Picture this: You are the owner of a company and a former customer writes a review online saying that the product your company sells is defective, your company is a scam, and you are a crook with a criminal record. None of this is true. Do you have a cause of action for defamation? Trade libel? Both?
Instruction on Nominal Damages Was Anything but Instructive as Jury Returns $800,000 “Nominal” Damage Award
In its recent opinion in Graphnet, Inc. v. Retarus, Inc., the New Jersey Supreme Court revisited the role of nominal damages in the defamation context. This time, the issue arose after trial in connection with a jury instruction that advised the jury, in part, that it may award nominal damages to compensate a plaintiff for injury to reputation caused by a defendant’s defamation. In 2014 defendant Retarus published a brochure that contained allegedly defamatory statements about one of its competitors, plaintiff Graphnet. The jury found that Retarus did defame Graphnet but that Graphnet had not shown any actual loss. The jury, nonetheless, awarded Graphnet $800,000 in nominal damages. This exorbitant nominal damage award was, at least in part, the result of a confusing and contradictory jury instruction, which advised the jury both that it was “permitted to award nominal damages to compensate the plaintiff” and that “[n]ominal damages…are not designed to compensate a plaintiff.” Only the latter part of that instruction is correct. Nominal damages, as distinct from compensatory or actual damages, are not meant to compensate the plaintiff for actual loss. Rather, they serve the purpose of vindicating the character of a plaintiff who has not proved a compensable loss. Nuwave Inv. Corp. v. Hyman Beck & Co., Inc., 221 N.J. 495, 499 (2015)....
The Supreme Court in WesternGeco LLC v. ION Geophysical Corp. opened a new door to recover for patent damages in its holding that a patent owner can recover damages for patent infringement under 35 U.S.C. §271(f)(2) and §284 of lost foreign profits. The Patent Act outlines several ways an alleged infringer may be liable for patent infringement, including §271(f) which “expands the definition of infringement to include supplying from the United States a patented invention’s components.” 35 U.S.C. §284 authorizes “damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.” In this case, WesternGeco developed technology for surveying the ocean floor for oil and gas companies. ION Geophysical Corp. sold a competing system where the components were manufactured in the United States and shipped abroad. The Southern District of Texas found that ION Geophysical Corporation infringed WesternGeco’s patents, and that WesternGeco lost specific contracts due to ION’s infringement. The district court awarded $93.4 million in lost profits and $12.5 million in royalties. On appeal, the Court of Appeals for the Federal Circuit reversed the award of lost-profit damages following its precedent in Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F. 3d 1348 (Fed. Cir. 2013) which held that...
EIFS litigation is no stranger to New Jersey. EIFS (or “exterior insulation and finish system”) – a popular, post-World War II building system that resembles stucco while simultaneously providing watertight exterior insulation – originated in Europe and migrated to American homes in the late 1960s and early 1970s. According to The New York Times, it was utilized in the construction of “countless homes built in New Jersey,” which meant that the state was deeply affected when it became evident that, installed in a certain way, EIFS trapped water behind its siding and led to crumbling wall sheathing and rampant mold. Nationwide lawsuits ensued and, while a class action settlement was eventually reached with the largest EIFS manufacturer in 2003, New Jersey courts – at every level – returned to EIFS litigation again and again.
In a recent unpublished opinion, the Appellate Division ruled that, although an arbitrator may modify an award to fix technical errors, he cannot include relief for claims not addressed in the original award, even if the failure to address those claims was due to an oversight by the arbitrator. In Merion Construction Management, LLC v. Kemron Environmental Services, Inc., subcontractor Kemron commenced arbitration alleging that although Kemron had substantially performed its obligations, contractor Merion had not paid its invoices. The arbitrator agreed with Kemron and awarded $873,758.56.
The Limited “Refund” Remedy Under the New Jersey Consumer Fraud Act Does Not Apply to Violations of the Home Improvement Practices or Home Improvement Contractor Registration Regulations
The New Jersey Consumer Fraud Act (“CFA”) provides powerful remedies that can be used by aggrieved parties to a construction contract. While the treble damages and attorneys’ fees remedies have traditionally received greater attention by parties and the courts, the CFA also references a refund remedy in N.J.S.A. §§ 56:8-2.11, -2.12 that aggrieved consumers have relied upon to seek refunds of amounts paid under construction contracts that violated the CFA, particularly where they had not been able to demonstrate an ascertainable loss entitling them to treble damages. However, the recent Appellate Division decision in Logatto v. Lipsky effectively eliminates the availability of the refund remedy in virtually all CFA cases, including cases arising out of construction contracts, as well as those involving alleged violations of the Home Improvement Practices and Home Improvement Contractor Registration regulations.
Prejudgment Interest on Claims for Consequential Damages for Breach of Contract are not Recoverable as of Right Under Pennsylvania Law
Parties often specify in their construction contracts what amounts are recoverable for various events of breach. These provisions can impact not only the award of damages, but also whether amounts should be added to the award for recovery of prejudgment interest under Pennsylvania law. In Cresci Construction Services, Inc. v. James H. Martin, the Pennsylvania Superior Court considered the circumstances under which recovery of prejudgment interest is mandatory as opposed to discretionary. In that case, the plaintiff contractor brought suit against the defendant homeowner, and the homeowner counterclaimed for breach of contract.
New Jersey’s Prompt Payment Act (“PPA”) can be a valuable tool available to contractors, subcontractors, sub-subcontractors, and product suppliers that are owed money on New Jersey construction projects, as aggrieved parties can recover interest on unpaid amounts at prime plus one (1%) percent in the event payment is not made within the time period provided by the PPA and attorneys’ fees. N.J.S.A. § 2A:30A-2. In TBI Unlimited, LLC v. Clearcut Lawn Decisions, LLC, the United States District Court for the District of New Jersey considered the scope of the PPA, which is only the subject of a handful of written opinions.
A recent non-published case from the District Court of New Jersey serves as a reminder that navigating the damages phase of patent infringement is just as important as proving liability. In Unicom Monitoring, LLC v. Cencom, Inc., Judge Cooper court denied the patent owner damages despite the fact that it succeeded in proving infringement. The patent at issue covered a device for rerouting alarm reports through a telephone line. Defendant Cencom was found to infringe claim 1 of the patent. Before the trial on Unicom’s damages, Cencom moved for summary judgment to dismiss Unicom’s damages claim because it failed to present expert evidence. Cencom also moved for summary judgment on injunctive relief because Unicom failed to establish its burden under the factors articulated by the Supreme Court in eBay Inc. v. MercExchange, LLC. Cencom argued that the only proof Unicom provided supporting Unicom’s reasonable royalty position was attorney argument, Cencom’s sales records, and statements from Unicom’s owners. The Court held that while expert testimony is not required to prove reasonable royalties, it agreed with Cencom that Unicom failed to establish competent proof to support its claim.
New York’s mechanic’s lien law sets forth seven items that must be included in a claimant’s notice of lien. See New York Lien Law § 9. While the statute states that the lien notice “shall” include each of the seven items, a recent New York Supreme Court decision demonstrates that failure to include one or more of these seven items can have varying consequences depending upon whether the omission is considered a substantial or a technical defect. See Avon Contractors v. D.C.M. of New York, LLC, et al. In Avon, plaintiff-general contractor D.C.M. of New York, LLC (“DCM”) moved to discharge a mechanic’s lien filed by subcontractor J.E. Berkowitz, L.P. (“JEB”), claiming that the notice of lien violated subdivisions 1 and 1-a of New York Lien Law Section 9 (which provides that a lien notice must include “1. The name and residence of the lienor; and if the lienor is a partnership or corporation, the business address of such firm, or corporation, the names of partners and principal place of business, and if a foreign corporation, its principal place of business within the state; [and] 1-a. The name and address of the lienor’s attorney, if any”). Specifically, DCM claimed JEB’s lien should be discharged because the lien notice was defective because it listed a P.O. Box...