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New Jersey

In Roman mythology, Janus was a two-faced god that controlled transitions and time, at once looking forward while also reflecting on the past. In more modern times Janus’s two faces came to symbolize a duplicitous nature, and the past year in New Jersey’s courts might fairly be described as a Janus moment, including transitions and mixed messages.

The 2016-2017 term of the New Jersey Supreme Court marked the first time in six years that the state’s high court had a full complement of judges. Now Gov. Chris Christie is on his way out, and it is unclear what the incoming administration’s attitude toward the court will be.

Four slots on the New Jersey high court will open up over the next few years. And Phil Murphy, the governor-elect, has not indicated whether he will stick with tradition and reappoint justices who have served their initial seven-year term, or follow the outgoing governor’s lead and replace some justices while keeping others.

A LAX APPROACH TO EXPERT TESTIMONY

By way of context, a case that was decided by the Appellate Division this summer and that’s currently on appeal to the New Jersey Supreme Court, highlights just how much of an outlier New Jersey is in evaluating whether expert testimony is based on real science and not merely fanciful theories offered by plaintiffs’ experts to mislead jurors into big verdicts.

Two years ago this report applauded Atlantic County Judge Nelson Johnson, who excluded the testimony of two expert witnesses who planned to support claims that Accutane, an acne medication, could cause Crohn’s disease. Judge Johnson found the plaintiffs’ experts were “cherry picking evidence” and had presented theories in a court room that would not withstand scrutiny in the scientific community. “It is one thing to stand alone in the world of science, advancing a hypothesis that others do not accept,” Judge Johnson wrote. “It is quite another thing to advance a hypothesis that can only be supported by disregarding valid scientific research.” His ruling blocked plaintiffs’ “hired-guns” from testifying and led to the dismissal of over 2,000 Accutane cases.

But virtually all of the dismissed cases were revived this summer when the Appellate Division overturned Judge Johnson’s decision. On appeal, a three-judge panel found that Johnson went “beyond [the court’s] gatekeeping function,” taking “too narrow a view in determining whether the experts were using accepted scientific methodologies to analyze the evidence, and improperly determined the weight and credibility of the experts’ testimony.” (Noteworthy is the fact that also on appeal is Judge Johnson’s similarly no-nonsense September 2016 exclusion of testimony claiming that talcum powder use caused ovarian cancer.)

The Appellate Division applied a “relaxed” standard for evaluating the reliability of expert testimony in cases involving medications or other substances. Its reasoning allows any credentialed experts to testify, so long as they are able to convince the court their methodology is sufficiently scientific. This is simply a bad idea. Expert witnesses should not be permitted to sway jurors with opinions that ignore objective, established science.

Meanwhile, the Accutane litigation has been pending for 14 years. Scientific studies have repeatedly found no tie between Accutane and Crohn’s disease. Judge Johnson this year continued to exclude so-called experts who use “a methodology which is slanted away from objective science and in the direction of advocacy.”

The New Jersey Supreme Court will soon decide the appeal of Judge Johnson’s 2015 ruling. The Court should get rid of the state’s relaxed standard for expert testimony. Instead, it should adopt the same rigorous review applied in the federal courts and the vast majority of other state court systems. That approach, known as the Daubert standard, requires the judge to determine not only that the testimony is the product of reliable principles and methods, but also that the purported expert has applied the principles and methods reliably to the facts of the case.

Advocates for a more evenhanded civil justice system certainly hope New Jersey’s high court will move the state’s expert evidence law into the mainstream. But considering the court’s January 2017 reinstatement of a $25 million Accutane verdict, one of the largest in recent years, for an Alabama plaintiff, it’s difficult to be optimistic.

IT’S NEVER TOO LATE IN THE GARDEN STATE

During oral argument in the Accutane case that ultimately reinstated the $25 million verdict noted above, Justice Barry T. Albin was quite candid with defense counsel, saying, “We apply our evidence rules and our court rules and that attracts plaintiffs here. They like our evidence rules, they like our expert witness rules … .” In later writing the opinion in McCarrell v. Hoffmann-La Roche, Justice Albin also made it clear that the loose application of statutes of limitations can now be added to the list of pot-sweeteners that draw plaintiffs from all across the country to New Jersey courts.

McCarrell established that, by suing in the Garden State, a plaintiff who lived and took Accutane in Alabama could nonetheless benefit from New Jersey’s longer statute of limitation on filing products liability lawsuits, rather than be subject to his home state’s shorter time limit.

A unanimous court abandoned the “governmental-interest” standard it had previously used to decide whether a lawsuit was timely when the answer would be different under the law of the state where the claim arose and New Jersey law. Under the new approach, rather than look to which state has a substantial relationship to the events in the lawsuit, in which there is a presumption favoring the law of the state where the injury occurred, the court looked to whether the forum state (New Jersey) has a “substantial interest” in the litigation. Under this approach, New Jersey’s statute of limitation is presumed to apply unless “exceptional circumstances” exist.

It is impossible to say at this point what sort of fact pattern New Jersey courts might find “exceptional,” but the high court’s opinion suggests that the state has a “substantial interest” in just about any product liability action. And observers say this welcoming attitude means plaintiffs who are time-barred from bringing claims in their home states will be drawn to New Jersey. “New Jersey is now a more attractive forum than ever to out-of-state tort plaintiffs,” they say.

ACTIVELY ANTI-ARBITRATION

Last year’s Judicial Hellholes report detailed the history of the New Jersey court system’s hostility to arbitration agreements, even as it claims to follow federal law that has long prohibited states from impeding alternatives to lengthy and costly litigation. The state’s predisposition against arbitration continues, despite a very clear message warning state courts to stop such interference sent by the U.S. Supreme Court in May 2017.

In Kindred Nursing Centers Ltd. v. Clark, a 7-1 U.S. Supreme Court instructed state courts that they cannot impose special requirements as a condition of enforcing arbitration agreements. In a decision written by Justice Elena Kagan, the Supreme Court reaffirmed that federal law requires courts to place arbitration agreements “on equal footing with all other contracts.”

New Jersey courts continue to insist that no “magic words” are necessary to make an arbitration agreement valid, but the experience of businesses says otherwise. Companies continue to have their agreements voided for not including specific terms. This is an expensive game of cat and mouse that benefits no one.

But even having an arbitration agreement that a court okays is no guarantee it will be upheld. In Dugan v. Best Buy, for example, Appellate Judges Scott Moynihan and Francis Vernoia in August 2017 voided an arbitration agreement over the process by which the defendant rolled out a new employment policy. Best Buy had employees go through an online training session informing them of the various progressive steps they could take to resolve a concern, the final option being a “claim in arbitration, rather than in court.” The final screen specifically focused on “Why is Best Buy Implementing an Arbitration Policy?” and contained a link to review the policy and for answers to frequently asked questions. At the conclusion, employees were asked to acknowledge the new policy. Nevertheless, an assistant manager ran straight to the courthouse with allegations that he was wrongfully terminated.

Even as the court found that the policy adequately informed employees that conflicts would be resolved through arbitration rather than in court, it found that the check-the-box process, without the employee “mechanically sign[ing] any document,” was insufficient to establish an enforceable agreement. “A handwritten signature is the customary and perhaps surest indication of assent,” the court said.

Really? In an age when we use smart phones to do our banking and pay our bills while shopping online for everything from holiday gifts to diapers for the baby, it seems this ruling-that-time-forgot shows an implacable anti-arbitration bias, plain and simple. No other contracts are subjected to a similar level of scrutiny. If they were, New Jersey would have a contract-formation crisis on its hands.

IS THE TCCWNA TIDE TURNING?

Last year this report observed, “Whenever there has been an opportunity for [New Jerseys] courts to crack down on victimless consumer lawsuits they have declined to do so.” So it’s quite nice to report that such an opportunity has finally been seized by the state’s high court.

TCCWNA Decisions As documented at length in previous reports, a once obscure state law known as the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) has rapidly become a choice weapon for plaintiffs’ lawyers to attack businesses that sell products or services in New Jersey. Known as a “gotcha” statute,” the TCCWNA allows plaintiffs’ lawyers to bring class action lawsuits seeking $100 per violation—an amount that often greatly exceeds actual damages, if any—based on trivial technicalities, such as statements made on a business’s website that are inconsistent with a New Jersey regulation. Statements like, “void where prohibited,” for example, are a no-no. It doesn’t matter whether a consumer even read the terms or conditions, relied on them in making a purchase, or experienced a loss – it’s still grounds for a class action and a chance at big money for the plaintiffs’ lawyers running this racket.

But in 2017 the New Jersey Supreme Court appropriately tapped the brakes on these out-of-control and often preposterous lawsuits. The court ruled that the failure of restaurants to list prices for every drink a customer might order on its menu should not subject it to a billion-dollar class action. Yes, that’s billion with a “b.”

During oral arguments the plaintiffs’ lawyer confirmed that under his interpretation of TCCWNA, the class action was potentially a billion dollar case. But the court was not persuaded. Its 5-1 decision in Dugan v. TGI Fridays and Ernest Bozzi v. OSI Restaurant Partners finally put some meaningful and much-needed limits on TCCWNA litigation.

The court began to bring some clarity to a critical element of the statute that requires consumers to have been “aggrieved.” It is not enough, the court found, for a business to have engaged in some trifling violation on paper. At the very least, the consumer must have seen that document, in the instant case, a menu. The court also held that the failure to provide prices on a menu does not violate a “clearly established legal right of a consumer or responsibility of a seller” as required under the TCCWNA because never before had someone made such a claim.

“Nothing in the legislative history of the TCCWNA … suggests that when the Legislature enacted the statute, it intended to impose billion-dollar penalties on restaurants that serve unpriced food and beverages to customers,” the court concluded as it denied class certification.

The ruling sets the stage for two more TCCWNA cases that are on their way to the high court: Spade v. Select Comfort Corp. and Wenger v. Bob’s Discount Furniture. Both cases involve claims that furniture sellers failed to include required language about timely delivery of furniture printed in 10-point type on contracts or sales documents, even as the consumers who sued received timely deliveries. New Jersey’s high court has agreed to answer two questions posed by the U.S. Court of Appeals for the Third Circuit. The first is whether a consumer who receives a contract that violates a state regulation is an “aggrieved consumer” even if he or she “has not suffered any adverse consequences from the noncompliance.” The second is whether a mere violation of the furniture delivery regulations, absent conduct that would otherwise violate New Jersey’s consumer protection law, violates a “clearly established right” under the TCCWNA.

Answering these questions should discourage the more outrageous, no-injury TCCWNA complaints that have clogged New Jersey court dockets in recent years.

A TIME FOR NEW BEGINNINGS

Rather than inventing new ways to enrich plaintiffs’ lawyers at the expense of business defendants and their customers (who pay higher prices when litigation costs are passed on to them), New Jersey courts should embrace their Janus moment. The courts have the power and an opportunity to choose a new path toward a fairer, more evenhanded civil justice system. Many hope the new governor understands this moment of opportunity, as well, and will firmly resist political pressure from the plaintiffs’ bar, which will surely lobby him to nominate, especially to the high court, more plaintiff-friendly, liability-expanding jurists like Justice Albin.