NJCJI joined a coalition of business advocacy organizations in a letter opposing H.R. 963, the “Forced Arbitration Injustice Repeal (FAIR) Act.” The so-called FAIR Act would prohibit pre-dispute arbitration agreements that require arbitration in employment, consumer, antitrust, or civil rights disputes or that interfere with the ability of individual plaintiffs to participate in joint, class, or collective actions related to those types of disputes. Effectively, the FAIR Act will ban arbitration provisions in most private contracts where they typically appear today. 

In its letter to the U.S. House of Representatives opposing the bill, the coalition highlighted the fact that arbitration helps litigants. Indeed, plaintiffs tend to prevail in arbitration, recover more money, and reap these benefits faster than they would in traditional litigation and class actions. Indeed, the only group that stands to gain from the FAIR Act are class-action lawyers, whose businesses profit from increased traditional class-action litigation. Nevertheless, H.R. 963 passed the House of Representatives and is now before the Senate Judiciary Committee. 

Read H.R. 963 here and the Coalition’s letter here. 

On March 23, 2022, the Honorable Freda L. Wolfson, Chief Judge for the United States District Court for the District of New Jersey, issued a comprehensive opinion granting summary judgment to Merck in In re Fosamax (Alendronate Sodium) Products Liability Litigation. Chief Judge Wolfson’s decision ends about 500 lawsuits filed over the last fourteen years. 

In re Fosamax involved more than 500 individual plaintiffs who took Fosamax, a drug manufactured by Merck. The plaintiffs claimed that they suffered atypical femoral fractures between 1999 and 2010 and that Merck failed to warn them of this alleged side effect. The plaintiffs’ claims were based on state-law failure-to-warn theory. 

This case previously went to the Supreme Court of the United States on the issue of whether the judge or jury decides whether federal law preempts the plaintiffs’ state-law failure-to-warn claims. The Supreme Court ruled that the trial judge decides the preemption issue. The case was remanded to the District Court to decide if communications between Merck and the Food and Drug Administration (“FDA”) were sufficient to give rise to preemption. Specifically, the FDA issued a Complete Response Letter (“CRL”) that rejected a warning concerning atypical femoral fractures that Merck proposed. 

Chief Judge Wolfson’s opinion evaluated whether the CRL rejecting Merck’s proposed warning preempts the plaintiffs’ state-law failure-to-warn claims. The plaintiffs argued that the CRL was not “clear evidence” that the FDA would have rejected any and all warnings. Chief Judge Wolfson disagreed, finding that Merck fully informed the FDA of the justification for its proposed warning, which would have been adequate under New Jersey law, and that the FDA did not approve changing the Fosamax label to include a warning about atypical femoral fractures. Further, the FDA based its rejection on insufficient evidence of a causal link between Fosamax and atypical femoral fractures, so Chief Judge Wolfson also found that the FDA would not have approved a differently worded warning about that risk. Thus, Chief Judge Wolfson concluded that the state-law failure-to-warn claims were preempted by the FDA’s rejection of the proposed warnings. 

NJCJI applauds this decision as an appropriate application of the doctrine of preemption. Read Chief Judge Wolfson’s thoughtful opinion here.

On March 14, NJCJI appeared as a friend of the New Jersey Supreme Court in East Bay Drywall, LLC v. New Jersey Dep’t of Labor and Workforce Devel., No. 085770, a dispute over application of New Jersey’s “ABC Test” for determining whether workers paid as independent contractors should instead have been classified as employees. The drywall installation company at issue sent drywall contractors to job sites all over the state. At issue in the case are whether (1) those remote job sites—the customers’ premises—count as “places of business” for the drywall company (as the State contends), and (2) the drywall company provided sufficient evidence that its contractors operated independent businesses (which the State disputes). The Appellate Division sided with East Bay Drywall and the Supreme Court granted the State’s petition to review the case. 

The Justices posed tough questions to both sides in the case and to the two amici, NJCJI on the defense side and the New Jersey chapter of the National Employment Lawyers Association in support of the State. With respect to whether remote work sites count as the drywall company’s “places of business,” precluding the company from satisfying the test’s “B” prong, questioning focused on differences between this case and Carpet Remnant Warehouse, Inc. v. N.J. Dep’t of Labor, 125 N.J. 567 (1991), in which the Supreme Court found that customers’ premises where the defendant’s contractors installed carpets were not the defendant’s places of business. Narrowing or reversing this interpretation of the “B” prong in the manner argued by the State would have serious implications not just for construction, but for many industries in New Jersey. For that reason, NJCJI urged the Court to follow and affirm its decision in Carpet Remnant.  

As to whether East Bay Drywall provided sufficient evidence that its contractors operated independent businesses, the test is fact-intensive. The State contended that the evidence East Bay Drywall submitted should not have sufficed, but the State neither provided any evidence of improper practices by the company nor explained where it would set the proof bar. Several Justices noted that the absence of regulations explaining what employers in East Bay Drywall’s position must provide is unfortunate and leaves employers without proper guidance. NJCJI acknowledged that the “C” prong issues in the case are complex and urged the Court not to impose an evidentiary burden higher than small businesses in the State would be able to meet without undue expense. 

Jeffrey Jacobson, a litigation partner at Faegre Drinker and a former Chief Counsel to the New Jersey Attorney General, briefed and argued the case for NJCJI. NJCJI would like to thank Jeff for his brilliant advocacy in this case and steadfast support of NJCJI.

On February 25, 2022, Chief Judge Michael Kaplan, U.S. Bankruptcy Judge for the District of New Jersey, denied claimants’ motions to dismiss bankruptcy proceedings filed by LTL Management, LLC (“LTL”). Allowing LTL to continue with its bankruptcy proceedings will allow LTL to efficiently and fairly resolve current and future personal injury claims related to talc baby powder produced by Johnson & Johnson. 

In filing the motions, the claimants alleged that LTL’s bankruptcy filing was not made in good faith. Judge Kaplan disagreed. In applying the standards of the United States Court of Appeals for the Third Circuit and examining the totality of the factual circumstances, Chief Judge Kaplan concluded that in filing a chapter 11 case “with the expressed aim of addressing the present and future liabilities associated with ongoing global personal injury claims to preserve corporate value is unquestionably a proper purpose under the Bankruptcy Code.” Further, Chief Judge Kaplan concluded that the current structure of the settlement and LTL will efficiently resolve the talc claims and was not developed to secure an unfair tactical advantage. Accordingly, the claimants’ motions to dismiss were denied. The plaintiffs have said that they plan to appeal the decision. 

NJCJI applauds the U.S. Bankruptcy Court’s decision in this matter since it will promote predictability, efficiency, and fairness in the disposition of these claims. Read Judge Kaplan’s thorough decision here.

On February 11, 2022, the New Jersey Supreme Court granted NJCJI’s request to participate as an amicus curiae (“friend of the court”) in the matter of East Bay Drywall, LLC v. New Jersey Department of Labor and Workforce Development. The East Bay Drywall case addresses the application of the “ABC test” to determine whether a worker is an employee or an independent contractor. 

In this case, the New Jersey Department of Labor (“NJDOL”) decided that when an enterprise sends contracted installers to private properties around the state, each and every premises where installers work is a “place of business” for the enterprise. This undermines virtually any enterprise’s argument that their independent contractors are not employees, because any place where work is done is transformed into a “place of business.” The New Jersey Supreme Court previously rejected this interpretation of the “B” prong of the ABC test, reasoning that if the NJDOL’s view were the law, it would effectively be impossible for any enterprise to satisfy the “B” prong. The NJDOL contends in East Bay Drywall that the Supreme Court should narrow or revisit its prior holding. NJCJI’s brief asked the Supreme Court to reaffirm its prior decision. 

Traditionally, the “C” prong of the “ABC test” asks whether the worker is customarily engaged in an independently established trade, occupation, profession or business. In East Bay Drywall, NJDOL conducted its employee-versus-contractor audit after twelve of the contract installation businesses had gone out of business. The enterprise provided NJDOL with certificates of insurance from those contractors, along with credible testimony explaining the enterprise’s belief that each of these contractors was an independently established business that satisfied the “C” prong. An administrative law judge (“ALJ”) sided with the enterprise, but the NJDOL Commissioner overturned the ALJ’s decision. NJDOL had no evidence tending to disprove that these contract installers had not been independently established businesses, but the Commissioner nevertheless took the position that that the enterprise had not satisfied its burden. NJDOL’s application of the “C” prong would impose such a high burden of proof on businesses as to make it nearly impossible to challenge any NJDOL determination that a worker was misclassified. In its amicus brief, NJCJI urges the Supreme Court to hold the NJDOL to a higher standard before it can disregard an ALJ’s findings of fact.  

NJCJI again thanks Jeffrey S. Jacobson, Esq., and his team from Faegre Drinker Biddle & Reath LLP for sharing their expertise and their excellent advocacy in drafting NJCJI’s brief.

This week, NJCJI filed its comment with the Judiciary Conference Advisory Committee in support of the proposed amendment to Federal Rule of Evidence 702 (“Proposed Amendment”). The Proposed Amendment will clarify that the proponent of expert testimony is required to demonstrate its admissibility by a preponderance of the evidence. This clarification will assist federal courts in carrying out their gatekeeping function and prevent unreliable junk science from being admitted as expert testimony.

NJCJI supports the Proposed Amendment, because many federal courts continue to misconstrue Rule 702. Despite the 2000 amendments to Rule 702, many federal courts still use outdated standards, apply a non-existent presumption of admissibility of proposed expert testimony, pass on the issue of admissibility by characterizing it as an issue of weight for the jury, and even hold that the reliability of an expert’s methodology is not subject to the gatekeeping function. These incorrect admissibility decisions result in the admission of untested, unreliable pseudoscientific notions before a jury who will rely on them as fact.

In addition to supporting the Proposed Amendment, NJCJI offered additional suggestions to ensure that the Proposed Amendment will remedy the federal courts’ misunderstanding of Rule 702:

• Adding language explicitly stating that the court decides admissibility – not the jury;
• Expanding the Committee Note to address a handful of outdated cases repeatedly, and incorrectly, cited as authority; and
• Emphasizing that Rule 702 does not favor a particular outcome.

NJCJI joins many other voices from the business community in supporting the Proposed Amendments and will update its membership when the Committee has completed its work on the issue.

NJCJI would like to thank Michelle Bufano, Esq. of Patterson Belknap for sharing her deep expertise on the subject and for drafting NJCJI’s comment. Read NJCJI’s comment here.

On February 10, 2022, NJCJI President Anthony Anastasio testified before the Senate Environmental and Energy Committee on Senate Bill 1005, which seeks to transform the tort of public nuisance in the context of hazardous lead paint. While this was the first time S1005 has come up for a committee hearing this session, its predecessor, S697, was up for committee hearings three times during the last legislative session. S1005 constitutes a radical swing in legal theory away from the rule of law and toward unrestrained confiscation by the State.

Since the early 1970s, New Jersey has been proactive in establishing a comprehensive legislative and regulatory regime to combat the hazards of lead paint. However, some New Jersey municipalities with deteriorating housing stock lack sufficient resources to address lead paint hazards. As a result, in the early 2000s, a group of municipalities sued a group of paint manufacturers for money damages under a theory of public nuisance, which is rooted in tort. In 2007, in In re Lead Paint Litigation, 191 N.J. 405 (2007), the New Jersey Supreme Court rejected the municipal plaintiffs’ use of public nuisance as a vehicle for a massive payday. The Court concluded that the municipal plaintiffs failed to meet all of the elements of the tort of public nuisance and, therefore, could not sustain a cause of actions for damages.

Now, S1005 would undo the Court’s ruling. If passed, the proposed legislation will completely defy the traditional understanding of the tort of public nuisance by removing all of the elements of the tort of public nuisance as applied to the State in the context of lead paint. If the bill passes, then the State could identify the presence of lead paint anywhere in the State and demand payment from manufacturers, despite the fact that manufacturers stopped making lead paint decades ago. This would present significant constitutional issues and is fundamentally unfair, as well as sets a dangerous precedent for applying a faux public nuisance doctrine to other contexts.

NJCJI President Anthony Anastasio testified alongside Ray Cantor, Esq. (Vice President for Government Affairs at the New Jersey Business and Industry Association) and Tony Diaz, Esq. (Partner, Jones Day on behalf of Sherwin-Williams). Anthony began by discussing the legal defects of the bill and how it completely upends the traditional tort of public nuisance. He noted that the bill would gut all of the essential elements of the common law tort of public nuisance and transform it into a license for the State to simply confiscate money from the paint manufacturers on a never-ending basis. Mr. Cantor said that the bill sends a message that manufacturers can do everything right at the time a product is made and then be held liable fifty years later for a product that was once legitimately sold and used. Finally, Mr. Cantor noted to the Committee that New Jersey is regularly recognized as an inhospitable habitat for business and industry, and this bill does New Jersey’s reputation and business community no favors. Mr. Diaz concluded by providing some brief history on lead paint hazards and then discussing a new law passed last session that provides a workable solution to this problem and does not undermine the rule of law.

Nevertheless, the Committee voted along party lines to release the bill without revising its obvious legal defects. At the end of the vote, the Committee Chair encouraged interested groups with proposed changes and concerns to discuss them with the bill’s sponsor, Senator M. Teresa Ruiz and, for the identical Assembly Bill, A659, Assemblymen Anthony S. Verrelli, Robert J. Karabinchak, and Raj Mukherji.

Listen to Anthony’s testimony here, starting at 1:42:45.

Read Anthony’s written testimony here. 

The Star-Ledger featured an op-ed from NJCJI President Anthony Anastasio and Counsel Kayla Rowe about why representative juries are critical to the administration of justice. Read the op-ed here.

On September 29, NJCJI joined the Insurance Council of New Jersey (ICNJ) in filing an amicus curiae brief with the New Jersey Supreme Court in Crystal Point Condo. Ass’n v. Kinsale Insurance. The Appellate Division’s opinion in that case eschewed New Jersey’s strong public policy in favor of arbitration and allowed the plaintiff, a third-party beneficiary to an insurance contract, who was suing the carrier through a direct action, to avoid the policy’s explicit arbitration provision.

In issuing its decision, the appellate panel asked more of the arbitration provision than it would an ordinary contract. This contradicts New Jersey and federal strong public policy in favor of arbitration agreements, which requires courts to apply traditional state-contract law standards to arbitration agreements. The panel appeared to require explicit mutual assent between a third-party beneficiary and an insurer. This is an unprecedented and improper burden to place on parties agreeing to arbitrate in this context. Placing such burdens on arbitration provisions will also result in unpredictability in enforcing arbitration provisions, resulting in more litigation, increased costs and higher insurance premiums. NJCJI and ICNJ have asked the Court to restore arbitration to its status as a preferred dispute resolution method and to remind New Jersey courts of the traditional principles governing arbitration agreements.

On October 22, the Supreme Court issued its order granting NJCJI and ICNJ’s motion to participate as amici curiae and accepted the joint brief for filing.

A copy of the brief can be found below: