Apr 5, 2021

April 2021 Client Litigation Alert

By Brian R. Lehrer, Esq.

A. LAD – Light Duty and Pregnancy

In a case involving a pregnancy discrimination claim brought by a police officer, the New Jersey Supreme Court recently held that the Pregnant Worker’s Fairness Act (PWFA) provides for multiple theories of recovery under N.J.S.A. 10:5-12 et. seq. Delanoy v. Township of Ocean, et al., - N.J. – (2021).

Plaintiff, Kathleen Delanoy, was employed by the Township of Ocean as a police officer. She became pregnant and informed her chief that she would be unable to perform her typical assignment. Ultimately, the police chief issued two standard operating procedures – one for maternity assignment and one for light/modified duty. In essence, plaintiff alleged that male officers under the light duty provision were treated differently than female officers under the maternity assignment.

The trial court dismissed plaintiff’s claim on the grounds that the maternity assignment as applied to the plaintiff did not violate the New Jersey Law Against Discrimination (LAD) as amended by the PWFA and dismissed plaintiff’s claim. The Appellate Division reversed. The Supreme Court upheld the Appellate Division and remanded the case for trial.

The PWFA amended existing portions of the NJLAD by including “pregnancy or breastfeeding” as a protected classification within existing LAD prohibitions or protections. The Appellate Division had determined that the PWFA recognized three distinct statutory causes of action: (1) unequal or unfavorable treatment of a pregnant or breastfeeding employee; (2) failure to provide a reasonable accommodation to a pregnant or breastfeeding employee (subject to the employer’s claim of undue hardship); and (3) illegal penalization of a pregnant or breastfeeding employee for requesting an accommodation. The Supreme Court directed that going forward plaintiffs bringing such claims under the PWFA should identify the theories on which their causes of action rely in order to provide a minimal level of clarity and efficiency in seeking to enforce the statute.

The Court first held that the maternity leave provision was facially invalid because it plainly pregnant employees different and less favorably than non-pregnant employees. In fact, the court found it invalid as a matter of law and remanded only for a jury to decide the issue of causation and damages. With regard to the reasonable accommodation claim under N.J.S.A. 10:5-12(s), the Court held that case law concerning reasonable accommodation under other theories in the LAD is not relevant, and that the section of the PWFA makes reasonable accommodation an employer obligation when for needs related to the pregnancy and employee based on the advice of a physician request the accommodation. While the section does permit employers to claim undue hardship, this section indicates that reasonable accommodation is required unless the employer can demonstrate undue hardship. The Court stressed that absence of undue hardship is not an element of a plaintiff employee’s prima facie case; rather, the presence of undue hardship is an affirmative defense as to which the employer carries the burden of proof.

In sum, the Court held that a claim for failure to accommodate a pregnant or breastfeeding employee under the Act requires a plaintiff to prove: (1) the employee is pregnant or breastfeeding; (2) the employer requesting reasonable accommodation; and (3) the employer failed to provide a reasonable accommodation. It is the employer’s burden to prove as an affirmative defense that the providing a reasonable accommodation causes and undue hardship.

Finally, the Appellate Division had noted that subsection (s) prohibits “penalizing” a pregnant employee who seeks an accommodation.  The Supreme Court agreed and added that penalization is plainly identified in the Act as an independent cause of action and that a viable claim of illegal penalty may arise when conditions of a designated accommodation are made particularly harsh.

B.        Product Liability – Evidence of FDA Approval

In an enormously complex case involving allegations of injuries caused by pelvic mesh medical devices, the Appellate Division recently held that a jury verdict in favor of the plaintiffs had to be reversed because of the categorical exclusion of proof that the defendants had obtained clearance from the Food and Drug Administration (FDA) for the devices implanted by plaintiffs’ surgeons. Hrymoc v. Ethicon, Inc., et al., - N.J. Super. – (App. Div. 2021).

Hrymoc involved two plaintiffs who sued various defendants for injuries arising out of the surgical implantation of pelvic mesh medical devices. During the trial, the trial judges had excluded any proof that the defendants had obtained “section 510(k) clearance” from the FDA for the devices implanted by plaintiffs’ surgeons. The Appellate Division reversed after plaintiffs obtained jury verdicts for compensatory and punitive damages.

The case was enormously complex. At its simplest level, 510(k) clearance is  only a determination by the FDA that the device in question is substantially equivalent to those devices which are already on the market but is not a finding by the FDA that the device itself is necessarily safe and effective.

The Appellate Division held that the New Jersey Products Liability Act does not mandate the admission of the 510(k) evidence but directed the trial Court to explore whether a limited amount of 510(k) information through a well-crafted stipulation or a modest presentation of evidence by both sides, along with a cautionary instruction from the judge, could help assure a fair trial. The Court held that the tough questions raised by the admission of this evidence are best addressed by the trial Court in a pre-trial hearing under N.J.R.E. 104. 

In an ancillary ruling, the Appellate Division held that the trial Court correctly declined to provide the jury with an instruction about the statutory state of the art defense under N.J.S.A. 2A:58C-3(a)(1) because the defendants did not present evidence contesting the technical feasibility of designing the product without arms or using a different kind of mesh. The defense instead argued that such alternative designs were not practical and would have had their own downsides. 

The Appellate Division also upheld the trial Court’s refusal to dismiss plaintiffs’ claims based upon proximate cause due to the “learned intermediary” doctrine. The Court noted that this doctrine generally discharges the manufacturers duty to warn the ultimate user of prescription drugs by supplying physicians with information about the drug’s dangerous propensities. However, the Court noted that there is evidence that the doctor who performed the surgical procedure on the plaintiff had failed to be adequately warned about the risks of the product and, therefore, upheld that failure to dismiss the claim on this basis.

C.        Direct Action Statute – Arbitration Not Required

In a case involving an insurance coverage action by a plaintiff who obtained an uncollectible judgment against the insureds, the Appellate Division recently held that the defendant carrier could not compel the plaintiff to arbitrate under the policy. Chrystal Point Condominium v. Kinsale Ins. Co., - N.J. Super. – (App. Div. 2021).

Plaintiff, Chrystal Point, sued several contractors involved in the construction of a building and obtained a judgment. The judgment was uncollectible and plaintiff then filed a lawsuit for insurance coverage from the insurance policy of the judgment debtors. The policy was issued by Kinsale Insurance Company and contained an arbitration clause mandating that all disputes over coverage be arbitrated. 

The trial judge dismissed the plaintiff’s Complaint and compelled arbitration. The Appellate Division reversed.

The Appellate Division noted that N.J.S.A. 17:28-2 provides for a direct action against an insurance policy under certain circumstances. Generally, an individual or entity that is a stranger to an insurance policy has no right to recover the policy proceeds. The statute provides an exception to this rule.

The court noted that cases are clear that an injured party cannot proceed through the direct action statute without proof of an unsatisfied execution or judgment. The Court found that the statute had been satisfied and dismissed defendant’s argument that the statute is limited to injuries arising out of accidents for property loss or damage from animals.

The Court then held that the arbitration provision was not enforceable against the plaintiff. While a third-party beneficiary to a contract may be compelled to arbitrate, where there is no intent to recognize the third party’s right to contract performance, then the third person is only an incidental beneficiary and has no contractual standing. The Court held that merely because the direct action statute allows a direct action against the insurer, arbitration is not required. 

The Court pointed out that non-signatories to an arbitration agreement may be compelled to arbitrate based upon principles of agency or other legal theories such as equitable estoppel. See generally, Hirsch v. Amper Fin., 215 N.J. 174 (2013). The Court concluded that the surrounding circumstances of the case and the language of the arbitration clause did not compel the plaintiff to arbitration merely because of its status as a third-party beneficiary of the policy through the direct action statute. 

D.        Social Host Duty – Service of Alcohol

In a case involving the scope of the duty owed to an adult who was not old enough to drink legally but who nonetheless drank alcohol to excess and injured himself in a motor vehicle accident, the Appellate Division recently held that student residential assistants (RAs) at Fairleigh Dickinson University owed a duty to the plaintiff and there were disputed issues of fact concerning whether they were grossly negligent which could strip them of the immunities conferred by the Charitable Immunity Act. Franco v. FDU, et al., - N.J. Super. – (App. Div. 2021).

Plaintiff, Kenneth Franco, was a twenty-year-old college student at FDU. He attended a social gathering in his suite and told his fellow student suitemates that he intended to spend the night. However, at 5:00 a.m. he awoke, left the suite and shortly thereafter was severely injured when his car went off the road. 

It was undisputed that the plaintiff could not legally drink alcohol. It was undisputed that the Social Host Liability Act at N.J.S.A. 2A:15-5.5 et. seq. did not apply because it only governs liability for third-party injuries resulting from the service of alcohol to of-age adults.

Plaintiff’s case was dismissed on summary judgment, but the Appellate Division reversed. The Appellate Division performed a very academic review of the question of duty. 

In essence, the court held that the plaintiff’s suitemates and three student guests owed him no duty. The court declined to extend social host liability for a first-party claim under the facts of this case. The court also pointed out that no case law or statute imposes a civil tort duty of care on social guests to monitor and control alcoholic drinking of another guest absent a special relationship or circumstance.

The court then addressed the RAs and FDU. The student RAs, and through them FDU vicariously, were exempted from simple negligence under the Charitable Immunity Act. They were not immunized for injuries caused by gross negligence or willful or wanton conduct. The court held that there was no evidence that FDU was grossly negligent or engaged in willful or wanton conduct. However, a fact issue existed as to whether the RAs were grossly negligent or willfully and wantonly indifferent in their failure to enforce FDU’s policies on alcohol. The court held that a jury question existed as to whether the RAs – and FDU vicariously - were liable under these theories and remanded the case to the trial court. See generally, N.J.S.A. 2A:53A-7 et. seq. The court ruled that the jury would have to consider the plaintiff’s comparative negligence at trial as well. 

DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.

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