Unfortunately, New Jersey still has the highest foreclosure rate in the country. Most weeks, the Appellate Division issues several decisions related to residential foreclosure, and most follow a predictable pattern – a lender forecloses and obtains final judgement of foreclosure, the borrower appeals, claiming that the bank lacked standing to foreclose, and the Appellate Division affirms entry of final judgment of foreclosure. But every now and then a case comes along that breaks that mold. U.S. Bank National Association v. Gallagher is one of those cases. (Note: I am not related to the Gallaghers in this case or the Gallaghers in the Showtime series, Shameless, but the facts of this case might actually fit in that show.)
Gallagher starts off normal enough. Defendants were married in 1986. In 1996 they bought property and built their marital home. Two years later, they used the property as security for a loan. Over the next ten years, they refinanced the mortgage on the property four times. Eventually, however, they were unable to make the monthly payments and the bank foreclosed.
That is the take home message from the Appellate Division’s recent decision in Goldfarb v. Solimine.
In Goldfarb, defendant promised to hire plaintiff to manage defendant’s family’s assets. Before getting written confirmation of defendant’s offer, plaintiff quit his job with an investment firm. Defendant then reneged on the promise, and plaintiff sued. At trial, the jury sided with plaintiff and awarded him damages based on the difference between the base salary defendant promised and what plaintiff actually earned at a new job he found after defendant reneged on that promise.
Both sides appealed on a number of issues, the most interesting of which had nothing to do with the underlying facts of the case. Plaintiff appealed the denial of his motion to recuse the trial judge, which plaintiff filed “after learning that a defense attorney, in an ex parte communication, sought the judge’s assignment to the case, and the judge responded by specifically requesting the assignment from the presiding judge.” The Appellate Division agreed with plaintiff and reversed the trial court’s decision on the motion to recuse.
Some of the best parts of the movie “My Cousin Vinny” are the interactions between Vinny, played by Joe Pesci, and Judge Haller, played by the late Fred Gwynne. In one scene, Judge Haller admonishes Vinny for failing to dress appropriately for court. When Vinny comes to court the next day wearing exactly the same thing he had on the day before, the following exchange occurs:
Judge Haller: Mr. Gambini, didn’t I tell you that the next time you appear in my court that you dress appropriately?
Schiavo has been pending for more than a decade. Plaintiffs worked as “costumed beverage servers” in the defendant’s “BorgataBabes” program. (Disclaimer: This is the actual name of the program, not my name for it.) They claimed that “defendant’s adoption and application of personal appearance standards (PAS) subjected them to illegal gender stereotyping, sexual harassment, disparate treatment, disparate impact, and . . . resulted in adverse employment actions.”
In Harrah’s Atlantic City Operating Co. v. Dangelico, plaintiff, a casino, lent defendant, a “casino gambler,” $160,000 against a $200,000 line of credit. The loan was secured by checks drawn on defendant’s bank account, coupled with defendant’s representation that he had sufficient funds in that account to cover the loan. Want to bet how this story unfolds?
What happens when the same parties enter into three contracts, all related to the same underlying services, the first two of which require the parties to litigate any disputes while the third provides that the parties “may” settle any disputes through binding arbitration? When a dispute arises, do you have to sue in court, can you arbitrate instead, if one side chooses arbitration, is the other side stuck with that choice? These were the issues in the Appellate Division’s recent decision in Medford Township School District v. Schneider Electric Building Americas, Inc.
In Medford Township, plaintiff contracted with defendant to “design and implement upgrades to several of [plaintiff’s] schools and its transportation and operations center.” The initial contract between the parties did not contain an arbitration provision. To the contrary, it contained a provision requiring that any disputes be resolved under the law of the state where the services were provided, and in the “federal, state, or municipal courts serving the county in which the services [were] performed.”
Some time later, plaintiff issued a request for proposals (RFP) for a related job. The RFP did not contain an arbitration provision. Instead, it required the winning bidder to agree that “any action or proceeding that [arose] in any manner out of performance of the RFP [or the resulting contract] . . . shall be litigated in the Superior Court of New Jersey, Burlington County.”
Keith Richards once said: “I look for ambiguity when I’m writing because life is ambiguous.” This would probably be number one on the list of things a lawyer would never say. Lawyers generally do not like ambiguity. Courts don’t like it either, including the U.S. Supreme Court, and including when it evaluates the availability of class arbitration under an arbitration agreement. Several years ago, in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., the Supreme Court held that courts could not compel class arbitration when the underlying agreement was “silent” on the issue. In Lamps Plus, Inc. v. Varela, the U.S. Supreme Court extended this holding to ambiguous agreements, holding that class arbitration is not available under an arbitration agreement that is ambiguous about the availability of such arbitration.
Plaintiff in Lamps Plus was a company that sold, you guessed it, “lighting fixtures and related products.” In 2016, the company suffered a data breach that revealed the tax information of approximately 1,300 of its employees. Soon after, a fraudulent tax return was filed in defendant’s name. He sued in California federal court on behalf of himself and a putative class of employees whose tax information had been compromised. But, like most of plaintiff’s employees, defendant had signed a broad arbitration agreement when he started working at the company. Thus, in response to defendant’s complaint, plaintiff moved to compel arbitration on an individual, not classwide, basis. The district court granted the motion to compel arbitration, but rejected plaintiff’s request for individual arbitration. The U.S. Court of Appeals for the Ninth Circuit affirmed.
The Ninth Circuit determined that the arbitration agreement was ambiguous on the issue of classwide arbitration. So it applied the state law doctrine of contra proferentem – an equitable principle under which any ambiguities in a contract are construed against the drafter – and construed this ambiguity against plaintiff. The Ninth Circuit held that Stolt-Nielsen was not controlling because the arbitration agreement in that case was silent on classwide arbitration, while the arbitration agreement in Lamps Plus was ambiguous on the issue. The Ninth Circuit used contra proferentum to resolve that ambiguity.
Social media can be a valuable tool for litigators. Every state or local ethics authority that has considered the issue has held that public social media profiles are fair game. So litigators can generally mine the public profiles of witnesses, jurors, or even their own clients for useful information. But the same is not true for private social media profiles. Lawyers attempting to access anyone’s private social media profile are entering an ethical minefield. If someone is represented by counsel, then an attorney requesting access to that person’s private profile violates RPC 4.2, which prohibits communicating with individuals represented by counsel. Even if the person is not represented by counsel, some jurisdictions hold that it is still improper for lawyers to request access to private social media profiles unless they identify themselves and explain why they are requesting access. (Good luck getting someone to accept that friend request.) And requesting access from jurors is always improper because RPC 3.5 prohibits ex parte communications with jurors.
A recent ethics opinion from the Supreme Court of Pennsylvania, Office of Disciplinary Counsel v. Miller, offers another example of lawyers using social media improperly. In that case, respondent was the elected district attorney of Centre County, Pennsylvania. The Centre County judiciary had declared the sale of bath salts to be a nuisance and had enjoined three stores from selling them. Purportedly to track the sale of bath salts and enforce these injunctions, respondent created a fictitious Facebook account under the name “Brittney Bella.” To “portray a connection to the local community,” respondent created a fake backstory for “Brittney Bella,” claiming that she was a Penn State dropout who had moved to State College from Pittsburgh. She also included photos “from around the internet of young female individuals” on Bella’s Facebook profile, “to enhance the page’s allure.”
Once she established the fake Facebook account, respondent “liked” local establishments that sold bath salts, which led people who also “liked” those establishments to send “friend” requests to the fictitious Ms. Bella. Respondent accepted these requests and sent her own “‘friend requests’ in order to appear legitimate.” Respondent also encouraged the attorneys and staff in her office to help her with the Brittney Bella gambit. She told her staff that she “made a Facebook page that is fake for us to befriend people and snoop.” She encouraged them to “use it freely to masquerade around Facebook.” Finally, she requested that they “edit it . . . to keep it looking legit,” and “[u]se it to befriend defendants or witnesses if you want to snoop.” Respondent did not provide any guidance to her staff to prevent contact with defendants or witnesses.