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New Jersey Legislature

  • Legislature pursues liability- expanding agenda for 2018- 2019 session
  • Trial bar has gained power and influence in the state legislature

In 2018, the New Jersey legislature distinguished itself as the most plaintiff-friendly legislature in the country. It immediately looked to capitalize on the change in leadership and pursued an agenda that included expanding civil justice liability. The legislature also continued to turn a blind eye to the problems caused by unsound laws that plague the state. Legislators did not even entertain the most modest of tort reforms, such as a limit on appeal bonds, and instead focused only on expanding liability for both businesses and individuals alike.

In a report that typically focuses on courts, New Jersey is an exception because of the legislature’s focus on drastically expanding liability in numerous areas.

The New Jersey Supreme Court took steps toward improving the judicial health in the state and should be applauded. The court eviscerated the abuses occurring under the state’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) and adopted the Daubert standard with regards to expert evidence. These decisions are highlighted in the Points of Light section of the report. Unfortunately, improvements to the judicial environment were overshadowed by the legislative activities.

A LIABILITY-EXPANDING AGENDA

LEGISLATURE ENACTS MOST EXPANSIVE EQUAL PAY LAW IN COUNTRY

On April 24, 2018, Governor Phil Murphy (D) signed the Diane B. Allen Equal Pay Act into law, the strongest and most expansive equal pay law in the country. The New Jersey law is considered the “strongest” in the country, not because of the additional protections it provides for employees, but rather for its draconian penalties and extensive look back period, all of which greatly benefit trial lawyers.

The law prohibits pay discrimination for “substantially similar work” based on characteristics protected by the New Jersey Law against Discrimination (i.e. race, sex, age, nationality etc.). Each payment of unlawfully disparate wages constitutes a separate offense. When coupled with the availability of both treble and punitive damages, and the extension of the statute of limitations to allow for up to six years of back pay, the new law provides a gift to plaintiffs’ lawyers.

In addition, the New Jersey law’s comparison of positions involving “substantially similar” work is so vague both sides will need to call in multiple experts to support their views. This will severely bog down the courts and turn them into de facto human resources departments.

The New Jersey law is an outlier, even compared with the laws of the most progressive states. California and Massachusetts, for example, only allow for a two and three-year statute of limitations respectively. Plaintiffs in those states also can only recover twice the amount of lost wages, as opposed to treble and punitive damages. For these reasons, Governor Chris Christie (R) issued a conditional veto of a similar bill in 2016.

MORE MONEY TO WORKERS’ COMP LAWYERS

Legislation enacted in August, S. 2145, gives another boost to the plaintiffs’ bar. The new law allows an attorney to collect more money at the expense of a client who was injured at work.

Previously, attorneys who represented clients in workers’ compensation claims were paid only for the incremental value they might bring over and above an employer’s insurance carrier’s initial offer of compensation. After all, the workers’ compensation system is set up to provide prompt, no-fault compensation without protracted litigation.

Now, an attorney can collect fees on total compensation his or her client receives, instead of any additional value the lawyer obtains. This change encourages unnecessary litigation that will delay payments to workers and allows lawyers to take a portion of their client’s recovery where the lawyer did not get anything other than what the employer offered to pay the employee.

SENATOR SCUTARI INTRODUCES TWO PROBLEMATIC LIABILITY-EXPANDING BILLS

The so-called “New Jersey Insurance Fair Conduct Act,” S. 2144, would authorize new lawsuits against insurers. The legislation creates a private right of action for a claimant against his insurer for unreasonable delay or denial of a claim. It rewrites the legal definition of “bad faith” in the insurance context in a manner that is so expansive that plaintiffs would be able to sue insurance companies for normal errors that occur in the ordinary course of business.

The legislation also is packed with financial incentives for trial lawyers to file lawsuits, such as the ability to obtain treble (triple) damages and attorneys’ fees and costs. If enacted, this proposal will open the floodgates for frivolous bad faith claims and could cause insurance premiums to skyrocket by as much as forty percent. New Jersey residents already pay among the highest average premiums in the nation, and this bill would only increase those costs. The bill, which passed the Senate in June, awaits Assembly consideration.

Another bill introduced by Senator Nicholas Scutari, S. 1766, would drastically expand the state’s wrongful death statute. Current New Jersey law provides fair and predictable compensation to those who file wrongful death claims, providing recovery for “pecuniary and economic loss.” The proposed legislation allows damages for “mental anguish, emotional pain and suffering, loss of society, and loss of companionship.” If enacted, S.B. 1766 would allow for purely emotional damages and introduce considerable uncertainty into litigation. This would make cases more difficult to settle and would increase insurance premiums for all New Jersey residents. The Senate Judiciary Committee reported the bill favorably in April 2018.

ATTACK ON ARBITRATION

ACTIVITY IN LEGISLATURE

The New Jersey legislature continued its efforts to limit arbitration rights. On September 27, 2018, Senator Theresa Ruiz introduced S. 2996, which makes any agreement to arbitrate unenforceable if a business entity attempts to apply an agreement to arbitrate to a purported contractual agreement that was created fraudulently with the consumer’s personal information. The language of the bill is vague, and could therefore have unforeseen consequences restricting the enforceability of arbitration agreements even further.

Another dangerous bill currently pending in the New Jersey legislature is S. 121. This legislation prohibits arbitration agreements in employment contracts. Any employer who attempts to enforce an arbitration provision that is deemed against public policy under the bill would be responsible for attorneys’ fees and costs, in addition to any available damages. The New Jersey Senate passed the bill in June 2018, but the Assembly has taken no action.

HIGH COURT’S ANTI-ARBITRATION DECISION

And while the New Jersey high court should largely be praised for its 2018 decisions, it did issue a disappointing decision that voided an arbitration agreement because it did not “clearly and unmistakably inform the party signing it that he or she is agreeing to waive their right to be heard in court or their constitutional right to a trial by jury.”

The agreement language in question stated, “If there are any disputes regarding this agreement, I … hereby waive any right I … may have to a trial and agree that such dispute … will be determined by binding arbitration.” And “By signing this document, I acknowledge that if anyone is hurt or property is damaged during my participation in this activity, I may be found by a court of law to have waived my right to maintain a lawsuit against SZITP.”

According to the court, because the agreement did not specifically say, “I waive my right to go to court,” it was not a clear waiver of the right to go to court. This reasoning ignores the U.S. Supreme Court’s instruction that any doubts about whether a particular dispute is subject to arbitration must be resolved in favor of arbitration. The U.S. Supreme Court also made clear in 2017 that state courts cannot impose special requirements as a condition of enforcing arbitration agreements. In a decision written by Justice Elena Kagan, the Supreme Court reaffirmed federal law requires courts to place arbitration agreements “on equal footing with all other contracts.”

New Jersey courts have insisted that no “magic words” are necessary to make an arbitration agreement valid, but this case certainly says otherwise. Companies continue to have their agreements voided for not including specific terms, creating an expensive guessing game that benefits no one.

TRIAL BAR GAINS POWER IN NEW JERSEY LEGISLATURE

With the election of Governor Phil Murphy in November 2017, New Jersey trial attorneys gained enormous power. While the New Jersey legislature always has tried to push a pro-plaintiff agenda, Governor Chris Christie served as an important backstop for eight years and prevented enactment of much of their liability-expanding agenda.

In addition to Governor Murphy, the trial bar also has a strong political ally in the chair of the Senate Judiciary Committee, Nicholas Scutari (D). Senator Scutari, who also serves as chairman of the Union County Democratic Party, is a trial lawyer by trade and has seen his political influence skyrocket over the past year. Senator Scutari oversees the confirmation process for Governor Murphy’s cabinet members. Also, Senate President, and future governor-hopeful, Stephen Sweeney (D) has greatly empowered Scutari by giving him more leeway on legislative and policy matters.

With all of these changes in leadership and shifts in power in 2018, the floodgates opened and the legislature tackled a very plaintiff-friendly agenda.

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