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Rule of Law.

New Jersey’s Old “New Business” Rule Survives Yet Another Challenge

November 13, 2020NewsNJCJI

A recent unpublished Appellate Division decision upheld the longstanding “new business” rule which bars new businesses from claiming lost profits.  Schwartz v. Menas

Under the new business rule, “prospective profits of a new business are considered too remote and speculative to meet the legal standard of reasonable certainty.”  Over the past 80-plus years, most states have rejected the new business rule and allow lost profits when they can be proved “with reasonable certainty.”  The Appellate Division observed in Schwartz that the Third Circuit has twice (in 1990 and 1993) invited the New Jersey Supreme Court to change its mind, and a plurality of the Supreme Court hinted in 1992 that the new business rule may no longer be absolute.  But the Appellate Division declared in Schwartz that until a majority of the Supreme Court says otherwise, the new business rule remains the law in this State.

The attorneys for the plaintiffs have advised NJCJI that they plan to file a petition for certification with the state Supreme Court.

If you would like to discuss this case further please contact Shalom Stone, Stone Conroy, 973-400-4182 or sstone@stoneconroy.com.

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