The Increasing Pace of Digital Change: Why Does Our Culture Always Seem so Blindsided?

I have previously written about the legal implications of augmented reality apps such as Pokémon Go. Mine was one of many articles on this topic, most of which decried the negative implications of AR technology. The basic premise was that society is not prepared to effectively deal with the social and legal consequences of augmented reality; for example, the types of legal claims that will be asserted for property damage, personal injury, invasion of privacy, sharing of private data, etc.

However, there is another perspective which most of us who write about these matters have not addressed: why has all of this so blindsided our culture at large? That is also a question worth asking.

Let’s start with the fact that many of my law firm’s clients in the industry, e.g. developers, licensors, IT professionals, have been speaking about this. But why have so many of our political, business and media leaders not been listening? The science fiction writer William Gibson famously said “the future is already here—it’s just not very evenly distributed.” Perhaps we might now add the corollary that the future has arrived, but most are not aware of it.

Articles sounding the alarm about the unintended consequences of such advances as the advent of augmented reality tend to promote knee jerk reactions among the leaders of our cultural institutions. However, that only provides the appearance of addressing the issues—the proverbial “debate by bumper sticker”—but it ignores the complexity of the underlying social impact of the increasing pace of change in our digital world. Setting aside the often-discussed legal challenges engendered by augmented reality apps such as Pokemon Go, here are a few examples of other some digital quandaries that confront us:

  • Are the IT best practices that are being implemented to secure the digital information of businesses in America so inadequate that a complete reordering of those protocols nationwide is necessary? In other words, is it possible that our best practices regarding security are not really the best practices available?
  • While it is true that there have been almost no deaths nor injury resulting from prototype driverless cars, it is likely that when they are introduced on a larger scale, it will result in at least some such tragedies. As discussed in a recent Newsweek article, will we be more comfortable accepting the high number of deaths caused in whole or in part by human fallibility (approximately 33,000 annually) than we are respecting an even infinitesimally small number of deaths caused by malfunctioning computers?
  • If a MOOC (Massive Open Online Course) is relatively free and the equivalent coursework while matriculated at an institution of higher learning is in the $40,000 – $60,000 range, is the difference in cost proportional to the benefit of actually attending that school?
  • How can digital technology improve speed and access to our court system, an institution whose rules and traditions are still largely unchanged from the period before the computer age? Setting aside the admitted incremental improvements such as e-filing and internet access in the courtroom, why can’t we go beyond that so that Americans can have access to a digital library of all litigation documents and view streaming video of all hearings and trials in our court system? True, there would need to be certain privacy protections put in place; the access would need reasonable limitations. However, most attorneys would agree that the process of opening up our court system to the public has generally not kept pace with the improvements in our digital world.

The surprised, and to some extent panicked, debate over the advent of augmented reality apps highlights that our cultural institutions are largely incapable of anticipating the increasing pace of technological advancement. Something has to be done to improve the capacity of those sometimes sclerotic cultural institutions to adapt more quickly.

Perhaps one solution is to redouble our efforts to build bridges with receptive politicians, journalists and business leaders in order to educate them about the otherwise obscure cyber-world. I fully acknowledge that many of them are simply not willing (nor sometimes capable) of considering a nuanced treatment of these complicated issues. Nevertheless, our culture needs to find a way to be more open to debating the role of digital technology without sensationalizing it, nor dumbing it down. The more this debate centers on facts rather than fear—a real assessment of what is likely to happen, rather than dwelling on an attenuated prediction of the worst (or best) that might occur—the more productive the discussion will be. Real communication about real issues in an ongoing dialogue is the key. Your thoughts?

Does The New Jersey Civil Rights Act Authorize A Private Cause of Action Against A Person Who Is Not Acting Under “Color Of Law”?

What started as a local town hall debate over a liquor license renewal ended as a state-wide lesson in grammar from the New Jersey Supreme Court.

New Jersey’s highest court ruled last month that the phrase “person acting under color of law” found in N.J.S.A. 10:6-2(c) is not modified or limited by the phrase’s surrounding grammar.  Therefore, the phrase applies to both deprivation and interference claims brought by private party plaintiffs.  Perez v. Zagami, LLC, Supreme Court of New Jersey (DDS No. 46-1-3947) (Decided May 21, 2014).

Zagami, LLC applied to the Borough of Glassboro for a liquor license renewal.  Luis Perez, a Borough resident, opposed the renewal and testified at the renewal hearing.  Zagami later used Perez’s testimonial statements as the basis for a defamation suit against Perez.  The Appellate Division of the Superior Court of New Jersey ultimately dismissed the defamation case, ruling that Perez’s statements were made during a quasi-judicial proceeding and were entitled to absolute immunity.

Perez then sued Zagami for malicious use of process.  The Trial Court granted Zagami’s motion to dismiss and denied Perez’s attempts to amend his complaint to include a Civil Rights Act (CRA) claim.  The Trial Court concluded that the CRA only authorizes private suits against persons acting under “color of law.”

The Appellate Division of the Superior Court of New Jersey disagreed with the lower Trial Court and found that Zagami’s defamation suit was largely transparent.  The Appellate Division allowed Perez to amend his complaint and include a CRA cause of action against Zagami for a “deprivation” of his civil rights.  Citing N.J.S.A. 10:6-2(c), which authorizes a private right of action for deprivations of or interference with protected civil rights by a person acting under color of law, the Appellate Division concluded that the “color of law” language applied only to the clause governing “interference” claims.

The Supreme Court of New Jersey disagreed with both lower courts by holding in Perez that the lack of a comma preceding the phrase “by a person acting under color of law” does not modify the phrase.  Instead, the phrase applies to both deprivation and interference claims brought by private party plaintiffs.  The Court explained that such an interpretation of the phrase was in alignment with both legislative intent and the federal cause of action governed by § 1983.

© 2014 Nissenbaum Law Group, LLC

A Copyright Lawsuit that Never Gives Up: the Litigation Over the film “Raging Bull”

The film, Raging Bull, was released in 1980. It won the Academy Award for Robert DeNiro as Best Actor. The film was the subject of a copyright lawsuit that was filed by the estate of the person who wrote a 1963 screenplay upon which she alleged it was based. In 2009 the United States Court of Appeals for the Ninth Circuit dismissed the case as out of time. The reason was that, although the 3 year statute of limitations was not a problem since the infringement was ongoing, the doctrine of laches applied.

In that case, Petrella v. Metro-Goldwyn-Mayer, Inc., 695 F. 3d 946 – Court of Appeals, 9th Circuit 2012, the court discussed the concept of laches, a doctrine of law that states a party cannot sit on its rights, but must vigorously assert them in a timely manner. In the event that the other side is prejudiced by the fact that the rights were not asserted earlier, a court can sometimes dismiss a claim because it would be inequitable to allow it to continue. This would be so even in the absence of a violation of the statute of limitations.

However, last week that case was overturned by the United States Supreme Court.  The court held that , “[t]o the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period . . . courts are not at liberty to jettison Congress’ judgment on the timeliness of suit.” This is an important decision because it strengthens the protection of the right of a plaintiff to bring a copyright claim many years after the initial infringement, so long as the statute of limitations is not violated. It is important to note that the court did state that there might be certain situations in which it would be simply inequitable to allow the case to proceed, not withstanding that the statute of limitations would otherwise allow it. However, such circumstances would have to be extraordinary.

© 2014 Nissenbaum Law Group, LLC

May a “Floating Forum Selection Clause” be Enforced by a New Jersey Court?

May a New Jersey Court enforce a floating forum selection clause in which someone from another jurisdiction is required to appear in New Jersey? The issue was recently dealt with in Professional Solutions Financial Services v. Cregar et al.  Superior Court of New Jersey, Appellate Division, Docket No. A-2239-11T3 (February 28, 2013).

In that case, the Court first defined the term, “floating forum selection clause” as one in which the signatory to a contract agrees that jurisdiction to enforce that contract will be in a different location according the prevailing circumstances at the time it is enforced. In Cregar, the clause stated:

You [Cregar] agree this Lease is to be performed in Dade County, Florida and this Lease will be governed by the laws of the State of Florida. You consent to personal jurisdiction and venue in the State or Federal Court located in Miami, Dade County, Florida . . . . You specifically agree to waive any right to transfer venue and that agreement is knowing and voluntarily and is an essential term to Lessor’s willingness to enter into this Lease. If this Lease is assigned by Lessor, You consent to personal jurisdiction and venue in the State or Federal Court located where the Assignee’s Corporate Headquarters is located. This is known as a floating forum selection clause and You agree that this is done knowingly and voluntarily and is an essential term to Assignee’s willingness to take an assignment of this Lease. You specifically agree to waive any right to transfer venue and that agreement is knowing and voluntary and is an essential term to Assignee’s willingness to take an assignment of this Lease.

Emphasis added.

After the lease was executed, Cregar stopped making payments. Cregar was sued in Iowa and did not enter an appearance.  As a result, a default judgment was entered against him.

Cregar lost his motion for relief from the judgment and appealed, stating that he was denied due process and that it was an error to use the floating forum selection clause to apply Iowa law instead of New Jersey law.  The Appellate Division rejected his arguments.

The Appellate Division ruled that a sister state’s judgment is enforceable absent a due process violation.  The Court held that Cregar was given adequate notice of the lawsuit, and he entered into an agreement which required him to litigate any disputes where the assignee’s headquarters was located.

Although the Court acknowledged that New Jersey law might not authorize a floating forum selection clause, that was irrelevant. Since Iowa law did, the judgment would be enforced in New Jersey.

© 2014 Nissenbaum Law Group, LLC

What is a Kinship Legal Guardian and Does Such a Person Have Superior Rights to the Birth Parent?

What does society offer for children whose birth parents are incapable of caring for them? Is foster care, with all of its drawbacks, the only remedy? The answer is that states such as N.J. have enacted laws to provide for the appointment of a kinship legal guardian.
The law authorizing such an appointment can be found at N.J.S.A. § 3(b)12A-1 et seq. It provides for an adult who is “typically…a caregiver with a ‘biological, legal, extended or committed emotional or psychological relationship with a child who [is] willing to assume care of the child due to parental incapacity or inability, with the intent to raise the child to adulthood.’” New Jersey Div. of Youth and Family Servs. v. D.H., 398 N.J.Super. 333 (App. Div. 2008).  The issue of whether the parent or kinship legal guardian has the superior authority to make decision for the child was resolved quite understandably in favor of the kinship legal guardian. Obviously if the parent were capable of caring for the child there would be no need for the kinship legal guardian. Nevertheless the parent does have the right (a) consent to the adoption and (b) have contact with the child. N.J.S.A. § 3(b): 12A-4(a)(1).
The advent of kinship legal guardians is an important step to providing for the needs of children who would otherwise be abandoned. When utilized in the proper manner, it can be of tremendous benefit in raising a self-supporting responsible adult.
 
Comments/Questions: gdn@gdnlaw.com
© 2014 Nissenbaum Law Group, LLC

May a “Floating Forum Selection Clause” be Enforced by a New Jersey Court?

May a New Jersey Court enforce a floating forum selection clause in which someone from another jurisdiction is required to appear in New Jersey? The issue was recently dealt with Professional Solutions Financial Services v. Cregar et al.  Superior Court of New Jersey, Appellate Division, Docket No. A-2239-11T3 (February 28, 2013).
In that case, the Court first defined the term, “floating forum selection clause” as one in which the signatory to a contract agrees that jurisdiction to enforce that contract will be in a different location according the prevailing circumstances at the time it is enforced. In Cregar, the clause stated:

You [Cregar] agree this Lease is to be performed in Dade County, Florida and this Lease will be governed by the laws of the State of Florida. You consent to personal jurisdiction and venue in the State or Federal Court located in Miami, Dade County, Florida . . . . You specifically agree to waive any right to transfer venue and that agreement is knowing and voluntarily and is an essential term to Lessor’s willingness to enter into this Lease. If this Lease is assigned by Lessor, You consent to personal jurisdiction and venue in the State or Federal Court located where the Assignee’s Corporate Headquarters is located. This is known as a floating forum selection clause and You agree that this is done knowingly and voluntarily and is an essential term to Assignee’s willingness to take an assignment of this Lease. You specifically agree to waive any right to transfer venue and that agreement is knowing and voluntary and is an essential term to Assignee’s willingness to take an assignment of this Lease.

Emphasis added.
After the lease was executed, Cregar stopped making payments. Cregar was sued in Iowa and did not enter an appearance.  As a result, a default judgment was entered against him. 
Cregar lost his motion for relief from the judgment and appealed stating that he was denied due process and that it was an error to use the floating forum selection clause to apply Iowa law instead of New Jersey law.  The Appellate Division rejected his arguments.
The Appellate Division ruled that a sister state’s judgment is enforceable absent a due process violation.  In this case, Cregar was given adequate notice of the lawsuit and he entered into an agreement which required him to litigate any disputes where the assignee’s headquarters was located.
Although the Court acknowledged that New Jersey law might not authorize a floating forum selection clause, that was irrelevant. Since Iowa law did, the judgment would be enforced in New Jersey. 
 
Comments/Questions: gdn@gdnlaw.com
© 2014 Nissenbaum Law Group, LLC

How do You Determine Where to Sue a Foreign Company?

Where is the appropriate place to sue a foreign company?  The United States Supreme Court just established a new and more strict rule regarding the answer to that question.  
In Daimler AG v. Bauman, 11-965, 2014 WL 113486 (U.S. Jan. 14, 2014), [READ CASE HERE] twenty-two Argentinian residents sued Daimler, an Argentinian Company, alleging that Daimler’s subsidiary assisted with state security services in killings, torture and other abuses.  Although the allegations arose from conduct that occurred in Argentina, the lawsuit was brought in California.  The plaintiffs (the above-referenced twenty-two residents who filed the lawsuit) brought suit in California. They argued that the applicable jurisdictional principles permitted suit to be filed in California because Daimler had an American subsidiary that did business in California.  The Supreme Court disagreed. In its holding, it created a more restrictive standard than the mere fact that there was a subsidiary in a particular state. It required that there be more than just such “slim contacts.”  Id.
The Daimler case is just one example of the trend in the law to make it more difficult to assert jurisdiction over a foreign entity. 
 
Comments/Questions: gdn@gdnlaw.com
© 2014 Nissenbaum Law Group, LLC

What Happens When A Pay-On-Death Account Holder Mistakenly Appoints the Wrong Person as its Beneficiary?

In Stephenson v. Spiegle, Jack M. Murray (“Murray”) executed a Will prepared by an attorney, William E. Spiegle, III (“Attorney”).  See Stephenson v. Spiegle, 429 NJ Super 378 (App. Div. 2013) at 380. The Will left his estate to his family. It stated that any assets he had – whether owned by him directly or through a trust that he might create for the benefit of his family – should pass to his family.

The Pay-On-Death Account

About two months later, Murray went to a bank and opened a pay-on-death account (“Account”). Id. A pay-on-death account is one that directs who will receive its balance when the account-holder dies, the beneficiary. Initially, Murray wanted his family trust to be the beneficiary of the Account. That would have meant that the balance would go to the trust and in turn (as stated in the Will), to his family members. Id.  Unfortunately, a bank representative dissuaded Murray from including this instruction because he did not have the trust documents with him at that time. Id.  Accordingly, Murray took the interim step of naming his Attorney as the beneficiary, with the intent that Murray would change it to the trust at a later time. Id.

Unfortunately, Murray did not do so before he passed away less than a year later. Murray left approximately one-third of his estate, $143,151.26 (“Balance”), in the Account. Id.  This meant that  the Attorney – rather than Murray’s family – was technically entitled to receive the Balance.

The executor (“Executor”) of Murray’s estate (the person in charge of distributing Murray’s estate assets) discovered the Account. Id.  He contacted the Attorney who understandably took the position that the Attorney was the Account’s sole beneficiary.

I have no idea why this [Account] was established. It was established approximately six weeks after [Murray] executed his will in my office, which leads me to believe the intent of this [Account] was clearly to take it outside the estate itself. I have no idea what motivated this action. I was completely unaware that this had occurred. I had not seen nor talked with [Murray] since the day he left my office December 16, 2006. I can only surmise that something happened on his way to Florida or after he got to Florida for him to take this action…

…I have looked at this situation from various points of view seeking to fathom the intent of this [Account]. I come back to the only conclusion that I can draw, which is—for whatever reason—[Murray] wanted me to have [the Balance].

Id. at 381.

The Executor disagreed. He initiated a lawsuit in the Chancery Division of the Superior Court of New Jersey (“Chancery Court”) to preclude the Attorney from receiving the Balance and to ensure that it was utilized for the benefit of Murray’s family. Id.  The Executor argued that Murray made a mistake when he named Attorney as the beneficiary of the Account Id.

The Court’s Ruling

The Chancery Court agreed,findingthat it was “virtually inconceivable” that Murray intended to benefit Attorney rather than his family. Id. at 383.  In support of that position, the Chancery Court specifically pointed to the fact that Murray made a Will that left his entire estate to his family members less than two months prior. This showed his intent to care for his family. Id. at 382-383.

Accordingly, the Chancery Court held that notions of fairness required it to grant rescission of the Account. Id. at Id. at 381. Rescission is a legal remedy rendering a contract (in this case the one governing the Account) null and void. In this case, rescission of the Account allowed the Balance to go directly to Murray’s estate and hence, his family.

The Attorney appealed the Chancery Court’s decision to the Appellate Division of the New Jersey Superior Court (“Appellate Court”) claiming that the grant of rescission of the Account was improper. Id.  The Appellate Court disagreed. Id. at 387.

The Appellate Court explained that it was proper for the Chancery Court to grant rescission of the Account because it was clear that Murray created the Account to pass to his family members and mistakenly thought that designating his attorney as the “pay-on-death” beneficiary would accomplish that. Id. at 384-385.  In other words, regardless of the mistaken idea that designating the attorney would effectively mean the money would go to his family, the obvious intent was that Murray wanted his family to receive the Account balance.  Id.

Accordingly, the Appellate Court upheld the Chancery Court’s rescission of the Account. Id. at 387. Therefore, despite the fact that Attorney was technically named as the beneficiary of the Account, the Balance was given to Murray’s family members instead of Attorney. Id.

Comments/Questions: gdn@gdnlaw.com

© 2013 Nissenbaum Law Group, LLC

 

Does Property Located Outside of the United States Count Toward a Surviving Spouse’s Elective Share Under the NJ Statute 3B:8-1?

In In re Estate of Pakdee B. Peck, a deceased spouse (“Decedent”) had signed two wills: one in New Jersey (“NJ Will”) and one in Thailand (“Thailand Will”). The NJ Will stated that it was Decedent’s “[e]xpress wish and desire that [Decedent’s] husband, Robert M. Peck [“Husband”] receive only his elective share of [Decedent’s] estate as defined in N.J.S.A. 3B:8-1.” In re Estate of Pakdee B. Peck, 429 N.J. Super. 409 (Ch. Div. 2012) at 411. The question was whether that elective share would include property outside the United States.

The Definition of the Term “Elective Share”

What does the term elective share (“Elective Share”) mean when it is used in relation to  a spouse’s estate? That question is answered in New Jersey Statute 3B:8-1, which states:

If a married person or person in a domestic partnership dies domiciled in this State, on or after May 28, 1980, the surviving spouse or domestic partner has a right of election to take an elective share of one-third of the augmented estateunder the limitations and conditions hereinafter stated, provided that at the time of death the decedent and the surviving spouse or domestic partner had not been living separate and apart in different habitations or had not ceased to cohabit as man and wife, either as the result of judgment of divorce from bed and board or under circumstances which would have given rise to a cause of action for divorce or nullity of marriage to a decedent prior to his death under the laws of this State.

Id.; emphasis added.

In other words, the Elective Share prevents a surviving spouse from being completely disinherited; at the very least, he or she will have the right to one-third (1/3) of the decedent’s augmented estate. It should be noted that the decedent’s property that falls outside of the augmented estate is not included in the one-third (1/3) calculation of the surviving spouse’s share.

What is an Augmented Estate?

A decedent’s augmented estate generally includes the property that she left in her will plus certain other property of the decedent such as certain gifts and joint bank accounts.  Specifically, “augmented estate” is defined in N.J.S.A. 3B:8-3, which states:

The “augmented estate” means the estate reduced by funeral and administration expenses, and enforceable claims, to which is added the value of property transferred by the decedent at any time during marriage, or during a domestic partnership, to or for the benefit of any person other than the surviving spouse or domestic partner, to the extent that the decedent did not receive adequate and full consideration in money or money’s worth for the transfer, if the transfer is of any of the following types:

  1. Any transfer made after May 28, 1980, under which thedecedent retained at the time of his death the possession or enjoyment of, or right to income from, the property;

Id.; emphasis added.

Is property outside the U.S. counted as part of the Elective Share?

In In re Estate of Pakdee B. Peck, the Husband filed a lawsuit asking for his elective share of Decedent’s augmented estate. Id. at 412. He claimed that the real property, bank accounts and investments owned by the Decedent in Thailand (“Thailand Property”) should all have been counted as part of the Decedent’s augmented estate.  Id. In other words, he claimed that his elective share included not only 1/3 of the property owned by Decedent in New Jersey but also 1/3 of the Thailand Property. Id.

The attorney for the deceased wife’s estate argued that Decedent’s augmented estate did not include the Thailand Property. Therefore, the Husband had no right to it.

The Estate’s legal position was that this was the deceased wife’s probable intent. Id.  It based this on the following:

  • The NJ Will did not refer to any previous wills or property located outside of the United States. Id.at 411.
  • Decedent advised the attorney that drew up her will that “she had prepared and signed a previous will in Thailand relating to property owned [by  her] in Thailand and [that she] did not wish to make a specific reference to preserving the terms of that will the [NJ Will] for the reasons discussed.” Id. at 411-412.
  • At the same time the deceased wife signed her NJ Will, she also signed a separate document witnessed by two people and acknowledged by a notary public, in which she ratified the provisions of the Thailand Will disposing of all of her property in Thailand. Id.at 412.
  • The Decedent expressed her intention to the attorney that drafted the NJ Will that the NJ Will dispose only of the property that she owned within the United States. Id.

Despite all this evidence that Decedent did not want her husband to receive 1/3 Elective Share of the Thailand Property, the Court held, in favor of Husband. This meant that the Thailand Property was to be included in Decedent’s augmented estate. Id.at 415. The Court stated the basis of its holding as follows:

  • There was no evidence establishing that at the time of Decedent’s death she did not retain possession or enjoyment of the real and personal property in Thailand. Id.at 414.
  • It is of no significance that the property was located in a foreign country because—pursuant to N.J.S.A. 3B:8-2— the augmented estate “includes real property to the same extent as it would be included if it were located in New Jersey.” Id.; See also N.J.S.A. 3B:8-2.
  • It did not matter whether the Decedent wanted her surviving spouse to have a one-third 1/3 right to her Thailand property because the Elective Share statute was enacted with the purpose of prohibiting the disinheritance of a surviving spouse who needs continuous support. Id.at 415 Therefore, the elective share was not created to carry out the decedent’s probable intent but rather to ignore it in order to protect the surviving spouse. Id.

Accordingly, the Court held that the Thailand Property was to be included as a part of the Decedent’s augmented estate. Therefore, it was included in the calculation of Husband’s 1/3 share of the Decedent’s estate. Id.

Conclusion

The Court’s holding articulated two important principles:

    1. Under certain circumstances, foreign property may be included in a decedent’s augmented estate; and

 

  • A surviving spouse’s right to his elective share may sometimes overshadow the deceased spouse’s probable intent.

 

Comments/Questions: gdn@gdnlaw.com

© 2013 Nissenbaum Law Group, LLC