The rules that govern what cases can come before the court, and how they are to proceed, play as big of a role in deciding the outcome of many disputes as the substantive law at issue does. That’s why we at NJCJI were quite eager to see what this year’s Rules Committees Reports would contain. This year’s Civil Practice Committee report is substantial, and we are still reviewing much of it, but below is a summary of a few key items of interest.
Civil Practice Committee, Citing Hollister, Declines to Recommend New Rule
In 2013, NJCJI asked the Civil Practice Committee to consider amending New Jersey Rules of Civil Practice 2:2-2, 2:2-3 and 2:9-5 to allow litigants to appeal class action certification decisions as of right, immediately after they are made.
The Committee took up NJCJI’s request, and was considering the issue when New Jersey Appellate Division released its opinion in Daniels v. Hollister. In a footnote in the Hollister case, the court announced a new appellate court policy governing interlocutory appeal, which is more favorable to the concept:
Orders granting or denying class certification are not appealable as of right; an aggrieved party must move for leave to appeal pursuant to Rule 2:5-6(a). We recognize, however, that the decision to grant or deny class certification often has a profound effect on the litigation. Accordingly, we will hereafter, as a general matter, liberally indulge applications for leave to appeal: (1) “when a denial of class status effectively ends the case (because, say, the named plaintiff’s claim is not of a sufficient magnitude to warrant the costs of stand-alone litigation)”; (2) “when the grant of class status raises the stakes of the litigation so substantially that the defendant likely will feel irresistible pressure to settle”; and (3) when permitting leave to appeal “will lead to a clarification of a fundamental issue of law.” Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 293 (1st Cir. 2000); see also Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 834-35 (7th Cir. 1999).
Citing Hollister, and the relative rarity of class action certification appeals in New Jersey courts, the Committee declined to adopt NJCJI’s proposed rule changes.
Committee Makes Recommendations on Wadeer Questions
On February 18, 2015, the New Jersey Supreme Court issued its decisions in two cases that had the potential to dramatically re-shape the state’s insurance law. The court’s opinion in the Wadeer case peaked the attention of the legal community, but not for the reasons one might expect. The court declined to answer several questions related to the case, and instead directed the Civil Practice Committee to look into the issues and make recommendations.
The Committee made quick work of their assigned task, answering the court’s questions as follows:
First Party Bad Faith & The Entire Controversy Doctrine
In Wadeer, the court determined that the nature of first-party bad faith claims – they can arise while the case is ongoing – makes them difficult to reconcile with the entire controversy doctrine, which requires the parties in a case to bring all the claims that they may have against one another that are at all related to the central claim at the same time. The court asked that the Civil Practice Committee determine whether the court’s rules should be changed to allow a policyholder to bring a first-party bad faith claim against an insurer after the resolution of an underlying uninsured motorist action.
In its report, the Civil Practice Committee recommended removing bad faith claims from the Entire Controversy Doctrine.
Offer of Judgment Rule
The court also directed the Civil Practice Committee to develop an amendment to the Offer of Judgment Rule. The Rule allows an offering party to recover litigation expenses and attorneys’ fees when a pre-trial offer is rejected and the subsequent monetary award exceeds 120 percent of the offer. The court would like the Committee to clarify if the Rule is triggered by the amount the jury awards or the amount a court reduces the jury award to in order to conform to the applicable insurance policy.
The Committee recommend amending the rule to apply offers to the full award or jury verdict rather than applicable insurance policy limits in the UM/UIM context.
In response to comments they received during this rulemaking from NJ PURE, the Committee also “determined that there should be a reexamination of the offer of judgment rule, including the Rule’s long-standing feature that plaintiffs should be insulated from feeshifting in no-cause verdict situations. A subcommittee was formed to take a comprehensive review of Rule 4:58. To ensure that the subcommittee has sufficient time to review this Rule, this issue has been deferred until the next rules cycle.”
Finally, the court asked that the Civil Practice Committee to determine whether attorney’s fees should be available to plaintiffs like Wadeer who bring a lawsuit against their insurer if they prevail.
The Committee declined to change the existing law, concluding that the changes to the Offer of Judgment Rule would largely align incentives in the desired direction in the UM/UIM context.
However, the Committee is requesting that the New Jersey Supreme Court clarify whether the Committee should take up the broader and more controversial question of whether any first party insured that sues their insurer should be awarded their fees and costs if they prevail.
Comments Being Accepted Until April 1
The New Jersey Supreme Court is accepting written comments on the 2014-2016 reports of the Supreme Court rules committees through Friday, April 1, 2016. Comments may be mailed to:
Glenn A. Grant
J.A.D. Acting Administrative Director of the Courts
Hughes Justice Complex
P.O. Box 037
Trenton, New Jersey 08625-0037
Or emailed to Comments.Mailbox@judiciarv.state.nj.us
Commenters should note that the New Jersey Supreme Court will not consider comments submitted anonymously, and all comments are subject to public disclosure. NJCJI will commenting on the report.
The New Jersey Supreme Court will conduct a public hearing on these reports in May and will be acting on the reports and recommendations in June or July, with any rule amendments becoming effective September 1, 2016.
The report also outlined issues that the Civil Practice Committee will consider during the upcoming rulemaking cycle. The Committee will be taking a look at the affidavit of merit process used in medical malpractice cases. The Committee is also going to be considering whether New Jersey should adopt a proportional discovery rule similar to the federal rule in complex business cases.
NJCJI will continue to review the report and prepare comments as appropriate. If you have questions or comments about the report, including things not mentioned above, please reach out to NJCJI’s chief counsel, Alida Kass.