NJCJI became involved in East Bay Drywall, LLC v. Dep’t of Labor and Workforce Development, No. A-7-21, because the Attorney General’s Office and Department of Labor were seeking to fundamentally redefine the meaning of the ABC test’s “places of business” B-prong. More than thirty years ago, in Carpet Remnant Warehouse, Inc. v. Dep’t of Labor, 125 N.J. 567 (1991), the Supreme Court said that when an enterprise sent workers to install carpet in customers’ homes and workplaces, those remote job sites were not the enterprise’s “places of business.” In East Bay, which involved workers traveling to job sites to install drywall, the Department sought a different outcome. But the Supreme Court declined in East Bay to revisit Carpet Remnant.

The Labor Commissioner found East Bay misclassified sixteen workers as contractors on several grounds, including that East Bay failed to demonstrate to the Commissioner’s satisfaction that the workers were engaged in independent businesses that would survive the end of their relationship with East Bay, as is necessary to satisfy the C prong. Appearing as amicus curiae, NJCJI asked the Supreme Court to provide clarification as to what a business in East Bay’s position must do to satisfy the C prong, and the Supreme Court did so by holding that so long as the Commissioner’s decision is not arbitrary and capricious, the Commissioner may reject a business’s showing as insufficient. The Supreme Court expressed deep concern about worker misclassification in the construction industry and reinforced that the burden for satisfying all prongs of the ABC Test is on the employer, not the Commissioner. Going forward, therefore, businesses that classify workers as contractors will need to collect more evidence from those workers that they operate independent businesses.

Because the Supreme Court decided the case in the Commissioner’s favor on C prong grounds, it did not reach the Commissioner’s B-prong arguments. It cited Carpet Remnant, and it suggested that if the Commissioner wants to hold businesses to a different standard, the State should adopt regulations defining “places of business” differently than the Court did in Carpet Remnant. Businesses should remain vigilant against any attempt to redefine the B prong in this way, as it would make the B prong effectively impossible to satisfy whenever a business sends workers to remote job sites.

NJCJI thanks Jeff S. Jacobson, Esq. and his team at Faegre Drinker for their exceptional and nuanced advocacy in this case.

Read the opinion here. Read NJCJI’s brief here.

On July 18, 2022, the New Jersey Supreme Court issued its decision in Crystal Point Condo. Ass’n v. Kinsale Ins. Co. NJCJI and the Insurance Council of New Jersey (“ICNJ”) participated jointly as amici curiae, in support of Kinsale Insurance Company.

The Appellate Division decision in Crystal Point eschewed New Jersey’s strong public policy in favor of arbitration and allowed the plaintiff, a third-party beneficiary to a professional negligence insurance policy who was suing the carrier through a direct action, to avoid the policy’s arbitration provision. In issuing its decision, the appellate panel asked more of the arbitration provision than it would an ordinary contract, contradicting New Jersey and federal law on arbitration agreements.

NJCJI and ICNJ asked the Supreme Court to acknowledge that the plaintiff’s rights to the professional negligence insurance policy were derivative of the insured professionals’ rights. In bringing a direct action against the insured’s carrier, the plaintiffs sought to enforce the contract to their benefit, as though they stood in the shoes of the insureds. Therefore, NJCJI and ICNJ reasoned, the plaintiff should be held to all of the same policy terms as the insured, including the arbitration provision the plaintiffs wanted to avoid.

A unanimous Court agreed with NJCJI and ICNJ. In the opinion, Justice Patterson noted that the Direct Action Statute, through which the plaintiffs brought their claims, mandates that the claim is brought “under the terms of the policy” and that the judgment creditor’s rights are “purely derivative.” (internal quotations and citations omitted). Ruling otherwise would contravene the plain language of the Direct Action Statute and ignore the purely derivative nature of the plaintiff’s rights under the insurance contract. NJCJI Counsel Kayla Rowe briefed and argued the matter for NJCJI and ICNJ.

NJCJI President Anthony Anastasio discussed third-party litigation funding with the New Jersey Law Journal and shared his insights about how these outside interests influence mass tort litigation in New Jersey. Plaintiffs’ lawyers increasingly use third-party investors’ money to pay for mass marketing campaigns to persuade consumers that they are victims of alleged defective products and are entitled to compensation. In turn, the sheer size of these campaigns can result in a torrent of claims and force the targeted businesses into massive settlements to avoid the high cost of litigation. Last year, NJCJI successfully persuaded the United States District Court for the District of New Jersey to adopt disclosure requirements for these types of investments. Since then, these disclosures have revealed the existence of third-party funding in mass tort litigation.

On June 30, 2022, the New Jersey Supreme Court issued its decision in Fowler v. Akzo Nobel Chemicals, Inc., in which NJCJI jointly participated as amicus curiae with the United States Chamber of Commerce.

The Court held that an asbestos manufacturer or supplier that places insufficient warnings on asbestos bags used in the workplace has breached its duty to warn the worker, regardless of whether it provided the employer with correct supplemental information intended to reach the employees. From a practical perspective, this means that the totality of a manufacturer or supplier’s efforts to communicate risk and safety information, such as flyers for an employer to hang in the workplace, are insufficient. This decision overlooks the fact that workers derive a significant benefit from manufacturer or supplier educational materials, especially when such materials are conveyed to them through their employer. Despite this reality, the majority of the Court elevated the importance of warnings on product packaging that an employee could (but will not necessarily) read, regardless of the extent of other education provided by the manufacturer or supplier. This holding could disincentivize an array of strategies used by manufacturers and suppliers to communicate product safety risks to employers who purchase their products.

NJCJI and the Chamber were represented by Philip S. Goldberg, Esq., Mark A. Behrens, Esq., and Cary Silverman, Esq., at Shook, Hardy, and Bacon L.L.P. NJCJI thanks Phil, Mark, and Carey for their hard work and expertise on an outstanding brief.

On June 20, 2022, NJCJI’s President, Anthony Anastasio, testified before the Senate Commerce Committee on Senate Bill 467 (S467). Part of a package of automobile insurance legislation advanced by Senate President Nicholas Scutari, S467 seeks to alter a New Jersey law that allows drivers to choose to limit their ability to bring accident lawsuits for non-economic damages in exchange for a lower auto insurance premium. That option, commonly known as the “verbal threshold,” can still be overcome if an injured driver suffers serious injuries. The law in its current state has been effective at containing automobile insurance costs in New Jersey and limiting time-consuming litigation for New Jersey’s courts.

However, S467 would allow anyone injured in a car accident that happened to be caused by someone convicted of drunk or reckless driving at the time of the accident to automatically bypass the verbal threshold, despite the choice they made when they purchased their car insurance and no matter how minor the injuries. This change will lead to increased auto accident litigation and in turn, higher insurance premiums for drivers in New Jersey.

Despite heavy opposition by both the business community and consumer advocacy groups, the Senate Commerce Committee voted favorably on S467 and the rest of the bills in the package. These bills will now be sent for a second reading in the Senate. So far, no counterpart to S467 been introduced in the Assembly, but other bills from this package have counterparts in the Assembly. NJCJI will continue to update its membership on this package of legislation.

Read NJCJI’s written comment here. You can listen to Anthony’s testimony here, starting at 1:43:43.

On June 7, 2022, the Committee on Rules of Practice and Procedure voted unanimously to approve an amendment to Rule 702 of the Federal Rules of Evidence. This amendment clarifies that the proponent of expert testimony is required to demonstrate its admissibility by a preponderance of the evidence and that experts will not assert a degree of confidence in an opinion that is not derived from sufficient facts and reliable methods. This clarification will assist federal courts in carrying out their gatekeeping function and prevent unreliable junk science from being admitted as expert testimony.

Next, the proposed amendment will go to the Judicial Conference for consideration this fall. After that, the proposed amendment will be reviewed by the Supreme Court of the United States and sent in its final form to Congress. Barring action by Congress to disapprove the amendment, the revised rule will take effect on December 1, 2022.

NJCJI would like to thank Michelle Bufano, Esq. of Patterson Belknap for sharing her deep expertise on the subject and for drafting the comment NJCJI submitted to the Committee on Rules of Practice and Procedure earlier this year.

On April 7, 2022, the U.S. Chamber of Commerce’s Institute for Legal Reform (“ILR”) released an update on third-party litigation funding across the globe. Among the trends and developments ILR identified was the third-party litigation funding rule adopted by the District of New Jersey. NJCJI successfully advocated for this rule, Civ. Rule 7.1.1, last year. Read ILR’s update here. 

The American Tort Reform Association (“ATRA”) recently released a report about the National Association of Attorneys General (“NAAG”). Traditionally, NAAG’s function was to host a forum for state attorneys general to coordinate shared antitrust cases and manage multistate investigations and lawsuits. However, as ATRA’s report shows, NAAG’s mission has crept from promoting consistency across these cases to promoting “entrepreneurial litigation” among its member-attorneys general. Now NAAG functions like an extension of the mass torts plaintiffs’ bar, even taking a cut of settlements, which are a major revenue source for NAAG. Read the full report here.

On Monday, March 28, 2022, the Supreme Court of the United States heard oral argument in Southwest Airlines Co. v. Saxon.

Southwest Airlines Co. v. Saxon asks the Supreme Court to determine whether workers who load/unload goods from vehicles that travel in interstate commerce but do not themselves physically transport the goods across state lines are considered interstate “transportation workers” exempt under Section 1 of the Federal Arbitration Act (“FAA”). This case raises similar questions to those answered by Chief Judge Freda Wolfson in the Uber misclassification cases in the District of New Jersey. In the Uber cases, Chief Judge Wolfson rejected the conclusion that Uber drivers are exempt from the FAA as interstate “transportation workers” simply because they sometimes drop off people at airports for interstate trips and occasionally cross state lines. NJCJI will issue an update when the Supreme Court issues its opinion in Southwest Airlines.