Prize Fighter Yoel Romero is Vindicated by the New Jersey Courts (NJ)
The matter of Yoel Romero v. Gold Star Distribution, LLC arose out of the sale of a dietary supplement manufactured and distributed by Gold Star. Romero is an MMA fighter who competed in the UFC, the highest level of competition in the MMA. He is also a former world champion freestyle wrestler who won a silver medal at the 2000 Olympic Games.
Gold Star is a dietary supplement company whose president is Steven Hankin. According to plaintiff, he consumed one of Gold Star’s products called “SHED RX”. He relied on Gold Star’s representation that the product was free of any substances banned by the World Anti-Doping Agency (WADA). Romero made a diligent inquiry with the company to ensure that the supplement did not contain any ibutamoren (a growth hormone) which is banned by WADA. Nonetheless, Romero tested positive for ibutamoren (which was the first and only time he tested positive for substances banned by WADA) and was suspended from the UFC at a time when he was a prime contender for the UFC middleweight title. In filing suit against Gold Star, Romero claimed he was denied prize money for such a high-profile fight, as well as other promising career opportunities and damage to his reputation.
Gold Star’s president evaded service of process, and, eventually, the court entered default as to liability against Gold Star and Final Judgment by Default against Gold Star. The trial court awarded $3,150,00 for lost wages and income, $3,000,000 for reputational damages, and $3,000,000 for infliction of emotional distress. In addition, the trial court trebled all three categories of damages pursuant to New Jersey’s Consumer Fraud Act, culminating in an award of $27,450,000.
Gold Star’s president thereafter quickly attempted to vacate default judgment. His attempt failed, and the Court upheld most of the trial court’s damages. However, the court refused to treble Romero’s $3,000,000 emotional distress award pursuant to case law holding that non-economic damages are not subject to trebling in consumer fraud actions. The court also remanded to the trial court with regard to the $3,000,000 for reputational damages and left open the question of whether such damages should be trebled under the Consumer Fraud Act.
The lesson to be learned here is that if you are sued, you cannot stick your head in the sand. The New Jersey courts, despite liberal standards governing motions to vacate entries of default and default judgments, will uphold one-sided default judgment awards if the defendant deliberately ignores the lawsuit.
Thanks to Mike Noblett for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MorePA Appellate Court Clarifies Collateral Review Concerning In Camera Review of Disputed Discovery (PA)
On June 25, 2021, in Fisher v. Erie Ins. Exchange, the Superior Court clarified when a party had an immediately appealable right, pursuant to Pa.R.A.P. 313, concerning the forced production of discovery materials for which a party asserts a privilege that the court denies. Typically, for an order to be considered a collateral order and therefore immediately appealable under Pa.R.A.P. 313, it must meet three separate prongs: (1) it is collateral to the main cause of action since it may be analyzed without analyzing the central issues of the case; (2) it implicates important rights too important to be denied review; and (3) such important rights will be lost if review is postponed. Here, in Fisher, the dispute centered around attorney-client privilege and production of documents for in camera review – but not to the opposing party – in which Erie asserted said privilege. Specifically, after a discovery dispute, Erie asserted privilege and withheld production of documents, while Fisher filed a motion to compel said production. After a hearing, the trial Court required Erie to produce the documents for in camera review. This appeal followed.
The only issue on appeal was the third prong as to whether the discovery order was a collateral order and therefore immediately appealable, i.e., where an important right will be lost if review is postponed. The critical question was whether production to a court for in camera review would also equate to the loss of an important right – here, the attorney-client privilege. Specifically, case law is clear that the production of documents, for which a party asserts attorney client privilege, and is compelled to produce, satisfies prong three. However, if the production is only required to be produced to a court for an in camera review, the question became: does this still qualify as a “lost” right? The Fisher Court answered in the negative.
The trial court held, and the appellate court agreed, that Erie’s objections were boilerplate objections and the trial court was well within its discretion to review the documents to assess whether the asserted privilege was valid. Ultimately, the Superior Court determined that an in camera review does not satisfy the third prong of the collateral order test, as the adverse party will not have the contested documents. Moreover, if the trial court ordered the production of the disputed documents to an adverse party, Erie would then have had the opportunity to appeal said order.
This case stands for the propositions that specific objections should be asserted and a court reviewing documents itself does not result in an irrevocable “lose” of rights.
Thanks to Matt Care for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreA New Side to COVID-19 Litigation (NJ)
Last week, in Open MRI v. Cigna Health and Life Insurance, a New Jersey judge dismissed a suit alleging Cigna was unjustly enriched as a result of its refusal to pay for a health care provider’s costs of administering COVID-19 tests.
Open MRI is a medical practice with locations throughout New Jersey. During the pandemic, Open MRI administered COVID-19 tests, diagnosed COVID-19 when necessary, and provided other basic COVID-19 treatment to its patients, resulting in nearly $400,000 in costs. Open MRI submitted these invoices to Cigna for repayment, and, after being denied, took Cigna to court. Open MRI’s complaint has popped up in multiple forms, first alleging Cigna violated the insurance coverage provisions of the Families First Coronavirus Response Act and the Coronavirus Aid Relief and Economic Security Act, then morphing into allegations of unjust enrichment and Employee Retirement Income Security Act (ERISA). The suit bounced around the District of New Jersey for the past 10 months, with Cigna filing multiple motions to dismiss until the court held last week that the case was dismissed, without prejudice to amend.
The court had good reason to leave the door open for amendment. The most recent allegations do not outright state, but rather strongly hint, that Open MRI had obtained assignments of its patients claims. To rightfully assert a claim under ERISA, only a “participant or beneficiary” may properly bring a claim. Without the explicit assignment of such a claim, Open MRI would have no standing to pursue these allegations and would not be entitled to any recovery.
The next step in this already heavily litigated claim will be for Open MRI to clearly show it obtained assignments of its patients’ rights, or else Cigna will rightfully be denying any compensation for the claim. This case shows an interesting and as-yet unexplored side to the fraught world of COVID-19 insurance cases and the ripple effects insurers and insureds alike will likely be feeling for many years – and claims – to come.
Thanks to Abby Wilson for her contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreGravity Induced Accidents Only: Clarity on Labor Law §240(1) (NY)
Robert Shencavitz v. Yuji Sugimoto is an interesting personal injury action. Plaintiff – a sailboat rigging technician – sought recovery under New York Labor Law §240(1) (i.e., the Scaffold Law) for damages sustained when his head was struck on a sailboat’s radar equipment while ascending via pulley along the vessel’s mast. The issue on Defendant’s summary judgment motion was whether Plaintiff’s alleged injury arose from work performed “at elevation” within the meaning of §240(1).
The facts of Shencavitz were undisputed. Defendant owned the “Yumi III” – a forty-two-foot sailing yacht. On the date of the incident, the Yumi III was moored at a boatyard, where it was undergoing maintenance/repairs. Defendant played no role whatsoever in the work itself and was unaware about its details. To perform work to the Yumi III, the boatyard’s co-owner repeatedly hoisted Plaintiff up the mast using the halyard (i.e., the rope that raises and lowers the sails). Rigging technicians, like Plaintiff, typically ascend masts in this fashion. After two trips up the mast, Plaintiff suggested using a different method (i.e., via crane). But the boatyard’s co-owner insisted that using the halyard would be faster and easier. On the third trip, Plaintiff’s head struck the bottom of the radar unit – which was plainly visible and protruded from the mast. Plaintiff did not fall. The ship was in good working order with no relevant dangerous conditions.
The only question before the Court was whether strict liability attached under Labor Law §240(1)’s statutory construct. The purpose of this statute “is to protect construction workers not from routine workplace risks, but from the pronounced risks arising from construction worksite elevation differentials ….” Runner v. New York Stock Exch., Inc., 13 N.Y.3d 599, 603 (2009). Following certification of questions by the Second Circuit, the Court of Appeals clarified in Runner that the statute was not limited to “falling worker” and “falling object” cases. Id. at 604. In further clarifying the questions asked, the Court of Appeals held that “[t]he relevant inquiry—one which may be answered in the affirmative even in situations where the object does not fall on the worker—is rather whether the harm flows directly from the application of the force of gravity to the object.” Id. The Second Circuit then reiterated the Court of Appeal’s determination, opining that “liability under New York Labor Law §240(1) … arises when ‘the harm [that causes an injury] flows directly from the application of the force of gravity to the object[.]’” Runner v. New York Stock Exch., Inc., 590 F.3d 904, 905 (2d Cir. 2010). Based on the foregoing, the Shencavitz Court determined that liability under § 240(1) is limited to gravity-induced incidents. Here, since Plaintiff was injured during an ascent powered by the pull of the shipyard’s co-owner, gravity played no role in the accident. As such, Defendant’s summary judgment motion was granted.
The main takeaway from Shencavitz is the Court’s clarification on the applicability of Labor Law §240(1). Only injuries arising from the application of gravity to a person or object are within the ambit of §240(1). If an alleged injury is not caused by gravity, any action pursuant to §240(1) is essentially tossed into the wind.
Thanks to John Amato for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreEighth Circuit Rules in Favor of Insurers In Connection With Covid Related Losses
On July 2, the Eighth Circuit became the first federal appellate court to weigh in on whether a business could recover business interruption losses for COVID-19 related claims. In Oral Surgeons, P.C. v. The Cincinnati Insurance Co., the court affirmed a federal district court decision from the Southern District of Iowa, which rejected a policyholder’s COVID-related business interruption claim.
The Eighth Circuit reasoned that losing revenue due to government restrictions that limited the policyholder’s ability to fully utilize its premises did not constitute physical loss or damage to property. The court stated, “there must be some physicality to the loss or damage of property — e.g., a physical alteration, physical contamination, or physical destruction.” This interpretation accords with the policy’s provision that it will cover lost business income during the “period of restoration,” which ends when the property is “repaired, rebuilt or replaced.” The court reasoned that only property that had suffered physical damage would require these remedies.
This decision represents a major win for insurers nationwide. While many other courts have already upheld a strict interpretation of physical loss, some outlier decisions had created a fair share of uncertainty. Time will tell if other circuits follow the Eighth Circuit’s lead or a split emerges that warrants a decision from the Supreme Court. We will continue to keep you posted as events progress.
Thanks to Christopher McCarthy for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreNew York (Insurance Coverage) State of Mind (NY)
In City of New York v. Fleet General Insurance Group Inc., the Eastern District of New York addressed the causal link required to trigger an insurer’s duty to defend an additional insured.
This case arises out of a state-court lawsuit, filed against the City of New York, for millions of dollars in property damage, that allegedly occurred when a section of Northern Boulevard in Queens collapsed during a construction project. Specifically, ConEd filed a complaint in state court seeking to recover damages allegedly suffered due to the collapse. The lawsuit named the City and the general contractor, Perini, as defendants, among others. In turn, the City filed a lawsuit in federal court arguing that Perini’s insurer was required to defend the City in the state court action on an additional insured basis.
By way of background, consistent with a City requirement, Perini had obtained an insurance policy that covered the City as an additional insured “only with respect to liability for … ‘property damage’ … caused, in whole or in part, by [Perini’s] acts or omissions.”
In determining whether the insurer had a duty to defend the City, the court concluded that since the additional insured endorsement required coverage for property damage “caused, in whole or in part, by” Perini’s acts or omissions, the insurer was required to cover the City for property damage proximately caused by Perini. Thus, the court continued that since, fairly read, the ConEd lawsuit alleged that the City was liable for such damage, the court concluded the insurer’s additional insured duty to defend had been triggered.
Accordingly, this case illustrates that New York courts will look to whether the insured’s actions were the proximate cause (not but-for cause) of the claimed damages, in determining whether an insurer’s additional insured obligations have been triggered.
Thanks to PJ Benasillo his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreNot So Slippery Slope: NJ Supreme Court Rules On Slip And Fall Snow / Ice Cases (NJ)
We previously reported a decision by the New Jersey Appellate Division in Pareja v. Princeton International Properties, which held that commercial landowners have a duty to prevent or remediate snow and ice conditions on their sidewalks even when precipitation is falling. The New Jersey Supreme Court, in a landmark decision, has reversed the Appellate Division and has held that the commercial landowner owes no duty to the public to prevent or remediate snow and ice conditions while precipitation is falling.
The Supreme Court stated that the Appellate Division’s holding did not consider the size, resources and the ability of commercial landowners or recognize that what may be reasonable for larger commercial landowners may not be reasonable – or even possible, for smaller ones. The Court stated that it did not wish to submit every commercial landowner to litigation when it was not feasible to provide uniform, clear guidance as to what would be reasonable. The Court declined to impose a duty that could not be adhered to by all commercial landowners.
The premises of the ongoing storm rule is that it is categorically inexpedient and impracticable to remove or reduce hazards from snow and ice while precipitation is ongoing. The Court stated that the duty is triggered within a reasonable time after the storm.
However, the Court set forth two exceptions to the rule. A commercial landowner may still be liable if its actions increase the risk to pedestrians and invitees on its property by creating “unusual circumstances” where the defendant’s conduct exacerbates and increases the risk of injury to plaintiff. Second, a commercial landowner may be liable where there was a pre-existing risk on the premises before the storm.
One Justice dissented arguing that a landowner can simply apply salt to its premises during an ongoing storm. The majority stated that this argument ignores the diversity of storms a landlord may confront and that measures like spreading salt in a heavy snowstorm or ice storm can be ineffective or even enhance the danger, thus imposing an untenable duty of care on landlords.
It is rare to see New Jersey courts put a stop to the ever growing and expanding tort liability that commercial owners and tenants face in this state. However, this is an important change in a defendant’s duty in connection with slip and fall cases.
Thanks to Mike Noblett for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreDoes COVID-19 Mean Quarantine? (PA)
In a recent order from the Eastern District of Pennsylvania, the court addressed the first of what is sure to be many cases stemming from cancellations of vacations and other travel due to COVID-19. This case was a putative class action filed on behalf of individuals who cancelled travel due to the coronavirus pandemic and whose claims for travel insurance claims were later denied by the defendant-insurer. The defendant-insurer moved to dismiss, and the court subsequently denied the motion on all grounds save for one breach of contract claim.
Ultimately, the court decided that there were too many issues of fact to decide the case so prematurely, one such issue being the definition of the word “quarantine”. The plaintiff at issue had purchased a travel insurance policy from the defendant for a European adventure set to take place in late March 2020. On March 7, the plaintiff cancelled the trip due to COVID-19 and filed a claim with the defendant on March 12, which was denied. The plaintiff argued the denial was incorrect, as the policy language guaranteed up to full reimbursement for any covered reason, one of which was “being…quarantined.” Quarantine was not defined in the policy.
The defendant-insurer argued that the term “quarantine,” based on the common meaning of the term, by no means applied to the large scale stay at home orders that were enacted to stop the spread of COVID-19. However, the court, recognizing the long-standing principle that an undefined, ambiguous term must be construed in favor of the insured, held there was still a question of fact to be addressed – particularly when considering this case dealt with lockdown procedures in the plaintiffs’ home states and cities as well as in all the destinations through and to which they were traveling.
Going forward, it will be interesting to keep an eye on this action, as the plaintiffs all had different situations leading up to their travel claims, however, the one common denominator was COVID-19.
Thanks to Abby Wilson for her contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MoreA Synysta Labor Law Case (NY)
Volodmyr Synysta v. 450 Partners LLC, NY Slip Op. 50508(U), 2021 WL 2213821 (Kings County, May 20, 2021) is a Labor Law action. Plaintiff brought Labor Law §§240(1), 241(6), 200, and common law negligence claims against various parties for injuries sustained after falling from a scaffold at a construction site. In the instant motion, Plaintiff sought summary judgment on his §§ 240(1), 241(6) claims against the owner and general contractor of the premises (“defendants”).
Plaintiff claims he fell from a Baker’s scaffold after being shocked by an electrical box, which he grabbed onto while painting. His §240(1) claim was supported by testimony that the scaffold did not have any ropes or other devices to tie off the scaffolding, and that the scaffold did not have any safety rails. Plaintiff also claimed that even if there were safety rails, they were not adequate in preventing the fall. Plaintiff’s §241(6) claim was supported by testimony that there were live wires in the workspace, and defendants failed to warn the workers about the live wires.
In response, defendants argued, inter alia, that the issue of whether a safety device provided proper protection is a triable issue of fact within the jury’s purview. They argued Plaintiff’s supporting evidence was insufficient to prevail on summary judgment, since he did not submit any evidence or expert report about the adequacy (or deficiency) of the scaffold’s safety measures for the work being performed. The defendants also asserted the scaffold did not fail, and that issues of fact exist about whether the scaffolding had safety rails, and if so, whether Plaintiff used them or failed to adjust them properly. Defendants further maintained there was an issue of fact as to whether Plaintiff was the sole proximate cause of the accident, based on testimony he chose not to use an accessible ladder. Furthermore, defendants asserted Plaintiff did not need to grab the electrical box to perform his painting task.
Based on the foregoing, the Court denied Plaintiff’s motion for summary judgment as to both his §§240(1), 241(6) claims. As to the former, the Court noted that, generally, the issue of whether a particular safety device provided proper protection is a question of fact for the jury. A fall from a scaffold does not establish, in and of itself, that proper protection was not provided. Defendants properly raised issues of fact about the existence of safety rails on the scaffolding, including whether safety rails would have prevented Plaintiff’s fall. As to the latter, the Court noted that the alleged Industrial Code violations do not unequivocally translate into a granting of summary judgment in every situation. Rather, the Industrial Code violation constitutes some evidence of negligence and “thereby reserve[s], for resolution by a jury, the issue of whether the equipment, operation or conduct at the worksite was reasonable and adequate under the particular circumstances.”
Based on a plain reading of this decision, the main takeaway from Synysta is that a Labor Law § 240(1) claim can be defeated at the summary judgment stage when genuine issues of fact exist about the adequacy of the safety measures employed. As to Plaintiff’s § 241(6) claim, however, it is unclear whether the Court properly denied summary judgment. If Plaintiff properly proved violations of the specified Industrial Code provisions, perhaps the Court misinterpreted the guidance in Rizzuto v. L.A. Wenger Contracting Co., 91 N.Y.2d 343 (1998). If so, it would be unsurprising if an appeal followed.
Thanks to John Amato for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
Read MorePennsylvania Federal Court Pulls The Emergency Brake On Car Dealers’ COVID-19 Lawsuits (PA)
In Star Buick, et al. v. Sentry Ins. Group, the Eastern District of Pennsylvania on May 26, 2021 dismissed plaintiffs’ Star Buick GMC, Star Buick GMC Cadillac, and Star Pre-Owned Bethlehem (collectively “Star Buick”) complaint seeking loss of business income pursuant to an all-risks business protection insurance policy. Star Buick filed an amended complaint seeking the loss of business income against its insurer, Sentry.
Sentry filed a motion to dismiss on the pleadings on three separate grounds. First, Sentry argued that the insurance policy at issue only covers business income loss for direct physical loss of or damage to property. Second, Sentry argued that a civil authority endorsement was inapplicable as the same required physical damage off the premises that impeded access to Star Buick’s property. Finally, Sentry argued that a virus exclusion barred all coverage.
The Court agreed that the COVID-19 pandemic did not cause a direct physical loss, holding that the modifier “direct” was essential, and that the “COVID-19 virus cannot be the basis for a physical loss.” The Court further determined that the civil authority endorsement was also inapplicable because the COVID-19 pandemic did not cause a physical loss to surrounding property that resulted in a government closure. Finally, the Court held that the virus exclusion plainly barred all coverage from COVID-19 losses, even if the previous two arguments were in Star Buick’s favor.
This recent opinion continues to show how courts are ruling with respect to COVID-19 claims. As this area of law is continually developing, we will continue to keep you apprised as events progress.
Thanks to Matt Care for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.
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