New Jersey Attorney Law Review Blog

Wednesday, August 03, 2011

New Jersey Law Prevents Judgment Creditors From Forcing Sale of Jointly Held Real Estate Unless Judgment Is Against Both Property Owners

This question frequently arises in the context of consulting with married couples who own jointly held real estate and a creditor has obtained a civil money judgment against only one of them. The most typical example is when either the husband or wife personally guarantees a business debt, the business ultimately fails or the husband or wife defaults on the loan, and the creditor files suit and recovers a judgment on the personal guaranty. Under New Jersey law can the judgment creditor of one spouse compel a court to order the sale of their jointly held marital residence?

The short answer is "no," provided that the non-debtor spouse survives the debtor spouse. When the debtor spouse passes away, the creditor's judgment goes to the grave with him/her and the surviving spouse holds the marital residence free and clear of the judgment.

However, during the lifetime of the debtor spouse the judgment creditor is still permitted to levy and execute against the debtor spouse's right of survivorship and his/her life estate. Should the non-debtor spouse predecease the debtor spouse, then the judgment creditor will take ownership of the property vis-a-vis ownership of the debtor spouse’s right of survivorship.

“A tenancy by the entirety is an estate held by husband and wife by virtue of title acquired by them jointly after marriage.” Dorf v. Tuscadora Pipe Line Co., 48 N.J. Super. 26, 31 (1957). “The tenancy is the creature of common law, created by legal fiction and based wholly on the common law doctrine that husband and wife are one. Id. Under New Jersey law, tenants by the entireties have certain specific rights. For example, tenants by the entireties each hold their estate as tenants in common for their joint lives subject to each spouse’s right of survivorship against one another. Upon the death of one of the spouses, the surviving spouse becomes the sole owner. In the Matter of Horace G. Houghton, 75 N.J. 462 (1978).

What About Splitting The House in Half?

So long as the non-debtor spouse does not predecease the debtor spouse, the judgment creditor cannot force a sale of the home by exercise of the remedy of partition, i.e., physically splitting the house in half and selling the debtor spouse’s half. Under New Jersey law, there may not be a partition with respect to lands held as tenants by the entirety. See Newman v. Chase, 70 N.J. 254, 260 (1976). See also Dvorken v. Barrett, 100 N.J. Super. 306, 309 (App. Div. 1968) (court has no power to order sale of property free of wife’s entirety interest); Citizens First National Bank of Ridgewood v. Grull, 122 N.J.Super. 562 (Ch. Div.1973) (levying creditor who had judgment against a tenant by the entirety could not compel a partition of the fee by sale or otherwise which would destroy the wife’s common law right of survivorship).

In King v. Greene, 30 N.J. 395, 412 (1959), the judgment creditor of the debtor spouse was allowed to levy and sell that spouse’s right of survivorship and his one-half (1/2) interest in the life estate for their joint lives. Such a sale, however, remains subject to the survivorship interest of the non-debtor spouse. Dvorken, 100 N.J. at 266. See also Freda v. Commercial Trust Co. of N.J., 118 N.J. 36 (1990) (a mortgage given by one tenant was deemed only to encumber that tenants interest where the mortgaged property was held as a tenancy by the entirety). In other words, a judgment creditor levying against the debtor spouse acquires no greater rights then that spouse had - which is one-half interest in life estate for their joint lives and debtor spouse’s right of survivorship. Guttermuth v. Ropiecki, 59 N.J. Super. 139, 142 (Ch. Div. 1977).

However, none of the above applies if the creditor has recovered a judgment against both the husband and wife.

Labels: Forcing Sale of Home NJ Law, Judgment Creditor Sale of House NJ, NJ partition

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Friday, July 22, 2011

No Class Action Status for Junk Fax Lawsuit, Says NJ Appeals Court

In a case of first impression in New Jersey which I am dubbing as the "Bakery vs. the Bagelry," the Appellate Division held that a plaintiff could not maintain a class action lawsuit to enforce a private cause of action seeking damages for transmission of an unsolicited fax. Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., Docket No. A-3923-09T2 (App. Div. 2011).

In this case, the plaintiff Local Baking Products received an unsolicited one-page fax from defendant Kosher Bagel Munch promoting Bagel Munch's local restaurant in Passaic, New Jersey. This fax was sent by a marketing company hired by Bagel Munch as part of a "blast fax" campaign advertising Bagel Munch's food services to over 6000 phone numbers - the fax was ultimately received by approximately 4649 fax machines.

In response to receiving this unsolicited fax, the bakery filed a complaint against Bagel Munch seeking damages for itself and on behalf of all the other approximate 4649 recipients of the same fax - otherwise known as a class action lawsuit - for violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C.A. § 227. Enacted by Congress in 1991, the TCPA prohibits the use of any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement. . . ." 47 U.S.C.A. § 227(b)(1)(C). The TCPA provides for a private cause of action entitling a prevailing plaintiff to receive either actual damages for each violation or $500 for each violation, whichever amount is greater. 47 U.S.C.A. § 227(b)(3).

At the trial court level, the defendant successfully argued that the bakery could not maintain a class action lawsuit under the TCPA to enforce its private cause of action for damages. Accordingly, the trial court granted Bagel Munch's motion to dismiss the class action claim for failure to state a cause of action. The bakery did, however, receive a judgment for $500 in statutory damages as permitted under the TCPA. On Appeal, the New Jersey Appellate Division affirmed finding that the bakery cannot maintain a class action.

The Appellate Division began its analysis by remarking about the simplicity of the provisions of the TCPA that prohibit the sending of any unsolicited advertisements via facsimile. After recounting the statutory definition of an unsolicited advertisement set forth in § 227(a)(5), the appeals court identified the TCPA's three exceptions for imposing liability on the sender of an unsolicited fax:

(1) if a prior business relationship exists between the parties;

(2) if the recipient voluntarily makes its fax number available for "public distribution"; or

(3) if the advertisement contains a notice informing the recipient of the ability and means to avoid future unsolicited advertisements.

47 U.S.C.A. § 227(b)(1)(C).

Reciting the legislative history of the TCPA and ether cases decided in federal courts, the NJ Appellate Division noted that the purpose behind the private cause of action remedy is to allow consumers to appear without an attorney in small claims court and provide a $500 minimum amount of damages without having to prove actual damages. Specifically, the Appellate Division explained:

The drafters [of the TCPA] recognized that damages from a single violation would ordinarily amount to only a few pennies worth of ink and paper usage, and so believed that the $500 minimum damage award would be sufficient to motivate private redress of a consumer's grievance through a relatively simple small claims court proceeding, without an attorney. See 137 Cong. Rec. S16205-06 (daily ed. Nov. 7, 1991) (statement of Sen. Hollings)("[I]t would defeat the purposes of the bill if the attorneys' costs to consumers of bringing an action were greater than the potential damages.").

Class actions are governed by R. 4:32-1 of the New Jersey Court Rules. This Rule provides that class action certification is appropriate only if:

(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the
class.

R. 4:32-1(a).

The appeals court explained that the issues in this lawsuit “are whether the proposed class raises ‘questions of law or fact common to the members of the class [that] predominate over any questions affecting only individual members [(commonality and predomination)], and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy [(superiority)].”

After discussing the standards that governed its analysis of the class action issues, the appeals court rejected the bakery's argument that the trial court’s ruling was inconsistent with United Consumer Financial Services v. Carbo, 410 N.J. Super. 280 (App. Div. 2010), which considered a class action under the Truth-in-Consumer Contract, Warranty and Notice Act.

Acknowledging that no published New Jersey decision had resolved the issue of class actions under the TCPA [though the court did cite several unpublished decisions in New Jersey involving class action certification under the TCPA which are not binding or of precedential pursuant to New Jersey Court Rule 1:36-2], the Appellate Division looked to decisions from other state and federal courts, finding that there was a “lack of uniformity as to approach and result.” For example, courts in seven states have published decisions allowing class certification for TCPA claims: Arizona, California, Florida, Indiana, Missouri, North Carolina and Oklahoma. Whereas, courts in five other states have published decisions denying class action certification under the TCPA: Colorado, Connecticut, New York, Ohio, and Texas. The appeals court also noted a split in decisions published by federal district courts.

Expressing its doubt that the plaintiff could satisfy the commonality and typicality requirements of New Jersey Court Rule 4:32-1 governing class actions, the NJ Appellate Division ultimately concluded that the bakery could not satisfy the predominance and superiority factors. Specifically, the court declared that “a class action suit is not a superior means of adjudicating a TCPA suit.” The court stressed that by providing consumers with a statutory award of $500, Congress had offered aggrieved parties with an adequate incentive to pursue their claims without having to resort to a class action in order to aggregate many small claims.

Furthermore, the appellate court emphasized out that “[t]he combination of the TCPA’s design and New Jersey’s procedures suggests that the benefit of a class action has been conferred on a litigant by the very nature of the procedures employed and relief obtained. The cost of litigating for an individual is significantly less than the potential recovery.” Lastly, the court reasoned that the facts that were necessary to succeed on an individual claim would be identical to the facts needed simply to be identified as a class member.

Labels: Class Action Lawsuits TCPA New Jersey, Junk Faxes New Jersey Law, NJ Appellate Attorneys, NJ Junk Fax Case

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Tuesday, June 21, 2011

Federal Appeals Court Reinstates Copyright and Defamation Case against NJ Shock Jocks

A New Jersey federal appeals court has reinstated a copyright and defamation lawsuit against a New Jersey radio station and its DJ's, one of whom is currently a co-host of the popular WFAN Sports talk radio show of Boomer & Carton. Access to the U.S. Third Circuit Court of Appeals written opinion issued in Murphy v. Millennium Radio Group, Case No. 10-2163, can be found here.

In this case the plaintiff, Peter Murphy, alleges that the defendants violated the Digital Millennium Copyright Act for failure to post his credit for a photograph appearing on the radio station's website. In addition, Murphy alleges that both DJ's defamed him during a 45 minute broadcast of their radio show by calling him a "man not to be trusted" in business dealings and suggesting he is gay.

Murphy had taken a photo of 101.5 FM DJ's Craig Carton and Ray Rossi for the New Jersey Monthly magazine, which had named them New Jersey's "best shock jocks." At the time, Carton and Rossi were known as the "Jersey Guys" on New Jersey 101.5 radio show. The photo (shown here) depicted them standing behind a plcard bearing the station's name, with no other visible apparel - essentially giving the impression that both men were naked but for the sign in front of them.

The radio station invited website visitors to alter the picture with photo-editing software, and displayed the altered versions on its website. Twenty-six (26) of the altered photos eventually were posted, according to the decision. However, the website did not include the credit to Murphy, which had appeared in the print version of the original unaltered photo. (Murphy’s photo credit and copyright information was contained in the inner margin of a page in the New Jersey Monthly magazine, not as embedded data.) Murphy claimed the omission violated the Digital Millennium Copyright Act.

When Murphy first filed suit in U.S. District Court in 2008, attorneys for the shock jocks argued they did not violate any copyright infringement laws because the photo on the website constituted fair use of his work.

As codified in 17 U.S.C. § 107, the factors governing whether a particular use of copyrighted material is “fair” are: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

Deciding the photo met the court’s four-pronged test for fair use and that the alleged defamatory remarks were nonactionalbe, rhetorical hyperbole, U.S. District Judge Joel Pisano dismissed the suit.

However, a three-judge panel of the 3rd Circuit Court of Appeals concluded Judge Pisano got it wrong and reinstated Murphy’s lawsuit, including the defamation claim.

The appeals court said the lower court erred in finding that the defendants' reproduction of the unaltered image on the website was a fair use, and that the trial judge was too quick to dismiss the defamation claim without first giving Murphy the opportunity to depose Carton and Rossi.

New Jersey’s previous court ruling had said the copyright information has to be part of that automated system and Pisano followed that ruling. But the 3rd Circuit said the copyright information does not have to be part of an automated system.

Although Murphy had asked the appeals court to rule on whether an allegation of homosexuality is susceptible of a defamatory meaning under New Jersey law, the panel declined to decide that issue.

Labels: NJ digital millennium copyright infringement, online defamation NJ, photographer copyright protection NJ, shock jock lawsuit NJ

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Monday, June 20, 2011

Blogger Must Reveal Sources, Says NJ Supreme Court

New Jersey Supreme Court says bloggers are not journalists! Unless a blogger is connected to a traditional media outlet, there is no protecting a blogger's sources.

In a February 9, 2011 post I discussed the case of Too Much Media LLC v. Hale which was argued before the New Jersey Supreme Court concerning the issue of whether a blogger is protected by New Jersey’s shield law from revealing her sources for her allegedly defamatory Internet postings about a Freehold, NJ software company.

Several weeks ago, the NJ Supreme Court unanimously held against the blogger, concluding that bloggers do not fall within the definition of "journalists" entitled to a privilege against revealing their sources. Finding that Hale's blogging comments to be synonymous to online message boards, Chief Justice Stewart Rabner did not find legislative intent to provide an absolute privilege in these circumstances:

"We do not find that online message boards are similar to those types of news entities listed in the statute, and do not believe that the Legislature intended to provide an absolute privilege in defamation cases to people who post comments on message boards," Justice Rabner commented.

Explaining further, Justice Rabner noted that "Internet bulletin boards are not news organizations, but rather public forums that provide a 'looser, more relaxed communications style.'" "In essence, message boards are little more than forums for conversations. Those forums allow people a chance to express their thoughts on matters of interest. But they are not the functional equivalent of the types of news media outlets outlined in the Shield Law," said Justice Rabner.

The Court did, however, find disagreement with the lower court's decisions requiring that a full evidentiary hearing should be held to determine whether a report is covered by the privilege. The Court explained that in most cases, a simple certification (or affidavit as is sometimes referred to) stating the reporter's connection to a news outlet, his or her purpose in gathering information and a clarification stating that the information was gathered in the course of his or her professional activities should suffice. "However, self-appointed journalists or entities with little track record who claim the privilege require more scrutiny," the Court remarked.

The American Civil Liberties Union of New Jersey joined with Hale on the appeal, urging the Court to adopt an "intent test," by which Hale would be able to show that she intended to publish news stories about the subject matter.

Hale maintained that she was in the course of investigating criminal activity in the Internet porn industry and that her comments, made on Oprano.com, were meant to inform the public about frauds, scans and misuse of technology.

Hale accused Too Much Media of fraud and "illegal and unethical use of technology," violating New Jersey's Identity Theft Protection act and profiting from the theft of e-mail addresses stolen by hackers in a 2007 security breach. Discussing a competitor's suit against Too Much Media, she said the company's principals "may threaten your life if you report any of the specifics."

Too Much Media filed suit against Hale in the Superior Court of New Jersey in Ocean County and was intending to take Hale's deposition when Hale unsuccessfully filed for a protective order. The trial court found that she was simply posting her messages on a bulletin board and rejected Hale's claim that she was investigating Too Much Media for her own website, Pornmafia.com which hadn't even been launched at the time.

The Appellate Division agreed, as did the NJ Supreme Court, that Hale exhibited none of the recognized qualities or characteristics traditionally associated with the news process, nor demonstrated an established connection or affiliation with any news entity.

As Justice Rabner observed, ". . . the popularity of the Internet has resulted in millions of bloggers who have no connection to traditional media. Any of the, as well as anyone with a Facebook account, could try to assert the privilege."

Being a blogger myself, I suppose I am not entitled to any protection from disclosing my sources unless the source is my client. After all, the last time I checked the attorney-client privilege is alive and kicking in New Jersey!

Labels: New Jersey Supreme Court blogging case, NJ blogger case, Too Much Media v. Hale blog case

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Monday, April 04, 2011

NJ Supreme Court Says Orders Compelling Arbitration Are Considered Final Orders Which Are Appealable As Of Right

"All orders compelling and denying arbitration shall be deemed final for purposes of appeal, regardless of whether such orders dispose of all issues and all parties, the time for appeal therefrom starts from the date of the entry of that order," said the New Jersey Supreme Court in a recent ruling issued in the case of GMAC v. Rosanna Pittella v. Pine Belt Enterprises, Inc. (March 23, 2011, A-15-10).

The relevant facts of the case are as follows: On February 27, 2003, Pittella entered into a “retail installment sale contract” with Pine Belt to finance the purchase of a car she bought at the Pine Belt auto dealership. Pittella simultaneously signed an arbitration agreement entitled “Option to Arbitrate Disputes,” which obligated Pitella to submit to binding arbitration any dispute arising out her financing, leasing or acquisition of the vehicle. In addition, the arbitration provision of the retail installment contract specifically informed Pitella that:

IF ARBITRATION IS CHOSEN BY ANY PARTY WITH RESPECT TO A CLAIM, DISPUTE OR CONTROVERSY, NEITHER YOU NOR WE WILL HAVE THE RIGHT TO LITIGATE THAT CLAIM IN COURT OR TO HAVE A JURY TRIAL ON THAT CLAIM, OR TO ENGAGE IN PRE-ARBITRATION DISCOVERY, EXCEPT AS PROVIDED IN THE ARBITRATION RULES. FURTHER, YOU WILL NOT HAVE THE RIGHT TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO ANY CLAIMS SUBJECT TO ARBITRATION. THE ARBITRATOR’S DECISION WILL GENERALLY BE FINAL AND BINDING. OTHER RIGHTS THAT YOU WOULD HAVE IF YOU WENT TO COURT MAY ALSO NOT BE AVAILABLE IN ARBITRATION. IT IS IMPORTANT THAT YOU READ THE ENTIRE ARBITRATION PROVISION CAREFULLY BEFORE SIGNING THESE DOCUMENTS.

As is typical in the auto industry, Pine Belt assigned the contract to GMAC which financed Pitella's purchase. On February 12, 2008, GMAC repossessed the car for non-payment and filed suit against Pittella in the Special Civil Part for a deficiency balance of $14,013.15.

In response to GMAc's lawsuit, Pittella filed an answer, a counterclaim, and a third-party complaint against Pine Belt.alleging violations of the New Jersey Consumer Fraud Act, breach of contract, fraud and breach of implied covenant of good faith and fair dealing,” Pittella claimed that Pine Belt charged an excessive price for the extended warranty on the car, and that “the disclosures and representations regarding the cost of the extended warranty [were] false, inaccurate or misleading” because Pine Belt retained “a substantial percentage” of the $3,400 warranty purchase price as profit for itself. Pittella also asserted “class action allegations” against Pine Belt on behalf of a proposed class of individuals who had purchased similar extended warranty plans from Pine Belt during the previous six years.

The action was transferred to the Law Division. In lieu of filing an answer, Pine Belt moved for summary judgment to compel arbitration and to dismiss the class action claims.

On July 31, 2008, the trial court partially granted Pine Belt’s motion and entered an order compelling “binding arbitration” of Pittella’s individual claims against Pine Belt, but did not stay GMAC’s claims pending the arbitration. The court initially denied the motion to dismiss Pittella’s class action claim because it found the class action waiver clause unenforceable. However, Pine Belt moved for reconsideration and, on August 29, 2008, the Law Division reversed itself, dismissing Pittella’s class action claim “with prejudice.”

Pittella and GMAC subsequently resolved their dispute in the pending litigation and, on March 5, 2009, executed a “stipulation of dismissal with prejudice” thus conclusively ending the entire litigation.

Within forty-five days of the March 5, 2009 dismissal, on April 14, 2009 Pittella filed a notice of appeal from the July 31, 2008 and August 29, 2008 orders. Pine Belt moved to dismiss the appeal “as untimely,” arguing that Pittella was required to file her appeal within forty-five days of the July 31, 2008 orders compelling binding arbitration and the dismissal of the class action claims.

NJ Court Rule 2:2-3 governs the filing of appeals brought as a matter of right final judgments. Under R. 2:2-3(a)(3), ". . .an order compelling arbitration, whether the action is dismissed or stayed, shall also be deemed a final judgment of the court for appeal purposes."

The Rule itself makes it clear that any order compelling arbitration should be considered a final judgment subject to appeal as of right under R. 2:2-3(a)(3). And in fact, prior New Jersey Supreme Court precedent held exactly that, in Wein v. Morris, 194 N.J. 364, 380 (2008) - that an order compelling arbitration as to all parties and all issues is indeed a final judgment appealable as a matter of right under R. 2:2-3(a)(3).

So it would seem to have been a slam dunk for Pine Belt to have prevailed before the New Jersey Supreme Court because clearly Pitella did not file her appeal within 45 days of the July 31, 2008 order compelling arbitration. Not so, said the Supreme Court.

Pittella countered that the July 31, 2008 orders did not dispose of all issues as to all parties, and therefore were not final judgments appealable as of right. For its part, Pine Belt argued Pine Belt argues Pittella’s appeal was not timely because all orders compelling arbitration are deemed final for appeal purposes under the express wording of Rule 2:2-3(a), including orders that do not dispose of all issues as to all parties.

The NJ Supreme Court elected to decide only the following issue:

Whether orders compelling arbitration as to some, but not all parties, in a litigation are excepted from this Court’s unconditional holding in Wein v. Morris, 194 N.J. 364 (2008) that all orders compelling arbitration are deemed final and immediately appealable as of right.

Ultimately, the Supreme Court agreed with Pitella's argument - that the July 31, 2008 order compelling arbitration could not be considered a final judgment subject to appeal as of right under R. 2:2-3(a)(3) because at the time that order was entered the trial court still had to decide GMAC's deficiency claim against Pitella. Therefore, the order compelling arbitration did not resolve all disputes as to all parties which distinguished this case from the fact pattern of Wein v. Morris.

Said the Supreme Court:

Because it addressed less than all issues as to all parties, it was not clear that the order compelling arbitration of Pittella’s claims against Pine Belt was final under Rule 2:2-3(a) and Wein. That question and its resolution are now crystal clear: orders compelling or denying arbitration are deemed final and appealable as of right as of the date entered. Based on the prior lack of clarity, we affirm that portion of the Appellate Division decision denying the motion to dismiss the appeal from the final judgment. We do so with the following warning: as of today, litigants and lawyers in New Jersey are on notice that all orders compelling and denying arbitration shall be deemed final for purposes of appeal, regardless of whether such orders dispose of all issues and all parties, and the time for appeal therefrom starts from the date of the entry of that order.

The case is important for lawyers and their clients because the Supreme Court has now made clear that any order compelling arbitration is considered final and appealable, and therefore any appeal from such an order must be filed within 45 days of the date it is entered.

Labels: appealing orders compelling arbitration New Jersey, NJ appeals from arbitration, orders compelling arbitration when to appeal, Uniform arbitration act NJ

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Saturday, February 12, 2011

NJ Wineries Claim Sour Grapes By Federal Appeals Court Ruling

In Freeman v. Corzine (United States Court of Appeals for the Third Circuit, Nos. 08-3268 and 08-3302, December 2010), the plaintiffs – two New Jersey wine enthusiasts, a New Jersey couple seeking access to more Kosher wines, and a California winery – brought suit in the United States District Court for the District of New Jersey against Jerry Fischer, New Jersey’s Director of Alcoholic Beverage Control, alleging that several aspects of New Jersey’s Alcoholic Beverage Control Law (“ABC Law”) infringe on the dormant Commerce Clause in violation of 42 U.S.C. § 1983.

The suit challenged the constitutionality of parts of New Jersey’s alcohol beverage control laws permitting certain New Jersey farmers and wineries to bypass wholesalers and sell directly to retailers and consumers.

Currently, out-of-state wineries must exclusively go through wholesale distributors to sell their products in New Jersey, but in-state vineyards can sell to customers directly in on-site tasting rooms, in its own storefronts and in larger retail stores throughout the state. The plaintiffs argue that such rules provide in-state wineries with a competitive advantage.

The Court of Appeals agreed with the plaintiffs, upholding the decision of the lower federal court which found the laws to be unconstitutional. The appeals court sent the case back to the District Court level to determine the solution: (1) either give all vineyards the same rights to sell directly to consumers in New Jersey, or (2) order all wineries to go through wholesalers. Thus, the District Court will decide who the winner is - New Jersey farmers or New Jersey wholesalers.

Fearing that the District Court may choose option # 1, the Garden State Wine Growers Association, which represents New Jersey’s 29 wineries, retained counsel and is contemplating petitioning the court to intervene in the case. According to news coverage of the case, if the rules change and all vineyards must sell their products through wholesalers, the vintners say the future of the state’s wine business could be in jeopardy. No matter which side the District Court finds in favor of, additional appeals will likely follow.

New Jersey's Three-Tier Alcohol Distribution Laws

New Jersey, like most other states, has a three-tier alcohol distribution system. Pursuant to that structure, alcoholic beverages are sold by (1) suppliers and manufactures to (2) wholesalers, who in turn sell to (3) retailers, who then sell alcohol to consumers.

The United States Supreme Court has held that such a three-tier system is legitimate. Granholm v. Heald, 544 U.S. 460 (2005); and North Dakota v. United States, 495 U.S. 423 (1990). The Granholm Court nevertheless cautioned that “straightforward attempts to discriminate in favor of local producers” of alcoholic beverages by, for instance, “subjecting out-of-state [producers], but not local ones, to the three-tier system,” are “contrary to the Commerce Clause and . . . not saved by the [states’ authority to regulate alcoholic beverages under] the Twenty-first Amendment.” Id. at 474, 489.

New Jersey’s Alcoholic Beverage Control Laws (“ABC Laws”), which are enforced by the Director of the Division of the Alcoholic Beverage Control (“ABC”), have allowed certain New Jersey farmers and wineries to skip the wholesalers and sell directly to retailers and consumers. Out-of-state wineries and wine aficionados cried foul and challenged the special privileges given to New Jersey producers, arguing that permitting them to operate outside the rigid three-tier distribution gave NJ businesses an unfair advantage.

The Third Circuit Appeals Court recognized that when “all out-of-state wine, but not all in-state wine [must] pass through an in-state wholesaler and retailer before reaching consumers, the discriminatory character of the system is obvious.” The Third Circuit Court further found that there was no legitimate purpose for this unequal treatment. As a result, the Third Circuit Court held that the privileges that allowed plenary or farm winery licensees to sell directly to retailers or consumers are unconstitutional.

The Third Circuit also invalidated a provision of the ABC Laws that required individuals to obtain a special permit from the ABC before importing more than a gallon of wine for personal use.

Labels: New Jersey Third Circuit Case Commerce Clause, NJ federal appeals court wine case, NJ federal court winery case, NJ winery case

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Thursday, February 10, 2011

Parents Didn't Commit Child Neglect For Slapping Teen and Taking Her Paycheck, Says NJ Supreme Court

According to the unanimous decision published by the New Jersey Supreme Court on January 26, 2011, the parents of a teenage girl did not commit child abuse by slapping their daughter and taking a portion of her part-time wages to pay family bills. New Jersey Division of Youth and Family Services v. P.W.R. (A-79-09, January 26, 2011).

The Court found the state Division of Youth and Family Services ("DYFS") lacked sufficient evidence to remove the teenager (Alice) from her father and stepmother’s home in 2008, and vacated the abuse and neglect judgment against her stepmother (Pam).

DYFS removed the girl from the home after her grandfather reported the parents for taking her earnings from her part-time job and "slapping her around." A DYFS worker also found the home was without heat and authorized an emergency removal.

The father told a DYFS representative that his wife (Pam) had slapped his daughter (Alice) once two years earlier, and that part of Alice's earnings went to the cable bill. The couple said their central heating was broken, and they were using space heaters. The family members were not named the decision.

The Supreme Court found that an occasional slap, "although hardly admirable ... does not fit a common sense prohibition against ‘excessive’ corporal punishment." And classifying as abuse and neglect the requirement of a working-aged child to contribute to the family finances is "simply wide of the mark," LaVecchia wrote. The Court further remarked:

The dominant allegation of abuse was that Pam slapped Alice in the face, which conduct, although abhorrent to a sixteen-year-old young woman, and hardly admirable, does not fit within the statutory definition of abuse.

* * *

In sum, although no parenting awards are to be won on this record, neither was actionable abuse or neglect proven. As stated at the outset, DYFS has many serious cases, and even more numerous referrals that necessitate investigations requiring the agency to wade into difficult family problems in order to protect children. Its task is hard and it must be vigilant, but it must be vigilant within the limitations of the law that empowers the agency’s actions. The record here simply did not demonstrate proof of actionable abuse or neglect of Alice by Pam. It was an error for the courts below to have sustained the findings of abuse and neglect entered against Pam.

The girl is no longer a minor, so the Court’s decision did not affect her custody. A full copy of the NJ Supreme Court's published opinion can be found here.

Labels: NJ Supreme Court DYFS, parental abuse NJ law, Teenage slapping case

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