All posts by NJCJI

Landmark Decision from New Jersey Supreme Court on Expert Testimony

August 1, 2018Issues, News, Top StoriesNJCJI

The New Jersey Supreme Court issued a landmark decision today backing NJCJI’s position concerning the admissibility of expert testimony. The Court agreed that the Daubert factors, long the standard in federal court, should now be used in New Jersey civil trials. The Court also reinforced the role of New Jersey’s trial courts as gatekeepers for the admissibility of expert testimony. And by adopting the Daubert factors, the Court has provided trial courts with more robust guidance in performing that gatekeeping role.

This development has been a top priority of NJCJI. The vast majority of other states have already adopted the federal standard, putting New Jersey businesses at a growing disadvantage, as less rigorous gatekeeping invited out-of-state claims based on unreliable expert testimony. This new decision will go a long way to keeping such meritless cases out of New Jersey courtrooms.

Farewell, Emily

April 13, 2018News, Recent NewsNJCJI

After four years at the Civil Justice Institute, Emily Kelchen, our Director of Public Affairs, is leaving us to pursue other opportunities. We wish her the best in her future endeavors!

Workers Comp Bill Would Line the Pockets of Attorneys at the Expense of Injured Workers

April 13, 2018News, Top StoriesAttorney Fees, Employment Law, New Jersey LegislatureNJCJI

Should attorneys get paid for work they didn’t do? If so, should that money come out of the pockets of injured workers? Those are the questions policy makers who voted yes on S2145 need to be able to answer.

On April 12, the New Jersey Senate voted to modify our state’s workers compensation system to increase the amount of money attorneys assisting injured workers can get. Unfortunately, this additional compensation will come directly out of the pockets of the victims themselves.

Under existing law, employers and their workers compensation insurance carriers are encouraged to act promptly to settle workers comp complaints. When payments are promptly made, the injured workers get the entire payment, and thanks to the system we have in New Jersey, often do not need to hire an attorney to assist them with their claims.

If a worker does decide to hire an attorney and seek additional compensation, state law limits the fee the attorney can charge his or her client to funds he or she is able to secure above and beyond what was originally offered.

While ensuring attorneys are fairly compensated is an admirable goal, taking money out of the pockets of injured workers is not a good way to accomplish it.

The existing formula fosters good public policy in several ways. It encourages prompt, good faith payments to injured employees. It also ensures that the incentives for litigating claims are aligned with the incremental benefit of the potential litigation. And by discouraging unnecessary litigation, it ensures maximum compensation for employees at a minimum cost to employers.

The proposed legislation, by contrast, would amend existing law to undo all of those beneficial incentives.

By eliminating the window of opportunity for carriers to make payments that go entirely to the injured party, this bill would weaken the carrier’s incentive to make maximum payments as quickly as possible. And it would encourage attorney involvement at an earlier stage of the process without regard to their incremental value. Tying the fees to the signing of an attorney client agreement simply incentivizes such agreements. And basing fees on total compensation means attorneys would be taking a share of money that carriers would have made absent any attorney involvement – diverting that money to attorneys instead of compensating victims.

We understand the desire to ensure that attorneys receive adequate compensation for their efforts – but should not come at the expense of injured workers. This legislation would undo each element of the existing, beneficial, incentive structure, to the detriment of injured employees.

Expanding Wrongful Death Damages Would Increase Insurance Premiums For All New Jersey Residents

April 12, 2018News, Top StoriesDamages, New Jersey Legislature, Wrongful DeathNJCJI

A bill being considered by the New Jersey Legislature would expand the range of damages that could be awarded under our state’s Wrongful Death Act. If passed into law, it would increase insurance premiums for all New Jersey residents by making lawsuits more expensive and difficult to settle.

S1766, which is being sponsored by Sens. Scutari and Gill, would expand New Jersey’s Wrongful Death Act to allow unlimited recovery for emotional damages. Scutari, who chairs the Judiciary Committee, refused to hear testimony before having the bill voted out of committee.

NJCJI president and chief counsel, Alida Kass, was quoted in the New Jersey Law Journal explaining our opposition to the bill:

“The existing [act] works well and already provides for fair and predictable compensation. Changing the scope of wrongful death remedies to include purely emotional damages, like mental anguish and pain and suffering, would introduce considerable uncertainty, making cases more difficult to settle, and imposing significant new risk and increased insurance premiums on all New Jersey residents…

“[T]he existing methodology also ensures clarity and certainty—the approach is well-established and honed through years of developing case law,” Kass said. “And by taking the purely emotional aspects out of the calculation, the methodology permits the ready valuation of cases, which is essential to reaching settlements.

“Changing the rules to permit awards for what is essentially unquantifiable would undo that fairness and predictability,” she said.

The change would also significantly increase the risk and burden on all New Jersey residents. People carry insurance because they recognize that a momentary lapse of judgment can sometimes result in tragic, completely unintended consequences. Everyone benefits from being able to insure against the financial consequences of such a tragic event. Exposing New Jersey residents to an open-ended and unpredictable risk of liability would mean a significant increase in premiums, and still no guarantee that they have adequate protection against a massive jury verdict.

There is no amount of money that can fully compensate for the lost life of a loved one. The best that the civil justice system can do is compensate the quantifiable losses – something the existing Wrongful Death Act already does very well. Ask for more than the system can reasonably provide, and we lose the predictability and basic fairness that we largely take for granted. The primary effect will simply be higher premiums, with a largely uninsurable risk that a momentary mistake results in life-altering financial calamity.

Click here to read the full NJLJ article.

Committees Consider Wrongful Death & Bad Faith Bills

April 6, 2018News, Top StoriesBad Faith, Damages, Insurance, New Jersey Legislature, Wrongful DeathNJCJI

April 5 was a busy day under the State House dome. While the halls were swarmed with people up in arms over vaccines and nuclear power, two other bills attracted the attention of NJCJI and our allies in the business community.

The Senate Judiciary Committee swiftly passed a bill providing additional damages in wrongful death cases without hearing any testimony, and the Senate Commerce Committee voted to advance a bill targeting the bad faith denial of insurance claims. It would be a big deal if either one of these bills were passed into law, but the combination of the two would send our state’s insurance market into a tailspin. NJCJI is opposing them both.

Additional Damages in Wrongful Death Cases

NJCJI is opposing this legislation because the existing Wrongful Death Act works well and already provides for fair and predictable compensation. Changing the scope of wrongful death remedies to include purely emotional damages, like mental anguish and pain and suffering, would introduce considerable uncertainty, making cases more difficult to settle, and imposing significant new risk and increased insurance premiums on all New Jersey residents.

The Wrongful Death Act already provides compensation both for straightforward pecuniary losses like future income, as well as less tangible aspects of loss like lost assistance, care, training, advice, counsel and companionship. The existing legal guidelines ensure clarity and certainty – the approach is well-established and the case law has been honed through the years.

By keeping the purely emotional aspects out of the calculation, the existing methodology permits the ready valuation of cases, which is essential to reaching settlements. Changing the rules to permit awards for what is essentially unquantifiable would undo that fairness and predictability. Tasking juries with putting a dollar value on “grief” without any limit or guidance would significantly undermine predictive value of all other calculations, creating wild fluctuations in awards, and that uncertainty in valuing cases would make those cases much more difficult to settle.

Bad Faith Bill is Bad for New Jersey

Although New Jersey already has mechanisms in place that discourage insurance companies from improperly denying claims, supporters of S2144 are urging the state to do more to deter claim denials.

The legislation, which is being sponsored by Sens. Scutari and Gopal, would create a private cause of action for claimants who face an “unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy.”

Successful claimants would receive:

actual damages caused by the violation;
prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses; and
treble damages.

On April 5, the Senate Commerce committee held a spirited debate, with Senator Cardinale observing the imbalance of the bill, which would impose treble damages on mistakes by insurance carriers but no comparable penalty on erroneous, or even false, claims made by plaintiffs. The bill was nevertheless voted out of committee.

While we appreciate the sponsors’ concern with encouraging fair and efficient behavior from both carriers and claimants when settling cases, expanding the availability of bad faith remedies would not improve the efficiency or fairness of claims settlements. Rather, it would make claims settlements less predictable and more expensive and distort the existing incentive structure to the particular detriment of law-abiding policy holders.

The challenge of regulating insurance is striking the appropriate balance of incentives. We want to ensure that policy holders are not subject to undue delay or unnecessary litigation, while at same time protecting carriers’ ability to investigate questionable claims and hold policies to terms on which they are drafted.

That balance is critical, because shifting too far towards deterring carriers from policing the terms of insurance contracts is not a benefit to consumers. Policies are priced according to their terms, not just as drafted, but as they are likely to be enforced. If policy limits cannot be enforced in a predictable fashion, then affordable policies with set policy limits will not be available for purchase.

The existing framework is designed to strike that balance. When there is no reasonable basis to dispute the claim, individual claimants can currently bring a bad faith claim to recover damages in excess of policy limits. But when carriers have a reasonable basis to dispute a claim, in other words, when the claim is “fairly debatable,” imposing fee-shifting and treble damages on mere mistakes would result in over-deterrence.

The goal is to distinguish errors made in good faith from claim denials that arise out of a general business practice to use litigation as a tool to drive down settlement values. Hence the regulatory oversight by the Department of Banking and Insurance, which brings bad faith actions against carriers when there has been a pattern of behavior to indicate bad faith settlement practices.

The individual policy holder is also not without effective remedy when he believes his insurance carrier is unfairly delaying or denying a claim. In fact, the offer of judgment rule exists for precisely such situations. The policy holder who makes a settlement offer and is ultimately vindicated by a verdict in excess of 120% of the offer is entitled, not only to damages but also to attorney fees incurred from the time the offer was made.

The one-sided super-penalties of S2144 would disrupt the existing balance of incentives. When insurance carriers can no longer effectively investigate and challenge potentially invalid claims, rates will go up, and it will ultimately be consumers who pay the price.

Double Trouble

New Jersey has come a long way since the days when our insurance rates far outstripped those in our neighboring states, and companies were hesitant to offer certain types of policies at all. Any change to our insurance laws must take into consideration the impact it will have on the broader market and on the legal system. The passage of either or both bills would send shockwaves through the insurance industry, and flood the courts with additional cases.

Employment Bills Scheduled for Vote on Monday

March 23, 2018News, Top StoriesArbitration, Employment Law, New Jersey LegislatureNJCJI

Several employment bills will be heading for floor votes on Monday, including two of particular concern to NJCJI. The “Diane B. Allen Equal Pay Act” continues to regulate much more than “equal” pay and would present a significant danger to employers who do, in fact, compensate all employees equally for equal work. S121/A1242, legislation “Concerning Discrimination” would also interfere with the enforceability of widespread employment contract provisions and run afoul of the Federal Arbitration Act.

Pay Equity

NJCJI members value all employees and do not discriminate in compensation of employees based on gender or any other protected classification. But we continue to oppose this “Equal Pay Act” as currently drafted, as it would impose a new standard that would equate different jobs according to a set of vague factors, with a risk of significant retroactive liability for employers who do not engage in discriminatory pay practices.

A1/S104 would change the standard for “equal pay” to a new and uncertain formulation of “substantially similar” work, as measured by similar “skill, effort, and responsibility.” This change alone will bring significant uncertainty, as it would equate entirely distinct jobs in an unpredictable way. Employers can no longer set compensation based on prevailing labor markets – paying the wages necessary to recruit suitable candidates.

Other states that have adopted a similar standard have recognized that common factors often account for wage disparities, such as local cost-of-living and working conditions, like risk of injury, night shift, and inclement weather. This bill as currently drafted does not permit accounting for such factors, and it is not clear how employers will fill jobs with more challenging and less-desirable working conditions without paying a wage premium.

But whatever the merits of such a standard going forward, the prospect of the retroactive application of that standard, with treble damages imposed on employers for failing to comply with a standard not in effect when compensation was set or paid, presents a risk of significant and inequitable liability.

Sponsors have indicated a willingness to mitigate the inequity of retroactive treble damages by capping the back-pay penalty at six years. However, we remain concerned that the amendment in its current form may not effectively cap the back-pay penalty at six years, given the open-ended language regarding the application of the continuing violation doctrine and discovery rule.

We also remain concerned that the retroactive application of treble damages does not meet standards of basic fairness, as it penalizes employers who had no reason to believe there was anything wrong with their employee compensation structure. Other states that have imposed treble damages in pay equity legislation have limited their application to “knowing or willful” violations of the law and thereby avoided the inequity of retroactive treble damages.

If amended to correct these particular flaws, the bill would still be the most aggressive pay equity legislation in the country. But as currently drafted, it presents a significant risk to employers who do not engage in discriminatory behavior in employment compensation.

Banning Nondisclosure Agreements… and Arbitration

Sparked by a desire to encourage greater transparency in settlement of sexual harassment claims, and concern that non-disclosure agreements (NDAs) can have the perverse effect of allowing such behavior to continue, legislation to restrict the enforceability of NDAs is also scheduled for a floor vote on Monday.

Unfortunately, the bill has also become a vehicle for the plaintiff’s bar, which desires a general prohibition on arbitration agreements in employment contracts. By barring waivers of “procedural rights” in employment contracts, which would include essential attributes of arbitration like waivers of jury trials, full discovery, and the like, the bill would prohibit prospective agreements to resolve employment disputes through arbitration.

When disputes arise in the employment context, there are two possible tracks: it can be resolved through litigation in court, or it can be resolved through arbitration. The substantive remedies are the same. But while proceeding in court will typically take years to resolve, with massive legal fees, arbitration is cheaper, faster, and more efficient.

By reducing legal fees and precluding class actions, arbitration also presents a challenge to the business model of the plaintiffs’ bar. As a result, we have seen an intensive anti-arbitration public relations campaign, coupled with efforts to undermine arbitration in state courts and legislatures.

Hostility to arbitration from those who benefit from the litigation business model is nothing new. Which is why federal law since 1925 has defended arbitration as a favored means of dispute resolution and expressly preempted efforts to undermine the enforceability of arbitration agreements.

This legislation would attempt to circumvent that preemption by defining state contracts to preclude arbitration agreements. But when a state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: the conflicting rule is displaced by the FAA. And the result is the same when state law prohibits essential attributes of arbitration.

As a practical matter, a prohibition on arbitration agreements does not benefit the average employee. Arbitration is a faster, more cost-effective way of resolving disputes, and the lower transaction costs inure to the benefit of all employees. Litigation costs, by contrast, function as a transfer of wealth from lower and middle-class employees, to more highly-compensated attorneys.

The New Jersey legislature’s attempt to interfere with the protections of the Federal Arbitration Act will result in protracted litigation, culminating in the legislation eventually being invalidated in federal court. And in the interim, it would impose massive litigation costs on employers and employees alike.

Top News Clips for the Week of March 10-16

March 16, 2018News, Recent NewsGovernor Murphy, New Jersey Courts, Outrageous LawsuitsNJCJI

A selection of the need-to-know civil justice news for March 10-16.

Murphy Proposes ‘Fiscally and Morally’ Balanced Budget, with $1.7B in New Tax Revenue

Ryan Hutchins | Politico New Jersey

New Jersey Gov. Phil Murphy on Tuesday proposed the largest state budget in history, saying he’ll deliver on his liberal agenda by raising $1.7 billion in new tax revenue, primarily by rolling back a small cut in the state sales tax, generating new revenue off the backs of millionaires and legalizing the sale of recreational marijuana.

Samantha Marcus | NJ Advance Media for NJ.com

You can call it the very model of a modern progressive budget. From tax hikes on New Jersey’s wealthiest to tax credits for the working poor and legalization of marijuana, Gov. Phil Murphy’s first state budget proposal leaves virtually no progressive stone unturned.

Anjalee Khemlani | ROI

While some attendees walked away tight-lipped from the governor’s first budget address, others were optimistic that Gov. Phil Murphy has taken a step in the right direction for the state. The tax-heavy budget plan for fiscal year 2019 is a $2.7 billion increase from the previous year and includes some initiatives that could shock the economic system in the state.

David Gialanella and Charles Toutant | New Jersey Law Journal

Returning to what many in the profession said was an important tradition, Gov. Phil Murphy and the New Jersey State Bar Association have executed an agreement that provides for county bar associations to have a formal role in evaluating potential judicial and prosecutorial nominees.

Jonathan Stempel | Reuters

A federal judge on Monday dismissed a lawsuit accusing Home Depot Inc of deceiving shoppers about the size of its four-by-four lumber. U.S. District Judge Sharon Johnson Coleman in Chicago rejected plaintiff Mikhail Abramov’s claim that the largest U.S. home improvement retailer should be held liable for selling lumber as 4 inches thick by 4 inches wide, when the dimensions were actually 3-1/2 inches by 3-1/2 inches.

Crafting More Workable Sick Leave Legislation

March 16, 2018News, Top StoriesEmployment Law, New Jersey Legislature, Paid Sick LeaveNJCJI

Governor Phil Murphy campaigned on a promise to sign sick leave legislation. He mentioned the issue again in his budget address, urging the legislature to get a bill to his desk. And an Assembly version sponsored by Assemblywoman Lampitt was heard and voted out of the Assembly Labor Committee this week and is moving through the legislative process.

NJCJI has been engaged in the details of sick leave since early versions were introduced last legislative session. We have focused not on the mandate itself, but on the manner in which it is imposed and the enforcement mechanisms involved in ensuring employer compliance. By that measure, the most recent version of sick leave represents a significant improvement, though two critical flaws in the enforcement mechanism would continue to unduly infringe on workplace flexibility and expose employers to significant and unwarranted liability.

Steps in the Right Direction…

It is striking that although the vast majority of New Jersey employers already offer more generous paid sick leave to their employees than would be mandated under the bill, many such employers have nevertheless opposed this legislation since first introduced last session. Under earlier versions, the broad statutory entitlement to paid sick leave, compounded by incentivized-litigation enforcement mechanisms, would deprive those employers of the flexibility to administer their leave policies in a way that deters abuse and is consistent with the needs of their businesses.

The Committee Substitute of A1827, sponsored by Assemblywoman Lampitt, is a significant improvement. The bill would ensure greater clarity and predictability, by imposing an effective blanket preemption on all local ordinances to ensure one uniform statewide standard, with one standard of 40 hours of leave for all employers. It would also grant employers more flexibility in deterring abuse of sick leave policies. Employers could require pre-clearance for foreseeable sick leave on “blackout” dates, as well as documentation to confirm non-foreseeable sick leave on those dates.

…But More Work to be Done

Some flaws in the enforcement mechanism would still expose employers to a risk of unwarranted liability. But that risk, and the overall workability of the legislation, could be significantly improved with a few modest amendments.

First, employer flexibility in making adjustments to schedules and responsibilities must be protected. An employee’s right to use sick leave must be balanced with an employer’s need to make the necessary adjustments to ensure that the work is completed on time. But the existing definition of prohibited “retaliatory personnel action” includes not just constructive discharge, demotion, and the like – it would also bar “unfavorable reassignment.”

“Unfavorable” could include a less lucrative shift with worse tips, for service-industry jobs, or working on a lower-profile product for a pending product launch in the consumer-product industry. For employees who travel to client offices, it could mean the difference between working a stint in San Diego or Bismarck. For a business in trade work, it might mean the difference between a prevailing-wage project and a project that pays market wages. But employers need the freedom to make all of these adjustments – the flexibility to move employees around to ensure necessary work is completed in timely fashion is essential to a functional work place. And employers should not have to risk being dragged into court to defend such adjustments.

Our second concern is with the presumption for retaliation. The bill would create 90-day window during which any adverse employment action is presumed to be retaliatory, with the burden on the employer to prove that the adverse action was unrelated to the employees’ sick leave-related activity. But in addition to documented and verifiable actions like filing complaints with the Department of Labor or with the courts, the presumption would also triggered by merely speaking to another employee about their rights under the law.

The burden-shift to employers to essentially prove their innocence is a powerful tool that should not be granted lightly. It should not be so easily manufactured by an employee, and so prone to abuse, as a mere conversation with colleagues about sick leave. And if the presumption has been triggered, it is only fair that the employer be on notice of the risk they run in taking any action that might be considered “adverse.”

The critical challenge of a paid sick leave mandate is balance.

The shift from voluntary policies to statutory entitlement will necessarily entail some lost flexibility, even for employers who already offer sick leave. But the sponsors’ core objectives can be achieved while preserving significant employer discretion. The remaining challenge to a workable bill is ensuring that enforcement mechanisms in the bill accommodate the practical challenges of running a business, and don’t penalize employers for taking the necessary steps to ensure that work gets done.

Murphy Outlines His Budget Priorities

March 16, 2018News, Top StoriesGovernor Murphy, New Jersey CourtsNJCJI

On March 13, Gov. Murphy delivered first budget address to a joint session of the legislature, giving the state its first good idea of his priorities now that he is in office. From now until July 1, the legislature will be focused on passing a budget built on the foundation Murphy laid.

The Governor’s plan calls for $37.4 billion in State appropriations, a $2.7 billion increase over FY2018, which makes this the largest state budget in New Jersey history. The increase in spending is to be funded by economic growth and $1.7 billion in new tax revenue. Murphy recommends increasing the sales tax to 7%, implementing a millionaires’ tax, and legalizing the sale of recreational marijuana.

The judicial branch would get $10 million less than last year under the Governor’s plan. This will undoubtedly cause some handwringing and perhaps lead to increased filing fees as the courts struggle to pay for bail reform and the move to electronic filing.

Although there is already a lot of disagreement over Murphy’s proposed budget, there is a wide-spread, bi-partisan recognition that it’s time to make some changes that will rev up New Jersey’s economic engine, and foster a “stronger and fairer” economy. Some thoughtful tweaks to our legal system could improve our state’s legal reputation, and stimulate economic growth without raising taxes or increasing spending.

Additional Resources

FY2019 Budget in Brief from the Office of Management and Budget

Governor Murphy’s Press Release

Full Text of Governor Murphy’s Speech

Murphy Proposes ‘Fiscally and Morally’ Balanced Budget, with $1.7B in New Tax Revenue

Ryan Hutchins | Politico New Jersey

Samantha Marcus | NJ Advance Media for NJ.com

Anjalee Khemlani | ROI

Read more.

Top News Clips for March 3-9

March 9, 2018News, Recent NewsBusiness Climate, Governor Murphy, Legal ReformNJCJI

A selection of the need-to-know civil justice news for March 3-9.

Phil Murphy Creates Jobs Council Designed to Improve NJ Economy

Dustin Racioppi | northjersey.com

Gov. Phil Murphy on Tuesday ordered the creation of a jobs council designed to advise him and recommend ways to follow through on his central promise to improve the state’s economy.

S.P. Sullivan | NJ Advance Media for NJ.com

In the first year of Donald Trump’s administration, the president faced a barrage of legal challenges from left-leaning states on everything from immigration to the environment. For the most part, New Jersey — run by a Republican governor and vocal Trump ally — sat on the sidelines. But Gov. Phil Murphy came to office pledging to take on Trump, and he found his attack dog in Gurbir Grewal, a 44-year-old former state and federal prosecutor born to Indian immigrant parents in northern New Jersey.

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