In Elmer Branch v. Cream-O-Land Dairy, (A-29-19/083379) (Decided January 13, 2021),the Supreme Court of New Jersey clarified the good faith defense under the New Jersey Wage and Hour Law (WHL), ruling that Cream-O-Land Dairy could not assert a defense under N.J.S.A. 34:11-56a25.2 based on its good-faith reliance on certain determinations by employees of the Department of Labor and Workforce Development (Department) that defendant is a “trucking industry employer.” The New Jersey Supreme Court also called on the Legislature and Department to make changes to further clarify the good-faith defense.

WHL Good Faith Defense

The WHL provides that an employer shall “pay each employee not less than 1 1⁄2 times such employee’s regular hourly rate for each hour of” overtime. The statute, however, creates an exemption from that overtime compensation requirement for employees of a “trucking industry employer. For such employees, the WHL provides for “an overtime rate not less than 1 1⁄2 times the minimum wage.”

Another provision of the WHL, N.J.S.A. 34:11-56a25.2, affords to an employer an absolute defense in certain WHL actions involving minimum wages and overtime compensation based on the employer’s good-faith reliance on certain Department determinations. To establish the good-faith defense, the employer must “plead[] and prove[] that the act or omission complained of was in good faith in conformity with and in reliance on” one of two alternative categories of determinations: (1) “any written administrative regulation, order, ruling, approval or interpretation by the Commissioner of the Department of Labor and Industry or the Director of the Wage and Hour Bureau,” or (2) “any administrative practice or enforcement policy of such department or bureau with respect to the class of employers to which [the employer] belonged.”

Facts of Elmer Branch v. Cream-O-Land Dairy

Plaintiff Elmer Branch asserted claims against his employer, defendant Cream-O-Land Dairy, for payment of overtime wages pursuant to WHL. Plaintiff contended that he and similarly situated truck drivers employed by defendant were entitled to overtime compensation at 1 1⁄2 times their regular hourly wage under N.J.S.A. 34:11- 56a4(b)(1).

Cream-O-Land Dairy raised two defenses. First, it argued that it is a “trucking industry employer” and therefore exempt from the overtime requirements of N.J.S.A. 34:11-56a4(b)(1) and required to pay only 1 1⁄2 times the minimum wage for overtime hours. Second, defendant asserted that it relied in good faith on certain determinations that it qualified as a “trucking industry employer” and could therefore invoke the defense set forth in N.J.S.A. 34:11-56a25.2.

In support of its assertion of the WHL’s good-faith defense, Cream-O-Land Dairy cited three prior determinations by employees of the Department concluding that defendant was a “trucking industry employer” entitled to claim an exemption under N.J.S.A. 34:11-56a4(f). Those determinations were reached by a hearing and review officer, a senior investigator, and the Section Chief of the Division of Wage and Hour Compliance (Division), respectively, but not by the Commissioner of Labor or Director of the Division. None of those matters was appealed by the complainant driver, and no further proceedings occurred in the Department with respect to any of the three matters.

The trial court concluded that those decisions satisfied N.J.S.A. 34:11-56a25.2’s standard for the good-faith defense and granted summary judgment dismissing plaintiff’s claims. The court did not address whether defendant constituted a “trucking industry employer” within the meaning of N.J.S.A. 34:11-56a4(f).

The Appellate Division reversed, finding that none of the determinations on which defendant relied met the requirements of the good-faith defense under the plain language of N.J.S.A. 34:11-56a25.2. The Appellate Division also rejected defendant’s invocation of a 2006 Opinion Letter by the Director of the Division that for certain employees of trucking industry employers, N.J.S.A. 34:11-56a4 “establishes their overtime rate at 1 1⁄2 times the minimum wage” because defendant did not represent that it had relied on that letter when it determined its overtime compensation.

NJ Supreme Court’s Decision in Elmer Branch v. Cream-O-Land Dairy

The New Jersey Supreme Court affirmed, agreeing that none of the decisions identified by defendant satisfy the requirements of the good-faith defense under the plain language of N.J.S.A. 34:11-56a25.2.

In reaching its decision, the court emphasized that the Legislature identified only two bases for the assertion of a good-faith defense by an employer under the WHL. It further noted that although the Legislature has empowered the Commissioner, the Director, “and their authorized representatives” to investigate potential violations of the WHL, the Legislature limited the first prong of the good-faith defense to determinations issued by the Commissioner and the Director themselves. The New Jersey Supreme Court also noted that the WHL permits reliance on a Department practice or policy applying the WHL to a “class of employers” and their employees, not to adjudications of individual complaints against a given employer.

Despite its ruling that the good-faith defense did not apply, the court acknowledged that employers like Cream-O-Land Dairy face a Catch-22. “We acknowledge, however, the dilemma faced by an employer such as defendant, which repeatedly prevailed in overtime disputes before subordinate Department employees but was unable to seek a ruling from the Commissioner of the Department of Labor and Workforce Development (Commissioner) because each of those disputes was resolved without further review,” the court wrote.

The New Jersey Supreme Court went on to encourage the Legislature and Department to work to refine the good-faith defense, writing:

We respectfully suggest that the Department would further the Legislature’s intent in N.J.S.A. 34:11-56a25.2 if it instituted a procedure by which an employer in defendant’s position could obtain an opinion letter or other ruling clarifying its obligations under the WHL’s overtime provisions. The Legislature and the Department may determine whether further statutory or regulatory guidance should be provided regarding the good-faith defense under N.J.S.A. 34:11-56a25.2. In that regard, the federal approach to the good-faith defense set forth in the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. §§ 201 to 219, and the regulations promulgated pursuant to the FLSA, may be considered.

The New Jersey Supreme Court remanded the case back to the trial court for consideration of defendant’s argument that it is a trucking-industry employer within the meaning of N.J.S.A. 34:11- 56a4(f) and for determination of whether defendant complied with the applicable WHL overtime standards in compensating its employees.

The Supreme Court of New Jersey recently heard oral arguments in a closely-watched case involving insurance claims related to Superstorm Sandy. The specific issue in New Jersey Transit Corporation v. Certain Underwriters at Lloyd’s London is whether New Jersey Transit Corporation’s (NJ Transit) insurers must insure $400 million of water damage loss caused by the storm.

Facts of NJ Transit Corp. v. Certain Underwriters at Lloyd’s London

In July 2012, NJ Transit, through its insurance broker, Marsh USA Inc. (Marsh), secured coverage from eleven insurers in a multi-layered property insurance policy program for the policy period from July 1, 2012, to July 1, 2013. The policies insured against “all risks” and provided coverage proportionally in four layers.

Lexington Insurance Company (Lexington) provided coverage in the primary layer and was responsible for the first $50 million of insurance. After the primary layer was exhausted, the policies provided three layers of excess coverage. The second layer provided coverage up to $100 million, and the third layer provided an additional $175 million. The fourth layer provided coverage of $125 million, resulting in a property insurance program with $400 million of coverage.

The defendants,Lloyd’s, London (Lloyd’s), Maiden Specialty Insurance Company (Maiden), RSUI Indemnity Company (RSUI), Specialty Insurance Company (Specialty), and Westport Insurance Corporation (Westport) (collectively, the “defendant insurers”), provided excess coverage in the third or fourth excess layers, or both. The policies of all participating insurers included a standard policy form and separate endorsements, some of which were included in all policies, and some which were unique to specific insurers.

On October 29, 2012, Superstorm Sandy struck New Jersey, causing significant damage to NJ Transit’s properties. After the storm, NJ Transit promptly notified Marsh and the insurers of its losses. NJ Transit’s employees, Marsh, and loss adjuster York Risk Services Group, Inc. (York) arranged for the inspection of the damaged properties and a valuation of the equipment that had to be repaired or replaced. Marsh then sought a determination as to the amount of coverage provided for the Sandy-related water damage to NJ Transit’s properties.

In April 2013, Terry S. Lubin, Executive General Adjuster for York, informed NJ Transit on behalf of the defendant insurers and other excess carriers that the claimed losses for water damage were limited by the $100 million flood sublimit in the policies, and the excess carriers would pay no more than $50 million in addition to the first-layer coverage provided by Lexington. NJ Transit disagreed, arguing that none of the sublimits in the policies applied to losses caused by a “named windstorm,” which was a separately defined peril.

In October 2014, NJ Transit filed suit, seeking a judgment declaring that the $100 million flood sublimit did not apply to its claims for property damage associated with Superstorm Sandy, and defendants were in anticipatory breach of their insurance contracts. In response, the defendant insurers maintained that they had no contractual obligation to provide coverage for any water-related damage caused by “flood” that exceeded $100 million, and asserted counterclaims for reformation of their policies.

The trial court found that the $100 million flood sublimit in the policies did not apply to NJ Transit’s claim, and it was entitled to coverage up to the full $400 million policy limits for the Sandy-related water damage. The trial court also found that defendant insurers had not submitted sufficient evidence to support their claims for reformation of the policies. Accordingly, the court granted summary judgment in favor of NJ Transit.

Appellate Division Decision in NJ Transit Corp. v. Certain Underwriters at Lloyd’s London

On appeal, the insurers argued that the water damage to NJ Transit’s properties were “losses caused by flood,” and therefore subject to the $100 million flood sublimit in the policies. The Appellate Division, however, affirmed the trial court’s decision. It concluded that the named windstorm provision controlled rather than the flood sublimit.

In reaching its decision, the appeals court cited the language of the insurance policies. As the Appellate Division explained:

The policies do not define “flood” to include “storm surge” and “wind driven water” associated with such a “named windstorm.” Although the definition of “flood” includes “surge,” the definition of “named windstorm” more specifically encompasses the wind driven water or storm surge associated with a “named windstorm.” Where, as here, two provisions of an insurance policy address the same subject, “the more specific provision controls over the more general.”

The Appellate Division further noted that if the parties had intended that damage from a “storm surge” would be subject to the flood sublimit, the policies would have stated so in plain language. “Moreover, if the term ‘flood’ already included damage from a ‘storm surge’ associated with a ‘named windstorm,’ as defendants claim, there would have been no need for the parties to include the ‘named windstorm’ provision in the policies,” the court added.

Issue before New Jersey Supreme Court

The New Jersey Supreme Court granted certification on June 18, 2020. The justices agreed to consider the following question:

Among other issues, were the losses suffered by the New Jersey Transit Corporation due to Superstorm Sandy covered up to the $400 million insurance limit in the policies, or only up to the $100 million flood sublimit in the policies?

The court held oral arguments on January 4, 2021. During their questioning of the insurers, several justices cited the policy’s plain language. In doing so, they questioned the meaning of the provisions, raising concern that the insurers’ arguments could make the windstorm provision redundant. A decision is expected in the coming months. Please check back for updates.

In Delaney v. Dickey, (A-30-19/083440) (Decided December 21, 2020), the Supreme Court of New Jersey held that attorneys must generally explain to a client the benefits and disadvantages of arbitrating a prospective dispute between the attorney and client for an arbitration provision in a retainer agreement to be enforceable.

Facts of Delaney v. Dickey

Plaintiff Brian Delaney signed a retainer agreement when he hired Sills Cummis & Gross P.C. to represent him in a lawsuit. Delaney, a sophisticated businessman, met with a Sills attorney who presented him with a four-page retainer agreement. During the meeting, the Sills attorney told Delaney that he should take his time reviewing the retainer agreement and ask any questions he had about its contents.

The third page of the retainer agreement contained an arbitration provision stating that any dispute about the firm’s legal services or fees would be determined by arbitration and that, by agreeing to arbitration, Delaney waived his right to trial by jury; the agreement also advised Delaney that the arbitral result would be final and non- appealable. The fourth page of the retainer agreement indicated that the arbitration proceeding would be conducted through a private arbitration and mediation organization called JAMS and contained a hyperlink to 33 pages of JAMS rules governing the arbitral forum. The Sills attorney did not provide Delaney with a hard copy of the JAMS rules, offer an explanation of the arbitration provisions in the agreement or the hyperlink, or advise Delaney of the advantages and disadvantages of an arbitral forum in the event of a future fee dispute with or legal malpractice action against the Sills firm. Delaney reviewed and signed the retainer agreement in the presence of the Sills attorney without asking any questions.

After the legal representation ended, a fee dispute arose and, in August 2016, Sills invoked the JAMS arbitration provision in the retainer agreement. While the arbitration was ongoing, Delaney filed a legal malpractice action against Dickey and the Sills firm. The complaint also alleged that the mandatory arbitration provision in the retainer agreement violated the Rules of Professional Conduct and wrongly deprived him of his constitutional right to have a jury decide his legal malpractice action.

The court held that the retainer agreement’s arbitration provision was valid and enforceable. The court specifically found that the provision’s language — “any dispute with respect to the Firm’s legal services and/or payment by you of amounts to the Firm” will be submitted to arbitration — was sufficiently broad to encompass a claim of legal malpractice. Additionally, the court determined that Delaney waived his right to trial by jury by agreeing to the unambiguously stated arbitration provision, citing Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430 (2014), and further observed that a law firm has no obligation to explain to a client the terms of a clearly written retainer agreement that “can be understood by a layperson.” Finally, the court noted that Delaney had sufficient time to consider the import of the retainer agreement.

The Appellate Division disagreed, emphasizing that Sills should have provided the 33 pages of JAMS arbitration rules incorporated into the agreement, that Sills did not explain the costs associated with arbitration, and that the retainer included a fee-shifting provision not permissible under New Jersey law.

NJ Supreme Court’s Decision in Delaney v. Dickey

The New Jersey Supreme Court agreed that Delaney’s malpractice action should not subject to the arbitration provision of the Sills retainer agreement. It also established a new rule for retainer agreements containing arbitration provisions.

“We now hold that, for an arbitration provision in a retainer agreement to be enforceable, an attorney must generally explain to a client the benefits and disadvantages of arbitrating a prospective dispute between the attorney and client,” the court held. “Such an explanation is necessary because, to make an informed decision, the client must have a basic understanding of the fundamental differences between an arbitral forum and a judicial forum in resolving a future fee dispute or malpractice action.”

In reaching its decision, the New Jersey Supreme Court distinguished a retainer agreement from typical commercial contracts. “[A] retainer agreement is not an ordinary contract governed by the rules of the marketplace but is a contract that must meet the high standards of the Rules of Professional Conduct (or RPCs),” the court wrote. “An attorney’s professional and fiduciary obligations require scrupulous fairness and transparency in dealing with clients — requirements different from the typical norms that regulate arm’s-length commercial transactions between vendors and customers.”

The New Jersey Supreme Court went on to hold that an attorney’s fiduciary obligation mandates the disclosure of the essential pros and cons of the arbitration provision so that the client can make an informed decision whether arbitration is to the client’s advantage. The court explained:

That explanation may include, for example, that in arbitration the client will not have a trial before a jury in a courtroom open to the public; the outcome of the arbitration will not be appealable and will remain confidential; the client may be responsible, in part, for the costs of the arbitration proceedings, including payments to the arbitrator; and the discovery available in arbitration may be more limited than in a judicial forum.

According to the court, the information can be conveyed in an oral dialogue or in writing, or by both, depending on how the attorney chooses best to communicate it. It referred the issues raised in this opinion to the Advisory Committee on Professional Ethics for its review, which may make recommendations to the New Jersey Supreme Court and propose further guidance on the scope of an attorney’s disclosure requirements.

While the New Jersey Supreme Court advised that its ruling should be applied prospectively, it also determined that Delaney should receive its benefit. “[I]t would be unfair to deprive plaintiff, who has helped clarify the application of our RPCs in his and all future cases, of the relief he has sought — a judicial forum in which to air his claims,” the court explained. Accordingly, it held that Delaney’s malpractice action is not subject to the arbitration provision of the Sills retainer agreement, and he must therefore be allowed to proceed with his malpractice action in the Law Division.

Rising COVID-19 cases have forced New Jersey Courts to again limit in-person proceedings, and the New Jersey Supreme Court is asking for feedback on what to do next. Under its proposal, New Jersey would conduct virtual civil jury trials during the ongoing pandemic.

According to a Notice to the Bar, the Judiciary’s Post-Pandemic Planning Committee on Resuming Jury Trials developed the proposal with discussion and detailed written input from members of the Working Group on COVID-19 Jury Operations, including the New Jersey State Bar Association, the New Jersey Association for Justice, the New Jersey Defense Association, and the Division of Law in the Department of Law and Public Safety.

COVID-19’s Impact on the Court System

After being shuttered for months, the New Jersey court system fully reopened to criminal and civil jury trials in late September. However, on November 16, 2020, rising COVID-19 cases forced the New Jersey Supreme Court to suspend new in-person jury trials pending further order.

In support of conducting trials virtually, the proposal notes that the effect of resuming jury trials, even for such a short time, was substantial. Juries returned verdicts in several cases, and more than 225 civil cases settled after being scheduled and conferenced for trial dates.

Accordingly, the Judiciary Post-Pandemic Planning Committee on Resuming Jury Trials recommends that all civil case types (all dockets and all tracks) should be eligible for virtual civil jury trials, with the Civil Presiding Judge, trial judge, and attorneys working together to select or exclude cases based on individual factors. The proposal also allows for “hybrid” or “modified” virtual civil jury trials with the judge, attorneys, and even witnesses participating from the courtroom. However, it notes that “given the possibility of an executive order that further limits or suspends indoor gatherings, the judge and attorneys also should plan for how they could continue the trial in a fully virtual format if necessary.”

The proposal suggests that the most straightforward cases — those involving a single plaintiff, a single defendant, and a modest number of live witnesses — should be scheduled first. Once those are completed, the courts could consider more complex cases. With regard to how virtual trials would be conducted, the Judiciary Post-Pandemic Planning Committee on Resuming Jury Trials makes the following recommendations:

• Jury Selection: To minimize public health risks and maximize juror yield, jurors should not come into the courthouse for an in-person phase of selection. Rather, jury selection should be conducted virtually (without requiring attorney consent for that virtual selection process). Given the modified process, judges should be more permissive in allowing attorneys to participate during virtual voir dire. In addition, up to two additional alternates should be selected to account for the possibility that a juror may experience technical difficulties that prevent them from continuing with the trial or that a juror could develop a COVID-19 related issue that necessitates excusal
• Use of Standard Technology: The Judiciary should provide standard technology to all empaneled jurors. The requirements for virtual jury selection should continue consistent with applicable court orders, including the Court’s July 22, 2020 Order that permits the use of various appropriate technology, including smartphones with cameras, for purposes of selection. Samsung Galaxy Pro tablets should be provided to all empaneled jurors, with Broadband activated if necessary. Consistent with the protocols for virtual jury selection and virtual grand jury proceedings, empaneled jurors should receive instructions and training on use of Judiciary-issued technology and on the protocol for informing the judge if they experience a technical problem during the trial.
• Pre-trial Conferences: The trial judge should conduct a comprehensive pretrial conference that covers all aspects of the virtual trial process, including whether the judge, attorneys, and parties will be present in a courtroom or participate remotely and the method(s) of presenting evidence. The proposal also states that the judge and attorneys should agree on a trial schedule designed to minimize Zoom fatigue for jurors.

Under the Judiciary’s plan, consent to proceed remotely would not be required. However, it further provides that “to the extent practicable, the first virtual civil jury trials should involve judges and attorneys who are amenable to the process and willing to provide feedback for refinement of future protocols.” It also states that relevant factors (including health- or travel-related barriers to attorneys convening in the courtroom) should be considered in selecting and scheduling cases for trial dates.

The Supreme Court of New Jersey recent heard oral arguments in Hager v. M&K Construction. The closely-watched case will determine whether an employer can be required to reimburse an employee for the cost of the employee’s medical marijuana.

Facts of Hager v. M&K Construction

In 2001, Vincent Hager (Hager), then 28 years old, was employed by M&K Construction (M&K) and working on a construction site, when a truck delivering concrete dumped its load onto him. Hagar underwent several surgeries; however, they were unsuccessful in alleviating his pain. After relying on opioids to treat his chronic pain, Hagar was prescribed medical marijuana under the New Jersey Compassionate Use Medical Marijuana Act (MMA).

After M&K’s denied his workers’ compensation claim, Hager filed suit. After several days of trial, M&K reached an agreement with Hager regarding medical bills, reimbursement for out-of-pocket medical expenses, temporary disability benefits, and third-party lien credits.  The issues remaining for determination by the workers’ compensation judge were the award of permanent disability and future medical treatment. The judge ultimately found that Hager exhibited permanent partial total disability of 65% and ordered M&K to reimburse petitioner for the costs of medical marijuana and any related expenses.

In finding that M&K must reimburse Hager for his medical cannabis treatment, the workers’ compensation judge rejected the testimony of M&K’s expert that Hager should “simply deal with his pain.” According to the judge, this position was “unacceptable as inhumane and contrary to the law concerning an employer’s obligation to treat.” The judge further noted that “if the only choice for petitioner is between opioids and marijuana, then marijuana is the clearly indicated option.” She added: “Both modalities present significant downsides in terms of adverse consequences and risks, but a comparison leads inescapably to a conclusion that marijuana is the appropriate option.”

Appellate Division’s Decision in Hager v. M&K Construction

The Appellate Division held that a workers’ compensation judge can order an employer to reimburse its employee for the employee’s use of medical marijuana prescribed for chronic pain following a work-related accident. According to the appeals court, New Jersey employers do not violate federal law in reimbursing workers who have been prescribed medical cannabis.

“Because we conclude the [workers’ compensation] order does not require M&K to possess, manufacture or distribute marijuana, but only to reimburse petitioner for his purchase of medical marijuana, we discern no conflict between the CSA and MMA,” the panel said. “Furthermore, M&K’s compliance with the order does not establish the specific intent element of an aiding and abetting offense under federal law.”

The appeals court rejected M&K’s argument that the Controlled Substances Act (CSA) preempts the MMA because it is impossible to comply with both statutes. In reaching its decision, the panel emphasized that “Congress has expressed its intent in the plain language of the CSA that it only preempts a state law that requires the performance of an action specifically forbidden by the federal statute.” According to the panel, “The MMA does not require an employer to possess, manufacture or distribute marijuana – the actions proscribed by the CSA. Because it is not physically impossible to comply with the CSA and the MMA, there is no positive conflict between these laws.”

The Appellate Division also rejected M&K’s argument that the order violates the CSA because it requires the employer to aid and abet petitioner’s possession of an illegal substance. “Under the circumstances presented here, M&K is not an active participant in the commission of a crime,” the court wrote. “The employer would be complying with an order requiring it to reimburse a person for the legal use of medical marijuana under this state’s law.”

Issues Before the New Jersey Supreme Court

M&K appealed, and the New Jersey Supreme Court granted certification on May 12, 2020. The justices agreed to consider the following question: “Among other issues, may a workers’ compensation judge order an employer to reimburse its employee for the cost of the employee’s medical marijuana prescribed for chronic pain following a work-related accident?”

The court held oral arguments on December 1, 2020. The justices appeared poised to uphold the Appellate Division’s decision, with several justices questioning M&K’s argument that reimbursing a worker for medical cannabis use would run afoul of the CSA. Of course, we will have to await the court’s ruling.

The Supreme Court of New Jersey has agreed toconsider In re Attorney General Law Enforcement Directive Nos. 2020-5 and 2020-6, which challenges directives issued by the New Jersey Attorney General requiring the state to release information about police officers subjected to serious discipline. The Appellate Division previously upheld the directive, ruling that the Attorney General was acting within his authority.

Facts of the Case

In June, the Office of the Attorney General issued two directives, Law Enforcement Directive Numbers 2020-5 and 2020-6 (collectively, the “Directives”), amending the statewide rules for internal affairs investigations, known as the Internal Affairs Policy and Procedures (IAPP). Shortly thereafter, several police unions representing law enforcement officers filed suit.

Directive 2020-5 amends the IAPP to require every law enforcement agency in the State to publish a synopsis of all complaints in which an officer received final discipline of termination, demotion, or a suspension of more than five days, including the name of the officer, a summary of the misconduct, and the sanction imposed. Initial reports, covering all discipline imposed during this calendar year, are due by December 31, 2020. Subsequent reports must be published at least annually thereafter. The Directive further permits, but does not require, county and municipal agencies to release similar information about earlier incidents of officer misconduct resulting in the same sanctions.

Directive 2020-6 orders all law enforcement agencies within the Department of Law and Public Safety, which the Attorney General heads, the Division of State Police and the Division of Criminal Justice, as well as the Juvenile Justice Commission, which is in but not of the Department, to publish no later than July 15, 2020, the same information required by Directive 2020-5 from January 1, 2000 to the present. The Directive orders the three agencies to provide notice to each officer it intends to identify at least seven days prior to publication, whenever possible making reasonable efforts.

The plaintiffs challenging the Directives argued that the Attorney General lacks the authority to issue the Directives because they conflict with a provision of the Open Public Records Act, a regulation promulgated by the Department of Law and Public Safety, N.J.A.C. 13:1E-3.2(a)(4), and various Executive Orders, most notably Executive Order 11 (Byrne), all of which protect the confidentiality of personnel records of public employees. Among other arguments, the plaintiffs also alleged that the Attorney General promulgated the Directives in violation of the Administrative Procedures Act and acted outside his authority by giving them retroactive application.

Appellate Division Decision

The Appellate Division upheld the Directives. “[W]e conclude the Attorney General acted within the authority conferred on him by the Legislature in the Law and Public Safety Act of 1948, the Criminal Justice Act of 1970, and N.J.S.A. 40A:14-181 in issuing Directives 2020-5 and 2020-6, and they therefore withstand petitioners’ facial challenge,” the court wrote.

In finding that the Directives did not run afoul of the rights of the State’s law enforcement officers in the privacy of their personnel records under Executive Order 11, section 10 of OPRA, or N.J.A.C. 13:1E-3.2, the Appellate Division emphasized that police officers have long been distinguished from other public employees, “by virtue of the public trust reposed in them to enforce and uphold the law, and the manifest ‘need in a democratic society for public confidence, respect and approbation of the public officials on whom the state confers’ the authority to use lawful force to arrest and detain their fellow citizens.”

The Appellate Division further noted that every iteration of the IAPP has expressly provided that the information and records of an internal investigation could be released at the direction of the Attorney General, “an authority the Legislature has never acted to limit or complaints of police misconduct and provided an explanation for the outcome.”

The Appellate Division did not “pass on the wisdom of the policy embodied in these Directives.” As the court explained:

The erosion of confidence in our law enforcement agencies is a serious problem, and it is enough that the Attorney General, New Jersey’s chief law enforcement officer tasked with the general supervision of criminal justice in our State, has determined that publishing the names of officers incurring major discipline for misconduct will increase public trust in those agencies and make them more accountable to the communities they serve. It is not for this court to assess the Attorney General’s policy choice. Our only focus is on his authority to implement the policy choice he has made.

Notably, the Appellate Division did not foreclose challenges to retroactive application of the Directives. “Our conclusion that the Directives constitute a valid exercise of the Attorney General’s authority does not preclude any officer from bringing an as-applied challenge to publication of his or her name pursuant to Directives 2020-5 and 2020-6 for discipline finalized before release of those Directives,” the court wrote.

Issue before the NJ Supreme Court

On November 25, 2020, the New Jersey Supreme Court agreed to consider the case. The justices will decide the following question:

Among other challenges to the adoption of these Directives, does the Attorney General have the authority to require public disclosure of the names of police officers assessed “major discipline”?

Oral arguments have not yet been scheduled.

The New Jersey Supreme Court recently heard oral arguments in Delanoy v. Township of Ocean. The closely-watched case involves the New Jersey Pregnant Workers Fairness Act (PWFA), which amended the New Jersey Law Against Discrimination (LAD) to expressly prohibit pregnancy discrimination in the workplace. Among requirements, the PWFA obligates employers, subject to an undue hardship exception, to provide reasonable accommodations in the workplace to pregnant women upon their request, and to not penalize such women because of their pregnant status. The case represents the first opportunity for the state’s highest court to interpret the PWFA.

Facts of Delanoy v. Township of Ocean

Kathleen Delanoy brought a pregnancy discrimination suit under the PWFA against her employer, Ocean Township, and various Ocean Township officials. She alleged that the Township’s “Maternity Assignment Standard Operating Procedure” (Maternity SOP) violated the PWFA. 

When Delanoy found out she was pregnant with her second child, she informed her supervisors her doctor recommended she be taken off patrol. She asked to be transferred to a “light-duty” or less strenuous position within the Ocean Township Police Department. The Maternity SOP and standard Light-Duty SOP policies require a police officer to deplete up to all of his or her accumulated paid leave time as a condition of receiving light-duty or a maternity assignment. However, the Light-Duty SOP, but not the Maternity SOP, grants the Chief of Police discretion to waive the requirement that an officer use up his or her accumulated time as a condition of the changed assignment. 

In her suit, the Plaintiff alleged that the Department’s Maternity SOP discriminates against pregnant employees because it is less favorable than the light-duty assignment policy for nonpregnant officers. She further maintained that requiring her to deplete her accumulated leave time as a condition of her maternity assignment violates the PWFA, because employers are obligated under the statute to “reasonably” accommodate pregnant employees. She further argued that this condition improperly penalized her in violation of the statute. 

The trial court granted summary judgment in favor of defendants, finding that defendants’ maternity assignment policy did not violate what it perceived as the PWFA’s “equal treatment” mandate. The court did not reach the issues of reasonable accommodation, undue hardship, or penalty. The court also denied plaintiff’s cross-motion for partial summary judgment on her facial challenge.

Appellate Division Decision inDelanoy v. Township of Ocean

The Appellate Division vacated the entry of summary judgment in favor of the defendants. It also upheld Delanoy’s facial challenge to the Township’s SOP policies and directed the trial court to grant her requests for declaratory and injunctive relief.

“We hold the Department’s maternity assignment policy, as written, unlawfully discriminates against pregnant employees as compared to nonpregnant employees who can seek and potentially obtain a waiver from the Police Chief. Such nonequal treatment violates the PWFA,” Judge Jack Sabatino wrote on behalf of the court. “Consequently, we uphold plaintiff’s facial challenge to those uneven policies and direct the trial court to grant her discrete requests for declaratory and injunctive relief, leaving other remedial issues to the trial court.”

The Appellate Division found that the trial court “underestimated” the significance of the key distinction between the two policies — that the Light-Duty SOP Policy allows the Police Chief for certain officers to waive the requirement that the officer receiving this benefit must deplete his or her accumulated bank of leave time. Judge Sabatino wrote: 

In any event, the two written policies are clearly unequal on their face. No pregnant officers (no matter what positions they hold) can obtain a waiver, whereas some nonpregnant officers can, in the Police Chief’s discretion. The facial difference supports plaintiff’s requests for declaratory and injunctive relief. 

The Appellate Division went on to find that it was “less clear” whether the facial difference between the two SOPs proximately caused Delanoy, who never had the chance to apply for a waiver, any damages. Accordingly, it directed that damages question be reserved for trial. The court similarly found that the Plaintiff’s allegations of retaliation and disparate treatment in the Defendants’ implementation of her modified assignment should be decided by a jury.

Issues Before New Jersey Supreme Court

The New Jersey Supreme Court agreed to consider the case. The specific issue before the court is: “Did the Township of Ocean Police Department’s ‘Maternity Assignment Standard Operating Procedure’ violate the New Jersey Pregnant Workers Fairness Act and its provisions within the New Jersey Law Against Discrimination, N.J.S.A. 10:5-12?”

The justices heard oral arguments on November 10, 2020. Much of the questioning involved whether wearing a gun is an essential function of the job of a police officer, as the Ocean Township Police Department maintains and Delanoy disputes.

Justice Barry Albin asked the township’s counsel: “So you are now saying that pregnant women who cannot wear their weapons cannot have any reasonable accommodation provided by your township? Is that your position?” He responded: “I know of no department that does not have a requirement to say, ‘don’t wear your weapon.’ Every police officer in every headquarters wears their weapon while they’re on duty unless in a cell block with prisoners.”

Delanoy’s attorney countered by stating. “If wearing a gun is an essential function of the job of a police officer such that no reasonable accommodation can be afforded, then women will not be police officers in the state of New Jersey if they want to have children,” he said, but “diversity in the ranks” is “exactly what this statute was designed to ensure.”

In State v. Louis V. Williams, (A-40-19/083400) (Decided November 2, 2020), the Supreme Court of New Jersey held that a warrantless search of a Trenton rooming house violated the U.S. and New Jersey Constitutions, both of which require that police officers obtain a warrant before conducting a search, unless that search falls into a recognized exception to the warrant requirement. In so ruling, the state’s highest court upheld an Appellate Division decision holding that a resident of a boarding or rooming house has a reasonable expectation of privacy in areas beyond his or her bedroom door.

Facts of State v. Williams

Detective Estevez of the New Jersey State Police testified at a suppression hearing that, on March 19, 2016, he heard gunshots from a nearby neighborhood while in his office in Trenton. Dispatch reports indicated that the gunshots were fired at a nearby bar and that the suspected shooter was a Black male named “Louis” who had fled to, and lived at, a dwelling on Spring Street.

Estevez and another officer drove to the Spring Street dwelling. According to Estevez, the front door was equipped with a lock but was unlocked at that time and swung open when he knocked on it. The officers entered what Estevez described as a long hallway with a stairway leading to the second floor directly in front of him. Estevez noticed multiple doors to his left, all of which had padlocks on them, which led him to believe the building was being used as “a boarding house because usually boarding houses are multi-apartment dwellings.” After searching the common areas for weapons and the suspect, Estevez and the officer returned to their vehicle to search the surrounding area. They received a police dispatch report indicating that a crime scene was established at the bar; Estevez testified that he thus believed he was involved in an “active shooting” investigation.

Estevez returned to the Spring Street dwelling and began knocking on the interior doors. As he approached one room, Estevez heard movement and smelled marijuana through the door. He knocked on the door, announced that he was a police officer, and told the individual to answer the door. According to Estevez, the smell of marijuana drastically increased when defendant Louis Williams (Williams or defendant) opened the door, and defendant was sweating and breathing heavily. Estevez stated that while he was standing in the doorway, still in the common hallway, he looked into defendant’s room as defendant went to get his wallet to provide identification. Estevez testified that, in light of safety concerns, he was closely watching defendant’s hands and thus saw a small bag of marijuana next to the wallet, at which point he concluded defendant would be placed under arrest. Estevez testified that he stepped into defendant’s room as defendant turned to provide the identification. Estevez saw on defendant’s driver’s license that defendant’s name was Louis Williams. He then placed defendant under arrest for possession of marijuana, conducted a protective sweep of the bedroom, and applied for a warrant to search defendant’s room for drugs, weapons, and other items. After obtaining the warrant, other police officers searched defendant’s bedroom and seized a bag of marijuana and a gun.

The trial court denied Williams’s motion to suppress the drugs and weapon based on the plain view exception to the Fourth Amendment’s warrant requirement. In order to satisfy the plain view doctrine when this case was decided, the State was required to establish: 1) a police officer was “lawfully in the viewing area”; 2) the officer “discover[ed] the evidence ‘inadvertently'”; and 3) it was “‘immediately apparent’ to the police that the items in plain view were evidence of a crime, contraband, or otherwise subject to seizure.” State v. Bruzzese, 94 N.J. 210 (1983).

The trial court determined that defendant did not have a privacy right as to the common hallway. It specifically found that the constitutional protections against unreasonable searches and seizures “only extend to such areas . . . in which an individual has a reasonable expectation of privacy,” and that those safeguards did not extend to “the building in general” or “the common areas” because “those areas are accessible and used by other occupants.” The court went on to conclude that in light of Estevez’s plain-view observation from that lawfully accessed area, there was no unlawful search or seizure.

Appellate Division Decision in State v. Williams

The Appellate Division reversed. As emphasized in the Appellate Division’s decision, the key issue in the case was “whether Estevez had a lawful right to be in the second floor hallway where he initially smelled the marijuana that led to his observations, defendant’s arrest, and the issuance of the warrant prompting the seizure of the . . . gun.” To answer that question, the court had to determine whether the defendant had a reasonable expectation of privacy in the common hallway, which would entitle him to Fourth Amendment protections against unreasonable searches and seizures

The Appellate Division ultimately rejected the trial court’s finding that the common areas of the boarding house, and specifically the second floor hallway outside defendant’s room, were open to the public, thereby eviscerating defendant’s privacy interest. In support, the appeals court noted that the front door was closed and equipped with a lock. Although the Appellate Division acknowledged that the door was unlocked when the officers arrived, it did not find that dispositive. According to the court, “the lack of proof that the communal areas were open to the public supports the conclusion that defendant had a reasonable expectation of privacy in the second floor hallway.”

The Appellate Division further noted that the rooms of the boarding house shared a communal bathroom, which was accessed via the hallway. “[W]e decline to endorse an “inroad[] upon the reasonable expectations of privacy of the lesser situated of our citizens who are forced by economic circumstances to reside in rooming houses,” the court wrote. “Accordingly, we determine that society is willing to treat as private the space between a person’s bedroom and bathroom in such settings.”

The Supreme Court of New Jersey recently heard oral arguments in Johnson & Johnson v. Director, Division of Taxation et al. The case involves whether, following the New Jersey Legislature’s 2011 amendment of N.J.S.A. 17:22-6.64, plaintiff Johnson & Johnson (J&J) was required to pay an insurance premium tax (IPT) based upon all the risks it insured throughout the United States or based upon only those risks localized in New Jersey.

Facts of the Case

In 1970, Johnson & Johnson formed Middlesex Assurance Company Limited (Middlesex Assurance) to secure broader coverage and lower the costs and fees associated with its substantial global insurance needs. Middlesex Assurance is a “single-parent” or “pure” captive insurance company, which is an insurance company that insures only the liabilities of its owner.

The dispute arises as a result of statutory amendments the New Jersey Legislature enacted in response to the Nonadmitted and Reinsurance Reform Act (NRRA), which specified rules for the reporting, payment, and allocation of IPT for nonadmitted insurance. Nonadmitted insurance, also known as unauthorized insurance, refers to insurance provided by an insurer that does not have a license to transact business within a particular state.

In New Jersey, there are two main types of unauthorized insurance markets: the surplus lines market and the self-procured market. As explained in Railroad Roofing & Bldg. Supply Co. v. Fin. Fire & Cas. Co., 85 N.J. 384, 389 (1981), “Surplus lines insurance involves New Jersey risks which insurance companies authorized or admitted to do business in this State have refused to cover by reason of the nature of the risk.” Meanwhile, the self-procured insurance market consists of unauthorized insurers directly providing coverage to the insured.

Prior to 2011, the two insurance markets were treated differently under New Jersey tax law. Nonetheless, the State collected IPT on all unauthorized insurance covering New Jersey risks. Surplus lines insurance was taxed under the authority of N.J.S.A. 17:22-6.59 (2010), which required the insurance agent to “collect from the insured” a “tax of 5% of all gross premiums” charged by the insurer, and to remit this amount to the State. Meanwhile, the tax on insurance coverage that an insured independently procures from a captive insurer located outside the State is governed by N.J.S.A. 17:22-6.64 (2010), which prior to the 2011 amendments at issue in the case,  required the insured to directly pay a 5% tax (the IPT) on the gross premiums it paid to procure “excess loss, catastrophe or other insurance” with an unauthorized captive insurer.

In 2011, NRRA created the Home State Rule, which provides that “no state other than the home state of an insured may require any premium tax payment for nonadmitted insurance.” Following the enactment of the NRRA, New Jersey enacted S.B. 2930, which added the following paragraph to N.J.S.A. 17:22-6.64: “If a surplus lines policy covers risks or exposures in this state and other states, where this state is the home state, as defined in [N.J.S.A. 17:22-6.41], the tax payable pursuant to this section shall be based on the total United States premium for the applicable policy.”

Nothing else in the statute was changed. Thus, N.J.S.A. 17:22-6.64 continues to provide, as it did before the amendment, that the insured must pay a 5% tax on the gross amount of any premium it pays to a nonadmitted captive insurer “upon a subject of insurance resident, located or to be performed within this State, other than insurance procured through a surplus lines agent pursuant to the surplus lines law of this State or exempted from tax under [N.J.S.A. 17:22- 6.59].”

J&J started paying insurance premium taxes on all of the U.S. premiums it paid to Middlesex Assurance Co. Ltd. for the self-procured insurance coverage, but later filed a claim seeking a  refund of approximately $55.9 million, plus applicable interest. J&J argued that the 2011 amendments to N.J.S.A. 17:22-6.59 and N.J.S.A. 17:22-6.64 that allowed the State to impose an IPT based upon the total premium paid by an insured for all risks covered in the entire United States only applied to surplus lines insurance coverage.

In response, the Division argued that the Legislature has always treated IPT imposed under N.J.S.A. 17:22-6.59 and -6.64 “as the same tax since their enactment in 1960” and that the only difference between the two taxes is that the surplus lines agent pays the tax under N.J.S.A. 17:22-6.59, and the insured pays the tax directly under N.J.S.A. 17:22-6.64.

The Tax Court acknowledged that the wording of the statute raised concerns. “Understandably, the addition of a paragraph in the self-procurement statute relating to surplus lines policies is problematic, as is the failure to remove the original language allocating the IPT to the location of the risk.” However, it found that the Legislature’s intent to assess tax on all of a company’s premiums paid to an unadmitted insured for the company’s operations throughout the United States was “clear and purposeful.”

Appellate Division’s Decision

The Appellate Division reversed the Tax Court, holding that New Jersey could only tax the premiums paid by Johnson & Johnson to Middlesex Assurance for New Jersey risks.”Under these circumstances, we are unable to conclude that the Legislature, by specifically stating that the Home State Rule only applied to surplus insurance coverage obtained through surplus line agents, likewise intended to extend it to the types of insurance coverage procured by J&J from Middlesex Assurance,” the panel wrote.

In reaching its decision, the Appellate Division disagreed with the Tax Court’s interpretation of the statute, writing:

However, nothing in the plain language of N.J.S.A. 17:22-6.64 supports this interpretation. Even if the language of the statute is somehow ambiguous, the Tax Court specifically found that there was nothing in the legislative history of L. 2011, c. 119 that even discusses the self-procurement statute. Under these circumstances, we are unable to conclude that the Legislature, by specifically stating that the Home State Rule only applied to surplus insurance coverage obtained through surplus line agents, likewise intended to extend it to the types of insurance coverage procured by J&J from Middlesex Assurance. Thus, we believe that the Tax Court erred by effectively rewriting N.J.S.A. 17:22-6.64 to apply to J&J.

The Appellate Division remanded the case back to the Tax Court to calculate the proper tax and refund the remaining amount. The Division of Taxation appealed to the New Jersey Supreme Court.

Issues Before the New Jersey Supreme Court

The New Jersey Supreme Court granted certification on February 20, 2020. The justices have agreed to consider the following question: “Following the 2011 amendment of N.J.S.A. 17:22-6.64, was plaintiff required to pay an insurance premium tax based upon all the risks it insured throughout the United States or based upon only those risks localized in New Jersey?”

During oral arguments held on October 27, 2020, the justices questioned why the self-procured insurance coverage at issue in the case should face the same tax liability as surplus lines coverage. “I’m still having trouble understanding why that language is still in there after it was amended if it was supposed to allow … the IPT to be applied throughout the United States,” Justice Fabiana Pierre-Louis said to Deputy Attorney General William B. Puskas Jr. In response, Paskas argued that the New Jersey Legislature has consistently treated self-procured insurance the same as surplus lines coverage.

On October 21, 2020, the New Jersey Supreme Court ordered the dismissal of hundreds of old juvenile warrants for minor matters and more than $140,000 in discretionary juvenile fines. The order is part of a broader initiative to ensure equal justice in the courts.

New Jersey Supreme Court’s Equal Justice Plan

In July, the New Jersey Supreme Court released its Action Plan for Ensuring Equal Justice, which identified nine reforms aimed to remove disparities within the court system and eliminate institutional obstacles to justice. One of the action items called for supporting juvenile rehabilitation by examining options for retroactively rescinding and prospectively eliminating court-imposed punitive fines and penalties for juveniles.

A new law, N.J.S.A. 2A:4A-43(b)(8), also took effect in July, under which courts will no longer impose discretionary fines as part of juvenile adjudications. However, more than $140,000 in fines remain outstanding that were imposed on juveniles before July 1, 2020. Those are now being dismissed under the court’s order.

Dismissal of Juvenile Fines and Warrants

The New Jersey Supreme Court’s Order vacates all outstanding discretionary juvenile fines, effective immediately.“The young people who owe those fines – including disproportionate numbers of youth of color – overwhelmingly lack the capacity to make necessary payments, and the fines serve only to prolong involvement with the juvenile and criminal justice systems,” Chief Justice Stuart Rabner wrote.

The New Jersey Supreme Court’s Order also addresses open failure to appear warrants issued more than five years ago for non-violent 4th degree or lesser juvenile charges. “Based on the passage of time, those warrants no longer serve their intended purpose under N.J.S.A. 2A:4A-34(c)(1) and 34(c)(2), yet they continue to create barriers to employment, housing, education, and social services,” Chief Justice Rabner wrote.

Accordingly, the New Jersey Supreme Court has directed judges to issue orders vacating all open juvenile warrants for failure to appear issued more than five years prior to the date of the Order for non-violent 4th degree or lesser offenses. Going forward, Assignment Judges are authorized and directed to issue orders on an annual basis to vacate all open juvenile warrants for failure to appear that are more than five-years-old as of that date for non-violent 4th degree or lesser offenses.