Tag: New Jersey

New Jersey Appellate Division Affirms Municipal Court Jurisdiction to Enforce Spill Act Penalties

On November 13, 2019, the Appellate Division held that the New Jersey Department of Environmental Protection (“DEP”) can bring a penalty enforcement action under the Spill Compensation and Control Act (the “Spill Act”), N.J.S.A. 58:10-23.11 et seq., in either the Superior Court or the municipal court with territorial jurisdiction. State of New Jersey Department of Environmental Protection v. Alsol Corporation, No. A-3546-17T1, — A.3d – (N.J. Super. App. Div. Div. Nov. 13, 2019).

In this case, DEP filed a summons in municipal court against Alsol Corporation (“Alsol”) alleging that Alsol failed to remediate certain property in accordance with DEP regulations, and sought to impose penalties against Alsol under the Spill Act. Alsol successfully moved to dismiss DEP’s summons for lack of subject matter jurisdiction. In dismissing the summons, the municipal court concluded that its jurisdiction to enforce civil penalties under the Spill Act was limited to “where a finding of liability ha[d] already been adjudicated.” DEP appealed to the Law Division, which reversed the municipal court’s decision. Alsol then appealed to the Appellate Division.

Following a de novo review, the Appellate Division affirmed and held that municipal courts have jurisdiction to impose civil penalties in a summary proceeding under the Spill Act. The Spill Act provides that any person who violates the Act or a court order issued under the Act, or fails to pay a civil administrative penalty will “be subject to a civil penalty not to exceed $50,000.00 per day for each violation,” and such penalties “may be recovered with costs in a summary proceeding pursuant to the [Penalty Enforcement Law of 1999] in the Superior Court or a municipal court.” N.J.S.A. 58:10-23.11u(d). The Appellate Division found that “a plain reading” of the Spill Act authorizes DEP to bring a penalty enforcement action in municipal court. In its reasoning, the Appellate Division cited to a prior decision in which it addressed an analogous issue under the Solid Waste Management Act, and also noted that the Supreme Court endorsed such an approach in Rule 7:2-1(h) “by making this type of summary action cognizable in the municipal courts using the Special Summons . . . DEP used” in this case.

Potentially responsible parties under the Spill Act should be aware that DEP may seek to impose and enforce penalties under the Spill Act in municipal court or Superior Court, and should treat a municipal court summons with the same urgency as a Superior Court complaint.

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

More on NJ environmental regulation on the National Law Review Environmental, Energy & Resources law page.

Cannabis Coming to the Northeast? Governors of NY, NJ, CT and PA Adopt “Core Principles” to Implement Adult-Use Legislation.

On October 17, 2019, Governor Cuomo of New York, Governor Lamont of Connecticut, Governor Murphy of New Jersey and Governor Wolf of Pennsylvania co-hosted the first Cannabis Regulation and Vaping Summit to create a set of uniform principles each state can implement through its adult-use legislation to standardize regulations across the region.

The summit resulted in an agreed-to set of core principles for rolling out adult-use legislation, including (1) market regulation and empowerment, (2) public health, (3) public safety and enforcement, and (4) vaping best practices. Also attending the summit were representatives from Rhode Island, Massachusetts and Colorado.

Market Regulation and Empowerment

When creating adult-use legislation and regulation, the states will implement agreed-to guidelines to set cannabis tax structures and to ensure that social justice initiatives are key components of the legislation. The guidelines discussed include:

  • Implementing social equity initiatives to ensure industry access to those disproportionately impacted by the war on drugs
  • Maintaining awareness of the need to ensure a fair and competitive market by deploying strategies such as limiting the number of licenses or license types
  • Implementing a similar overall tax structure for cannabis products between the four states
  • Providing guidance to open up banking to the industry
  • Implementing meaningful social justice reform such as expediting expungements or pardons and waiving associated fees.

Public Health

Concerned that decreasing production costs might lead to inexpensive high-potency products, the four governors agreed to standardized product safety and testing requirements and impose restrictive advertising requirements to ensure youth are not targeted. These principles include:

  • Prohibiting advertising and product forms that target minors
  • Restricting advertising to audiences that are for the most part over the age of 21
  • Banning adverting and products that appeal to youth, such as flavored cannabis products
  • Restricting cannabis sales to purchasers over the age of 21
  • Collecting and sharing cannabis use data to better understand public health outcomes
  • Limiting the cannabis possession amount and limiting the overall THC content of products to discourage over-consumption and accidental overdose.

Public Safety and Enforcement

To help ensure highway safety and improve options for testing cannabis impairment in the field, the states agreed to the following guidelines:

  • Uniform treatment of drug recognition expert evidence
  • Uniform standard for blood or saliva tests
  • Training for drug recognition experts
  • Methods for sharing information on suspected “bad actions” in legal markets
  • Law enforcement strategies to police the illicit market.

Vaping Best Practices

The states agreed to principles to regulate the entire vaping industry, including vapes containing nicotine, CBD and THC. Using the following guidelines, the states will share strategies and solutions for investigating illicit THC vape pens and regulating filler oils and carrier fluids:

  • Banning or regulating the sale of flavored vapes to reduce use among youth
  • Implementing vape product safety standards for nicotine and cannabinoids that include diluents, excipients and cutting agents
  • Regulating temperature control for vape heating mechanisms
  • Increasing enforcement actions to prevent sale to minors.

New York will aim to pass adult-use legislation during the 2020 legislative session, which begins in January. It is expected that Governor Cuomo will include a cannabis plan in his budget proposal, as he did last year.

© 2019 Wilson Elser

For more cannabis regulation, see the National Law Review Biotech, Food & Drug Law page.

New Jersey and New York Further Strengthen Wage and Hour Laws to Protect Employees: Part 1 – NJ Developments

On August 6, 2019, New Jersey substantially amended its wage and hour laws in several critical respects by, among other provisions, expanding the statute of limitations, increasing damages and criminal penalties, strengthening anti-retaliation provisions and, overall, making it easier and more lucrative for employees to prevail on wage and hour claims. The new “Wage Theft” Law is effective immediately, except for one provision identified below. Here is a summary of the key provisions:

    • The Statute of Limitations Expands from 2 to 6 years – The amendment triples the amount of time available to file claims for unpaid minimum wage and overtime payments, thereby tripling the potential damages available to employees. New Jersey now joins New York in implementing a 6-year statute of limitations for such claims. In contrast, the statute of limitations under federal law remains at 2 years or 3 years, depending on whether a willful violation was committed.

    • Liquidated Damages – The amendment provides that, in addition to having to pay earned, unpaid wages, employers also will be liable for liquidated damages of up to 200% of the wages owed. Previously, liquidated damages were not available under New Jersey law. A limited “good faith” defense will be available to first-time violators under certain circumstances.

    • Anti-Retaliation – The amendment expands the anti-retaliation provisions by making it a disorderly persons offense to take retaliatory action by discharging or otherwise discriminating against an employee for making a complaint, instituting an action, or informing other employees about their rights concerning wages and hours of work.There is a rebuttable presumption of retaliation for adverse actions taken within 90 days of an employee filing a complaint with the Department of Labor or a court action. Liquidated damages are available for claims of retaliation.

    • Fines and Penalties – It is now a disorderly persons offense for an employer to (i) knowingly fail to pay wages, compensation or benefits when due, (ii) take retaliatory action, or (iii) fail to pay agreed-upon wages within 30 days of the date when payment is due. An employer who commits any such offense must pay wages due plus 200% of that amount in liquidated damages, reasonable costs and attorneys’ fees, a fine of $500 for a first offense (which increases for subsequent offenses) and, under certain circumstances, an additional penalty of 20% of wages due and/or imprisonment. The amendment provides for a broad definition of “employer” to include officers of a corporation and “any agents having the management of that corporation.”

    • Creation of a New Crime – The amendment creates a new crime of “pattern of wage nonpayment” for a person convicted of violating certain provisions of the Criminal Justice Code and/or wage and hour laws on two or more occasions. Though this is classified as a “3rd – degree” crime, there is no presumption of nonimprisonment. This provision will become effective three months from the August 6 enactment date.

    • Joint and Successor Liabilities – The amendment expands the circumstances under which organizations may now be held liable as joint or successor employers.

    • Failure to Maintain Records – The amendment provides that employers who fail to produce required records are subject to a rebuttable presumption that allegations by the employee concerning the time period the employee was employed and the wages that are due are true.

    • Employer Notice Requirement – The amendment imposes a new written notice obligation on employers. NJ employers will be required to distribute both to current employees and new hires a form the NJ Department of Labor and Workforce Development will publish.

Take Aways

Wage and hour compliance has long been a vulnerable area for employers, and New Jersey employers must now contend with wage and hour protections that are among the strongest in the nation. It is more imperative than ever for New Jersey employers to (i) properly classify workers, where warranted, as employees rather than as independent contractors, (ii) properly classify employees as exempt or non-exempt from overtime requirements, (iii) timely pay employees all wages, compensation and benefits due, including overtime, and (iv) maintain required wage and hour records for at least 6 years.

 

© Copyright 2019 Sills Cummis & Gross P.C.
For more wage-hour laws, see the National Law Review Labor & Employment law page.

Federal Government Slaps $600K Fine on Wanaque Center After 11 Children Die

The federal government imposed a $600,331 fine on the New Jersey nursing center where a viral outbreak left 11 children dead and 36 sick last year. Investigators reported Wanaque nursing home’s poor infection controls, lack of administrative oversight, and slow response from medical staff “directly contributed” to the rapid spread of the virus and its related death toll.

The 114-page federal inspection report, published in December, claimed the staff at Wanaque failed to correct issues that could have controlled the outbreak, allowing residents and one staff member to contract the virus and placing others in “immediate jeopardy.”

The report alleges the center had a faulty infection-control plan, did not respond appropriately when the outbreak emerged, and failed to properly monitor the infection rate.

Multiple children at Wanaque retained high fevers for days before staff sent them to the emergency room, two of which died within hours of arriving at the hospital. At least two other children, who had been symptom-free, contracted the virus and died after staff failed to separate them from their sick roommates.

Wanaque’s pediatric medical director appeared to be absent during the crisis and claimed he did not fully understand the responsibilities of his position. The director also failed to attend quality assurance and performance meetings and had not filed monthly reports for the last four years.

The Wanaque facility is strongly disputing the findings in the federal investigation report, arguing the staff followed proper protocols and the outbreak was “unavoidable.”

New Jersey ceased all admission to the nursing home following the outbreak, but is now allowing the facility to admit new patients. A restriction does still remain in place barring Wanaque from admitting pediatric ventilator patients until federal and state officials approve the facility’s written infection-control plan.

In addition to the $600,331 federal fine, the New Jersey Department of Health is imposing a $21,000 penalty on the nursing home for each infection-control-related failure.

 

COPYRIGHT © 2019, STARK & STARK
This post was written by Jonathan F. Lauri of Stark & Stark.
Read more Malpractice Enforcement on our Professional Malpractice Page.

Are New Jersey Uber Drivers Covered By Workers’ Compensation Insurance?

You might ask yourself the above question if you are considering signing up to drive for the transportation service Uber. Uber promises that anyone with a valid driver’s license, personal car insurance, a clean record, and a four-door car can meet the New Jersey requirements to drive for Uber.

The Uber driver makes his or her own hours and is free to pick up or drop off a rider anywhere they chose and the driver can work as much or as little as they choose. Uber requires its drivers to carry the appropriate automobile insurance to cover the driver’s liability to other parties, damage to the vehicle and injury to the driver.

Uber provides commercial auto liability insurance for drivers to protect against injury to others. Uber drivers are paid a percentage of the fares they generate and receive a 1099 form yearly from Uber so that they can declare their earnings and pay their own taxes on the money they earn.

Since Uber does not consider its drivers employees, or provide workers’ compensation coverage in the event an Uber driver is injured, it is important to know what you are giving up by being an Independent Contractor/Uber driver.

Workers’ compensation coverage in New Jersey includes weekly wage replacement paid at 70% of wages, medical care paid 100% by the workers’ compensation carrier, and partial or total permanency benefits paid for a period of time if the injured worker is left with an impairment after all of the medical treatment is provided.

The courts in New Jersey have not decided any workers’ compensation cases for Uber drivers, however, they have decided cases for other employees who drive for other car services. Although the facts of each individual case vary, the case explained below gives an idea of the factors the court considers when deciding if a driver is an independent contractor or an employee.

The courts have outlined a 12-part test to determine if a person is an employee or an independent contractor, for the purpose of whether or not New Jersey workers’ compensation coverage applies. These factors include the employer’s right to control the manner of the work, the extent of supervision needed, who furnishes the equipment, how the person is paid, whether there is paid vacation and sick time, and whether the “employer” pays Social Security taxes, and the intention of the parties.

In a recent court case in New Jersey, the Appellate Division found that a limousine driver for the XYZ Two Way Radio Company was an independent contractor and not an employee when the driver was injured in a serious motor vehicle accident. The court analyzed the above factors and found that XYZ Two Way Radio Company exercised little control over the driver since he could work as many or as few hours as he wanted.

The Court noted that the driver supplied his own equipment, including his own vehicle and auto insurance, and that the company only provided a small car computer that was used to communicate with the office. The driver was paid a percentage of the fares he generated, and was free to reject any pick-up sent to him by the company. The driver was sent a 1099 form every year and no Social Security or wage taxes were paid by the company.

Based on all of these circumstances the Court found that the driver for XYZ Two Way Radio was an independent contractor, and not an employee entitled to workers’ compensation coverage. This was despite the fact that that the driver worked for the company for 23 years, was told what type of car he must drive and what to wear, and worked a fairly regular schedule.

Comparing the above case to the factors relevant to the Uber driver, courts in New Jersey may consider Uber drivers independent contractors and not employees subject to workers’ compensation coverage. Uber is still taking the position that its drivers are Independent contractors, not subject to workers’ compensation in New Jersey.

However, this has not yet been the subject of an Appellate Court decision. If you work for Uber and get injured in an accident while working, your own automobile coverage would provide some medical care, and possibly some weekly wage replacement benefits, but probably not to the level of coverage provided under the workers’ compensation laws in New Jersey.

Your own automobile policy would not provide the permanency benefits provided under the workers’ compensation statute in this state. Probably not a deal breaker for many given the flexibility offered by Uber, but at least Uber drivers should be aware of the workers’ compensation benefits they may be giving up.

 

COPYRIGHT © 2019, Stark & Stark.
This post was written by Marci Hill Jordan of Stark & Stark.

One-Two Punch for NJ Employers: State Enacts Minimum Wage Rate Increases and Expands Paid Family Leave Insurance Benefits

New Jersey’s minimum wage rates will steadily climb to $15 per hour, and both the duration and amount of the state’s paid family leave insurance benefits will significantly increase, under two recently enacted laws.

New Minimum Wage Rates

On February 4, 2019, Governor Murphy signed a bill that substantially increases the state’s minimum wage rate for non-exempt hourly workers.

Prior to the bill’s enactment, the state’s minimum hourly wage, as of January 1, 2019, was $8.85. With a few exceptions for seasonal workers (who work between May 1 and September 30), employees employed by a “small business” with fewer than six employees, and agricultural laborers, the minimum hourly wage will rise to $15.00 by January 1, 2024, in accordance with the following schedule:

7/1/19 $10.00
1/1/20 11.00
1/1/21 12.00
1/1/22 13.00
1/1/23 14.00
1/1/24 15.00

For seasonal workers and employees of small businesses, the minimum hourly wage rate increases will be more gradual and will not reach the $15.00 rate until January 1, 2026, based on the following schedule:

1/1/20 $10.30
1/1/21 11.10
1/1/22 11.90
1/1/23 12.70
1/1/24 13.50
1/1/25 14.30
1/1/26 15.00

It will take an even longer period of time for farm laborers to reach a minimum hourly wage rate of $15, given the following schedule:

1/1/20 $10.30
1/1/22 10.90
1/1/23 11.70
1/1/24 12.50

Any further minimum rate increases for farm laborers would be tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”).

New Jersey now joins three other states – California, New York and Massachusetts – as well as the District of Columbia in committing to minimum hourly wage rates that significantly exceed the current federal minimum hourly wage rate of $7.25.

Business groups in New Jersey have voiced two principal objections to the new minimum rates. First, the numbers threshold for meeting the “small employer” exception is relatively low – employers with six or more employees do not satisfy it. Second, the New Jersey statute, unlike the California and New York laws, makes no provision for suspending scheduled minimum hourly rate increases in the event of deteriorating economic conditions in the state.

Family Leave Enhancements

On February 19, 2019, Governor Murphy signed into law a bill that substantially expands the job-protected family leave requirements applicable to smaller employers under the New Jersey Family Leave Act (“FLA”), as well as expands the monetary benefits available under the paid family leave insurance (“FLI”) and temporary disability insurance (“TDI”) programs for employees employed in New Jersey.

Under the state’s leave and benefit programs (which must be coordinated with applicable federal requirements), an eligible employee may take time off from work and receive family insurance benefits during such leave to, among other things, care for a newborn child or a covered family member who is suffering from a serious health condition.

Effective immediately,

  • There no longer is a one-week waiting period before FLI benefits may be received.

  • Covered family members under the new law now include siblings, grandparents, grandchildren, and parents-in-law, as well as others related to the employee by blood or who have a “close association with the employee” which is equivalent to a family relationship (though evidence of same must be provided by the employee).

  • FLI benefits may also be taken by a covered employee while taking time off from work pursuant to the NJ Security and Financial Empowerment Act (“SAFE Act”), to assist a covered family member who is a victim of domestic or sexual violence.

  • An employer may not retaliate against an employee with respect to compensation, terms, conditions or privileges of employment because the employee took or requested any TDI or FLI benefits.

Effective June 30, 2019, NJ businesses employing at least 30 employees will be covered by the FLA and may not retaliate against employees returning from family leave by refusing to reinstate them, down from a 50 employee threshold.

Commencing July 1, 2020, the maximum duration of FLI leave benefits will increase from 6 to 12 weeks during any 12-month period; in cases of intermittent leave, the maximum FLI leave will increase from 42 days to 56 days. Further, the dollar amount of weekly FLI benefits will increase from two-thirds of a claimant’s average weekly wage to 85% of an employee’s average weekly wage, capped at $859 per week.

Although FLI benefits are funded entirely by employee contributions, NJ-based businesses have raised concerns that the broader eligibility for FLI leave, and the longer duration of such leaves, will increase business costs due to the need to pay more overtime wages to assure adequate staff coverage, or employ more temporary replacement workers, while eligible employees are out on leave. These increases may also lead to greater work load demands placed on regular employees who must cover while co-workers are out on such leave.

Employer Tips

NJ employers should assure that the wage rates they pay their employees meet the new NJ minimum wage rate thresholds.

Further, NJ employers should review and update their family leave policies to ensure that they comply with the requirements of the new law, which is complicated and substantially amends multiple existing laws.

 

© Copyright 2019 Sills Cummis & Gross P.C.

New Jersey Announces Minimum Wage Increase

Governor Murphy, Senate President Sweeney and Assembly Speaker Coughlin have just announced their plan to increase New Jersey’s minimum wage to $15 per hour. Currently, minimum wage in New Jersey is $8.85 per hour.

Under the proposed plan, minimum wage would increase to $10/hour on July 1, 2019. Minimum wage would then increase by a dollar per year as follows:

  • 1/1/2020 – $11
  • 1/1/2021 – $12
  • 1/1/2022 – $13
  • 1/1/2023 – $14
  • 1/1/2024 – $15

Note that this increase will be delayed for some workers. Seasonal workers and employees at businesses with five or few workers won’t be eligible for the $15 minimum wage until 1/1/26. Agricultural workers will also be subject to different rules. More details on the plan will certainly follow in the coming weeks.

 

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved
Read more news on minimum wage increases on the National Law Review’s Employment Law Page.

New Jersey Appellate Panel Countenances Beach Easement Condemnations for Federal Funding

A New Jersey appeals court recently upheld the Township of Long Beach’s exercise of eminent domain to acquire beachfront access easements in the consolidated appeal of Twp. of Long Beach v. Tomasi, N.J. Super. App. Div. (per curiam) – the latest chapter in a series of disputes between coastal New Jersey municipalities and owners of beachfront property within those municipalities.

The Township of Long Beach sought federal funding pursuant to the “Sandy Act,” which authorizes the Army Corps of Engineers (“Army Corps”) to protect the New Jersey shoreline through beach replenishment and dune construction projects funded either in whole or in part by the federal government. See Disaster Relief Appropriations Act, 2013 (Sandy Act), Pub. L. No. 113-2, 127 Stat. 4. In order to obtain such federal participation and funding, the township was required to comply with conditions set forth in the Army Corps’ engineering regulations, including the requirement that participating municipalities provide “reasonable public access rights-of-way” to the beach, defined as “approximately every one-half mile or less.” U.S. Army Corps of Engineers, ER 1105-2-100, Planning Guidance Notebook 3-20 (2000); see also N.J.A.C. 7:7-16.9.

As the township’s shoreline did not have the required public access, it resolved to obtain public access easements in various locations to achieve compliance with the Army Corps and NJDEP regulations such that it would be eligible for inclusion in an ongoing shoreline protection project undertaken by those entities. Accordingly, the township passed appropriate resolutions authorizing it to condemn and acquire via eminent domain four public access beach easements, including a ten-foot-wide strip of land along the defendants’ properties. After unsuccessfully negotiating with the defendants to purchase the easements, the township initiated condemnation proceedings in the Superior Court, giving rise to the Tomasilitigation.

In September 2017 the trial court entered summary judgment in favor of the township and held that it had properly exercised its eminent domain power in acquiring the beach easements for public use. The defendants appealed and sought reversal based on their contention that the township was unable to establish either necessity or proper public purpose for the condemnations. More specifically, the defendants argued that reasonable beach access already existed in the township such that there was no necessity to condemn the easements under the Public Trust Doctrine or otherwise; and that the stated impetus for the condemnations, i.e. seeking federal funding, could not constitute a viable public purpose.

On December 20, 2018, the two-judge appellate panel issued its decision affirming the lower court and rejecting both of the defendant-appellants’ primary arguments. The court noted its “limited and deferential” review of municipal exercises of eminent domain power, cited the traditionally broad conceptual scope of public use, and held that the township’s undertaking to protect its shoreline – including conforming to state or federal requirements to obtain project funding – was a proper public use or purpose.

There are several relevant takeaways from the Tomasi decision, though they should be understood with an important caveat. The court resolved the narrow question before it without engaging in a comprehensive or detailed legal analysis and as a result, land use practitioners and municipal personnel should be cautious not to overstate the holding in this brief unpublished opinion. Nevertheless, the Tomasi decision is significant based on its factual distinctions from more traditional beach easement litigations.

Specifically, the easements at issue in Tomasi were for perpendicular access to the beach and ocean rather than for dune construction. Though both dune construction and access easements relate to shore protection, the former directly enable and contribute to such protection, whereas the latter are merely incidental to it. In that sense, the Tomasi easements are arguably less justifiable than dune construction easements in the eminent domain context – and the defendants in Tomasi appeared to base their public purpose-driven arguments on precisely that premise. However, the court evidently did not find the above-described “direct vs. incidental” distinction meaningful and rejected the defendants’ argument, finding that pursuing federal funding for shoreline protection was a sufficient public purpose for eminent domain purposes.

Under the facts of this case, that is a logically defensible outcome, as the township’s acquisition of the access easements was a de-facto prerequisite for constructing dunes and otherwise protecting its shoreline area, per the Army Corps and NJDEP regulations. Accordingly, a possible implication for future cases is that the precise nature of the condemnation easement in question will not necessarily be dispositive, and the focus of a reviewing court’s inquiry instead will be whether such an easement is ultimately necessary to effectuate the contemplated shoreline protection program.

It is unclear if this premise informed the court’s decision in Tomasi. To the extent that it may have, it would be valuable for municipalities, property owners, and land use practitioners to know that the court employs a functional analysis in evaluating public use / purpose in eminent domain cases. Similarly, but conversely, it would be equally valuable for those stakeholders to know that the court did not equate access easements with dune construction easements but rather expanded the scope of eminent domain by permitting condemnation for easements which are merely incidental to shore protection.

Accordingly, the ambiguity in this space following the Tomasi decision is worth monitoring, both in that litigation as the Supreme Court considers whether to hear a (presently unfiled but) likely forthcoming appeal, and in future cases with similar or slightly different facts. Though its implications are presently limited, the Tomasi case clearly stands for the proposition that beach access condemnation easements to obtain federal funding for shore protection projects are permissible exercises of municipal eminent domain power.

 

© 2018 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

The New Jersey Supreme Court’s Latest Decision Affecting Pharmaceutical Multicounty Litigation

On October 3, 2018, the New Jersey Supreme Court made its long-awaited decision in the Accutane Multicounty Litigation. Developed by the New Jersey-based pharmaceutical giant Hoffman-La Roche, Accutane is a prescription acne treatment that has been found to be linked to inflammatory bowel disease.

Numerous plaintiffs filed lawsuits in New Jersey, essentially claiming that, based upon the drug maker’s own internal documents, Accutane’s warnings should have been stronger in stating that Accutane has been found to directly cause inflammatory bowel disease. A Multicounty Litigation was formed, which encompassed 532 plaintiffs – of which 18 were New Jersey residents, and 514 were residents of 44 different jurisdictions other than New Jersey.

In 2015, the trial court basically ruled that NJ’s Product Liability Act governed all of the cases in the Multicounty Litigation. Unlike the law in most other states, New Jersey’s Product Liability Act contains a rebuttable presumption that basically holds that a drug maker’s warning is adequate if it was approved by the United States Food and Drug Administration. The presumption can only be overcome if the plaintiffs show deliberate nondisclosure to the Food and Drug Administration, economically driven manipulation of the regulatory process, or clear and convincing evidence that the drug maker knew or should have known of the inadequacy of the warnings in light of the relevant federal regulations. Having found that the presumption applies to all of the cases, the trial court then held that the plaintiffs could not overcome the presumption and dismissed the cases.

That decision was appealed and the Appellate Division found that New Jersey’s Product Liability Act did not govern all of the cases, and that each case was governed by the respective laws of the jurisdictions where the plaintiff used Accutane. The Appellate Division analyzed the many different legal standards and found that the cases from the vast majority of the jurisdictions involved (including New Jersey), should not be summarily dismissed based on the federal approval presumption.

The matter was then taken up by the Supreme Court, which held that New Jersey has an interest in consistent, fair, and reliable outcomes in its consolidated Multicounty Litigation cases that cannot be achieved by applying a “diverse quilt of laws.” Having found that all of cases in the Multicounty Litigation were governed by New Jersey’s Product Liability Act, the Supreme Court went on to hold that the plaintiffs had not overcome Act’s rebuttable presumption and that the drug maker’s approved warnings were adequate as a matter of law. Accordingly, the Supreme Court dismissed all 532 cases.

The ramifications of the Supreme Court’s holding are still unclear. A recent, palpable lull in New Jersey Multicounty Litigation applications and filings was followed by changes on the bench through judicial retirements and promotions. Thereafter, there was a relative flurry of designations of Multicounty Litigations for Abilify, Taxotere, Zostavax and Physiomesh, all in the late spring and summer of 2018. No doubt, this Supreme Court ruling will serve to shape the procedural structure and legal strategy of the parties in all pending and contemplated pharmaceutical Multicounty Litigations in New Jersey.

 

COPYRIGHT © 2018, Stark & Stark.

State Investments in Electric Vehicle Charging Infrastructure

Various studies indicate that an overall lack of charging infrastructure serves as an impediment to the widespread adoption of electric vehicles (EVs). However, the road to transportation electrification is officially under construction following several major state investments.

At the end of May, in the largest single state-level investment in EV charging infrastructure, the California Public Utilities Commission (CPUC) approved more than $760 million worth of transportation electrification projects by the State’s three investor-owned utilities. The CPUC’s Decision, See A.17-01-020, Proposed Decision of ALJs Goldberg and Cook (May 31, 2018),  authorized Pacific Gas and Electric Company (PG&E) and Southern California Edison (SCE) to install vehicle chargers at more than 1,500 sites supporting 15,000 medium or heavy-duty vehicles. The FD also approved rebates to San Diego Gas & Electric (SDG&E) residential customers for installing up to 60,000 240-volt charging stations at their homes. Moreover, PG&E was authorized to build 234 DC fast-charging stations.

Besides the total spend and resulting emissions reductions represented by the Commission’s action, the Proposed Decision is also notable for the policy priorities it advances.  For instance, it clearly prioritizes the creation of electrification-related benefits for California’s disadvantaged communities (DACs).  (The authorizing legislation, SB 350, found that “[w]idespread transportation electrification requires increased access for disadvantaged communities . . . and increased use of [EVs] in those communities . . . to enhance air quality, lower greenhouse gases emissions, and promote overall benefits to those communities” § 740.12(a)(1)(C) (De Leon)).  Accordingly, the CPUC focused on promoting construction of charging infrastructure in DACs.   For example, the PG&E fast charging program will target construction in DACs by providing up to $25,000 per DC fast charger in rebates to cover a portion of the charger cost for sites located in DACs.

The CPUC also prioritizes the survival of non-utility charging competition.  For example, the Proposed Decision eliminates utility ownership of the charging infrastructure on the customer side of the meter in the SDG&E residential charging program. Additionally, for the PG&E and SCE’s medium and heavy-duty programs, the utilities will own make-ready infrastructure, but not the Electric Vehicle Supply Equipment (EVSE). Instead, the utilities will allow customers to choose their own EVSE models, EVSE installation vendors, and any network services providers.

The CPUC noted several benefits of allowing the utility to own electrification infrastructure only up to the point of the EVSE stub.  First, the Commission found that “[u]tility ownership of the charging infrastructure dramatically drives up costs, in comparison to alternative ownership models.” Instead, restricting utility ownership of charging equipment will allow more charging infrastructure to be built at the same (or lower) cost to ratepayers. Second, it allows private parties to compete and innovate, which will improve charging technology and lower costs. Lastly, non-utility competition addresses “stranded cost” fears, since private parties will bear the risks of nascent charging technologies.

While California has made the largest commitment, other states have also joined the effort to pave a national road toward the widespread adoption of EVs.

In New Jersey, utility company PSE&G recently proposed spending $300 million to set up a network of up to 50,000 charging stations. This investment would constitute a massive upgrade to New Jersey’s charging infrastructure, which currently consists of less than 600 charging stations according to U.S. Department of Energy data. The proposed investment is part of a larger $5.4 billion expansion in PSE&G’s five-year infrastructure plan, and represents the first major proposal of New Jersey’s largest utility to invest in EV infrastructure.

In New York, Governor Andrew Cuomo announced a $40 million commitment (that could grow to $250 million by 2025) by the New York Power Authority for its EVolve NY initiative. The new funding will be used to build fast chargers and to support EV model communities. EVolve NY is a part of the broader Charge NY 2.0 initiative, which advances electric car adoption by increasing the number of charging stations statewide. The new funding will aid New York as it aims to meet its particularly ambitious goal of 800,000 electric vehicles on the road by 2025.

Late last year, the Massachusetts Department of Public Utilities approved a $45 million charging station program by local utility, Eversource. The program includes investments to support the deployment of almost 4,000 “Level 2 Stations” and 72 DC Fast Charging stations. Even more investment could be on its way to Massachusetts as utility company National Grid has also proposed investing in charging station infrastructure.

And in Maryland, utility companies have proposed spending $104 million to build a network of 24,000 residential, workplace and public charging stations. The program, currently before the state’s Public Service Commission, would be a major part of Maryland’s effort to reach 300,000 electric vehicles on the road by 2025.

On the federal level, energy-related projects could be eligible for the $20 billion “Transformative Projects Program” announced by the Trump administration in February.  However, President Trump recently remarked that his infrastructure plan will likely have to wait until after this year’s midterm elections.  In the meantime, states have shown that they are more than willing to take the lead in investing in transportation electrification infrastructure.  (In related news this week, Colorado’s decision to move toward adopting California’s greenhouse gas emissions standards for light-duty vehicles represents a parallel and noteworthy development, further indicating leadership and action from states focused on developing advanced vehicle technology.)  It’s also notable that in addition to utility commission activity, states are also expressing support for advanced vehicle technology While the states have certainly taken a lead, their investments also complement significant action in the private sector, including the recent effort to stand up the Transportation Electrification Accord.  See our recent post on that subject, and continue to follow Inside Energy and Environment for continued updates on this subject.

© 2018 Covington & Burling LLP

This post also includes contributions from Michael Rebuck, a summer associate.

This post was written by Jake Levine Covington & Burling LLP.