NJBIA At Issue

Going to Court for NJ Businesses

At Issue

Mary Beaumont, vice president for Health and Legal Affairs

Improving New Jersey’s business climate isn’t always about legislation; often, how laws and rules are interpreted by the judiciary can be just as important. New Jersey’s courts have long had a reputation for being very favorable to plaintiffs when it comes to business lawsuits, but with the help of one of New Jersey’s leading law firms, we are trying to change that.

Businesses won a victory in October when the New Jersey State Supreme Court ruled against certifying frivolous class-action lawsuits over restaurant drink prices. The court is also considering cases that could strengthen standards for expert testimony and require that consumers actually suffer harm to justify suing a company.

The three cases have received little attention outside of legal journals, but collectively, they are important in lawsuits involving consumers and businesses.

Take the case decided in October, Dugan vs. TGI Friday’s, and others. Restaurants were facing class-action suits for charging different prices for drinks at their bars than in their dining rooms, or during different times of day, such as happy hours. The plaintiffs argued these differences in price are violations of the NJ Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA).

Attorneys David Kott, Edward Fanning, Jr. and Zane Riester of McCarter & English, who prepared an amicus brief on NJBIA’s behalf, told the court, every patron who bought a drink in that restaurant would be a member of the affected class if certified, creating potentially thousands of cases. The Supreme Court thankfully has spared businesses from that prospect.

The rules regarding expert testimony are a good example of how New Jersey is out of step. Thirty-nine states use a standard that has four specific criteria that a witness must meet to be considered an expert and qualified to give opinions on a case. New Jersey, however, simply requires the judge to determine that the testimony is “generally accepted” by the scientific community.

How this plays out is illustrated by a case involving Accutane, a strong anti-acne medication. A lawsuit claims that it causes Crohn’s disease, and the plaintiffs offered two experts to back up the claim. The judge, however, didn’t allow it, citing, among other things, the eight scientific studies that concluded the drug didn’t cause Crohn’s. That judge was reversed on appeal, and it will now be up to the Supreme Court to decide. Kott again filed a friend-of-the-court brief arguing the stricter standard would ensure that “only reliable and reliably applied expert testimony” is allowed at trial.

The stakes are high. New Jersey’s pharmaceutical companies are frequent targets of product liability cases, often brought by out-of-state plaintiffs trying to take advantage of New Jersey’s more liberal court rules. The cases often are class actions, so potential damages could be big.

Kott also recently appeared before the Supreme Court arguing that New Jersey businesses should not have to defend themselves against class-action lawsuits where no one has been seriously harmed. Naturally, forcing businesses to pay penalties when no damage has been done can hardly help New Jersey’s business climate.

Running a small business is hard enough without having to defend against frivolous lawsuits. However these cases are decided, NJBIA is deeply grateful to Kott and his team at McCarter & English. Not only have they done excellent work, but they have also done it pro bono on behalf of businesses in New Jersey.


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