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment” is against public policy and unenforceable.” The law does not define “employment contract” and leaves open to interpretation whether it applies to all agreements between employer and employee, whether an employment agreement, a separation agreement, or a settlement agreement. The prohibition on waiving any procedural right would make arbitration agreements, which by their nature waive the right to a jury trial, also invalid and unenforceable in contravention of the Federal Arbitration Act and recent United States Supreme Court precedent. An immediate challenge to this aspect of the law is likely since it casts doubt on all arbitration agreements between an employer and employee that seek to include claims of discrimination, harassment, and retaliation. Section 1 also prohibits a prospective waiver of any right or remedy under the New Jersey Law Against Discrimination (NJLAD) or any other statute or...

New Jersey Supreme Court Expands Reach of the Consumer Fraud Act to Include Customized Merchandise

by

Posted in General Litigation

On February 6, 2019

Relying on the remedial purpose of the Consumer Fraud Act (CFA), the New Jersey Supreme Court recently held that customized merchandise falls within the reach of the CFA. In All the Way Towing, LLC v. Bucks County International, Inc., plaintiffs, an individual and his limited liability towing company, entered into a contract with defendants for the purchase of a medium-duty 4×4 truck to be customized with an autoloader tow unit to meet plaintiffs’ particular needs. After the manufacturer attempted delivery on four occasions of a tow truck with significant problems, plaintiffs believed the situation to be “hopeless,” rejected delivery and demanded return of a $10,000.00 deposit. The manufacturer refused return of the deposit. Plaintiffs then brought suit for, among other things, violation of the CFA. The trial court granted summary judgment to the manufacturer on all claims, holding in pertinent part that a customized “tow truck was not something available ‘to the public for sale’” under the CFA. The Appellate Division reversed, holding that the line of cases that excluded “complex” goods or services from CFA claims was not applicable here because there was no showing that the tow truck at issue was any more “complex” than any other tow truck. Defendants then appealed, arguing that the CFA does not apply to transactions concerning custom-made...

Arbitration Clause’s Punitive Damages Waiver Held Unenforceable Under the LAD

by

Posted in Alternative Dispute Resolution

On October 23, 2018

In Roman v. Bergen Logistics, LLC, the Appellate Division recently held that a plaintiff was required to arbitrate her claims of sexual harassment and retaliation with her former employer. The court also held, however, that the arbitration agreement’s contractual provision that barred the employee’s access to punitive damages was unenforceable. Background Plaintiff Milagros Roman was hired by the defendant, Bergen Logistics, as a human resources generalist. She signed an arbitration agreement at the outset of her employment. In addition to requiring Roman to arbitrate any and all claims related to her employment, the arbitration agreement compelled her to waive any claim for punitive damages. After her termination, Roman filed a complaint in New Jersey Superior Court alleging that her former supervisor sexually harassed her, created a hostile work environment, and retaliated against her in violation of the New Jersey Law Against Discrimination (LAD). The defendants moved to dismiss Roman’s complaint and compel her to arbitrate her claims. The Law Division found that Roman knowingly signed the arbitration agreement and that the agreement contained an unambiguous waiver of claims for punitive damages. Accordingly, that court held that Roman was required to submit her claims to arbitration and could not seek punitive damages. Roman timely appealed. The Appellate Division’s Decision The Appellate Division held that the arbitration...

Third Circuit Holds Anti-Assignment Clauses in ERISA Plans Are Enforceable

by

Posted in General Litigation

On June 27, 2018

The Third Circuit, in a decision that may limit the remedies available to medical providers in the event of non-payment, recently clarified that “anti-assignment clauses in ERISA-governed health insurance plans as a general matter are enforceable.” In so holding, the Third Circuit joins all other circuit courts that have addressed the issue. On the basis of that clause, the Court held that the plaintiff out-of-network health care provider seeking reimbursement for a participant’s medical claims lacked standing to pursue the claim against the insurers on the participant’s behalf. In October 2015, the plaintiff provider performed shoulder surgery on a patient who was covered by an ERISA-governed health-insurance plan. In billing the individual for the procedure, the provider – because it was not part of the plan’s provider network – charged amounts that far exceeded the plan’s reimbursement limits for the surgery. The plan’s insurers applied its out-of-network limit in processing the claim and reimbursed only a fraction of the total amount charged. The provider appealed the claim on the patient’s behalf. At the same time, the provider had the patient sign an assignment-of-benefits form which assigned to the provider the patient’s right to pursue claims under his health-insurance plan for the surgery. The insurers denied the appeal, and the provider sued alleging ERISA violations. The insurers...

New Jersey Senate Labor Committee Amends Bill Prohibiting Use of Nondisclosure Provisions in Employment and Settlement Agreements

by

Posted in Discrimination / Employment Agreements

On April 20, 2018

In response to the recent spotlight on sexual abuse and harassment claims in the workplace and the #MeToo movement, the federal government and numerous states, including New Jersey, have focused attention on the use of nondisclosure provisions in settlement agreements involving claims of sexual harassment and assault. As we previously reported, the Tax Cuts and Job Bills Act was passed in December 2017 and includes a provision that bars any settlement or payment related to claims of sexual harassment or sexual abuse from being deducted as a business expense if the payments are subject to a nondisclosure agreement. While the federal tax bill aims to discourage the use of nondisclosure agreements, the proposed New Jersey legislation initially provided an outright ban on such agreements. At the time of its first introduction during the prior legislative session in December 2017, Senator Loretta Weinberg’s proposed bill prohibited New Jersey employers from including “a provision in any employment contract or agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.” The bill is unique because it is not limited to sexual harassment or abuse claims, but rather would apply to any type of discrimination, retaliation, or harassment claim under New Jersey’s Law Against Discrimination. Senator Weinberg’s bill was reintroduced...

SDNY Expands Interpretation of “Possession, Custody, or Control” – Orders Adverse Inference Against Company for Spoliation of Text Messages by Non-Party, Independent Contractor on Personal Phone

by

Posted in General Litigation

On April 2, 2018

In Van Zant, Inc. v. Pyle, et al., 270 F. Supp. 3d 656 (S.D.N.Y. 2017), the Southern District of New York ordered an adverse inference against Los Angeles-based Cleopatra Entertainment LLC (“Cleopatra”), based on the conduct of its independent contractor and non-party to the case, Jared Cohn (“Cohn”). Cohn had been hired by Cleopatra to write and direct a motion picture about the 1977 plane crash that killed two members of the Southern rock band Lynyrd Skynyrd. During the film’s production, Cleopatra and Cohn enlisted the aid of Lynyrd Skynyrd drummer Artimus Pyle (“Pyle”), who, along with other surviving band members (and the estates of deceased members), was party to a 1988 Consent Order that set limits on the permissible use of the Lynyrd Skynyrd name; the likenesses, names, and biographical material of its members; the band’s history; and related items. The Consent Order also detailed the respective parties’ rights to royalties from Lynyrd Skynyrd music, merchandise, and other proceeds, and prohibited the parties from “implicitly or through inaction authoriz[ing] the violation of the terms [of the agreement] by any third party.” Pyle initially did not make Cleopatra aware of the Consent Order, but plaintiffs (also parties to the 1988 Consent Order) sent Cleopatra a copy, along with a cease and desist letter, after learning...

The Power of New York’s Borrowing Statute

by

Posted in General Litigation

On February 15, 2017

On October 11, 2016, the Supreme Court of New York, Appellate Division, First Department, decided 2138747 Ontario, Inc. v. Samsung C&T Corp., et al., which serves as a reminder to attorneys that New York’s borrowing statute applies even where the parties agreed to a New York choice-of-law provision. The borrowing statute, CPLR 202, provides that, when a non-New York resident sues on a cause of action accruing outside New York, the complaint must be filed timely under the statute of limitations of both New York and the jurisdiction where the cause of action accrued. The statute’s underlying objective is to prevent forum shopping by nonresident plaintiffs. In Ontario, the plaintiff, a corporation formed under the law of Ontario, Canada, was a creditor of SkyPower Corporation, a bankrupt Canadian renewable energy developer. SkyPower’s bankruptcy trustee assigned to the plaintiff all of its claims against the defendants. The plaintiff then sought damages against the defendants for a breach of a nondisclosure and confidentiality agreement (NDA), which contained a broad New York choice-of-law provision. The plaintiff’s complaint was untimely under Ontario’s two-year statute of limitations but was timely under New York’s six-year statute of limitations. The trial court found that Ontario’s two-year statute of limitations applied and dismissed the case. The Appellate Division affirmed. Although the court found...

Believe It or Not: Computer Fraud Coverage May Not Cover Fraud Involving a Computer

by

Posted in Insurance

On November 14, 2016

Is a commercial policyholder able to get insurance under the terms of its computer fraud coverage (typically offered as part of a crime policy) for a fraud based upon information transmitted by email? Not according to the Fifth Circuit’s recent decision in Apache Corporation v. Great American Insurance Company, which vacated the trial court’s judgment and left the policyholder with a $2.4 million uninsured loss. While the opinion is unpublished and therefore should have limited precedential value, it highlights the importance of reviewing your company’s coverage profile in an effort to close potential gaps in insurance coverage for security breaches and other losses involving computer use.

Fourth Circuit Confirms that Data Breach Claims are Covered Under Traditional CGL Policies

by

Posted in Insurance

On May 5, 2016

Policyholders may still enforce an insurer’s duty to defend under a Commercial General Liability (“CGL”) policy for claims arising out of a data security breach, according to a recent Fourth Circuit decision. While the decision was issued in an unpublished opinion (a mere 18 days after oral argument), the decision represents a significant victory for policyholders seeking insurance coverage for claims arising out of data breaches resulting in the disclosure of personal information.

Attention Corporate Policyholders: Comply With All the Notice Requirements of Your Insurance Policies When Reporting a Claim or Risk Losing All Available Coverage

by

Posted in Insurance

On April 25, 2016

A recent decision by the New Jersey Supreme Court serves as a strident warning to commercial insureds to make prompt notice of claims under claims-made policies. In Templo Fuente de Vida Corp. v. National Union Fire Insurance Company of Pittsburgh, P.A., the claims-made D&O policy at issue required written notice of a claim “as soon as practicable … and … during the Policy Period.” The insured was served with an underlying complaint on February 21, 2006. It retained defense counsel and filed an answer, but did not provide notice of the claim to its insurer until August 26, 2006 — a delay of six months, yet still within the policy period. The insurer denied coverage for various reasons, including that notice was not provided “as soon as practicable.”

Connect:

About Gibbons

With 200 attorneys, Gibbons is a leading law firm in New Jersey, New York, Pennsylvania, Delaware, Washington, DC, and Florida, ranked among the nation’s top 200 by The American Lawyer. More…

Subscribe

Archived Blog Posts

Categories