Litigation Quarterly Newsletter

A quarterly newsletter analyzing litigation cases and trends in New Jersey, Pennsylvania and New York.
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On the Clock: How the Dismissal of One Claim Alleging a Violation of Federal Civil Rights Can Derail an Entire Civil Action

Early in law school, future attorneys are taught to pay attention to times and dates because one small procedural error in the timeliness of a filing could make or break a case. The United States District Court for the District of New Jersey recently demonstrated just how important this early lesson can be and how failure to act promptly can cost a client time, effort and money.

In DiGiesi v. Township of Bridgewater Police Department, 2024 U.S. Dist. LEXIS 55476 (D.N.J. Mar. 27, 2024), plaintiff sued the Township of Bridgewater Police Department (BTPD) as well as thirteen individual defendants in their official and individual capacities stemming from an alleged “orchestrated effort” to falsely arrest and prosecute him. In March 2016, Plaintiff was working as a security guard at a local restaurant when a verbal altercation broke out between plaintiff and the son of a retired BTPD officer. The verbal altercation escalated to a disputed account of physical blows leading to plaintiff pushing the officer’s son and causing the officer’s son to suffer personal injuries. Thereafter, a Somerset County grand jury returned a one-count indictment of third-degree aggravated assault leading to plaintiff’s arrest. The matter was tried in a bench trial over the course of two days which resulted in plaintiff’s acquittal on June 6, 2017. The Court found that the State failed to meet its burden of proving that a third-degree aggravated assault, or any of its lesser included offenses, was committed beyond a reasonable doubt.

On July 1, 2019, plaintiff filed a civil action in the United States District Court for the District of New Jersey, on the basis of subject matter jurisdiction, asserting claims against BTPD and its individual officers sounding in violations of both the Federal and State Civil Rights Acts, violations of the New Jersey Tort Claims Act, malicious abuse of the legal process, malicious prosecution, false arrest, defamation and conspiracy to commit tort. Six of the individual defendants were dismissed by stipulation leaving seven other individual defendants along with the BTPD.

After the case proceeded through discovery, BTPD moved to dismiss pursuant to Federal Rule 12(b)(6) or in the alternative for summary judgment pursuant to Federal Rule 56. The individual defendants followed suit by filing a motion for summary judgment also pursuant to Federal Rule 56. In analyzing these motions in the context of plaintiff’s claims, defendants argued that plaintiff’s claims of violations of his Federal civil rights were time-barred. In agreeing with defendants that the Federal civil rights claims were time-barred, the Court emphasized that these claims arise out of 42 U.S.C. § 1983, not any of its surrounding sections. Further, when determining the statute of limitations for these claims, which are essentially for personal injuries, the Court followed State law and determined that plaintiff’s Federal civil rights claims held a two-year statute of limitations like other New Jersey personal injury claims. The false arrest claim begins to accrue when plaintiff “knew or had reason to know of his injury,” which was when he was arrested on or around March 13, 2016. Further, the malicious prosecution claim would accrue when “the criminal proceedings against the claimant terminated in his favor…” which was on June 6, 2017.

Since plaintiff filed his complaint on July 1, 2019, his Federal civil rights claims were time-barred under the applicable New Jersey statute of limitations. The Court explained that he should have been aware of the accrual of his claims after the alleged violations took place, which was especially true of his claim for malicious prosecution. There, the Court did not accept the argument that accrual was when the Judgement of Acquittal was uploaded, but rather, it found that accrual began on the date of acquittal.

In dismissing plaintiff’s claims asserted pursuant to 42 U.S.C. § 1983, the Court determined since it no longer held original jurisdiction over any of the remaining claims, they must be dismissed without prejudice and decided by the state Courts of New Jersey. Thus, the motions were denied to the extent that they sought dismissal of the remaining State law claims with prejudice.

In reaching its decision, the Court affirmed the principle that allegations of violations of Federal civil rights, egregious as they may be, must be timely filed. Where these claims are deficient, a Federal court has no obligation to rule on any remaining State law claims, which could result in those claims being sent back to a State Court in what could end up being a challenging venue for one of the parties. In addition to potential challenges posed by a particular venue, this dismissal with prejudice and refiling of claims in State Court will cost more time, effort and money as a result of issues that could have been avoided. As shown in this case, an untimely filing can easily make a March 2016 incident the subject of continued litigation over eight years later in 2024 with a number of claims left to be resolved in a new court, before a new Judge and in a new venue.

The New N.Y. C.P.L.R. § 2106 Amendment: A Game Changer

Do you need an affidavit in support of a motion for summary judgment, but your client is delaying returning the document because he or she does not have a notary readily available? Are you on trial and need a business record produced pursuant to a subpoena to be accompanied by a certification in the form of an affidavit and the custodian of the records tells you that there is no notary in their office? Do you have clients in rural areas who find themselves in the burdensome process of finding a notary to sign an Affidavit of No Excess Insurance? Look to the new N.Y. C.P.L.R. § 2106 to save the day.

Prior to its new amendment enacted on January 1, 2024, N.Y. C.P.L.R. § 2106 allowed a witness to submit an affirmation, which is an unnotarized sworn statement, in limited situations where the witness was signing the statement overseas or was either a lawyer, physician, osteopath, or dentist. All other witnesses needed to submit sworn statements in the form of notarized affidavits.

A law signed by New York Governor Hochul in October 2023, amended the C.P.L.R. to allow affirmations from any person, bringing New York civil practice in line with Federal practice, where unnotarized declarations are used pursuant to 28 U.S.C. § 1746, as well as with numerous states that have already adapted this standard such as Pennsylvania and New Jersey.

The new N.Y. C.P.L.R. § 2106 allows any person to submit an affirmation in lieu of an affidavit, “with the same force and effect” that the affidavit would carry. By submitting an affirmation instead of an affidavit, the need for documents to be signed before a notary public is eliminated. The statute provides that the affirmation shall be in substantially the following form:

I affirm this ___ day of ______, ____, under the penalties of perjury under the laws of New York, which may include a fine or imprisonment, that the foregoing is true, and I understand that this document may be filed in an action or proceeding in a court of law.

(Signature)

As for affirmations signed outside New York State, it appears that affirmations that are in compliance with the § 2106 statute should be considered without the need to comply with the provisions in N.Y. C.P.L.R. § 2309(c) requiring a Certificate of Conformity. Nonetheless, practitioners should proceed with caution until there is appellate authority on this matter.

Another practical concern is how rapidly court clerks and court staff will become aware of the rule change. It is anticipated that there may be some risk that unnotarized affirmations from non-attorneys could be erroneously rejected. However, for the foreseeable future, this new statute is a great procedural tool to simplify the execution of certain documents without the need for a notary public.

Respondent Ordered to Provide Petitioner with Information About Identity of the Prospective Defendants Necessary to Frame a Complaint

In Matter of Morquecho v. HMH Architectural Metal & Glass, 2024 N.Y. Misc. LEXIS 423 (N.Y. Sup. Ct. 2024), the Supreme Court of New York, Kings County, addressed whether a respondent must be compelled to disclose necessary information against a party that the Petitioner wants to sue.

Eduardo Andrade Morquecho was an employee of HMH Architectural Metal & Glass. On August 21, 2023, he approached a delivery truck that arrived on the premises to assist with unloading the delivered material. As he began unloading, some of the material fell from the truck and injured him. Morquecho sought to bring a suit against the trucking company but lacked the necessary information including the name and address of the company. His employer HMH refused to share this information and assist in filing suit. In light of this refusal, Morquecho filed a petition seeking an order of Disclosure for Purposes of Bringing and Action Pursuant to CPLR Section 3102 (c).

CPLR Section 3102 (c) provides, “Before an action is commenced, disclosure to aid in bringing an action, to preserve information or to aid in arbitration, may be obtained, but only by court order.” Morquecho asserted that disclosure of the information concerning the accident was patently necessary to facilitate his suit against the delivery truck company. HHM did not oppose the petition.

In considering pre-action disclosure requests, the Court noted that the order mandating pre-action disclosure must be narrowly tailored. It relied on Mattocks v. White Motor Corp., 258 AD2d 628 (2d Dep’t. 1999), which provides that, “there should be full disclosure of all material and necessary in the prosecution or defense of an action.” The Court noted that in granting pre-action disclosure requests, the allegations of a prospective cause of action and the limited nature of the disclosure request must be considered. In addition, the Court relied on Leff v. Our Lady of Mercy Academy, 150 AD3d 1239, 1240 (2d Dep’t. 2017) where the Appellate Division granted pre-action disclosure in order “to allow a plaintiff to frame a complaint and to obtain the identity of the prospective defendants.”

In granting Morquecho’s Petition, the Court observed that HMH’s current refusal to disclose relevant information clearly hindered Morquecho’s ability to sue the company that contributed to his injuries. Therefore, the Court ordered disclosure of the incident report and the name and address of the delivery truck company.

Stacking Underinsured Motorists Benefits in Pennsylvania Clarified by Supreme Court and Under Review by State Legislature

In Pennsylvania, under 75 Pa. C.S. § 1738, an insured with underinsured motorist benefits (“UIM”) can “stack” or multiply these benefits based on the number of vehicles covered by the insurance policy. This statutory system, which protects insured drivers involved in motor vehicle accidents with other drivers who have no insurance coverage or too little insurance coverage, has undergone several changes in recent years. Most recently, in early 2023, the Pennsylvania Supreme Court in Erie Ins. Exch. v. Mione, 289 A.3d 524 (Pa. 2023) clarified the applicability of “household vehicle” exclusions of UIM benefits to the stacking statute.

In Mione, Albert Mione owned a motorcycle insured by Progressive which, due to Mr. Mione’s express waiver, was not insured by UIM coverage. Mr. Mione and his wife Lisa Mione jointly owned a car that was insured by Erie, and their daughter Angela, who lived in their house, also had a policy with Erie, qualifying Albert and Lisa as insureds under both Erie policies. However, the Erie policies both contained “household vehicle” exclusions, which precluded the application of the Erie policies’ UIM coverage for any injuries sustained by an insured when the insured was operating a vehicle not identified as an insured vehicle under either Erie policies. In 2018, Mr. Mione sustained injuries in an automobile accident while operating his motorcycle.

Albert and Lisa submitted claims for UIM benefits to Erie, claiming the UIM coverage in the two Erie policies should be stacked thereby providing them with the total UIM benefits available under their own Erie policy plus the total UIM benefits available under Angela’s policy. Erie denied coverage, stating the “household vehicle” exclusions of both policies precluded such coverage. Erie filed suit with a declaratory judgment action asking the court to uphold its denial of Albert and Lisa’s claim for stacked UIM coverage. Both the Trial Court and the Appellate Court agreed with Erie, holding that the “household vehicle” exclusions were enforceable and unavailable for UIM stacking.

The Supreme Court would ultimately unanimously affirm the Superior Court’s decision. The Court determined that because the insureds waived UIM coverage for the motorcycle policy, they were not entitled to stack the UIM benefits from the Erie policies that contained the “household vehicle” exclusions. Very simply, without UIM coverage on the vehicle involved in the accident, there is nothing on which to “stack” the household vehicle policies. The Supreme Court distinguished this case from a prior case, Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019), which had similar facts, the only difference being that the vehicle involved in the accident was covered by UIM policy. In Gallagher, the Supreme Court ruled that barring an insured from stacking UIM policies that contained “household vehicle” exclusions when the underlying policy provided UIM coverage would serve as a de facto waiver of stacking and thereby violate § 1738 which requires an express waiver for stacking.

The Pennsylvania State legislature is in the process of repealing the entire UIM stacking statutory system. On September 7, 2023, a Pennsylvania State Senator introduced SB 901, which intends to repeal and rewrite the law that provides UIM stacking benefits. Touting the problems brought by confusion in the current stacking system, Senator Chris Gebhard intends the new bill will introduce a more straightforward approach to the purchasing of UIM coverage that establishes a set framework for the purchase of UM/UIM to avoid the complications in analyzing, purchasing, or renewing auto insurance policies. While there are still many steps in the legislative process to go before this bill becomes law, the status of Pennsylvania’s system of stacking UM/UIM coverages will be the focus of insureds, insurers, and Courts for the foreseeable future.

Expedited Discovery and Service of Pre-Discovery Third-Party Subpoenas Permitted Following Allegations of Anonymous Cryptocurrency Theft.

The United States District Court for the District of New Jersey recently granted a Plaintiff’s Motion for expedited discovery and for leave to serve third-party subpoenas prior to a Federal Rule 26(f) conference where the information sought in those subpoenas was critical to properly amending and serving Plaintiff’s Complaint.

In Tyson v. Coinbase Global, Inc., 2024 U.S. Dist. LEXIS 2576 (D. N.J. Jan. 4, 2024), Plaintiff, Sydney Tyson, owned bitcoin in an account managed by Defendant, Coinbase Global, Inc. In the Summer of 2023, Plaintiff alleged that his Coinbase account was hacked leading to suspicious emails confirming transactions that he never completed. The strange activity continued until one day, Plaintiff received an email addressed to someone named “Paul” noting that his account had been locked. Plaintiff was never able to unlock or deactivate his account and alleges that he had $298,500 worth of bitcoin taken from his account. After learning about the alleged theft, Defendant refused to reverse the transaction or compensate Plaintiff for his alleged losses.

Less than four months after the alleged theft took place, Plaintiff filed a Complaint in the United States District Court for the District of New Jersey containing counts stating causes of action under the Computer Fraud and Abuse Act, New Jersey’s Computer-Related Offenses Act and common law claims of fraud, conversion, replevin and unjust enrichment. Shortly after filing his Complaint, Plaintiff hired an outside consultant to trace the allegedly stolen bitcoin and the consultant was able to identify a collection of digital wallets into which the stolen cryptocurrency was placed. However, by nature of the exchange taking place on a cryptocurrency platform, the identities of the human individuals who owned those digital wallets could not be determined. Therefore, the Complaint was unable to name the alleged hackers and bitcoin thieves because cryptocurrency transactions do not allow users to identify persons holding or transferring assets on any cryptocurrency exchange.

Given this time-sensitive issue of pleading fictitious parties, Plaintiff filed a motion seeking expedited discovery and for leave to file four third-party subpoenas on the cryptocurrency exchanges on which Plaintiff’s outside consultant was able to trace the allegedly stolen bitcoin. Plaintiff’s subpoenas would seek, among other documents and information, “All documents related to [the wallet address], including account opening and closing documents, the identity of the account holder, all proofs of identification (such as government-issued photo ID), date of birth, Social Security Number, telephone number, electronic mail address, residential/mailing address, and Know York Consumer (“KYC”) and Anti-Money Laundering (“AML”) information compiled by [the exchange]…”

In ruling on Plaintiff’s Motion, the Court cited Federal Rule of Civil Procedure 26 and explained that while the scope of federal discovery is broad, parties are generally barred from seeking discovery before the completion of a Rule 26(f) conference. The Court did note that it had the ability to grant a party leave to conduct discovery prior to this conference when the request was reasonable in light of the circumstances presented by the moving party. Citing the “good cause” standard, the Court noted that such “good cause” exists where the need for expedited discovery outweighs the prejudice to the responding party. In so deciding, the Court was bound to consider (1) the timing of the request in light of the formal start to discovery; (2) whether the request is narrowly tailored; (3) the purpose of the requested discovery; and (4) whether the discovery burdens Defendants and whether Defendants can respond to the request in an expedited manner.

Applying these factors, the Court agreed that “good cause” was present to permit expedited discovery. Specifically, the motion for leave to file the third-party subpoenas was filed just eight days after Plaintiff’s Complaint was filed and the information sought, namely the identities of digital wallet holders, was necessary in order to serve Plaintiff’s Complaint. Further, the Court found that the information was being sought by non-party cryptocurrency exchanges, which did not prejudice the named defendants in any way. The Court noted that these digital wallet holders may have held information vital to resolution of the case.

In granting Plaintiff’s Motion for expedited discovery and for leave to file third-party subpoenas, the Court did curtail the breadth of information sought by these subpoenas. Specifically, the Court determined that the legal name, street address, telephone number and email address of these wallet holders would be sufficient information to allow Plaintiff to identify the wallet holders and serve his Complaint upon them. This limitation was imposed in order to provide Plaintiff the relief he sought and to allow this case to proceed while also respecting the boundaries established by Rule 26(f) making all other information sought by Plaintiff discoverable after this mandated conference.

The United States District Court for the District of New Jersey’s ruling is indicative of how the Federal Rules of Civil Procedure are adapting to technological advances that impact the needs of attorneys in conducting modern discovery. As technology continues to evolve and the information underlying civil claims becomes more complex, Federal Courts have shown the willingness and ability to relax certain Federal Rules in the name finding equitable solutions to novel and challenging legal issues at the inceptions of civil cases.

Spoliation of Evidence Found for Failure to Preserve Video Surveillance in a Slip and Fall

In Heagy v. Burlington Stores, Inc., 2023 U.S. Dist. LEXIS 157151 (E.D. Pa. Sept. 6, 2023) the U.S. District Court for the Eastern District of Pennsylvania denied Defendant store’s Motion for Partial Summary Judgment, which sought punitive damages in a slip and fall case. The case arose from an August 1, 2019 incident in which the Plaintiff entered the Defendant’s store and slipped and fell on a mat. About ten minutes before the Plaintiff fell, an employee of the store also slipped and fell on the same mat. The parties agreed that the mat on which Plaintiff fell was soaking wet at the time of the fall.

Exactly two weeks after the fall occurred, Plaintiff’s counsel sent a letter to the Defendant store requesting the preservation of surveillance video of the incident. Plaintiff’s counsel requested the entire unedited video for a 24-hour period before and a 24-hour period after the incident. In the same request, counsel further advised that destruction of the video would be considered spoliation of evidence.

A week after receiving the letter from Plaintiff’s counsel, the investigating adjuster for the defendant store’s third-party administrator advised Plaintiff’s counsel that 48 hours of footage could not be provided, but assured counsel that the footage would be preserved. Two days prior to this correspondence, the investigating adjuster directed the store to burn surveillance footage capturing 30 minutes before and after the subject slip and fall. This left a collection of footage showing Plaintiff for just 3 minutes before and just 17 minutes after the fall.

The Court ultimately decided that the defendant store was liable for spoliation of evidence through its mishandling of the surveillance footage. In reaching its decision, the Court noted that slip and fall incidents follow predictable patterns, which leave defendants expectant of litigation soon after an incident occurs. Here, Plaintiffs’ counsel unequivocally requested for preservation of the entire unedited video, provided a requested timeline, and advised that failure to preserve would be considered spoliation. According to the Court, the letter should have immediately prompted the store to preserve any potentially relevant evidence within the 48-hour time period.

The surveillance footage evidence could have proved crucial to resolution of several issues like how, when and by whom the hazardous condition was created. Therefore, the Court concluded that the defendant store was liable for spoliating evidence because there were no facts to support an inference that its failure to preserve the requested footage was result of an inadvertence, routine practice, or accident.

The Court also denied Defendant store’s Motion for Partial Summary Judgment. All arguments regarding sanctions for spoliation were considered premature because no trial date had been set and the parties had not submitted proposed jury instructions. The Court granted the parties leave to file appropriate motions for sanctions near the time of trial.

It is clear from this opinion that Courts will consider the evidentiary value of video surveillance footage in slip and fall cases to determine the issue of spoliation. This decision also makes clear and reaffirms that defendants using surveillance systems have a duty to preserve and produce footage in the course of expected litigation.

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