BUSINESS LAWSUIT BLOG

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

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.

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

If a Person Donates for a Specific Purpose to a Charity, May the Charity Use the Money for a Different Purpose?

If a person donates a “conditional gift” (a gift that can only be used for the stated purpose) to a charity, may the charity ignore that restriction and use it for another purpose? The Court in  Adler v. Save, was confronted with that very issue. In that case, Bernard and Jeanne Adler (the “Adlers”) donated fifty thousand dollars ($50,000.00) (“Donation”) to SAVE. (See Adler v. Save, 432 N.J. Super. 101 (App. Div. 2013) at 111. The Adlers made the Donation to SAVE based upon its representations that the money would be utilized to construct and run a new animal shelter facility (“New Facility”).  Unfortunately, after accepting the Donation, SAVE decided that it no longer wanted to build the New Facility. The question presented to the Court was whether SAVE would be required to return the Donation to the Adlers.

Background

SAVE was a charitable organization with a self-proclaimed mission to provide for the rescue, shelter, veterinary care, and adoption of stray companion animals. SAVE was located in the Borough of Princeton, New Jersey (“Princeton”). Id at 105.

Prior to agreeing to make the Donation, SAVE informed the Adlers of the original plans for the New Facility which encompassed the following:

    • a large facility approximately thirty-five thousand (35,000) square feet;
    • separate living areas for cats and dogs;
    • areas designed for isolation and rehabilitation;
    • areas for spaying and neutering, including an on-site veterinary clinic with x-ray equipment for treatment and triage of sick and injured animals;
    • accommodations for larger dogs, designed as “dog living rooms.”

The Adlers informed SAVE that the purpose for their agreement to make the Donation was “to have rooms for large dogs and older cats that are not easily adopted and specifically for the naming rights for those rooms at that facility [in Princeton].” Id at 113-114. According to Mrs. Adler, SAVE told her that, in recognition and appreciation for the Donation, it would designate two rooms in the New Facility; one for the care of large dogs and the other for the care of older cats. SAVE also told them that the Adlers would have nameplates outside of each of those rooms. Id.

However, after receiving the Donation, SAVE announced to its donors (including the Adlers) that instead of proceeding with its construction of the New Facility, it had decided to merge with another charitable foundation. As a result, SAVE decided that it would not construct its new shelter at its original location in Princeton. Id at 114.  The newly formed “merged charity” would transfer all of its operations to a location in Montgomery Township, New Jersey. Id.  According to the new plans, SAVE decided to construct a new animal shelter that was significantly smaller than the New Facility and did not include two rooms specifically designated for the long-term care of large dogs and older cats. Id. at 114-120.

The Lawsuit

As a result of SAVE’s new plans, the Adlers demanded the return of the Donation. Id at 116. SAVE refused. Id.  Accordingly, the Adlers filed suit in the Law Division of the Superior Court of New Jersey (“Trial Court”) seeking the return of the Donation. Id at 115. They argued that SAVE violated the material aspect of their gift by deciding, without their knowledge or approval, to use the Donation to construct a facility that did not meet their expressed animal-care conditions and would be located in an area outside of Princeton. Id at 115-116.  Accordingly, the Adlers argued that they were entitled to the return of the Donation because it was a conditional gift and SAVE failed to meet its conditions. Id.

The Trial Court confirmed that this was a conditional gift. That means that the gift was one in which the recipient must comply with certain conditions in order to keep it. Normally, if the recipient fails to do so, it must return the gift to the donor upon the donor’s request.

The Trial Court went on to explain that the Donation made by the Adlers was motivated by their desire to provide better conditions for large dogs and older cats. Id at 121. Thus — since SAVE was no longer building a facility that would serve those goals — the Trial Court ruled in favor of the Adlers, finding that they were entitled to the return of the Donation. Id at 120-121.

SAVE appealed to the Appellate Division of the Superior Court of New Jersey (“Appellate Court”). Id at 121.  The Appellate Court explained that SAVE was under a fiduciary obligation to return the Donation to the Adlers if it could not meet the conditions they imposed upon it. Specifically, when a donor places trust and confidence in a recipient who is in a dominant or superior position, the recipient assumes a fiduciary duty to the donor. Id at 125. In this case, the Adlers placed their trust in SAVE to meet the conditions of their gift. By virtue of SAVE’s control of the funds, it was required to either meet the Adlers’ conditions or obtain their consent to rededicate the funds to another purpose acceptable to them. Otherwise, SAVE had a fiduciary duty to return the Donation to the Adlers.  Id.

Conclusion

In sum, the Appellate Court held in favor of the Adlers based upon the “unquestionable realization” that SAVE accepted the Donation fully aware of the Adlers’ conditions and did not express any reservation to them about SAVE’s ability to meet any of those conditions. Therefore, even though SAVE no longer wanted to build the New Facility, SAVE had to return the Donation to the Adlers since it failed to meet those original conditions.  Id at 124.

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