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Defendant in Civil Case May Be Questioned at Deposition As to Statements Made During Criminal Guilty Plea

Defendant Alex Brown-Eskengren, with two accomplices, attacked minor plaintiff R.J. after a party.  Defendant was charged criminally for this attack and eventually pled guilty to third-degree aggravated assault on the condition that he would be admitted to pre-trial intervention (PTI).  As part of the plea, he gave a factual allocution regarding the attack, testifying that he struck plaintiff.  The issue in R.J. v. Brown-Eskengren, 2025 N.J. Super. Unpub. LEXIS 1620 (App. Div. Aug. 27, 2025) was whether the defendant could be compelled to answer questions in his civil suit deposition regarding his sworn statement and testimony given in the criminal case.

Plaintiff R.J. sued defendant for injuries he suffered during the attack.  After plaintiff requested defendant’s deposition, the trial court ordered that it be adjourned until the resolution of defendant’s criminal charges.  After his criminal plea, he was deposed.  During the deposition, plaintiff’s counsel tried to impeach defendant using his guilty plea allocution.  (A criminal allocution consists of statements and testimony made by defendant with respect to entering a plea for a criminal charge.)

Defendant’s counsel objected on the grounds that the plea allocution was inadmissible.  However, the trial court ordered that defendant could be cross-examined regarding his plea allocution.  Defense counsel then unilaterally cancelled the deposition.

Thereafter, plaintiff’s counsel filed an application to compel the defendant’s deposition.  The trial court judge granted the application and ordered that defendant’s deposition be taken within forty-five days.  Additionally, the trial court entered an order compelling defendant to answer questions regarding his sworn statement and testimony in the criminal case.  The court found that the question of admissibility could be addressed closer to trial and that the rules covering discovery in a civil case did not prevent plaintiff from cross-examining defendant regarding his guilty plea allocution at the deposition. 

Defendant appealed these orders, contending that the questions regarding his guilty plea allocution should be barred.

Initially, the Appellate Division noted that in evaluating a trial court’s evidentiary rulings, an appellate court would “generally defer to a trial court’s disposition of discovery matters unless the court has abused its discretion or its determination is based on a mistake and understanding of the applicable law.”  Further, the court noted that New Jersey’s discovery rules are to be construed liberally in favor of broad pre-trial discovery.

The Appellate Division cited to R. 4:10-2(a) which stated that “parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party. . .”  The Court did note that the parties’ discovery rights are not unlimited and that protective orders can be entered which would protect a party or person “from annoyance, embarrassment, oppression or undue burden or expense.”

Here, defendant did not contend that his guilty plea allocution was privileged or that it would cause annoyance, embarrassment, oppression or undue burden or expense which would require a protective order.  Defendant simply argued that the allocution was inadmissible at trial.  The Court pointed out that the test for discoverability under the civil court rules was limited to whether the evidence was relevant, not whether it was admissible.

The Appellate Division concluded that “the trial court did not abuse its discretion in compelling defendant’s attendance at deposition and permitting cross-examination of him regarding his guilty plea allocution.”  The Court agreed that the trial court correctly found that the ultimate question of admissibility was to be determined after the deposition.  Therefore, the Appellate Division affirmed the trial court’s ruling that defendant must sit for a deposition and that he must answer questions regarding his sworn statement and testimony in his criminal case.

Landlord Found Not To Be Responsible For Fatal Injury of Tenant’s Employee

The decedent Sean King was employed by High Grade Beverage (“HGB”) when he received a fatal electric shock while attempting to replace an emergency light fixture. OSHA determined that he was working with live wires when he was electrocuted, as the circuit breaker feeding the emergency light fixture had not been turned off. The issue in The Estate of Sean King v. High Grade Beverage, Inc., 2024 N.J. Super. Unpub. LEXIS 2321 (App. Div. Oct. 4, 2024) was whether the landlord, HGB Realty 2, LLC could be held liable for the decedent’s accident.

The property was originally leased in 2011 to HGB.  It consisted of a one-story, masonry, cold storage industrial complex comprising of about 72,600 square feet of warehouse, office and garage space.  HGB acknowledged that it had inspected the property and was fully familiar with its condition at that time.  According to the lease, the basic rent payable by the tenant was intended to be a “triple net” and all other charges and expenses imposed upon the leased premises would be paid by the tenant.  In addition, according to the lease, the tenant was responsible to keep the leased premises, including but not limited to the electrical, in good condition and repair.

The original lease was apparently renewed in 2016, at which point the name of the landlord was changed to HGB Realty 2, LLC.  The 2016 lease had the same provision for the tenant to keep the leased premises in good condition and repair.  According to the Chief Financial Officer of HGB Realty 2, there were no circumstances in which the tenant was required to obtain approval from the landlord to perform maintenance on the property.

Perry Morris was HGB’s maintenance chief until July 2017.  He was not a licensed electrician but did take a course in household wiring.  While employed by HGB, Morris would perform maintenance such as changing ballasts and repairing and replacing light fixtures.  Prior to his retirement, he trained decedent for about two weeks.  He testified that when the building was first built, there were three electrical contractors who did not know what they were doing, resulting in circuit breaker panel labels that were not done right the first time.  He and another employee attempted to correct the labels to the best of their ability and for the most part were successful.

Plaintiff submitted an expert report of an engineer, Les Winter, P.E., who opined that the decedent’s electrocution was caused by his lack of training as an electrician and the panel board directory being non-compliant and unreliable.  He opined that it was not legibly marked and that decedent could not through “trial and error testing” turn off and on random circuit breakers to determine whether the fixture was de-energized.

At the conclusion of discovery, the landlord, HGB Realty 2, filed for a summary judgment.  The trial court granted the summary judgment, dismissing the complaint.  The trial court found that HGB’s employees knew about the electrical panel at issue, that the emergency light breaker was labeled and that Morris, who trained the decedent, did show him which switch controlled which circuit breaker.

Further, the court found that HGB Realty 2 leased exclusive control of the property to HGB and the tenant HGB knew of the condition or had reason to know of the condition prior to the decedent’s accident.  It had the opportunity and indeed attempted to remedy the condition prior to the accident at issue.  Thus, the trial court ruled that the landlord, HGB Realty 2, could not be held liable for the alleged defective condition.  This appeal ensued.

The Appellate Division agreed with the trial court’s decision.  It found that the tenant executed a triple net lease in which the commercial tenant was responsible for maintaining the premises and for paying all utilities, taxes and other charges associated with the property.  Additionally, the Appellate Division noted that HGB had exclusive use of the property and that the obligation to maintain and repair the property was delegated under the lease to HGB.  Further, HGB Realty 2 did not maintain an office at the property, did not actively participate, or oversee HGB’s maintenance consistent with the terms of the lease.  Thus, the Appellate Division agreed that, under New Jersey law, the landlord did not have responsibility for the personal injury suffered by its commercial tenant’s employee. 

Appellate Division Upholds Dismissal of Complaint With Prejudice Due to Plaintiff’s Failure to Provide Complete Discovery

This appeal concerned the trial court’s dismissal of the plaintiff’s complaint with prejudice for failure to provide discovery.  The matter involved a complaint against the plaintiff’s commercial condominium association’s board members and property manager for consumer fraud, common law fraud, unjust enrichment, and negligent misrepresentation.  After filing an answer, the defendants served plaintiff with a notice to produce documents and interrogatories.  The issue in Arsenis v. Frank, 2024 N.J. Super. Unpub. LEXIS 2164 (App. Div. Sept. 17, 2024) was whether the trial court judge abused her discretion by dismissing plaintiff’s lawsuit due to her failure to provide discovery.

In response to defendants’ request for discovery, plaintiff did provide certain information in response to the discovery demands, which defendants deemed inadequate.  Defendants’ counsel sent plaintiff two deficiency letters, detailing their objections to various interrogatories and document requests.  The defendants demanded fully responsive answers to these discovery requests within two weeks to avoid motion practice.

Plaintiff, however, failed to respond to the deficiency letters and, thereafter, defendants filed a motion to compel more specific responses to their demands.  The trial court judge granted that motion, issuing an order to require plaintiff to provide more specific responses within seven days.  In that order, the court elaborated as to how plaintiff should address each of the requested interrogatories.

Plaintiff failed to comply with this order.  Thus, defendants filed another motion to dismiss her complaint, without prejudice, which motion was granted.  Sometime thereafter, plaintiff filed a motion to reinstate her complaint, claiming that she had complied with the prior orders.  The judge denied plaintiff’s motion, finding that plaintiff failed to comply with both prior orders “and otherwise provide good cause to vacate dismissal of the case and restoration to the active trial calendar.” 

Thereafter, defendants now filed a motion to dismiss plaintiff’s complaint with prejudice, which motion the trial court judge again granted. The judge noted that “not withstanding the prior court’s explicit direction to plaintiff,” she failed to comply with the court’s prior orders.  Thus, the trial court judge dismissed plaintiff’s complaint with prejudice.

Upon appeal, the Appellate Division considered whether the trial court had abused its discretion in entering its orders to dismiss the complaint.  The Court noted that dismissal of a complaint under court Rule 4:23-5 follows a two-step process.  First, the non-delinquent party may move for dismissal without prejudice for noncompliance with discovery obligations.  If the delinquent party does provide full and responsive discovery, it may then move to vacate the dismissal without prejudice at any time before the entry of an order of dismissal with prejudice. 

But, if the delinquent party fails to cure its discovery delinquency, “the party entitled to the discovery may, after the expiration of 60 days from the date of the order, move on notice for an order of dismissal . . . with prejudice.”  According to Rule 4:23-5(a)(2), the court is to grant the motion to dismiss with prejudice unless a motion to vacate the previously entered order of dismissal without prejudice has been filed by the delinquent party and either the demanded and fully responsive discovery has been provided or exceptional circumstances are demonstrated.

The Appellate Division further noted that this rule advances two objectives, which are to compel discovery which would promote resolution of disputes on the merits and “to afford the aggrieved party the right to seek final resolution through dismissal.”  It noted that the dismissal of a claim for failure to comply with discovery is the “last and least favorable option.”

In this matter, however, plaintiff failed to move to vacate the without prejudice dismissal order, she had not demonstrated that she provided fully responsive discovery or presented any circumstances that qualified as exceptional circumstances to avoid the dismissal of her action with prejudice.   

The Court further noted that it was not persuaded by the plaintiff’s argument that the motion judge failed “to carefully scrutinize her discovery responses before dismissing her complaint with prejudice.”  Accordingly, the Appellate Division upheld the ultimate sanction that was imposed upon plaintiff, to dismiss her complaint with prejudice. 

What is “Discovery” in a Civil Lawsuit?

Lawyers understand the term “discovery” in the context of a civil lawsuit but laypeople involved in a lawsuit likely do not understand what it means to “conduct discovery.” In general terms, it means exactly as it is defined in plain English, i.e. to find out something. In the context of a lawsuit, discovery is used to find out about the basis of the plaintiff’s claims, as well as the basis of the defendant’s defenses.

Our court rules permit a wide latitude in discovery. A party may “discover” any information or documentation that is either relevant to the subject matter of the lawsuit, either the claims or the defenses, or which is “reasonably calculated to lead to the discovery of admissible evidence.” This information or documentation may not be admissible at trial based upon an evidentiary rule but it may nevertheless be required to be produced in discovery if requested.

Discovery can be made through various formats. Typically, lawsuits start off by requesting the other party to answer written questions called interrogatories. These questions will include topics asking about either the claims or defenses, such as asking about the party’s version of events, persons with knowledge of relevant facts, the plaintiff’s injuries and/or damages, and the identity of experts and their reports.

Additionally, written discovery requests will likely ask for relevant documents that would support the party’s claim or defenses.

After written discovery is exchanged, the parties usually move onto depositions. In depositions, witnesses are asked to give oral sworn testimony about the subject matter of the lawsuit. Some of the same topics asked in written questions are often asked in depositions but in much more detail. It also gives the other party the opportunity to assess the individual’s demeanor as a witness.

Discovery may also include an inspection if the claim involves an incident resulting from the condition of a premises or a piece of equipment or machinery. Experts, if retained, may need to conduct an inspection to prepare an expert report.

If the matter involves a personal injury, medical records need to be obtained during the discovery process to be able to assess the medical condition and extent of injuries suffered by the injured plaintiff. These records are evaluated by defense counsel and then typically utilized to set up a defense medical examination. The plaintiff has treating or examining doctors and the defense will need its own doctor to examine the plaintiff and provide an opinion on what injuries the plaintiff suffered in the incident and if the plaintiff suffered a permanent injury.

Depending on how the accident occurred, after the written discovery and depositions are completed, then the parties decide if other experts need to be retained. In addition to medical experts, other experts may need to be retained who can render opinions on the liability aspect of the case, such as who is responsible for the incident occurring (or not responsible). In addition, there could be other experts as to damages that need to be retained, such as economic or vocational experts.

And, the last discovery typically conducted would be expert depositions. Due to the cost of deposing experts, expert depositions are not routinely conducted.

Once all of this discovery is completed, the lawsuit moves onto its final stage. Settlement is often considered at the conclusion of discovery. If the case does not settle, personal injury lawsuits are subject to mandatory nonbinding arbitration in New Jersey. Additionally, mediation is used frequently as a proceeding to facilitate settlement.

If the case does not settle, the parties can consider filing a motion for summary judgment to try to obtain a dismissal before trial. If not, or if the motion is not granted, at that point, the case would be resolved through a trial.

Appellate Division Reverses Trial Court’s Dismissal of Lawsuit

This lawsuit involved a letter of protection dispute arising from $183,107.30 of medical bills allegedly owed for services rendered by plaintiff North Jersey Hip & Knee Center to defendant Janet Quevedo after an automobile accident.  Plaintiff had treated Quevedo for her injuries from the accident based upon a letter of protection from Amy Peterson, Esq., Quevedo’s personal injury attorney.  Due to plaintiff’s failure to comply with a court order compelling discovery, the trial court dismissed the complaint with prejudice.  The issue in North Jersey Hip & Knee Center v. Quevedo, 2024 N.J. Super. Unpub. LEXIS 171 (App. Div. Feb. 5, 2024) was whether the trial court made a mistake in entering the ultimate sanction of dismissal versus other less drastic sanctions available due to the plaintiff’s failure to comply with the court order. 

Because defendant Quevedo did not have personal auto insurance, her attorney represented to Quevedo’s physician, Dr. Aiman Rifai (at North Jersey Hip & Knee Center), that she would protect plaintiff’s customary and reasonable fees to the extent available from a third-party recovery when the case was concluded. In other words, Quevedo’s attorney was essentially “guaranteeing” that the physician would be paid out of any third-party settlement if he agreed to render medical care to defendant.

Presumably, there was a third-party settlement but the plaintiff medical practice was not paid for its services.  Plaintiff sued defendant seeking damages for the payment of its medical bill, attorney’s fees, interest, and costs.  An answer was filed, including a third-party complaint against Dr. Rifai, which plaintiff’s counsel answered.

After the answer was filed, defendant served plaintiff with discovery requests including a request for Answers to Interrogatories, and Notice to Produce Documents and Request for Admissions.  After plaintiff failed to provide the requested discovery, defendant sent via e-mail “a good faith deficiency letter.”  Defendant also served plaintiff with a deposition notice for Dr. Rifai.  One day before the noticed deposition, plaintiff informed defendant that Dr. Rifai was unavailable.

Thereafter, defendant filed a motion to dismiss the complaint without prejudice pursuant to the court rule which permitted a dismissal based upon a failure to answer discovery.  The court entered an order granting the motion to dismiss the complaint without prejudice for failure to provide discovery but also entered an order to compel Dr. Rifai to appear for a deposition within thirty days or else “face sanctions as permitted by the rules of the court up to and including dismissal with prejudice.”

Defendant then served plaintiff with another notice of deposition prior to the end of the 30 day period.  Again, the day before the deposition, plaintiff informed defendant that Dr. Rifai was unavailable.  Defendant filed another motion to now dismiss the complaint with prejudice for failure to appear for a deposition and failure to comply with the court’s order.  Before the motion was heard, plaintiff did serve answers to the written discovery requests.

The trial court judge, however, granted the motion to dismiss the complaint with prejudice.  The judge found that the plaintiff had elected to willfully ignore the court’s directive.  Motions to vacate the dismissal and reinstate the complaint and also for reconsideration of that order were both denied.

This appeal ensued in which the plaintiff argued that the trial court judge “abused her discretion by failing to consider alternative sanctions and imposing the ultimate sanction of a dismissal with prejudice.”  The Appellate Division noted that the review of a dismissal of complaint with prejudice for discovery misconduct is based upon whether the trial court abused its discretion in entering the order.  A court must “carefully weigh what sanction is the appropriate one, choosing the approach that imposes a sanction consistent with fundamental fairness to both parties.”  Further, the Appellate Division stated that in determining the selection of a sanction, the court must consider the varying levels of culpability of delinquent parties.   Further, it held that the ultimate sanction of dismissal was to be used only sparingly.

While the Appellate Division commented that it did not condone “the dilatory pace at which plaintiff prosecuted its action and/or its failure to respond to discovery demands,” it nevertheless concurred with plaintiff’s argument that the judge erroneously dismissed the complaint with prejudice when lesser sanctions were available.  The Court noted that the trial court judge failed to address at any point that the defendant had served an untimely deposition notice on defendant.

Under the court rules, deposition notices must be served ten days in advance and the deposition notice for Dr. Rifai was only served eight days in advance.  There was no indication in the record that defendant’s attorney made any “good faith attempt” to confer with plaintiff’s attorney to resolve scheduling Dr. Rifai’s deposition.  The trial court judge also failed to consider that plaintiff had served answers to interrogatories and responses to the notice to produce documents before the return date of the motion.  Further, the trial court judge apparently gave little consideration to counsel’s representation that they did not receive the two e-mail discovery requests. 

Hence, the Appellate Division found that these considerations, “in addition to the untimely deposition notice, weighed in favor of a lesser sanction.”  Accordingly, the Court found that the drastic sanction of dismissal was unwarranted.  There existed lesser alternative sanctions which could address plaintiff’s failure to complete the deposition.  The Appellate Division did not express any view as to what lesser sanction should be imposed.  However, the Court reversed the orders which denied plaintiff’s motion to reinstate the complaint and remanded the case back to the trial court.

Day in the Life Video Excluded at Trial

Plaintiff Tameko Sawyer was in a motor vehicle accident with defendant Randy Lucas in which she claimed to have suffered an injury to her neck, lower back, and shoulder.  Defendant Lucas had been driving a tractor-trailer owned by defendant Hicks Paving, LLC and Hicks Septic & Portable Toilets, LLC on Route 78, when he moved his truck into plaintiff’s lane, striking her car and causing it to slam into the guardrail.  At issue in the case of Sawyer v. Lucas, 2024 N.J. Super. Unpub. LEXIS 53 (App. Div. Jan. 11, 2024) was whether the plaintiff’s Day in the Life video and her recently supplied supplemental medical records should have been barred by the trial court or whether this evidence should have been admitted into evidence and shown to the jury.

A Day in the Life video is a powerful tool of evidence utilized by plaintiffs to show graphically over the course of the day an injured party’s disability and pain and suffering caused by an accident.  This graphic evidence can be more compelling than mere oral testimony describing a person’s medical condition and limitations.

In Sawyer, there was an issue as to the extent of plaintiff’s injuries.  Plaintiff claimed an injury to her neck, lower back, and shoulder.  At the hospital, she was evaluated for head, neck, and back injuries.  Subsequently, she was found to have suffered disc herniations and bulges in her neck and underwent five separate surgeries.  At trial, she did testify about conservative pain management for an older, unrelated back injury.  During the trial, there was disputed testimony about the plaintiff’s back injury and whether it was either caused or exacerbated by the accident.

Prior to trial, the plaintiff had prepared a Day in the Life video.  This video was five minutes long and was recorded about one and a half years after the accident.  However, the video was made just eight days after plaintiff had back surgery, at which time she still required significant assistance with activities of daily living.  Plaintiff contended that the video was relevant “to support her claim for future medical costs and the pain, suffering and loss of enjoyment she endured.”

During trial, the defendants filed a motion to exclude the plaintiff’s Day in the Life video and some recently supplied medical records.  The trial court granted the motions and barred both the video and the recently supplied records from being admissible at trial.

The jury found in favor of the plaintiff. However, Plaintiff was dissatisfied with the amount of the verdict. She moved for a new trial on damages or additur. (Additur is a procedure by which a court may increase the amount of damages awarded by the jury.)  The trial court denied the additur motion, finding that the jury’s verdict did not shock the conscience (which is the standard for increasing or reducing a jury award on damages). 

She then appealed the trial court’s evidentiary rulings and the denial of her motion for a new trial on damages or additur. In reviewing these trial court decisions, the Appellate Division applied the “abuse of discretion” standard in determining if the lower court’s decisions should be upheld.

Upon appeal, the plaintiff argued that the Day in the Life video should have been admitted because it “was necessary to demonstrate her difficulty in day-to-day activities and the inability to present it deprived her the right to show the jury evidence of pain and suffering.” However, the Appellate Division found that the trial court did not abuse its discretion in excluding the videotape. 

The Appellate Division pointed out that the Sawyer video was taken during her recuperation from her back surgery, instead of day-to-day life post-accident.  Hence, it agreed with the trial court that the focus of the video was her recovery from surgery as opposed to her day-to-day life and that it was not an accurate representation of the continued impact of her injuries.  The Court noted that Plaintiff had testified during her trial regarding the extent of her injuries as a result of the accident and the impact of those injuries upon her.

The Appellate Division also upheld the trial court’s ruling in excluding the recently supplied medical records.  The trial court found that there had been plenty of opportunity to produce the records prior to two weeks before trial.  The appeals court found no abuse of discretion in the trial court’s motion to bar these records at trial.

Further, the Appellate Division upheld the trial court’s denial of the motion for a new trial or additur.  The plaintiff had argued that the verdict was against the weight of the evidence such that it constituted “a clear miscarriage of justice.”  Plaintiff argued that based upon her injuries and prolonged treatment, the verdict of $400,000 was “shockingly low.” Plaintiff pointed out that, considering the total medical expenses incurred, more than $600,000, the jury award was disproportionate.

Again, the Appellate Division upheld the trial court’s rulings on the motion for additur and new trial.  It found that there was no abuse of discretion in the denial of either motion.  The Court noted the trial court’s finding that there was contested testimony and that “given the contested testimony, the jury believes some of what each party said.”  The trial court was satisfied that the jury appropriately considered the information and competing arguments and arrived at a “reasoned judgment” based upon the evidence.  Further, the trial court did not find that the damages were so disproportionate “’such to shock the conscience or to be manifestly ‘[u]njust.’” 

Again, the Appellate Division found no abuse of discretion in the trial court’s ruling to deny the motion for additur and a new trial.  Thus, the appeals court affirmed the trial court’s rulings, leaving the jury verdict in place.

Supreme Court Rules That Third-Party Observer or Recording May be Permitted at DME, Upon Plaintiff’s Request, Unless Defendant Moves for a Protective Order

I had previously reported on the Appellate Division decision of DiFiore v. Pezic, 472 N.J. Super. 100 (App. Div. 2022) which concerned the circumstances upon which a DME (defense medical exam) may be recorded or a third-party observer permitted.  This case went up on certification to the New Jersey Supreme Court, which affirmed certain portions of the Appellate Division decision, but reversed the Appellate Division’s order placing the burden upon the plaintiff to show special reasons why third-party observation or recording should be permitted in each case.  In DiFiore v. Pezic, 2023 N.J. LEXIS 647 (2023) the Supreme Court set forth its ruling concerning the recording or third-party observation of defense IME’s.

By way of background, the DiFiore case dealt with three consolidated cases, two of which were defense neuropsychological exams and one was an orthopedic exam.  In each one of these cases, the plaintiffs alleged either cognitive limitations, psychological impairments or language barriers and sought to record the examinations or to be accompanied by a third-party observer. 

The Supreme Court affirmed the Appellate Division’s core holding that the trial court should determine on a case-by-case basis what conditions, if any to place on a DME, which would include who may attend and whether it may be recorded.  The Court affirmed that video recording, in addition to audio recording, should be included in the range of options.  Further, the Court held that the parties should enter into a protective order when a defense expert is concerned about the disclosure for proprietary information.  When third-party observation is permitted, the trial court shall impose reasonable condition to prevent any disruption or interference with the exam. 

However, the Supreme Court disagreed with the Appellate Division, which had placed the burden on the plaintiff to show special reasons why third-party observation or recording should be permitted in each case.  Instead, the Supreme Court ruled that once the defendant issues a notice to the plaintiff of a DME, the plaintiff should inform the defendant if they seek to bring a neutral observer or record the exam.  If the defendant objects, the two sides should meet and confer to attempt to reach agreement.  If agreement is not reached, the defendant may move for a protective order, seeking to prevent the exam from being recorded or to prevent a neutral third-party observer from attending. 

The Court noted that “[f]actors including a plaintiff’s cognitive limitations, psychological impairments, language barriers, age, and inexperience with the legal system may weigh in favor of allowing unobtrusive recording in the presence of a neutral third-party observer.  Although a defense neuropsychologist cannot dictate the terms under which DMEs are held, they can raise concerns that may weigh against recording or third-party observation in particular instances.”

Thus, the major difference between the Supreme Court and the Appellate Division decisions was whether the burden should be on the plaintiff to show that a recording or observation was necessary versus upon the defendant.  That is where the Supreme Court ruling departed from the Appellate Division decision.  The Supreme Court ruled as follows: “[w]e conclude that placing the burden on defendants to show why a neutral third-party observer or an unobtrusive recording should not be permitted in a particular case best comports with the realities of DMEs and the text of Rules 4:19 and 4:10-3.  It also ensures fairness in our civil justice system.” 

Hence, the Court’s ruling that the burden would be on defense counsel to move for a protective order to bar the observation or recording.  Note, however, that the Court ruled that the parties must first meet and confer in an effort to reach agreement.   Barring an agreement, the defendant then must move for a protective order to bar the observation or recording.  The trial court must decide the issue in a case-by-case basis, balancing “the need for an accurate record and the imbalance of power between a medical professional and a patient against any valid concerns regarding the expert’s ability to conduct an accurate assessment of the patient’s condition with a recording or a neutral third-party observer.” 

Very significantly, the Court applied its holding only to neutral third-party observers, not attorneys.  The Court made it clear that its holding was limited to third-party observers, not third parties who seek to interfere with or disrupt the exam.

Last, the Supreme Court noted that its decision only involved defense medical examinations.  It did not decide whether defendants should be permitted recording or third-party observation and examinations conducted by plaintiff’s treating physicians or non-treating physicians.  The Supreme Court referred the matter to the Civil Practice Committee “whether there should be any provision to allow defendants to record or observe examinations by non-treating doctors arranged by plaintiffs’ counsel solely for the purposes of litigation.”

The (Often Obscured) Impact of “Litigation Funding”

While most industry professionals have heard of “litigation funding,” the impact of the same may often not be fully appreciated.  This partially is attributable to the fact that many (primarily) Plaintiff’s counsel are often reluctant to even confirm that an individual claim does involve “Third Party Litigation Funding (or Financing),” (“TPLF”), or the related “Third Party Medical Funding” (“TPMF”).

In one case handled by the author, Plaintiff’s counsel did voluntarily disclose the existence of third party involvement in a claim as we were negotiating settlement of a fairly significant matter.

While counsel described this funding as “My (counsel’s) problem and not yours (the author and his client),” this was in fact not the case.  Rather, this situation complicated and delayed the ultimate settlement of that claim- and the amount of funding provided to that Plaintiff was relatively minimal.  This is often not the case in such scenarios.

Most commonly, in a TPLF scenario, in exchange for advancing money to a party (again, primarily- though not exclusively- a Plaintiff), an “investor” receives a portion of the proceeds from the litigation.

Conversely, TPMF involves Plaintiffs with bodily injury claims receiving medical services from providers within the “investor’s” “network” in exchange for transferring the right to recover the related medical bills to the “investor” via a medical “lien.”

Opponents of TPLF often argue that the same violates the Model Rules of Professional Conduct.  For example, Rule 5.4(a) prohibits lawyers from sharing fees with non-lawyers, and Rule 1.7(a) prohibits any representation where there are conflicts of interest, both of which are arguably present in the typical TPLF situation.

Conversely, however, proponents of TPLF dismiss these arguments, asserting that so long as the client contracts directly with the “investor,” then the client can waive any potential conflict of interest.

Given the scenarios as described above, the “investor” is interested in maximizing claim value and by extension the value of their stake, and is often therefore even more inclined to have settlement offers rejected or refuse to negotiate any reduction from any purported full “lien” amount, which in turn can make potential settlement both more difficult and expensive.

Court decisions regarding these issues tend to vary throughout the country.  However, in New Jersey we are fortunate to have some guidance to consider.

The District of New Jersey addressed the issue in the matter of In re: Valsartan N-Nitrosodimethylamine (NDMA) Contamination Prods. Liab. Litig., 405 F. Supp. 3d. 612 (D.N.J. Sept. 18, 2019).  In this multidistrict litigation, there was an allegation that contaminated valsartan (a generic prescription medication used to treat high blood pressure) contained carcinogens that caused injuries.  The Defendants, some 60 entities around the world, including manufacturers, distributors and the like of the same, sought discovery of the Plaintiffs’ litigation funding. Plaintiffs objected.

The Court noted that “Generally, Defendants want to discover whether Plaintiffs are backed by litigation funders, the details of the financing, and communications regarding the financing.” Id. at 612.

Specifically, Defendants sought the following:

“All documents and communications related to funding or financing, if any, you or your counsel have obtained to pursue this litigation.” Id. at 614.

Defendants’ letter brief identified precisely what they sought:

“Defendants seek to obtain information about Plaintiffs’ agreements and communications with any third-party funders of the litigation, including Plaintiffs’ documents and communications relating to or concerning any litigation finance obtained in connection with this litigation, documents and communications regarding conferences, meetings or conventions attended with the purposes of seeking litigation finance, and documents and communications relating to agreements to finance this litigation.” Id.

Plaintiffs asserted that what they characterized as “private personal financial information” was irrelevant and, as such, the Defendants had no need for or entitlement to the same.

In response, “Defendants argue the requested discovery is relevant to identifying, ‘the real party in interest as to some or all of the claims alleged in this action,’ and whether Plaintiffs have standing to sue. Defendants also argue Plaintiffs’ funding information is relevant to determining: (1) Plaintiffs’ credibility and bias, (2) the scope of proportional discovery, (3) the scope of potential sanctions, and (4) the “medical necessity and the reasonableness of Plaintiff’s treatments.” Id.

The Court ultimately concluded that:

“After considering the present record and the relevant case law, the Court rules in Plaintiffs’ favor. The Court finds that litigation funding is irrelevant to the claims and defenses in the case and, therefore, plaintiffs’ litigation funding is not discoverable.”  Id. at 615.

The Court did allow that discovery could be allowed if “good cause” was shown that “something untoward occurred,’ such as a non-party making litigation decisions.

However, subsequently, the U.S. District Court for the District of New Jersey adopted a local Rule, Civ. Rule 7.1.1, effective June 21, 2021, requiring disclosure by litigants regarding the use of litigation funding.

Though some Federal Courts have implemented rules mandating some disclosure of the existence and identity of litigation funders, New Jersey’s rule requires all parties to further disclose:

“1. The identity of the funder(s), including the name, address, and if a legal entity, its place of formation; 2. Whether the funder’s approval is necessary for litigation decisions or settlement decisions in the action and if the answer is in the affirmative, the nature of the terms and conditions relating to that approval; and 3. A brief description of the nature of the financial interest.”  Civ. Rule 7.1.1. (Emphasis added.)

Some potential “signs” that TPLF or TPMF may be involved in a particular claim include:

  1. Significant and unusually high medical billing;
  2. Treatment for unrelated or “new” alleged injuries;
  3. Particularly aggressive and/or accelerated medical treatment;
  4. Medical treatment possibly provided outside the “specialty” of the physician; and
  5. Medical treatment provided by physicians not located in the geographic area of the Plaintiff/claim.

If and when discovery is sought, it should include requests for agreements between the “investor” or Third Party funder and the Plaintiff, but also the “investor” or Third Party funder and any medical provider(s), and by extension any supporting correspondence and the like.

If the “Third Party” “investor” is not a party to the litigation, subpoenas may be required.

How aggressively opposing counsel may respond to requests on these issues may in itself suggest whether Third Party Funding is implicated in a given matter.

In short, it does seem likely that at least some aspect of “litigation funding” will be a significant issue for consideration in the industry going forward.  Therefore, if the circumstances of a particular claim suggest that some form of “Third Party Funding” may be involved, the issue should be thoroughly investigated.  Relevant discovery obtained could be very beneficial in calling the credibility of a claimant into question, and in any event would be instructive as to the motivating factors playing upon Plaintiff’s counsel in the pursuit of the same.

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