New Jersey Open Public Records Act Does Not Require Disclosure of Police Video, Supreme Court Holds

A divided New Jersey Supreme Court ruled today in Paff v. Ocean County Prosecutor’s Office that the “criminal investigatory records” exemption to public disclosure under New Jersey’s Open Public Records Act, permits the Ocean County Prosecutor’s Office (OCPO) to withhold disclosure of a police mobile video recording (MVR) of a traffic stop.  The case related to a police chase ending in Barnegat Township in which a police officer was investigated and ultimately charged with causing a police dog to injure the driver.  Paff, an activist for government transparency – see the Press of Atlantic City’s profile of him here – requested the MVR from the OCPO, which conducted the internal investigation.

The criminal investigatory records exemption allows public records to be withheld if they are “not required by law to be made” and if it pertains to a criminal investigation.  Reversing the Appellate Division (see our discussion on August 10, 2017, Litigation Law Blog New Jersey Courts Hands Victories to Open Government Records Advocates), the Supreme Court found that MVR was not “require by law” because the Barnegat Township Police Department’s directive did not have the force of law.    Relying on the Court’s recent decision in North Jersey Media Group v. Lyndhurst, also discussed in our August 10, 2017 Post, the Court compared the local directive to the Attorney General’s Use of Force Policy, which required creation of Use of Force Reports statewide and has the force of law on all police departments.  Since the MVR related to the investigation of the driver for evading arrest, the Supreme Court held it could be withheld under that exemption.

The Court, however, noted that the MVR would not be exempt under the “investigation in progress” exemption or due to the driver’s asserted privacy interest because of the strong public interest in police transparency.  The decision sends the case back to the trial court to determine whether the record should be released under the “common-law right of access” a broader doctrine that requires the court to balance competing interest to determine public access to records.

For more information on this decision or public records access, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

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Third Circuit Finds ADT Consumer Class Action Correctly Returned to State Court

The Third Circuit upheld a decision to remand a class action to state court, agreeing that one of the defendants  could not be disregarded as a “nominal party” even though it had transferred all of its contracts, assets, debts, and liabilities to another company. Walsh v. Defenders, Inc., Civ. No. 18-2156 (3d Cir. July 2, 2018).

The plaintiff is a New Jersey citizen who filed a class action, consumer fraud complaint in New Jersey state court relating to cancellation fees under contracts for home security equipment.  The plaintiff named three entities as defendants: Defenders, Inc., an Indiana citizen; ADT Security Services, Inc., n/k/a Tyco Integrated Security LLC (ADT SSI-TYCO), a New Jersey citizen; and ADT LLC, a Delaware citizen.  The Defendants argued that ADT SSI-TYCO should be disregarded as a “nominal party” for purposes of determining Class Action Fairness Act (CAFA) diversity jurisdiction because years before the suit, it had transferred all its assets and liability to ADT LLC.

Rejecting this argument and finding that ADT SSI-TYCO was a real party to the suit, the Third Circuit noted that, though ADT SSI-TYCO transferred the contracts and related liabilities to co-defendant ADT LLC, it nonetheless continued in operation and serviced the commercial contracts. Because ADT SSI-TYCO remainaaked an active company, its transfer of assets and liabilities could not discharge claims unless the plaintiff consented to the transfer and discharge.

The Third Circuit then affirmed the District Court’s ruling that the case fit the “local controversy exception” to the federal court’s CAFA jurisdiction—ADT SSY-TYCO is a New Jersey citizen, just like the named plaintiff, and its conduct formed a significant basis for the claims asserted.

The Third Circuit’s decision highlights the difficult questions that can arise when a company merges with or sells assets to a different entity.  These issues can be amplified in the class action context where a party’s citizenship can make the difference in keeping the case in state court and out of federal court.

For more information on the Walsh decision and on jurisdictional issues, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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Supreme Court Paves the Way to Sports Wagering

In a victory for states’ rights and sports fans looking to cash in on their insight, the Supreme Court ruled today in favor of allowing states to determine whether to legalize sports wagering in Murphy v. NCAA.

Writing for the majority, Justice Alito ruled that the Professional and Amateur Sports Protection Act’s (“PASPA”) prohibition of state authorization of sports wagering violated the Tenth Amendment’s anti-commandeering doctrine, saying that the provision “unequivocally dictates what a state legislature may and may not do… A more direct affront to state sovereignty is not easy to imagine.”  Justice Alito then refuted the respondents’ preemption arguments on the grounds that the Constitution “confers upon Congress the power to regulate individuals, not States,” and PASPA’s prohibition on state authorization can, in no way, be understood as a prohibition on individuals.  Finally, the Court determined that offending portion of PASPA is not severable from the rest of PASPA and, therefore, the entire statute is struck down.

Justice Thomas concurred with the opinion but expressed his concern regarding the Court’s method in determining the severability of offending sections of a statute.  Justice Ginsburg wrote a dissenting opinion that Congress was within its authority to prohibit sports wagering since the activity substantially affects interstate commerce, and even if the prohibition is unconstitutional, it is severable from the law and PASPA should still stand.  Justice Breyer concurred in part with the majority decision that PASPA’s prohibition of state authorization of sports wagering was unconstitutional, but he agreed with Justice Ginsburg in that the provision is severable from the rest of the statute.

Does this mean you can start wagering on MLB games and the NHL playoffs?  Since the Court reversed the Third Circuit’s decision regarding the State’s 2014 sports wagering law, casinos and racetrack may engage in sports wagering, and each individual venue is left to craft their own regulation.  However, the casinos and racetracks are now waiting for the State Legislature to create a regulatory framework.  Legislation was introduced recently that will do just that (Assembly Bill No. 3911 was introduced on May 7, and Senate Bill No. 2602 was introduced today).  Senate President Stephen Sweeney said that the Senate intends to move quickly on sports wagering and anticipates passage by early June.

For more information about the potential impacts of this ruling or what steps you can take to effectively leverage same, please contact Nicholas R. Amato, Esq., Chair of the firm’s Casino & Gaming Law Practice Group, at namato@genovaburns.com or 973-533-0777.

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Governor Murphy Signs Executive Order Directing New Jersey to Reenter the Regional Greenhouse Gas Initiative

On Jan 29, Gov. Phil Murphy signed an executive order tasking NJDEP and NJ BPU with NJ’s reentry into the Regional Greenhouse Gas Initiative  (RGGI). The Regional Greenhouse Gas Initiative is a cooperative of states in the northeast United States committed to limiting and reducing greenhouse gases.  New Jersey was a founding member of RGGI in 2009, but withdrew on January 1, 2012, as the previous governor believed the program “a failure.”

RGGI is a cooperative among states in the northeast dedicated to capping and reducing carbon dioxide emissions from the power sector through a mandatory market-based program. Through each state’s independent Carbon Dioxide Budget Trading Program, each participating state sells emission allowances through auctions and invests proceeds in clean energy innovations. During the years New Jersey failed to participate in RGGI, it is estimated that New Jersey would have received $279 million in revenue that could have been used to sponsor programs in energy efficiency and renewable energy.

The executive order requires NJDEP and NJ BPU to “rejoin RGGI in an expeditious manner” and to promulgate guidelines for the allocation of any funds resulting from New Jersey’s participation which must include factors to ensure any funds New Jersey receives be allocated to projects that will serve New Jersey communities most impacted by the effects of climate change.

For more information regarding the potential impacts of this Executive Order, please contact William F. Harrison, Esq., Chair of the Firm’s Environmental Law and Land Use & Approvals Practice Group, at wharrison@genovaburns.com or 973-533-0777.

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New Jersey Appellate Division Clarifies Rights to Disclosure of School Records Under Public Records Law

In a lengthy, published opinion, the New Jersey Appellate Division recently ruled on four appeals from different trial courts (that had reached conflicting results) about the ability of a nonprofit advocacy organization for disabled students and one of the parent’s efforts to obtain copies of settlement agreements from public school districts relating to the provision of special services to other qualified students.

The issue was how to strike a balance between privacy rights in educational records reflected in the New Jersey Pupil Records Act, and the Federal Family Educational Rights and Privacy Act of 1974, on the one hand, and the broad right to obtain public records under New Jersey’s Open Public Records Act or OPRA, on the other hand.  (See Litigation Law Blog’s Post on a Series of Recent OPRA Decisions by the New Jersey courts.)

The Appellate Division Panel held that the non-profit entity plaintiffs in three of the cases were entitled to copies of the requested records with personal identifying information redacted, if they establish that they are “bona fide researchers” under the New Jersey Public Records Act or if they obtain in advance an order from the trial court granting them access. The school districts were directed to not turn over the redacted records until first providing reasonable advance notice to the parents or guardians of the affected students.

The Court distinguished one of the cases on appeal in which the requestor sought a report that exclusively mentioned her own child, affirming parents’ right to obtain unredacted records relating to their children.

For more information on OPRA, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at at jborek@genovaburns.com.

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New Jersey Supreme Court Holds that Consumers Cannot Pursue Class Action Claims Against TGI Fridays for Inflated Drink Prices, But May Do So Against Carrabba’s Italian Grill

The New Jersey Supreme Court issued a decision on two consumer class actions under the New Jersey Consumer Fraud Act (“CFA”) and the Truth in Consumer Contract, Warranty and Notice Act (“TCCWNA”).  In two separate cases, consumers sought damages against TGI Fridays and the operator of several Carrabba’s Italian Grill, respectively, alleging unlawful practices with respect to the disclosure of prices for alcoholic and non-alcoholic beverages to customers.

With respect to TGI Fridays, the Court held that the named plaintiffs failed to show that common questions of law and fact predominate over individual issues.  The plaintiff had advanced a “price inflation” theory – that the fraudulent marketing drove up the cost of the drinks – but the Court rejected it noting that its prior decisions had found this theory did not support a claim under the CFA.

With respect to Carrabba’s, on the other hand, the plaintiff’s allegations focused on specific pricing practices, which plaintiff claimed are supported by receipts showing that each customer making this claim was charged different prices for the same brand, type, and volume of beverage in the course of a single visit. Because the proposed class had been redefined to only include customers who make that specific CFA claim, they met the predominance requirement for class certification.

In both cases, the Court found that the plaintiffs had failed to meet the standards for a class action as to their TCCWNA claims. Under TCCWNA, a claimant must prove that they received a written sign (here, a menu), which contained information in violation of a consumer law.  Because each individual claimant would have to prove that they received a menu, the Court held, the cases were not suitable for resolution as a class action.

For more information on class actions, the CFA or TCCWNA, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

 

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N.J. Supreme Court Finds Material Breach by Company That Knowingly Refused to Cooperate with Arbitration Demands Filed in Compliance with the Arbitration Agreement

The New Jersey Supreme Court has ruled that a company’s refusal to cooperate with plaintiffs’ arbitration demands was a material breach of their arbitration agreement, which barred the company from later compelling arbitration. Tahisha Roach v. BM Motoring, LLC 

The plaintiffs had purchased cars from BM Motoring, LLC and Federal Auto Brokers, Inc. d/b/a BM Motor Cars (BM).  As part of the transaction, each plaintiff signed an arbitration agreement requiring resolution of disputes through arbitration in accordance with the rules of the American Arbitration Association (AAA).  The plaintiffs had filed demands for arbitration against BM with AAA.  In one case, despite repeated requests by AAA, BM refused to advance the filing fees that the arbitration agreement obligated BM to pay, resulting in dismissal of the arbitration for nonpayment of fees. In another case, a plaintiff’s claims were dismissed based on BM’s failure to comply with AAA’s rules and procedures.  The plaintiffs then jointly filed the present action against BM, who moved to dismiss the complaint in favor of arbitration.

Ruling in the plaintiffs’ favor, the Court noted that arbitration agreements are governed by general principles of contract law.  BM’s arbitration agreement required arbitration in accordance with AAA’s rules and therefore permitted arbitration before the AAA.  The Court held that BM’s failure to pay the AAA fees or to respond to plaintiffs’ arbitration demands violated BM’s duty of good faith and fair dealing that New Jersey law implies in all contracts.  Specifically, BM’s actions destroyed the benefit plaintiffs expected in signing the arbitration agreement, namely, the ability to arbitrate claims.  Accordingly, BM was barred from later compelling arbitration.

The New Jersey Supreme Court refused to enact a bright-line rule on the issue, emphasizing the fact-sensitive nature of its determination.  Nonetheless, businesses that include standard arbitration clauses in their agreements, should be aware that a failure to cooperate in bringing the case before an arbitrator may result in a waiver of the arbitration agreement.

For more information, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

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Third Circuit Rejects Class Certification for Widener Law Grads

A panel of the Third Circuit Court of Appeals refused to allow class certification for a group of Widener University School of Law Graduates who allege that the law school inflated postgraduate employment rate statistics in Harnish v. Widener Univ. Sch. of Law, No. 15-3888 (3d Cir. Aug. 16, 2016). The law graduates claimed that, between 2005 and 2011, Widener advertised that up to 97% of students obtained employment after graduation, when, in fact, only 50-70% of graduates obtained full-time legal employment. This misrepresentation, the plaintiffs argued, violated New Jersey and Delaware consumer fraud statutes.

The circuit court rejected the plaintiffs’ theory of damages, predicated on the report of their expert economist, Dr. Donald Martin. Dr. Martin attempted to show a statistically significant relationship between employment rates and tuition prices across 64 private law schools. The analysis, though compelling, was flawed, the Court held. Because the plaintiffs did not present a theory of class-wide damages, they failed to establish that common questions of fact with respect to damages “predominate” over individual questions or that the named plaintiffs’ claims were “typical” of the class—both requirements for class certification under Federal Rule of Civil Procedure 23.

Specifically, the plaintiff’s theory was that Widener’s misrepresentations empowered the school to charge higher tuition across the market. This type of “price inflation” theory is similar (though not identical) to the “fraud on the market” concept that has been accepted in federal securities class actions. Although the Court found that Mr. Martin’s expert approach held some merit since law schools operate in a largely fixed-price market, both the New Jersey and Delaware Supreme Courts have rejected this type of theory of proof outside of the securities context. Because this theory was the only one presented to establish damages on a class-wide basis for the plaintiffs’ state-law consumer fraud claims, the Court found that class certification was inappropriate.

Harnish highlights the importance of expert evidence at the class certification phase. Although plaintiffs are not required to prove their case, they must present a coherent theory showing damages on a class-wide basis, and one that is cognizable under substantive law.

For more information on class certification or consumer fraud claims or the Court’s decision in Harnish v. Widener University School of Law, please contact Kathleen Barnett Einhorn, Esq., Chair of the firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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