All posts by NJCJI

Assembly Labor Committee Releases Restrictive Covenant Bill with No Amendments

February 26, 2021NewsNJCJI

On Wednesday, February 24, 2021, the Assembly Labor Committee heard testimony on a sweeping bill that all but prohibits employers’ use of restrictive covenants from a practical perspective. Among other things, the bill requires employers to provide 100% pay and continue contributions to fringe benefits for former employees during the duration of a restrictive covenant (also known as “garden leave”); bans enforcement of restrictive covenants against independent contractors; prohibits application of restrictive covenants against former employees when customers solicit an employee or otherwise initiate contact; limits the duration of all restrictive covenants to one year; and creates a new cause of action for employees, including liquidated damages and a right to seek attorneys’ fees and costs.

NJCJI’s President, Anthony Anastasio, offered detailed testimony in opposition to this bill. First, NJCJI requested that the bill be amended to explicitly state that lawful provisions of restrictive covenants remain severable and that our courts can still blue pencil these agreements as a matter of equity. In its current form, the bill casts doubt on courts’ ability to do so.

Next, NJCJI addressed the garden leave requirement for all restrictive covenants, arguing that this entitlement will depress wages for New Jersey workers among other unintended consequences. NJCJI requested that this entitlement either be deleted or amended to only apply to low-wage employees.

NJCJI also argued for deletion of the provision that allows former employees to engage customers of their former employer if the customers initiate first contact. NJCJI highlighted the obvious consequence of a flood of litigation over backdoor solicitations by former employees who disingenuously seek protection under this provision.

Then, NJCJI argued for deletion of the provision that bars enforcement of restrictive covenants against independent contractors. This provision will create the obvious consequence of prohibiting protection of proprietary information from misappropriation in business-to-business transactions involving subcontractors.

Further, NJCJI argued against the imposition of a 12-month limit on the duration of restrictive covenants, which completely disregards the practical realities of different industries in New Jersey’s diverse economy. Using drug manufacturers as an example, NJCJI stressed the fact that our courts are perfectly capable of using their equitable powers to ensure that durations are fair and reasonable in each unique set of circumstances.

Finally, NJCJI argued that the liquidated damages provision would result in a flood of class action lawsuits based on technical violations of the bill’s detailed requirements. That is, any such violation could theoretically sustain an action for liquidated damages since those damages can be sought regardless of actual harm.

Supporters of the bill then offered testimony laden with hyperbole and mischaracterization of the bill’s actual written requirements. After only a few short questions, the Committee voted to release the bill with no amendments, on party lines.

NJCJI is currently arranging to meet with the sponsor of this bill to further press its concerns before a full Assembly vote. Please email Anthony if you would like to discuss this legislation.

A copy of NJCJI’s written testimony can be found below. A link to Anthony’s oral testimony can be found here. A1650 starts at the 11:50 mark and Anthony’s testimony can be heard at the 21:30 mark.

Assembly Labor Committee A1650 Restrictive Covenant Download

New Jersey Trial Court Rules that Statutory Prohibition of Certain Arbitration Agreements is Preempted by Federal Law

February 12, 2021NewsNJCJI

On January 21, 2021, the Honorable Craig L. Wellerson, Presiding Judge of the New Jersey Superior Court, Law Division, Civil Part (Ocean County), issued a bench opinion holding that N.J.S.A. 10:5-12.7 is pre-empted by the Federal Arbitration Act (“FAA”). That statute, enacted by the New Jersey Legislature in 2019, has the practical effect of barring employers from using arbitration agreements to compel arbitration of certain employment-related claims. The New Jersey Civil Justice Institute (“NJCJI”) has consistently maintained that this constitutes a clear violation of the FAA, and aggressively lobbied against the statute on that basis.

The above-mentioned case, Albino v. Comcast Corp. (Docket No. OCN-L-002125-20), involved claims by an employee against his employer for unlawful discrimination. The plaintiff-employee argued that the arbitration agreement set forth in his offer letter and related documents was unenforceable as written, and also, that it was void by way of N.J.S.A. 10:5-12.7, which covered his claims. After finding that the agreement complied with the general requirements of New Jersey law governing arbitration agreements, the Court found, as a matter of first impression, that “the supremacy of the [FAA] would clearly override [New Jersey] legislation attempting to divest the [FAA] of the . . . force of law.” Notably, during oral argument, the parties considered the import of NJCJI’s on-going lawsuit against the State of New Jersey seeking to bar enforcement of N.J.S.A. 10:5-12.7 by the New Jersey Attorney General’s Office on those same grounds.

Judge Wellerson ultimately issued an Order granting the defendant-employer’s motion to compel arbitration of the plaintiff’s claims, thereby disregarding the mandate of N.J.S.A. 10:5-12.7 on the basis of federal preemption. It is unclear whether the plaintiff will appeal the Court’s decision in this case. However, this ruling provides some insight on how trial court judges may approach this issue in future cases. NJCJI will continue to monitor the docket of this and other matters in which N.J.S.A. 10:5-12.7 is at issue and update its members accordingly.

NJCJI President Anthony Anastasio featured in NJBIZ

February 5, 2021Recent News, Top StoriesNJCJI

This week, NJBIZ published an unedited Zoom interview that its chief editor, Jeff Kanige, conducted with NJCJI’s new President, Anthony Anastasio. Anthony discussed NJCJI’s mission along with its current and future priorities. He also discussed the shifting political landscape in Washington D.C. and its effect on legislative and regulatory priorities in New Jersey. A link to the interview can be found here.

Biometric Privacy Bill Released from Assembly Science, Innovation and Technology Committee

January 29, 2021News, Recent News, Top StoriesNJCJI

A3625, legislation that imposes restrictions on the use of biometric information by businesses, was released from the Assembly Science, Innovation and Technology Committee after a hearing on Monday, January 25, 2021.

The Chair of the Committee and sponsor of the bill, Assemblyman Andrew Zwicker, offered some brief comments at the outset of the hearing. Assemblyman Zwicker emphasized that safeguarding biometric information is an important issue and noted his desire for the bill to balance privacy concerns with the realities of today’s marketplace. Throughout the hearing, other Committee members also expressed an interest in a measured solution to the issue.

NJCJI was among several representatives of the business community testifying against A3625. NJCJI’s President, Anthony Anastasio, testified that the bill’s private right of action and liquidated damages provisions will create a strong financial incentive for class action lawsuits against businesses for violations of the law. For instance, even purely inadvertent violations of the bill’s technical requirements that are promptly remediated could still lead to astronomical liability since Section 5 imposes a minimum $1,000 of liquidated damages per violation. Also, there is no cap on cumulative liability for a series of related violations. This liability is imposed even in the absence of actual injury or harm, and a business’ good faith is irrelevant.

Since biometric privacy is a technical topic and use of biometric identifiers in the marketplace is rapidly evolving, NJCJI argued that enforcement authority for this law should exclusively vest in New Jersey’s Attorney General. Experts with technical knowledge and sound discretion—not enterprising plaintiffs’ lawyers—should lead consistent enforcement efforts, which will protect the public and allow for investment and innovation.

Also, NJCJI argued that businesses operating in good faith should receive notice and an opportunity to cure alleged violations before enforcement is authorized. Privacy laws are complex, and even businesses with the best intentions may stumble in attempting to comply in real-world scenarios. NJCJI noted that the federal Health Insurance Portability and Accountability Act of 1996, commonly known as HIPAA, creates a cure period for this very reason and does not provide a private right of action.

The Committee voted in favor of releasing the bill on party lines. A3625 will now proceed to the Appropriations Committee for further review. NJCJI is working with the sponsors to ensure that businesses who use this technology are not subject to a flood of abusive lawsuits for harmless violations. Please email Anthony if you would like to discuss this legislation further.

Read NJCJI’s full written comments here. Listen to testimony delivered in Committee here. The bill is introduced at the 20:30 mark and Anthony’s testimony begins at 1:07:50, respectively.

New Jersey Appeals Court Issues Notable Decision Regarding Arbitration Agreements

January 22, 2021News, Recent NewsNJCJI

On January 19, 2021, the New Jersey Superior Court, Appellate Division, issued a noteworthy decision enforcing an arbitration agreement in the employment context. The plaintiff in the case claimed that her supervisor committed various acts of sexual harassment and retaliation prohibited by the New Jersey Law Against Discrimination. The defendant-employer moved to compel arbitration of these claims, arguing that the plaintiff did not opt out of its arbitration program for workplace disputes. Notably, the employer sent the plaintiff an e-mail in September of 2015 explaining the expansion of its arbitration program, which required employees to arbitrate such claims. The e-mail’s subject title specifically referred to arbitration and the e-mail included a provision that allowed employees to opt out of the program.

In support of the applicability of its arbitration program to plaintiff’s claims, the employer produced testimony and metadata demonstrating that the above-mentioned e-mail was marked as “read” by the plaintiff’s e-mail inbox, but she never opted out. Other e-mails received by the plaintiff at that same time were not marked as “read”. The plaintiff responded that the mere receipt of an email was insufficient to establish the mutual assent necessary to compel arbitration in New Jersey.

The Appellate Division found that since the plaintiff received the e-mail, did not return the opt-out form and then continued to work for her employer under the conditions set forth in the e-mail, there was an enforceable agreement to arbitrate her claims. Relying on the New Jersey Supreme Court’s recent decision in Skuse v. Pfizer, Inc., 244 N.J. 30 (2020), the Court found that the plaintiff’s alleged failure to review the e-mail did not invalidate the agreement to arbitrate.

It is unclear whether this decision signals a trend of more balanced treatment of arbitration agreements by New Jersey’s courts. However, following Skuse, it is a step in the right direction towards conforming New Jersey’s treatment of arbitration agreements with the mandate of the Federal Arbitration Act.

Read a copy of the decision here.

Bad Faith Bill Released from Senate Commerce Committee

January 22, 2021News, Recent NewsNJCJI

S1559, legislation that would expand policyholders’ ability to bring bad faith claims against their automobile insurers, was released from the Senate Commerce Committee on Thursday, January 21, 2021, with amendments.

The sponsor of the bill, Senator Nicholas Scutari, testified in support of this legislation. Senator Scutari generally claimed that policyholders have no recourse against their auto insurers when they delay payment or offer unreasonably low settlements on UM/UIM claims (i.e., coverage for auto accidents involving uninsured or underinsured motorists). To remedy this purported problem, S1559 allows policyholders to bring private civil actions against their auto insurers for any “unreasonable delay or unreasonable denial of a claim for payment of [UM/UIM] benefits under an insurance policy” or violation of N.J.S.A. 17:29B-4 (which lists prohibited insurance trade practices that are currently enforced by the New Jersey Department of Banking and Insurance).

S1559 does not define an “unreasonable” delay or denial, creating uncertainty that must be resolved through litigation. The bill does state that claimants are not required to prove that an insurer’s actions were part of a “general business practice”. Most important, though, the initial draft of the bill provided that a successful claimant is entitled to “actual damages caused by the violation including, but not limited to, actual trial verdicts” and “prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses”. At the outset of the hearing, however, Senator Scutari announced that the sponsors would be amending the bill to remove entitlement to interest, attorneys’ fees and litigation expenses.

NJCJI was among several representatives of the business community testifying against S1559. Insurance industry representatives were quick to point out that, contrary to Senator Scutari’s claim, the New Jersey Supreme Court recognized a cause of action for policyholders against carriers for bad faith delay or denial of claims. See Pickett v. Lloyd’s, 131 N.J. 457, 621 A.2d 445 (1993). Insurance industry representatives also testified that the bill would result in a significant increase in bad faith litigation due to its broad and ill-defined standards for violations along with the strong financial incentive for plaintiffs’ lawyers embedded in its remedy (i.e., actual trial verdicts often far exceed UM/UIM policy limits).

NJCJI’s President, Anthony Anastasio, then testified that the New Jersey Supreme Court and its Civil Practice Committee already carefully analyzed the exact issue raised by this bill. See Wadeer v. New Jersey Mfrs. Ins. Co., 220 N.J. 591, 110 A.3d 19 (2015). As a result of that analysis, the Court amended the Offer of Judgment rule to incentivize prompt payment of legitimate UM/UIM claims. Notably, the Civil Practice Committee rejected other penalties, such as fee shifting on all first-party claims, out of fear of generating distortions in the insurance market that could result in higher premiums. NJCJI argued that the Supreme Court’s well-crafted solution to this issue effectively struck the right balance between deterring delay and unnecessary litigation, while protecting carriers’ ability to investigate questionable claims and hold policies to their terms.

The Senate Commerce Committee voted in favor of releasing the bill, 3-2, on party lines. The bill has yet to proceed in the Assembly. Please email Anthony if you would like to discuss this legislation further.

Read NJCJI’s full written testimony here. Listen to testimony delivered in Committee here. (S1559 is introduced at 41:30 and Anthony’s testimony can be heard at 50:36).

U.S. District Court for the District of New Jersey Issues Significant Ruling Regarding Discovery in Multidistrict Litigation

January 14, 2021NewsNJCJI

On January 8, 2021, U.S. Magistrate Judge Joel Schneider issued a ruling in multidistrict product liability litigation that analyzes the standards for designating discovery materials as confidential in such cases. This ruling may have widespread significance, as it is one of the few instances where those standards are discussed in detail and applied against a defendant-manufacturer.

The case involves a products liability claim related to the defendant’s manufacture of Valsartan, a generic blood pressure drug. The defendant sought to designate certain business communications as confidential on the basis that they were not publicly available, contained proprietary or sensitive commercial information, and involved discussions with customers that could cause competitive harm. The plaintiffs, on the other hand, argued that the defendant failed to comply with the Court’s procedure for disputes over the confidentiality of those communications as set forth in its Discovery Confidentiality Protective Order. The plaintiffs further argued that the communications were not entitled to a confidential designation pursuant to existing law.

The Court found that the defendant failed to meet its obligations under the Discovery Confidentiality Protective Order, and on that basis, held that the disputed confidentiality designations were waived as per the Order. Then, the Court went on to analyze the defendant’s substantive arguments regarding the disputed designations. The Court explained that under existing law, confidential designations can only be applied to proprietary, trade secret and/or highly sensitive commercial information that has the potential, if disclosed, for causing competitive advantage to others. The Court further noted that a confidential designation is not warranted merely because a document may be harmful, uncomfortable or embarrassing. After analyzing the disputed communications, which included various internal and external discussions regarding a product recall, the Court found that they were simply routine business communications in response to an exigent situation and therefore did not warrant a confidential designation under the applicable legal standard.

This ruling demonstrates that broad confidentiality designations that are only supported by conclusory allegations of harm may be rejected by a reviewing court if disputed. Accordingly, to ensure confidentiality designations are effective, the party seeking it must be able to make specific demonstrations of fact, supported by evidence when possible.

A copy of the Court’s decision can be found HERE

Valsartan_MDL Download

New Jersey Supreme Court Acknowledges a Difficult Situation for Employers

January 14, 2021News, Recent NewsNJCJI

On Wednesday, January 13, 2021, the New Jersey Supreme Court issued its decision in Branch v. Cream-O-Land Dairy, in which NJCJI appeared as amicus curiae. The decision presents a cautionary tale for employers who rely on comments or decisions by officials from the New Jersey Department of Labor and Workforce Development (NJDOL) regarding the appropriateness of the employer’s compensation practices under the State’s wage-and-hour law.

By way of background, under New Jersey law, no employer can be held liable for failure to pay the minimum wage or overtime compensation if, in good faith, it conformed with and relied on a regulation, order, ruling, approval or interpretation by the Commissioner of NJDOL or the Director of its Wage and Hour Bureau, or an administrative practice or enforcement policy of NJDOL. Although this statutory “good-faith” defense to wage-and-hour claims has existed for decades, there is scant case law explaining the types of communications from NJDOL that employers can rely on or how they can establish good faith.

Cream-O-Land Dairy received three separate communications from NJDOL officials over the course of ten (10) years, each after a field investigation, informing the company that it paid its employees appropriately. None of those communications, however, came from the NJDOL Commissioner or the Director of its Wage and Hour Bureau. Cream-O-Land was later sued by a putative class of employees for alleged unpaid compensation. In response, Cream-O-Land argued that its compensation practices were appropriate for the reasons previously communicated by NJDOL. Further, Cream-O-Land argued that the above-described statutory defense applied based on its good-faith reliance on NJDOL’s communications. The trial court agreed with Cream-O-Land and dismissed the class action on the basis of the good-faith defense, but the Appellate Division later reversed.

In support of the employer’s legal position in the case, NJCJI argued that the text and intent of the good-faith defense should allow employers to rely on guidance communicated by lower-level NJDOL officials when they act as the final decision-maker in an investigation. Unfortunately, the Supreme Court disagreed, relying on a narrow reading of the applicable statute to further the remedial purpose of the New Jersey wage-and-hour law. Accordingly, written communications from the Commissioner of NJDOL or the Director of its Wage and Hour Division, stating that an employer’s compensation practices are appropriate, remain the only clear safe harbor from litigation.

However, NJCJI is still pleased that the Supreme Court explicitly acknowledged the difficult situation that New Jersey employers face here. That is, the Supreme Court noted that NJDOL presently offers no formal procedure for employers to seek advisory opinions signed by the Commissioner or Director. Without a mechanism for employers to solicit such opinions, businesses risk litigation even when other NJDOL officials repeatedly assure them that their compensation practices are appropriate. The Supreme Court therefore suggested that NJDOL develop a procedure for employers to obtain these advisory opinions. The Supreme Court further suggested that the Legislature and NJDOL determine whether additional statutory or regulatory guidance should be provided to employers and employees regarding the applicability of the good-faith defense in wage-and-hour proceedings.

With the recent enactment of New Jersey’s “wage theft” law, employers of all sizes now face astronomical liability for violations of the State’s wage and hour laws. Employers should not be forced to endure costly “bet-the-company” litigation to get answers on these complex and often unsettled legal issues; especially in today’s unprecedented operating environment due to COVID-19. Accordingly, NJCJI hopes that NJDOL will follow the Court’s suggestion and establish a procedure for obtaining reliable advisory opinions on these issues so that a clear safe harbor will be available to employers. Further, NJCJI hopes that NJDOL or the Legislature will provide further clarity regarding the applicability of the good-faith defense.

NJCJI would like to thank Jeffrey Jacobson of Faegre Drinker for his excellent advocacy and representation of NJCJI in this matter.

A copy of the Court’s decision can be found HERE

Cream-O-Land_Decision Download

NJCJI Contact Info Survey

January 8, 2021News, Recent News, Top StoriesNJCJI

With our recent President change, NJCJI would like to ensure we have the most up-to-date contact information for our members and friends in the community. Please fill out the following form and email Tara at tmccreedy@civiljusticenj.org if you have any questions! Thank you in advance!

Take Our Survey!

NJCJI Welcomes New President Anthony Anastasio!

December 18, 2020News, Press Releases, Recent News, Top StoriesNJCJI

The New Jersey Civil Justice Institute (NJCJI), announced Anthony M. Anastasio as its new President and Chief Counsel this week. Mr. Anastasio is an attorney and advocate with diverse experience in both the private and public sectors. He will draw upon this experience to continue the work of his predecessors and advance NJCJI’s mission of promoting fairness, justice and the rule of law in the State of New Jersey.

“In these difficult times, the New Jersey Civil Justice Institute’s mission of promoting fairness, justice and adherence to the rule of law is more important than ever,” said Anastasio. “I am therefore humbled and honored that NJCJI’s Board of Directors has selected me for the position of President and Chief Counsel to lead the organization at this time. As a result of the tireless work of NJCJI’s past leaders, Alida Kass and Marcus Rayner, the organization now enjoys a stellar reputation in both the legal and political communities. I intend to continue the hard work of my predecessors and build upon the foundation they created so that NJCJI can continue to pursue its critical mission in the challenging times ahead.”

The NJCJI Board of Directors released the following statement regarding Mr. Anastasio’s appointment: “In appointing Anthony, NJCJI’s Board of Directors recognized that he is possessed of not only the requisite qualifications, but also, the right qualities to successfully lead the organization’s next chapter. The Board looks forward to partnering with Anthony in his new role and invites you to join them in extending your congratulations to Anthony.”

Before joining NJCJI, Mr. Anastasio served as the Director of Legal and Regulatory Affairs for the New Jersey Coalition of Automotive Retailers (“NJ CAR”). There, he advanced the interests of New Jersey’s franchised automotive retailers before all branches of state government. While at NJ CAR, Mr. Anastasio worked closely with NJCJI and its former President, Alida Kass, on multiple NJCJI initiatives.

Prior to NJ CAR, Mr. Anastasio practiced law at the law firm of Genova Burns LLC, representing clients in litigation. He also previously served as an Assistant Prosecutor in Hunterdon County, New Jersey. Mr. Anastasio began his legal career as the law clerk for the Honorable Robert B. Reed, J.S.C. He received his B.A. from Rutgers College and his J.D. from Rutgers Law School in Camden. Mr. Anastasio is licensed to practice law in New Jersey and Pennsylvania, and before the federal courts of those states.

Contact Anthony at aanastasio@civiljusticenj.org

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