Category Archives: business law

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

May a Plaintiff Amend His Claim After Identifying the Incorrect Defendant?

In a world filled with partnerships, subsidiaries, and joint ownerships, identifying a defendant is not as easy as it sounds. However, if a plaintiff fails to name the correct defendant, he may risk dismissal. The question becomes what does a plaintiff need to do to ensure that his  claim is not dismissed? Is it
reasonable to rely on a party’s representation that they are the defendant?  What will be the result if a
party deceives another into believing they are defendant, when they are not?
In Dashi Slatina & Vjollca Slatina  v. D. Construction Corp. and Armored Inc., A-0851-10T2 (N. J. Super. Ct., App. Div. August 3, 2012), the plaintiff, Dashi Slatina, suffered serious injuries at work. He was erecting a masonry wall when it toppled on him. He filed suit against Newport Associate Development Company (“Newport”) under the belief that Newport was the owner and/or general contractor. However, the trial court dismissed the complaint with prejudice against the plaintiff because Newport was not the actual owner and/or general contractor.
Thereafter, the plaintiff filed a motion to amend the complaint in order to include the actual owner and general contractor. The basis for the motion was that plaintiff had been misled into believing that it had named the correct defendant. For example,
  • Newport initially admitted it owned the property where the plaintiff was injured.
  •  Newport’s interrogatory answers and it’s counsel’s certification did not expressly deny ownership, nor did it identify the actual owner and or general contractor (which Newport was actually linked to by common ownership).
  • The insurance policies that named the actual owner also included Newport as a named insured after the accident occurred.
The trial court denied plaintiff’s motion. In its holding, the court explained “that absent a pre-existing complaint, a plaintiff has nothing to amend”. Therefore, the very idea of amending a complaint that
had just been dismissed was illogical.  In its holding, the trial court mentioned that the only way to restore (and essentially amend) the complaint would be upon reconsideration, or if judgment were vacated after an appeal.
On appeal, the Superior Court considered whether the trial court abused its discretion when it denied the motion for leave to amend. In reversing the trial court’s decision and holding for the plaintiff, the Superior Court explained that although the trial court applied the correct standard for determining reconsideration, it did not construe the standard as liberally as the circumstances warranted. Rule 4:50-1 states,
On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party’s legal representative from a final judgment or order for the following reasons:
(a) mistake, inadvertence, surprise, or excusable neglect;
(b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49;
(c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void;
 (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or
 (f) any other reason justifying relief from the operation of the judgment or order.
The Superior Court held that although the circumstances of this case do not fall into subsection (a) through (e) of Rule 4:50 -1, the trial court had the authority to grant plaintiff’s leave to amend under
the catchall, subsection (f). That subsection allowed the trial court to consider whether it was “in the interest of justice” to restore the complaint for the purpose of enabling the plaintiff to add additional parties. Thus the Court explained that under subsection (f), the trial court had sufficient discretion to grant relief to address exceptional circumstances.
The Court found exceptional circumstances to be present in that case because the great injustice it would create if it held otherwise. The Court explained that Newport initially admitted to owning the
property and throughout its interrogatories never expressly stated that they did not. In fact, Newport was not only named as an insured on the post-accident insurance policy, but they also turned out to be a related entity to the “true owners.”
The Court also recognized that the policy was one promoting decisions on the merits. To hold otherwise would result in the“true owners” being able to avoid responding to the merits of the lawsuit. This would be due to the delayed disclosure by Newport, a related entity. The Court also took into consideration the fact that Newport would suffer no prejudice because the complaint would be restored solely for the purpose of allowing the new amendment and would not subject Newport to potential liability. Finally, the Court noted that plaintiff acted promptly to restore the complaint after judgment was entered. All of these factors favored allowing plaintiff to restore it to the active docket.
The lesson of this case is that a party should always thoroughly investigate whether or not it is bringing suit against the correct party. Nevertheless, in the event that the wrong party is named, under
the right circumstances, there may be a remedy.

Comments/Questions: gdn@gdnlaw.com

© 2013 Nissenbaum Law Group, LLC

Should Parol Evidence be Used When The Terms of an Employment Agreement are Unambiguous?

In Margot W. Teleki v. Talk Marketing Enterprises, No. a-1448-11T2 (N.J. Super. Ct. App. Div. 2012), the court was presented with a common legal issue: whether parol evidence may be used to interpret a contract.  The court determined that it could not because the contract was unambiguous.

Parol evidence is evidence that is extraneous to a contract and is used to interpret its meaning.  The law discourages the use of parol evidence since contracts are meant to be interpreted by their actual wording.  Therefore, unless the contract is ambiguous or there are other exceptional circumstances, parol evidence will not be allowed.  Id. at 16-17.

In this case, since the employment agreement at issue clearly stated that wages would be paid to the Plaintiff, the failure to pay those wages provided personal liability to the principals of the employer  under NJSA 34:11-4.1 and 4.2 (New Jersey Wage Payment Law).  The fact that there was an “understanding”, as demonstrated by parol evidence,  that there would be no personal liability was irrelevant.

Comments/Questions: gdn@gdnlaw.com

© 2012 Nissenbaum Law Group, LLC