All posts by NJCJI

Chamber and New Jersey Civil Justice Institute win major arbitration case in New Jersey

March 26, 2021News, Press Releases, Recent News, Top StoriesNJCJI

The U.S. Chamber of Commerce and the New Jersey Civil Justice Institute (NJCJI) prevailed on their challenge to New Jersey’s effective prohibition against the inclusion of mandatory arbitration agreements in employment contracts.

The federal court for the District of New Jersey held that the state’s attempt to invalidate employment arbitration agreements violates the Federal Arbitration Act favoring the use of arbitration to resolve workplace disputes. The court’s thoughtful and well-reasoned opinion permanently enjoined the New Jersey attorney general from enforcing the statute.

John Wood, the Chamber’s General Counsel and Chief Legal Officer, said: “We are very pleased with the court’s decision. Employees tend to get more money, more often, and more quickly when they utilize arbitration rather than litigation. Both employers and employees benefit from the fact that arbitration is faster and less expensive than court proceedings.”

Anthony Anastasio, President of the New Jersey Civil Justice Institute, said: “The court’s ruling confirms what NJCJI has always maintained in advocating against this statute: A categorical rule banning employment arbitration agreements is invalid under federal law.”

As studies have shown, arbitration is better for employees and employers. Employees are more likely to prevail and recover higher damages in arbitration than in court.

The Court’s ruling follows Supreme Court precedent that courts must enforce arbitration agreements that comply with the Federal Arbitration Act, which ensures a neutral and fair process for dispute resolution.

The Chamber previously prevailed in a similar lawsuit challenging a similar statute in California.

Below, please find links to the Court’s Opinion and Order in the matter.

3/25/21 Judge Thompson Opinion Download

3/25/21 Judge Thompson Order Download

NJ Assembly Considers Various Privacy Bills

March 19, 2021News, Recent News, Top StoriesNJCJI

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:

NJCJI comments on three privacy bills 3.12.21 Download

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

NJCJI Offers Testimony in Opposition to Forum Selection Bill

March 12, 2021News, Recent News, Top StoriesNJCJI

On Monday, March 8, 2021, the Assembly Consumer Affairs Committee heard testimony on A5240, a bill that seeks to invalidate clauses in consumer contracts that require disputes to be resolved in a venue, forum or jurisdiction other than New Jersey.

Despite the fact that this bill does not directly target arbitration, the Chair of the Committee and co-sponsor of the bill, Assemblyman Paul Moriarty, still used the hearing as an opportunity to attack what he called “forced arbitration”. Assemblyman Moriarty appeared to argue that arbitration is a defective method of dispute resolution, claiming that “normal” procedural safeguards and evidentiary standards are not available in such proceedings. Moreover, the bill’s supporters argued that out-of-state forum clauses are intended to create unreasonable hurdles for New Jersey consumers to assert their rights in consumer transactions.

NJCJI’s President, Anthony Anastasio, testified in opposition to the bill. Anthony’s testimony focused on the actual language of the bill, and he suggested revisions to clarify ambiguities and limit the scope of the bill to low-dollar consumer transactions. Anthony also suggested giving consumers the option to select New Jersey as the forum for dispute resolution but not require it in every consumer transaction.

While the bill was released from the Committee, both the sponsor and other members of the Committee appeared receptive to NJCJI’s concerns. Some members of the Committee indicated likely opposition to the bill’s continued progress in the full Assembly if amendments to address the business community’s concerns were not adopted.

NJCJI will continue to monitor this bill as it progresses through the Assembly. 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:

A5240 Forum Selection Download

Anthony’s oral testimony can be found here at 17:05: New Jersey State Legislature Media Player

NJCJI Speaks Out Against Restrictive Covenant Bill in the Press

March 12, 2021News, Recent News, Top StoriesNJCJI

Pending legislation, A1650, seeks to drastically limit the ability of New Jersey employers to use restrictive covenants to protect their legitimate business interests. A1650 recently sailed through the Assembly Labor Committee without amendments, despite significant opposition from NJCJI and the New Jersey business community. However, NJCJI continues to make the case that this bill casts far too wide a net in its current form and is therefore bad for New Jersey’s economy.

This week, NJCJI’s President, Anthony Anastasio, authored an Op-Ed on the bill that was published by Roi-nj.com. This Op-Ed reiterates some of the problems with the bill described in NJCJI’s testimony before the Assembly Labor Committee, and also, offers insights as to why this bill and other recent employment legislation fails to effectively balance competing interests. NJCJI will continue to sound the alarm about this bill and other legislation that seeks to radically alter the existing paradigm of employment law to the detriment of innovation and job creation in New Jersey.

Anthony was also quoted in an article on this topic published on NJBIZ.com. Links to both articles can be found below:

Noncompete agreements: Searching for balanced solution

Restrictive covenants in the COVID era

Federal Court Hears Oral Argument on NJCJI’s Motion for Summary Judgment in its Case to Preserve the Right to Arbitrate Employment Disputes in New Jersey

March 5, 2021News, Recent News, Top StoriesNJCJI

On Thursday, March 4, 2021, the Honorable Anne E. Thompson, a Senior Judge for the United States District Court for the District of New Jersey, heard oral argument on a motion for summary judgment filed by the New Jersey Civil Justice Institute (“NJCJI”) and the U.S. Chamber of Commerce in their pending civil action against New Jersey’s Attorney General. This case seeks a declaratory judgment that N.J.S.A. 10:5-12.7 is unconstitutional as preempted by the Federal Arbitration Act (“FAA”), and also, seeks a permanent injunction against the Attorney General’s enforcement of the law. That statute, enacted by the New Jersey Legislature in 2019, effectively bars use of arbitration agreements in the employment context in New Jersey. NJCJI has consistently maintained that this constitutes a clear violation of the FAA, and aggressively lobbied against the law on that basis.

Thursday’s argument centered on four issues: Federal preemption, the plaintiffs’ associational standing, the plaintiffs’ organizational standing, and ripeness of the plaintiffs’ claims. Regarding federal preemption, the Attorney General failed to raise the issue in its earlier motion to dismiss, which was denied, and in its opposition to NJCJI’s motion for summary judgment. Accordingly, NJCJI argued that there was no genuine dispute as to preemption, and therefore, only summarized its legal position in that regard. Regarding ripeness. NJCJI was able to cite to Judge Thompson’s prior opinion denying the Attorney General’s motion to dismiss, which found the matter was ripe for disposition.

The core of the oral argument addressed the plaintiffs’ standing, both on associational and organizational grounds. Judge Thompson previously allowed limited discovery on the standing issues, and as a result, NJCJI and the U.S. Chamber produced evidence in support of standing that was not factually disputed by the State in its papers or during the argument. Rather, the State simply argued that more evidence was required before judgment as a matter of law could be warranted. Accordingly, the State requested that the plaintiffs’ motion be denied so that plenary discovery on the standing issues could occur. After hearing both sides’ arguments and asking limited questions, Judge Thompson reserved on her decision, which we expect to receive in the coming weeks.

NJCJI and the U.S. Chamber were both represented in this matter by Shalom D. Stone, Esq. of Stone Conroy, LLC and Archis A. Parasharami, Esq. of Mayer Brown. NJCJI would like to thank both Shalom and Archis for their excellent advocacy on the motion. NJCJI would also like to thank Daryl Joseffer, Esq. from the U.S. Chamber Litigation Center.

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.

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