On June 21, 2021, the United States District Court for the District of New Jersey (“USDNJ”) adopted Local Rule 7.1.1, which promotes transparency in third-party litigation funding (“TPLF”). NJCJI and the U.S. Chamber of Commerce’s Institute for Legal Reform (“ILR”) submitted a joint comment to the USDNJ in support of this rule because it will help reduce TPLF’s pernicious effect on fair and efficient disposition of civil litigation.

The new rule requires parties to file a statement, shortly after the commencement or transfer of a matter to the court, containing information about any non-parties funding the litigation. Specifically, the rule mandates disclosure of the identity of the non-party funder; whether the funder’s approval is necessary for litigation decisions or settlement, and the nature of that required approval; and a description of the nature of the funder’s financial interest in the outcome. While the rule does not require production of the actual agreements between non-party funders and parties to the litigation, it does allow parties to seek discovery of the terms of those agreements upon a showing of good cause that the funder has the authority to make material litigation or settlement decisions, the interests of the parties (or class) are not being promoted or protected, or conflicts of interests exists, or such other disclosure is necessary to any issue in the case.

This new rule takes effect immediately and applies to all pending cases in the USDNJ upon its effective date. Parties to such litigation must comply with the rule’s disclosure requirements within 45 days of that date. A copy of Local Rule 7.1.1 can be found here. Please contact NJCJI’s President, Anthony Anastasio, with any questions about Local Rule 7.1.1 or the broader effort to promote transparency in TPLF across the country.

On Wednesday, June 16, 2021, both the Senate Labor Committee and the Assembly Appropriations Committee considered a package of proposed legislation that expands the New Jersey Department of Labor and Workforce Development’s (“NJDOL”) enforcement power to address worker misclassification. Notably, these bills were first introduced the prior Friday, June 11, 2021, which gave little time to conduct substantive analysis or confer with the sponsors.

Among other things, the bills enhance NJDOL’s investigatory capacity, broaden NJDOL’s authority to pursue civil actions on behalf of workers in court, expand NJDOL’s ability to impose stop-work orders (i.e., at all business locations across the state) and to suspend business licenses, and codify worker misclassification as insurance fraud. Notably, one of the bills expressly extends the attorney-client privilege of confidentiality to communications between workers and the Attorney General’s Office in such matters, which suggests NJDOL is functioning as an advocate. The bills also create a new department called “Office of Strategic Enforcement and Compliance,” which is intended to facilitate an interdepartmental enforcement initiative to address violations of state wage and benefit laws in the context of worker misclassification. 

NJCJI’s President, Anthony Anastasio, testified against all of these bills in the Senate Labor Committee. Anthony highlighted the fact that the NJDOL’s interpretation of the “ABC Test”, which governs worker classification, is at odds with the courts’ interpretation. Notably, the agency’s interpretation of prongs B and C of the test, dealing with the location and nature of an independent business, effectively makes it impossible for many businesses to use independent contractors. Anthony further noted that the NJDOL’s divergent interpretation was recently repudiated by the Appellate Division in the case of E. Bay Drywall, LLC v. Dep’t of Labor & Workforce Dev., 2021 N.J. Super. LEXIS 47, 2021 WL 1537473 (App. Div. 2021). In that case, the NJDOL advanced tenuous arguments in support of employee classification that better resembled worker advocacy than even-handed regulatory enforcement. 

Anthony also highlighted the fact that there is ample ambiguity and resulting confusion in this area of the law, as highlighted by the Third Circuit’s recent request for clarification from the New Jersey Supreme Court in Walfish v. Northwestern Mut. Life Ins. Co., 2020 U.S. App. LEXIS 42191, 2020 WL 9433211 (3d Cir. 2020). NJCJI has a pending application to appear as amicus curiae in that matter. To further increase NJDOL’s enforcement powers against this backdrop is practically inviting regulatory overreach. Facing statewide stop-work orders and/or “bet-the-company” civil litigation brought by NJDOL on behalf of workers, small and medium-sized business that lack the resources to litigate to assert their rights will be forced to acquiesce to employee classification, to the detriment of independent workers who rely on otherwise lawful work arrangements.

Based on the quick progression of these bills through the legislative process, it is clear that their quick passage into law is a priority for both the legislative and executive branches. While the political landscape on this issue is challenging for the business community, NJCJI will continue to advocate on behalf of both businesses and independent workers who seek clarity in the law and neutral regulatory enforcement. NJCJI’s written comments to the Senate Labor Committee can be found here, and Anthony’s testimony can be heard here at the 17:00 minute mark (34:20 left in the audio). Please contact Anthony with any questions about this bill or NJCJI’s broader efforts regarding worker classification. 

On Thursday, June 10, the Senate Labor Committee also considered Senate Bill 3580, which mandates that an assistant prosecutor be assigned in each New Jersey county to criminally prosecute wage and hour law violations and provides funding for said assignments. Against the backdrop of widespread legal confusion regarding those laws in the civil context, increasing criminal prosecution will only cause more uncertainty and fear among honest businesspeople and stifle capital investment in our State.

NJCJI’s President, Anthony Anastasio, offered testimony in opposition to the bill. Anthony noted that there are numerous examples of civil courts and regulatory agencies disagreeing about various nuanced and disputed points of wage and hour law, including those involving overtime exemptions and worker classification. These issues often present daunting compliance challenges for businesses since several reasonable analyses may apply to a given situation. Anthony emphasized that employers face liability for disorderly persons offenses, punishable by up to 6 months in jail, for violating these confusing requirements.

Anthony then stressed that our Legislature recently created a new crime called a “pattern of wage nonpayment” as part of comprehensive wage and hour legislation commonly known as the “wage theft law”. Essentially, if a businessperson or business entity has two prior convictions for violations of the State’s wage and hour laws (including worker classification and overtime determinations) and they violate any of those laws for a third time, then they commit a crime punishable by a mandatory state prison sentence.       

Anthony concluded by arguing that incentivizing criminal prosecution against this backdrop flies in the face of fundamental fairness and due process. NJCJI therefore requested that S3580 be held so that changes to the wage theft law can be made to ensure a more fair, predictable backdrop for potential criminal liability. Despite NJCJI’s opposition, S3580 was released from the Committee on party lines. Notably, however, several senators on both sides of the aisle expressed concerns about the lack of clarity in the law highlighted by NJCJI. NJCJI will continue to oppose this bill as it moves through the legislative process.

NJCJI’s written comments to the Committee can be found here. Anthony’s testimony before the Committee can be found here at minute mark 33:15 (2:22:50 left in audio). If you have any questions about this bill or NJCJI’s efforts to amend the wage theft law to ensure consistent application, then please contact Anthony via e-mail at aanastasio@civiljusticenj.org.

On Thursday, June 10, 2021, the Senate Labor Committee considered Senate Bill 3352, which is sponsored by Senate Majority Leader Loretta Weinberg. The bill proposes radical changes to the New Jersey Law Against Discrimination [NJLAD] that will vastly increase frivolous litigation against all New Jersey businesses, big and small. All businesses should therefore take notice of this bill, contact their legislator, voice opposition to it, and offer a preferred alternative, as suggested below.

By way of background, in February 2020, the New Jersey Division on Civil Rights (“DCR”) released a report entitled “Preventing and Eliminating Sexual Harassment in New Jersey”.

This report presented the DCR’s findings and recommendations from three public hearings it conducted in response to widespread public concern regarding sexual harassment generated by the #metoo movement.

The report was accompanied by proposed legislation drafted by the DCR to implement its recommendations in the workplace, housing and education.
The DCR’s proposed legislation mirrors the recommendations set forth in its report, including, but not limited to: mandatory harassment training and policies; mandatory reporting of harassment complaints to the DCR; eliminating affirmative defenses related to training; codifying the need to prove severe or pervasive conduct to establish an actionable harassment claim; and expansion of the statute of limitations to 3 years. Notably, the requirements for training, policies and reporting grant exclusive enforcement authority to the DCR instead of granting a private right of action.

The DCR’s proposal was introduced as identical legislation by Assemblywoman Annette Quijano in September 2020. (See Assembly Bill4637). On the other hand, Senator Weinberg’s proposed legislation differs from the DCR’s proposal in two fundamental respects that will lead to an oppressive litigation environment for New Jersey employers. Anthony’s testimony before the Senate Labor Committee emphasized those differences.

First, Senate Bill 3352 states that all “prior complaints of harassment or unlawful discriminatory practices at the same employer or relevant organization are discoverable and relevant [in NJLAD cases] regardless of whether the individual complaining of harassment, discrimination or retaliation witnessed or was aware of the prior complaints.” This language is clearly intended to strip our courts of their gatekeeping role in civil discovery and evidence. Notably, large businesses receive harassment complaints all over the country. This provision would make such complaints arising on the other side of the country, involving individuals a claimant never met, both discoverable and relevant.

By codifying the relevance of prior acts or wrongs, the bill tilts the scale heavily in favor of admissibility when applying evidence rules, such as N.J.R.E. 404(b) and 403. This would be highly prejudicial to businesses at trials of NJLAD claims. The bill would also certainly lead to widespread use of oppressive discovery demands by plaintiffs’ attorneys to force quick and large settlements, which benefits neither businesses acting in good faith nor credible victims seeking to tell their story in court. Arguably, this provision also violates separation of powers principles.

Second, Senate Bill 3352 outright eliminates the severe or pervasive conduct requirement to establish actionable harassment. This standard is derived from Title VII at the federal level, and has been applied by New Jersey courts for almost thirty (30) years. Our courts have applied this standard to thousands of workplace interactions, covering the entire spectrum of conduct. New Jersey businesses have formulated policies and training in accordance with this standard and the legal precedent it generated.

Senate Bill 3352 eliminates the standard and essentially replaces it with nothing. It merely states that conduct is defensible if its constitutes a petty slight or trivial inconvenience, which is already the case. This is obviously not a workable standard of review for harassment claims. It also diminishes the credibility of the NJLAD as a vehicle for societal change and victim recourse. Finally, since S3352 contains workplace training and policy requirements, it is completely absurd to also eliminate the established standard of review. How will employers train employees or develop policies if they no longer know what the law is?

But most important, on page 28 of its above-mentioned report, the DCR specifically recommended against eliminating this standard, stating: “[C]reating a completely new legal standard could cause confusion and lead to unintended consequences.”

Anthony forcefully argued these points to the Senate Labor Committee, and several senators on both sides of the aisle expressed serious concerns about the issues he raised. Notably, Senator Holly Schepisi, herself a lawyer and leader in addressing harassment and discrimination issues, stated the bill looks like it was “written by a plaintiffs’ attorney for the benefit of plaintiffs’ attorneys.” Despite the stated concerns of the committee members, the bill was still released from the committee on party lines.

Given the political realities in Trenton today, either the Assembly Bill or the Senate Bill will likely pass. While not ideal for a struggling business community, the DCR’s recommendations, as reflected in Assembly Bill 4637, are clearly preferable to the radical approach offered by Senate Bill 3352, outlined above. Accordingly, NJCJI has expressed its preference for the Legislature to advance Assembly Bill 4637, with some small tweaks.

For more information on NJCJI’s position on this issue, its written comments to the Senate Labor Committee can be found here. Anthony’s testimony can be found here at the 1:36:56 mark (1:19:14 left in audio). To discuss this bill or NJCJI’s advocacy against it, please feel free to contact Anthony via e-mail at aanastasio@civiljusticenj.org.

On Friday, May 21st, NJCJI and the U.S. Chamber of Commerce’s Institute for Legal Reform (“ILR”) submitted a joint comment to the United States District Court for the District of New Jersey (“USDNJ”) in support of Proposed New Local Rule 7.1.1, which promotes transparency in third-party litigation funding (“TPLF”). In recent years, the presence of TPLF has grown rapidly across the country; especially in the context of class action and mass tort litigation. This proposed rule seeks to reduce TPLF’s pernicious effect on the fair and efficient resolution of disputes.

The proposed rule was posted by the USDNJ’s Lawyers’ Advisory Committee on April 14, 2021. The rule requires parties to file a statement, shortly after the commencement or transfer of a matter to the court, containing information about any non-parties funding the litigation. Specifically, the rule mandates disclosure of the identity of the non-party funder; whether the funder’s approval is necessary for litigation decisions or settlement, and the nature of that required approval; and a description of the nature of the funder’s financial interest in the outcome. While the rule does not require production of the actual agreements between non-party funders and parties to the litigation, it does allow parties to seek discovery of the terms of those agreements upon a showing of good cause that the funder has the authority to make material litigation or settlement decisions, the interests of the parties (or class) are not being promoted or protected, or conflicts of interest exists, or such other disclosure is necessary to any issue in the case.

Currently, there are 24 other federal district courts that mandate disclosure of TPLF. Also, six United States appellate courts have mandated disclosure (the Third, Fourth, Fifth, Sixth, Tenth and Eleventh circuits). However, TPLF has remained unregulated in the USDNJ, and its presence and effect on litigation decisions and settlement dynamics there have been unknown. Recently, a ruling by former USDNJ Magistrate Judge Joel Schneider, in multidistrict litigation over the blood pressure drug Valsartan, noted that no binding authority compelled disclosure of litigation funding arrangements among the plaintiffs. That decision prompted consideration of Proposed New Local Rule 7.1.1. A copy of NJCJI’s and ILR’s joint comment can be found here. Please contact NJCJI’s President, Anthony Anastasio, with any questions about this proposed rule or the broader effort to promote transparency in TPLF.

On Monday, March 15, 2021, the Assembly Science, Innovation and Technology Committee heard testimony on a group of different bills that all seek to impose various restrictions on businesses’ collection and use of customer data. Various interested parties testified both in favor and opposition to this legislation. NJCJI’s President, Anthony Anastasio, offered testimony in opposition to two of the bills, A3283 and A3255, which effectively create a private right of action for all violations via their explicit designation as unlawful practices under the New Jersey Consumer Fraud Act (“NJCFA”). 

NJCJI argued that these bills deal with complex and technical topics, and contain highly detailed requirements. Thus, a private right of action with the enhanced remedies of the NJCFA would encourage aggressive and abusive lawsuits that would stifle innovation and job growth in New Jersey. Accordingly, NJCJI argued that exclusive enforcement authority should vest in New Jersey’s Attorney General and businesses operating in good faith should receive notice and a right to cure violations.  Notably, one of the bills, A5448, contains these requirements, which NJCJI believes is sound public policy.

The Committee Chair indicated a willingness to continue to confer with all interested parties on these bills. Given the stated preference for a private right of action by various influential supporters of these bills, NJCJI remains concerned about the potential for unintended consequences here. NJCJI will therefore continue to monitor the bills as they progress through the Committee.  If you have any questions or concerns, then please reach out to Anthony at aanastasio@civiljusticenj.org.

NJCJI’s written testimony can be found here:

Anthony’s oral testimony can be found here at the 43:40 mark.