It Is Alive . . . Contingency Fee Enhancements Are Still the Law in NJ

Defense counsel in employment cases --- in any fee-shifting case, actually --- are going to be crying in their beer over yesterday's decision by the NJ Supreme Court in two consolidated cases.  The cases are Walker v. Giuffre and Humphries v. Powder Mill Shopping Plaza.  Interestingly, neither is an employment case, but their combined impact upon employment cases is undeniable.

For the past 17 years, under a case called Rendine, attorneys who represent plainitffs under contingency fee agreements in fee-shifting cases under NJ law have been permitted to seek enhancements of their fees under certain circumstances.  For instance, if the base fee is $100,000, and the court decides that a Rendine enhancement of 25% is appropriate, the attorney's fee becomes $125,000.  The theory is that allowing fee enhancements incentivizes attorneys to take on difficult cases, or ones that seek to vindicate important policies, where there is a significant risk of non-payment.

The law in NJ seemed settled.  Then enter the US Supreme Court, with its 2010 decision in Perdue v. Kenny A, a civil rights case.  The Court there held that fee ehancements are only appropriate to award superior attorney performance in extraordinary cases.  That standard is far more restrictive than the Rendine standard, and it is undeniably the law of the land in cases that are decided under federal law. 

The Perdue standard then seeped down into a couple of cases decided under NJ state law.  In the Walker and Humphries cases, panels of the NJ Appellate Division adopted the Perdue "extraordinary circumstances" test to deny fee enhancements to successful plaintiffs, who appealed.

In no uncertain terms the NJ Supreme Court reversed the Appellate Division, holding that

the mechanisms for awarding fees, including contingency enhancements, that we adopted in Rendine shall remain in full force and effect as the governing
principles for attorneys’ fee awards made pursuant to fee-shifting
provisions in our state statutes and rules.

Take that, US Supremes!

The opinion is long, but it is required reading for attorneys who handle contingency cases.  It clarifies all of the standards that are used to award fees in contingency fee cases, not just fee enhancements. Among other things, folks, there is going to be little excuse for not keeping detailed, contemporaneous time records --- if you want to get paid.

There's a good chance that we're all going to be citing to Walker and Humphries from now on.  Rendine will still be cited, but we'll be arguing the cases decided on January 25, 2012.

Somerset Business Partnership Annual Meeting Sets Record

Yesterday's Somerset County Business Partnership Annual Meeting set a new attendance record and featured an address by NJ Economic Development Authority Executive Director Caren Franzini.  Article here, and picture with your humble blogger lurking in the background.

Frank Steinberg Finishes Two Year Term as Business Partnership Chair

Today I wrapped up two years as Chairman of the Board of the Somerset County Business Partnership, at the Partnership's Annual Meeting.  SCBP is a public-private partnership of the business, non-profit, and government communities that focuses on enhancing the business climate and quality of life in Somerset County, New Jersey.  It has been an honor and a privilege to lead this highly effective organization.  My thanks to CEO Mike Kerwin and his staff, and especially to the many volunteers who keep the Partnership at the forefront of the discussion of public issues in the great Garden State.  

HR Help: Skills Training for Your Employees

With the economy still struggling and money tight, businesses need to take advantage of every resource to remain competitive.  There's nothing more important to a business than its employees. New Jersey has a way to help with employees' skills training.  As for the cost, well . . . there's nothing better than free, is there?

The program, called the Basic Skills Workforce Training Program, is offered through a consortium of New Jersey's community colleges.

It offers training in computer skills, communications, mathematics and measurement, and English as a second language.  And did I mention that it's free?  All the employer has to do is pay the employees who are being trained at their regular rate.

My firm took advantage of the program a few months ago to upgrade our word processing capabilities, through our local institution, Raritan Valley Community College.  We were very happy with the quality of the training and will likely use it again soon.

If your business is in New Jersey, you should check this out.

Employee or Contractor Is An Important Distinction for Employers

This article from the Wall Street Journal notes that the IRS is stepping up its enforcement efforts on how small businesses classify workers.  It's a problem that some employers are not aware of.  Even if you know about the distinction, the legal standards are fuzzy enough that there often is no obvious answer.  And getting it wrong can cost you money --- a lot of it.

If you have any doubt at all, it's best to get help.

(H/T Accountant Gail Rosen of Martinsville, NJ)

NJ Jettisons Its Definition of Exempt Employees - Adopts Federal Standard

The New Jersey Department of Labor and Workforce Development recently eliminated its definition of exempt employees for overtime purposes, and adopted in its place the federal standard.

The new rule is NJAC 12:56-7.2, and it can be found here.  The new rule grew out of the Christie administration's initiative to cut red tape and duplicative regulation. 

The practical effect of the new regulation --- in addition to simplifying compliance for employers --- should be to increase the number of workers who are exempt from the overtime regulations, and thus reduce to some extent employers' obligations for overtime pay.  It is not clear, however, how much employers will benefit since it is difficult to know how many employees who were non-exempt under NJ law will have their status changed by the new definition.

Note, also, that the new regulation does not adopt the federal standard for governmental workers.

New Rule to Notify Terminated Employees of Unemployment Timing

As of July 1, 2011, employers must give terminated employees notice of the time sensitivity of filing a claim for unemployment benefits, via a revised version of Form BC-10.  Also, employers must now provide unemployment information to all employees who are laid off for any length of time, not just those laid off for more than 7 days, contrary to prior practice. 

Click here for the revised form.

New NJ Intentional Infliction Case - Important for Employers

It has never been easy for a plaintiff to prove a claim for the tort of intention infliction of emotional distress, especially one arising out of  the workplace.  Things are not getting any easier for employees.  In Ingraham v. Ortho-McnNeill, decided by the Appellate Division of New Jersey Superior Court on August 25, 2011, the court emphaszied that IIED cases that arise in the workplace are analyzed in exactly the same way as IIED cases that arise in non-employment settings.  Click here for the full opinion.

The facts that the plaintiff presented in Ingraham were sympathetic.  The plaintiff's teenage daughter, a talented, accomplished, and popular girl, died tragically while still in high school.  Her mother, of course, was distraught.  She kept reminders of her daughter in her cubicle at work, including pictures and a pair of ballet slippers.  She talked frequently with co-workers about her daughter, so much so that a year and a half after the fact her colleagues complained to management.  While sympathetic to her situation, they felt that they had said all that they could.  The situation was affecting workplace performance.

A supervisor spoke with plaintiff.  Among other things, he instructed her to remove the pictures and ballet slippers, and (in response to plaintiff's question) to "act [as] if [her daughter] did not exist."

Plaintiff became extremely upset, went to a cardiologist for an angioplasty, and eventually quit.  After filing suit, her claim for IIED was the only one of three counts that came before the court for decision.

Among other things, the plaintiff argued that the "power dynamics of the workplace" should lessen her burden of demonstrating that plaintiff's conduct was extreme and outrageous.  The court rejected that argument.

The law provides no different standard of proof that applies in the workplace from other places where emotional distress might result. The employer-employee relationship is no more special and conducive to emotional distress than, for example, a doctor-patient relationship, the relationship of a decedent's family to a funeral home, the tense relationship of a precarious tenancy where homes might be lost, or the relationship of a husband and wife in a hostile divorce.  Indeed, the workplace has too many personal conflicts and too much behavior that might be perceived as uncivil for the courts to be used as the umpire for all but the most extreme workplace disputes. We have previously said that conduct in the workplace will rarely be so egregious as to give rise to a claim of intentional infliction of emotional distress. In Griffin, supra, we stated: "Except for the kind of aggravated discriminatory conduct involved in Taylor, 'it is extremely rare to find conduct in the employment context that will rise to the level of outrageousness necessary to provide a basis for recovery for the tort of intentional infliction of emotional distress.'

And so, as far as IIED cases are concerned, the status is quo.  The court declined to lower the plaintiff's burden of proof to account for the "power dynamics of the workplace."  This seems to have been an attempt by plaintiff to import a similar comment from sexual harassment law. 

While the risk to employers from IIED claims has not been increased, neither has it been reduced.  While rare, it is possible for an employer to lose an IIED case.  For this reason, employers are well-advised to continue to investigate complaints, document problems, and establish and follow sound HR procedures.

Injured During Amorous Activity on Work Trip

Would this be compensable under Workers' Comp?  First note that this took place in Australia, so my question whether it would be compensable under U.S. law is completely hypothetical.

A woman was sent one day to set up for a meeting to be held the next day in another city.  That evening, while in her hotel, she engaged in some extra-curricular activity with a friend.  During the sport a light fixture came loose, fell, and hit her in the face, causing injury.  (Wow.  Draw your own conclusions.)

She sued, claiming that she was in that position for work-related reasons.  Here's the whole story.

I've seen claimants get comp benefits when they were injured in an after-work softball game, but this one might be going too far for U.S. courts.

Jurors Count in All Kinds of Cases

One of our practice areas, in addition to business litigation and employment law, is sports law.  So it was that, in my review of sports law blogs, I came across AthletesinCourt, published by Davis & Hoss, P.C.  of Chattanooga, Tennessee.  It turns out that Bryan Hoss, one of the name partners, went to my undergrad alma mater, Denison University, so these guys must know what they're doing.  Right?

What caught my eye was this post on considerations in jury selection in the Roger Clemens perjury trial.  There's nothing like a high profile case involving a celebrity to bring the subtleties of law practice into focus for the layman.

As the post points out:

In the end it is the opinions of these few individuals that will matter: not Clemens, not the US Attorney, and respectfully not even Judge Walton’s opinion compares to the power of a jury.

And so the post lists many things that both the prosecution and defense must consider to determine the types of citizens whom they want --- and as importantly, do not want --- on the Clemens jury.  (I was particularly amused by the tongue-in-cheek suggestion that Clemens would want both Barry Bonds and Alberto Contador as jurors, if only they were available.  The jury, I suppose, is still out on Lance Armstrong.)  (Sorry.)

While the Clemens case is a criminal prosecution, every lawyer in every jury trial, including employment law civil jury trials, is faced with the same decision as the lawyers in that case.  Who do we want on the jury?  Who do we not want?  What kind of person is likely to be sympathetic to a plaintiff who claims that she was discriminated or retaliated against?  What kind of person is likely to think that corporate wrongs against employees should be conservatively --- or lavishly --- compensated? 

It's worth 2 or 3 minutes to read the post on the Clemens case, because it will help to bring into focus the ways in which different kinds of jurors can view the same facts in different ways and reach completely different conclusions.  And whether you are an athlete, a wronged employee, or a business owner, in that difference often lies the gulf between victory and defeat.