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SEPTA Race Discrimination Settlement Requires SEPTA to Implement New Anti-Racism Policies & Pay Compensatory Damages

On August 1, 2022, the United States Department of Justice announced a settlement with Southeastern Pennsylvania Transportation Authority (SEPTA), a regional public transit company based in Philadelphia, Pennsylvania that will require SEPTA to overhaul its anti-racism policies and pay for damages caused as a result of employment inequities.

In an action captioned United States of America v. Southeastern Pennsylvania Transportation Authority, No. 2:22-CV-03004-KSM, the United States filed a claim under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., alleging that several SEPTA employees were subject to a hostile work environment and the basis of race and religion. The complaint is based on charges of discrimination filed with the Equal Employment Opportunity Commission’s (EEOC)’s Philadelphia District Office on October 21, 2019, which were investigated. The investigated discrimination was directed at three (3) officers from the SEPTA Police Department. After investigation, the EEOC found reasonable cause that SEPTA violated Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race, color, national origin, sex and religion, and prohibits retaliation against employees for opposing employment practices that are discriminatory under Title VII.

The EEOC was not able to resolve the matter between the parties, so the EEOC referred the charges to the Justice Department. The United States thereafter filed a complaint regarding these charges against SEPTA in the Eastern District of Pennsylvania. Specifically, the officers alleged that they were subjected to hostile work environment by their supervisor and subsequently experienced retaliation when they opposed this harassment. The hostile work environment claims originated from the officers’ supervisor repeatedly harassing them with racial slurs and derogatory comments about Black people and Muslims, threatening the officers and physically assaulting them.  The complaint further alleges that the Police Chief retaliated against the officers for opposing the harassment. The Police Chief and the Officers’ supervisor are no longer employed by SEPTA.

While SEPTA has denied any discriminatory conduct in violation of the Civil Rights Act, it has entered into a consent decree with the United States in an attempt to avoid further costs and litigation. The decree, initially filed August 1, 2022 and thereafter amended on August 25, 2022, required SEPTA to cease any discriminatory conduct immediately, namely, cease all conduct that has been alleged to have created a hostile work environment on the basis of race and religion. SEPTA also agreed to cease any actions that would otherwise violate the Civil Rights of any of its employees. In addition, SEPTA is charged with drafting and implementing, subject to United States approval, new anti-discrimination and anti-retaliation procedures for reporting any conduct in violation of those new procedures. These polices would be specific to Transit Police and would clearly lay out a prohibition on race and religion based discrimination, a prohibition against retaliation for reporting discriminatory conduct, appropriate descriptions of prohibited conduct, identification of employees to whom complaints can be submitted, a description of the investigation process into alleged discrimination and implementation of these procedures among several other requirements. Transit Police would be required to attend additional and specific trainings to avoid discriminatory conduct.

In addition to the need to overhaul its policies as a result of this legal action, SEPTA will also pay the complaining officers a total of $496,000 in compensatory damages. The Department of Justice explained that the decree would seek “the full and fair enforcement of Title VII” and this goal “is a top priority of the Justice Department’s Employment Litigation Section of the Civil Rights Division.”

New Jersey Defendants Carry the Burden of Differentiating Between Multiple Potential Causes of a Plaintiff’s Injury.

When a plaintiff pleads in her Complaint that an accident aggravated a pre-existing injury, it is the plaintiff’s burden to provide a comparative analysis of the two injuries – the prior injury and the aggravation – in order to succeed on her claim that the accident caused the aggravation. The Appellate Division in Blocker v. DeLoatch, 2022 N.J. Super. Unpub. LEXIS 1059 (App. Div. June 14, 2022) held that when a plaintiff had a pre-existing injury but did not allege an accident caused an aggravation of that injury, it is the defendant’s burden to establish that the injury had multiple different causes.

In Blocker, the plaintiff’s medical history indicated she sustained a workers’ compensation injury to her lower back in 2015. Thereafter she was involved in two motor vehicle accidents about two years apart from one another: a three-car accident in Franklin Township in April 2016, and another motor vehicle accident in New Brunswick in March 2018. Plaintiff filed a complaint in April 2018, asserting a negligence claim against all of the other drivers in both of the 2016 and 2018 accidents seeking damages for “permanent injuries” sustained because of those two accidents. Plaintiff, however, did not allege that either the 2016 and 2018 accidents aggravated any previously sustained injuries. Plaintiff’s expert provided a report that indicated the plaintiff sustained a permanent injury caused by the 2016 accident, that was aggravated by the 2018 accident. She had no complaints prior to the 2016 accident.

Prior to the close of discovery, the defendants filed a motion for summary judgment arguing that, (1) the plaintiff’s failure to submit a comparative analysis of the injuries sustained prior to the 2016 accident; (2) the injuries suffered in the 2016 accident; (3) the injuries sustained in the 2018 accident; and (4) how those accidents may have aggravated or exacerbated the pre-existing lower back injuries, was fatal to her complaint. In response, the plaintiff provided her expert’s report from a doctor she claimed rebutted the defendants’ claims. The motion judge granted summary judgment, agreeing with defendants that the plaintiff’s expert’s report failed to provide any analysis as to whether or how the injuries from the 2016 accident were aggravated by the 2018 accident and that there was no review of anything concerning plaintiff’s pre-2016 injuries.

The Appellate Division reversed, holding that, in a non-aggravation case, a plaintiff need only show she sustained a permanent injury arising from the claimed accident to carry her burden without having to exclude all prior injuries to the same body part. The court determined that plaintiff only had to present proof of aggravation by way of a comparative analysis when she pled aggravation. Conversely, they held that a plaintiff is not required to present such an analysis when she does not plead aggravation. It follows that in such a circumstance the defense has the burden to show that the alleged injury existed at the time of the causal accident.

If it is fully incumbent on a defendant to bear the burden of establishing a plaintiff had a pre-existing injury to the same body part injured in a subsequent accident, a logical conclusion from the above appears to question the practice of alleging a plaintiff had an aggravation of a pre-existing injury at all. The strategy appears to be that, since it is the defendant’s burden to prove aggravation, a plaintiff’s attorney would anticipate that strategy, prepare a comparative analysis on the side and, in the event that a defendant does (a) discover a pre-existing injury and (b) provide the proofs to establish same, produce the comparative analysis to rebut the claims made by a defendant. On the other hand, to carry their own burden, the defendant should investigate a plaintiff’s medical history to uncover prior injuries, have their expert establish the aggravation and prepare for the showdown with the plaintiff.

An Insurance Company’s Actions Within an Insurance Contract Not Sufficient to Bring Negligence Action for Denial of Benefits

In Moravia Motorcycle, Inc. v. Allstate Ins. Co., 2022 U.S. Dist. LEXIS 83043 (W.D. Pa. May 9, 2022), the United States District Court of the Western District of Pennsylvania dismissed an insured’s negligence claim against its insurer carrier but upheld a bad faith claim for the insurer’s sudden and unexplained denial of benefits for property damage to a motor home after previously accepting the claim causing the insurer further damage.

In April 2020, plaintiffs’ motor home was damaged after a storm caused a tree branch to fall on the motor home’s roof. The damaged roof allowed water to seep into the home. Plaintiffs notified their insurer, who sent an adjuster to evaluate the damage. The adjuster concluded that the damage was covered under plaintiffs’ policy. Allstate, the insurer, then sent a second adjuster without explanation to again inspect the damage. The second adjuster denied the claim. The motor home was not repaired resulting in additional damage including electrical issues, decay of the interior walls and mold growth. As a result of this denial, plaintiffs filed negligence and bad faith claims against Allstate.

Allstate moved pursuant to Rule 12(b)(6) to dismiss plaintiff’s negligence and bad faith claims for failing to state a claim for which relief can be granted. Plaintiffs’ negligence count argued that Allstate misrepresented the status of the policy, failed to fully advise them of the actual terms of coverage, failed to train its agents about the coverage, failed to inform its agents as to the proper manner by which policyholders should be advised about the scope and extent of insurance coverage and failed to inspect the motor home in a workmanlike manner.

Plaintiffs’ bad faith count was based upon Allstate’s alleged conduct in violation of 42 Pa. C.S. § 8371, which is Pennsylvania’s bad faith statute. To prevail on a bad faith claim under 42 Pa. C.S. § 8371, a plaintiff must demonstrate (1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer knew or recklessly disregarded its lack of a reasonable basis in denying the claim. Nealy v. State Farm Mut. Auto. Ins. Co., 695 A.2d 790, 792 (Pa. Super. 1997).

The District Court granted Allstate’s motion as to the negligence claim but denied the motion as the bad faith claim. Allstate argued that the only relationship between the parties was the insurance contract and, therefore, the parties can only be held to their contractual obligations and not a broader tort standard. Plaintiffs relied on Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014) in which the Pennsylvania Supreme Court allowed a negligence claim to proceed against an insurance company when its adjuster and engineer found mold in the plaintiff’s basement but advised it was harmless. The plaintiff’s house ultimately became uninhabitable and the court allowed a negligence claim to proceed based on the assurances made by the insurer’s representative that were outside the scope of the contract.

The District Court distinguished Bruno from the present case as Allstate’s adjuster in the present matter did not make any representations regarding the damage. The adjuster merely denied the claim based on the terms of the policy. Plaintiffs did not allege that Allstate took any actions or made any representations outside of the contract to warrant a negligence claim.

The District Court denied Allstate’s bad faith claim despite Allstate’s arguments that plaintiffs failed to plead with specificity, name any of the adjusters personally or plead how the coverage decision was conveyed. The District Court held that plaintiffs sufficiently pled a legally cognizable claim for bad faith under 42 Pa. C.S. § 8371 since plaintiffs alleged that the first adjuster approved the claim but a second adjuster inexplicably denied the claim without explanation causing plaintiffs further damage.

While plaintiffs were ultimately not successful in pursuing a negligence action against Allstate, the District Court did state under which circumstances a negligence claim between parties of contract can proceed. Actions and words by an insurance company’s representatives can open up the insurance company to a negligence claim thereby exposing the company to different and greater damages than those contemplated by the insurance contract.

Separating Elevations Risks Under Labor Law § 240 (1) From Other Conditions That Could Cause an Employee’s Injury

By: Erika Vasant, Law Clerk
Editor: Patrick J. Graham, Esq.

In Schutt v. Dynasty Transp. of Ohio, Inc., 203 A.D.3d 858 (2022), the Supreme Court of New York, Appellate Division, Second Department reaffirmed the State’s current understanding of Labor Law §240(1). In this case, plaintiff, an elevator assembly employee, was unloading the components of an elevator from a truck. As plaintiff was attempting to move a hydraulic jack, his foot slipped and he fell down two feet from the truck bed injuring his shoulders and back. When plaintiff stood up, he noticed that an oily substance was on his clothes, which he determined to have originated from the truck’s bed.

Plaintiff filed a complaint alleging violations of Labor Law §240(1) and §241(6) as well as negligence by the defendants. The Supreme Court, however, granted all the defendants’ motions to dismiss, and the plaintiff appealed.

The Appellate Division first referenced the notes in Labor Law Section 240(1) which states:

Labor §240(1) should apply only to circumstances where there are risks related to elevation differentials since types of devices which statute prescribes (ladders, scaffolds, etc.) share common characteristic related to relative elevation at which task must be performed or at which materials or loads must be positioned or secured.

As such, the Court reasoned that if plaintiff’s injury resulted from an elevation risk, but the fall was actually caused by spilled oil, the fall would constitute a separate hazard. Leaning on the Court of Appeals of New York’s decision in Nicometi v. Vineyards of Fredonia, LLC, 25 N.Y.3d 90 (N.Y. 2015), the Court noted that “regardless of the type of safety device involved, liability arises under Labor Law §240(1) only where the plaintiff’s injuries are the ‘direct consequence’ of an elevation-related risk not a separate and ordinary tripping or slipping hazard.”

Prior to Nicometi, the Court of Appeals held that “…the question is whether the circumstances surrounding plaintiff’s work subjected him to the sort of risk which Section 240(1) was intended to obviate.” Rocovich v. Consolidated Edison Co., 78 N.Y.2d 509, 514 (N.Y. 1991). In analyzing both Nicometi and Rocovich the Court affirmed that Labor Law §240(1) only applied to injuries caused by elevated surface differentials.

Nonetheless, the Court did not dismiss the claims against the same defendants regarding the causes of action relating to Labor Law Section 241(6) based on 12 NYCRR 23-1.7(d). The law bars employers from allowing employees to “use a floor, passageway, walkway, scaffold, platform, or other elevated working surface which is in a slippery condition.” N.Y. Comp. Codes R. & Regs. tit. 12 §23-1.7 (2021). In this case, the Court found that the defendants did incur liability by allowing Plaintiff to perform his work in the truck amidst spilled oil.

Fundamentally, this case continued Labor Law §240(1) preference for employers because liability is only incurred when the injury stems from a device that creates elevation risks. If an injury stems from any other type of object that has no elevation risk, then employers are exempt from liability. Even so, employers must remain careful so as to not permit employees to perform their work in slippery conditions in order to avoid violating 12 NYCRR 23-1.7(d).

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Erika Vasant is one of Capehart Scatchard’s 2022 Law Clerks. Ms. Vasant is a rising 3L at Rutgers Law School. She has played an active role in diversity as President of the South Asian Law Students Association. Currently, she is President of the Rutgers Employment and Labor Law Association, Vice President of the Animal Legal Defense Fund, and the Notes and Comments Editor for the Women’s Rights Law Reporter. Last summer, she interned with the Honorable Judge Younge in the United States District Judge for the Eastern District of Pennsylvania. She is incredibly honored to be interning at Capehart Scatchard this summer!

Providing Legal Counsel To New York State Funeral Homes Facing Liability – A Brief Overview Of Relevant Issues

Death is one of life’s greatest uncertainties and is often accompanied by fear, discomfort and existentialism. Societal reluctance to discuss death in an open and honest manner often carries real costs by leaving families and friends of the deceased ill-prepared for the untimely deaths of loved ones. In a time of uncertainty and emotional taxation, families spending thousands of dollars on funeral arrangements expect perfection and flawless delivery of contracted funeral services. While errors by funeral homes and service providers in executing these arrangements do happen and can often be resolved with transparent communication, larger mistakes, such as burial of the wrong body, or burial in an incorrect manner, can land funeral service providers in civil lawsuits potentially carrying disastrous consequences. The State of New York has developed a large body of law addressing these civil claims asserted against funeral homes and this law probes a funeral service provider’s conduct in its disposition of the remains of the deceased.

New York recognizes, among other claims, a specific cause of action to recover for funeral home negligence by way of Right of Sepulcher. Generally, common law Right of Sepulcher protects the next of kin’s right to bury the deceased. This common law right was seminally articulated in Rugova v. City of New York where the Court noted that it is the next of kin’s absolute right “to the immediate possession of a decedent’s body for preservation and burial.” The right’s parameters were further articulated in Melfi v. Mount Sinai Hosp., where the Court explained that if a “person unlawfully interferes with that right or improperly deals with the decedent’s body,” damages are awarded against that person “as compensation to the next of kin” for the emotional injury that resulted from their inability to conduct a proper burial.”

The Right of Sepulcher is recognized in New York’s common law, but the State legislature also codified the right under the New York Public Health Law Article 42 (hereafter “NYPHL 42”).  A plaintiff can assert claims under both the common law and NYPHL 42 versions of the right when interference with right to a proper burial occurs. NYPHL 42 deals with cadavers and consists of multiple chapters and subsections discussing these issues.  New York’s Courts have recognized a cause of action under NYPHL 4200 for interference with right to immediate possession of decedent’s body and specifically provides:

Except in the cases in which a right to dissect it is expressly conferred by law, every body of a deceased person, within this state, shall be decently buried or incinerated within a reasonable time after death…The provisions of this section shall not impair the right to carry the body of a deceased person through this state, or to remove from this state the body of a person who has died within it, for the purpose of burying the same elsewhere.

New York Courts have broadly interpreted the issues surrounding this right, and have awarded compensation in the past for violations of the same. The New York judiciary has historically favored plaintiffs in hearing these claims. New York Courts have essentially created a “deluxe package” of the property right in a deceased’s body and disposition, which was first recognized in the case of Larson v. Chase. Over the years, New York Courts have assigned property value in corpses to be protected, allowed for recovery for emotional distress even absent money damages, expanded the right to include body parts and organs and imposed a duty to notify. This “deluxe package” only increased the duties and penalties on hospitals and those who handle the dead.

Typically, practitioners asserting claims on behalf of a deceased’s next of kin in New York Courts will file a civil complaint against a funeral home or funeral service to accuse the entity of negligence, breach of contract, or breach of some other kind of duty. The decision to assert a separate count citing the Right of Sepulcher is a strategic one and some attorneys choose to raise the Right of Sepulcher for the first time in a dispositive motion. As discussed in more detail below, it is of the utmost importance for a plaintiff’s attorney to prove that the funeral service provider failed to act in good faith in carrying out the disposition of the deceased’s remains. The Right of Sepulcher is especially concerned with the lack of good faith conduct and will find for a plaintiff when the same is present.

Given the strength of the Right of Sepulcher and the New York judiciary’s tendency to favor Plaintiffs, it should be noted that the right is not absolute. NYPHL 42 also provides for statutory defenses that New York practitioners defending funeral homes and funeral service providers should seek to invoke. NYPHL 4201 concerns “disposition of remains, responsibility therefore.”  Article 42, Title 7 concerning cemetery and funeral home liability, provides a shield for funeral home liability for:

actions taken reasonably and in good faith to carry out the written directions of a decedent as stated in a will or in a written instrument executed pursuant to this section [and] actions taken reasonably and in good faith to carry out the directions of a person who represents that he or she is entitled to control of the disposition of remains, provided that such action is taken only after requesting and receiving written statement that such person:

(a) is the designated agent of the decedent designated in a will or written instrument executed pursuant to this section; or (b) that he or she has no knowledge that the decedent executed a written instrument pursuant to this section or a will containing directions for the disposition of his or her remains and that such person is the person having priority under subdivision two of this section.

This statutory defense places a great deal of emphasis on having the right person control the disposition of the deceased’s remains. For many funeral homes and service providers, this issue of control is a nonfactor as control is not for the funeral service provider to decide and is normally left to the next of kin or to the deceased in preparing a last will and testament. To be afforded this protection, a funeral home must first prove that it took actions in good faith to carry out the directions of a member of the estate who represented that he or she is entitled to control of the disposition of decedent’s remains. The other component of the statute requires the funeral home to request and receive a written statement that such person is either the designated agent of the decedent (designated in a will or written instrument executed pursuant to this section); or that person has no knowledge that the decedent executed a written instrument pursuant to this section or a will containing directions for the disposition of his or her remains and that such person is the person having priority under subdivision two of this section shown above.

In showing that it acted in good faith in carrying out the instructions the deceased’s designated agent, a funeral home or service provider must establish a fine detailed timeline of events in conducting the disposition. Funeral service providers should be aware that these types of claims function as an examination of their compliance with the statutory requirements under NYPHL 4201. In defending against Right of Sepulcher claims, a timeline showing compliance with NYPHL 4201 and to the designated agent’s instructions by way of the deceased may be the difference in funeral service providers avoiding liability for alleged mistakes.

The New Jersey Appellate Division Revisits the “Relation Back Doctrine”

On March 9, 2022, the New Jersey Appellate Division had occasion to address, reaffirm and further clarify New Jersey’s “Relation Back Doctrine.”  In the unpublished opinion Segal v. Recovery at the Crossroads v. Gitelis, 2022 WL 701907, the Appellate Division applied the Relation Back Doctrine to a counterclaim filed well past the applicable statute of limitations that the Court found to be germane to the timely filed Complaint.

Third-Party Defendant Michael Gitelis (hereafter “Gitelis”) was admitted to the Recovery at Crossroads facility after showing signs of violent and erratic behavior. However, on or about December 6, 2017, he signed his against medical advice (hereafter “AMA”) discharge from the facility. After becoming agitated and threatening self-harm, Gitelis left the Crossroads facility by stealing an employee’s vehicle. Local police were alerted and eventually found Gitelis walking along the side of a local road and requesting a “second chance” for treatment at Recovery at Crossroads. He was once again admitted.

Thereafter, Gitelis continued to engage in threatening behavior and demanded he be discharged a second time. As the Appellate Division noted, upon Gitelis’ second discharge:

it should have been abundantly clear that he required a police escort lest he pose a danger to himself and/or others. No police nor law enforcement were contacted[,] despite Mr. Gitelis … displaying threatening behavior towards other people, and a lawful duty to do so was required by the New Jersey Duty to Warn Law, and/or be involuntarily committed as required by law.

Gitelis would go on to steal yet another vehicle and “went on a rampaging crime spree, during which he attacked and seriously injured [Plaintiff Segal] in an attempt to rob her on December 7, 2017, while in Brooklyn, New York.” Plaintiff was reportedly seriously and permanently injured as a result of the attack by Gitelis.

Plaintiff, Eileen Segal, filed her Complaint stemming from these December 7, 2017 events on December 3, 2019, only four days before the expiration of the Statute of Limitations on her claims. The Complaint named Recovery at the Crossroads, Behavioral Crossroads Recovery, LLC, Behavioral Crossroads, LLC and Deena Lefkovits (hereafter “Crossroads Defendants”) as Defendants, but omitted naming Gitelis among the Defendants. Instead, Plaintiff merely alleged that Gitelis was admitted as a patient at the Crossroads facility on or about December 4, 2017 until he was discharged pursuant to signing his AMA for a second time on December 7, 2017.

On April 24, 2020, the Crossroads Defendants were granted leave to file a Third-Party Complaint against Gitelis, which was filed on May 1, 2020. After the Court dismissed the Third-Party complaint for lack of prosecution, the Court signed a Consent Order on March 19, 2021, reinstating the Third-Party Complaint and permitting Gitelis to file an Answer.

On April 1, 2021, Gitelis filed his Answer to the Third-Party Complaint, setting forth eleven separate defenses and a counterclaim against the Crossroads Defendants. The allegations in the counterclaim “closely mirrored the allegations set forth in Plaintiff’s complaint, alleging that the [Crossroads Defendants] failed to screen Gitelis for mental illness and involuntary commitment, resulting in his discharge at a time when he was a danger to himself and to others.” Gitelis also alleged that the Crossroad Defendants “violated the standard of care for facilities … trained to evaluate and treat mental health issues as well as substance abuse issues” and as a result, the Crossroad defendants “caused injury to [Gitelis] and others.”

After the Crossroads Defendants filed their Answer to Gitelis’ counterclaim, they promptly filed a Motion for Summary Judgment, asserting that the counterclaim was barred by the statute of limitations. Gitelis opposed the motion, asserting that his counterclaim was timely in the context of the litigation pursuant to the “relation back” principles set forth in New Jersey Court Rule 4:9-3.

The Trial Court denied the Motion for Summary Judgment and listed several factors leading to its decision. Among its reasons for denying the Motion, the Court noted:

(1) plaintiff’s original complaint was timely filed; (2) plaintiff’s complaint alleged that the Crossroad defendants failed to screen Gitelis for mental illness and involuntary commitment, leading to his discharge and the subsequent injury of plaintiff; (3) the counterclaim pled by Gitelis ‘relates back [to] the claims of the original complaint as both arise from the same conduct and occurrences’; and (4) because the counterclaim ‘relates back’ to the date of plaintiff’s complaint, it is not barred by the statute of limitations.

The Trial Court also found that genuine issues of material fact existed regarding Gitelis’ counterclaim and that a rational fact finder could resolve this matter in his favor. The Crossroads Defendants were then granted leave to file an interlocutory appeal.

On appeal, the Crossroads Defendants argued that the Trial Judge erred in denying their Motion for Summary Judgment, asserting that the “Relation Back Doctrine” did not apply because Gitelis’ counterclaim was affirmative in nature, and therefore was not a “germane” counterclaim. As such, Crossroads Defendants concluded that the two year Statute of Limitations bars Gitelis’ counterclaim. The Appellate Division disagreed, indicating that:

Rule 4:7-1 provides that, ‘a pleading may state as a counterclaim any claim against the opposing party whether or not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim.’

Comments to Rule 4:7-1 provide support for the motion judge’s decision by stating:

Although this rule does not expressly so state, ordinarily a germane counterclaim will not be barred by the statute of limitations if the complaint itself is timely. A germane counterclaim is conceptually akin to an amended pleading that states a claim or defense arising out of the same conduct, transaction, or occurrence as the original claim, and R. 4:9-3 expressly provides for relation back in that situation. The only difference is the identity of the party raising the germane claim, and it would seem to make little functional difference whether a party amends his own pleading to add a germane claim or if the adverse party responds with a germane claim. The policy of the statute of limitations is no more offended in one case than the other.

See Pressler & Verniero, Current N.J. Court Rules, cmt. 2 on R. 4:7- 1 (2022).

Thus, the Appellate Division held that for a germane counterclaim to “relate back” to the filing of the original Complaint, “the following conditions must be met: (1) the original complaint must have been timely filed; and (2) the counterclaim must ‘arise out of the same conduct, transaction, or occurrence as the original claim.’” See also R. 4:7-1, at cmt. 4; R. 4:9-3.

The Appellate Division explained that in Molnar v. Hedden, 260 N.J. Super. 133 (App. Div. 1992), rev’d on other grounds, Molnar v. Hedden, 138 N.J. 96 (1994), in an opinion by Judge Pressler, the filing of a germane counterclaim is permitted after the expiration of the statute of limitations under the “relation-back” doctrine.  Id. at 140. Judge Pressler opined that:

the ‘relation back’ doctrine could permit the filing of a counterclaim after the expiration of the statute of limitations:

Application of our well-settled and liberal jurisprudence dictates that a counterclaim arising out of the same transaction as pleaded by the complaint and therefore meeting the test of R. 4:9-3 – that is to say, a litigation component embraced by the entire controversy doctrine – is eligible for the relation back principle of the rule and consequently for protection from the limitations bar.

However, after the Supreme Court reversed Molnar on other grounds, this left in question whether a germane counterclaim “relates back” to the original complaint when that counterclaim was filed outside the applicable limitations period. Molnar, 138 N.J. at 105. The Supreme Court in Molnar specified that “Because we find nothing to which defendant’s amendment can relate back, we save such a determination for a case that provides the proper factual support.”

Therefore, the Appellate Division in Segal was satisfied that this case provided the proper factual support found lacking by the Supreme Court in Molnar. Plaintiff’s timely-filed Complaint remained pending when Gitelis filed his first responsive pleading asserting his counterclaim. Gitelis’ counterclaim was clearly “germane” to the claims set forth in Plaintiff’s Complaint, where she asserted causes of action arising out of “the failure of the Crossroads Defendants to respond appropriately to the dangerous and threatening behavior exhibited by Gitelis during his two stays at their facility, including the failure to notify the police after Gitelis’ second departure from their facility.”

Satisfied that it could now affirm the New Jersey Supreme Court’s reasoning in Molnar with the proper factual background in place, the Appellate Division found that Gitelis’ counterclaim was germane to Plaintiff’s Complaint and applied the relation back doctrine accordingly. Thus, this unpublished opinion will be useful precedent in articulating the factors which a party must establish in order to invoke the “Relation Back Doctrine.”

PA Judge Cuts Plaintiff’s Damages From $7,000,000 To $250,000 Following SEPTA’s Successful Post-Trial Motion

In October 2017, a Southeastern Pennsylvania Transportation Authority (SEPTA) bus struck Hayley Freilich as she was walking within the crosswalk at the intersection of Broad Street and Vine Street in Philadelphia, Pennsylvania. The collision would cause Freilich to suffer permanent bodily injuries necessitating extensive medical treatment.  Nearly five year after the collision and subsequent lawsuit filed against SEPTA, Freilich’s cause of action continues on as her originally stipulated damages of approximately $7 million dollars has been reduced to a mere $250,000 despite SEPTA’s admission of negligence.

The original dispute in Freilich v. Se. Pa. Transp. Auth. concerned whether or not SEPTA was negligent in causing Freilich’s injuries. In a stipulated verdict, the parties reached an agreement whereby SEPTA admitted that its driver was negligent in causing Plaintiff’s injuries and the parties stipulated to award Freilich $7,000,000.

However, following the award, SEPTA filed a post-trial motion to mold the verdict, citing the Sovereign Immunity Act (hereafter “the Act”). The Act provides for limitations on liability for “Commonwealth parties” when those parties have acted in a negligent manner. Notably, the Act provides that liability may be imposed on the Commonwealth and the defense of sovereign immunity is inapplicable to claims for damages caused by:

The operation of any motor vehicle in the possession or control of a Commonwealth party. As used in this paragraph, motor vehicle’ means any vehicle which is self-propelled and any attachment thereto, including vehicles operated by rail, through water or in the air.

42 Pa. C.S.A. § 8522(b)(1)

The Act further provides that while liability may be imposed on the Commonwealth for the negligence of one of its motor vehicle operators, a plaintiff’s recovery against that Commonwealth party will be limited. 42 Pa. C.S.A. § 8528(b) specifically mandates that “damages arising from the same cause of action or transaction or occurrence or series of causes of action or transactions or occurrences shall not exceed $ 250,000 in favor of any plaintiff or $ 1,000,000 in the aggregate.” Id.

With this statutory precedent governing in Pennsylvania, in March of 2022, Judge Crumlish, the post-trial motion judge, granted SEPTA’s motion to mold the verdict and reduced Freilich’s damages to $250,000 in accordance with 42 Pa. C.S.A. § 8528(b). Despite agreeing that the reduction was a “profound economic inequality,” Judge Crumlish explained he had a “prescribed role” based on the Act and was without judicial discretion. He noted that unless and until the Pennsylvania Supreme Court accepted the case and reached a different conclusion, he was bound by precedent.

It has long been argued that Pennsylvania’s statutory damages cap for Commonwealth parties is too low and does not provide adequate redress for the negligence of Commonwealth actors. In fact, in Zauflik v. Pennsbury School District, the Pennsylvania Supreme Court invited the State legislature to review the Act and consider raising the statutory limits on damages. Again, in 2019, the Supreme Court extended this invitation following its decision in Grove v. Port Authority of Allegheny County. There, the Court recognized the difficulties presented by the $250,000 damages limit and its tendency to be inequitable and bordering on unconstitutional in some cases where damages should vastly exceed $250,000.

In an effort to increase the $250,000 limit, Freilich’s counsel sought certiorari in 2018 from the State Supreme Court, but the Court declined to grant the petition. Freilich’s counsel recently appealed to the State Supreme Court aiming to increase the current limit prescribed for all cases of this nature. Freilich’s counsel feels as though her case is the exact situation that the Pennsylvania Supreme Court in Grove feared and that her Constitutional rights have been violated leaving her without proper redress in the wake of steep medical bills and attorneys fees. For now, Freilich and all similarly situated plaintiffs can only wait patiently for the State legislature to accept the Pennsylvania Supreme Court’s invitation to act and raise the limit of statutory damages.

Broad Application of Summary Judgment Standard in Plaintiff’s Favor Tests Limits of Premises Liability Claims

Carol Frie was walking from the parking lot toward the mall when she stepped onto the sidewalk from the parking lot surface. While she did not know what element of the sidewalk caused her fall, she stated that it was “unkempt.” In Frie v. Fairlane Village Mall, 2020 Pa. Super. Unpub. LEXIS 2848 (Sept. 9, 2020), the issue in the appellate court was whether Ms. Frie, who could not specifically identify the portion of the sidewalk that caused her fall, raised a genuine issue of material fact to defeat the Mall’s motion for summary judgment.

In October, 2014, Ms. Frie parked her car in the parking lot of the Fairlane Village Mall in Pottsville, Pennsylvania, and walked across the parking lot towards the Mall. She testified that she was looking straight ahead as she stepped onto the sidewalk and she fell due to, what her answers to interrogatories stated broadly stated was “unkempt property.” She reported the incident to an employee of the Mall’s manager who took photographs of the area at which Ms. Frie said she fell. Ms. Frie agreed the photos showed the area she fell. The employee said that she took photos of that specific area because that was where Ms. Frie pointed; the employee noticed a “little lip” in the sidewalk in the area where Ms. Frie pointed and she felt she needed to show how much of a lip existed by taking a close up photograph. She then stated that she wrote in an incident report that Ms. Frie had told her she “tripped over the uneven sidewalk and fell;” “uneven sidewalk” being the employee’s own words. The employee said Ms. Frie only pointed to the sidewalk in general and the employee, finding the “little lip,” assumed it was the cause of her fall. Ms. Frie agreed with this assertion.

On these facts, the trial court granted the Mall’s motion for summary judgment. The court relied on case law that states, though property owners have a duty to keep their sidewalks in a reasonably safe condition for travel for the public and business invitees, in order to establish liability, someone who falls on a sidewalk “must prove what actually caused the accident, not what might possibly have caused it.” The court found that because Ms. Frie could not identify the cause of her accident, she could not prove what actually caused her fall.

The appellate court reversed this decision. The appellate court found that the trial court failed to apply the proper standard on summary judgment, to construe the record in the light most favorable to the plaintiff, Ms. Frie. The appellate court saw that the employee’s claims that Ms. Frie showed her where she tripped, the photographs of the uneven sidewalk, the incident report that stated Ms. Frie tripped over an uneven sidewalk and, especially, Ms. Frie’s agreement with everything the employee had stated required a jury to determine whether the uneven sidewalk caused Ms. Frie’s fall or that Ms. Frie could not specifically identify the “little lip” as the cause of her fall. This is a broadly important determination because, despite case law specifically requiring a plaintiff to identify what caused their fall, a general claim can present a factual issue as to what portion of the sidewalk caused a fall in order to defeat a summary judgment motion.

Supreme Court of New Jersey Holds the Products Liability Act Does Not Bar a Consumer Fraud Act Claim Alleging Express Misrepresentations

The Supreme Court of New Jersey recently considered “whether a Consumer Fraud Act (“CFA”) claim can be based, in part or exclusively, on a claim that also might be actionable under the Products Liability Act (“PLA”).”  Stated differently, can a CFA claim be maintained where a PLA claim could also be asserted?  In Sun Chemical Corp. v. Fike Corp., 243 N.J. 319 (2020), the Court held that where a CFA claim alleges express misrepresentations, such a claim may be asserted notwithstanding the plaintiff’s ability to assert a separate claim under the PLA.

In 2012, Sun Chemical Corporation (“Sun”), an ink manufacturing business, installed a dust collection system at its facility.  Sun then purchased an explosion isolation and suppression system (the “Suppression System”) from Fike Corporation and Suppression Systems Incorporated (collectively, “Fike”) to prevent and contain potential explosions in the dust collection system.  On the first day the Suppression System was operational, a fire occurred in the dust collection system and an alarm on the Suppression System’s control panel activated, but was not audible.  An explosion sent a fireball through the ducts of the dust collection system, injuring seven Sun employees and damaging Sun’s facility.

Sun brought a single-count complaint under the CFA alleging that Fike made oral and written misrepresentations about, inter alia, the ability of the Suppression System to prevent explosions.  The District Court granted Fike’s summary judgment motion, finding that Sun’s claims would be governed by the PLA, and that it could not avoid the requirements of the PLA by crafting its claims under the CFA.  On appeal, the Third Circuit determined there was no New Jersey case law which sufficiently addressed this issue.  As such, it certified its questions to the Supreme Court of New Jersey, which reformulated and accepted same.

The Supreme Court noted that the CFA explicitly states “the rights, remedies and prohibitions” contained therein are “in addition to and cumulative of any other right, remedy or prohibition accorded by the common law or statutes of this State.”  N.J.S.A. 56:8-2.13.  Citing its prior decisions in Lemelledo v. Beneficial Management Corp. of America, 150 N.J. 255 (1997) and Real v. Radir Wheels, Inc., 198 N.J. 511 (2009), the Court stated there is a “presumption that the CFA applies to a covered activity,” which presumption can be overcome only when a court is satisfied “that a direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme or schemes.”

Beginning its analysis with the CFA, the Court noted that Act prohibits deceptive, fraudulent, misleading, and other unconscionable commercial practices in connection with the sale of any merchandise or real estate.  In contrast, the PLA imposes liability upon manufacturers or sellers for a product’s manufacturing, warning, or design defects.  Under the PLA, a claimant can recover damages against the manufacturer or seller where the product causing the harm was not reasonably fit, suitable or safe for its intended purpose.

Based on the above analysis, the Court found the CFA and PLA are intended to govern different conduct and provide different remedies for such conduct.  The PLA governs the legal universe of products liability actions, while the CFA applies to fraud and misrepresentation and provides unique remedies intended to root out such conduct.  As such, the Court concluded there is no direct and unavoidable conflict between the two statutes.

With regard to the circumstances under which CFA and PLA claims may be simultaneously asserted, the Court noted that if a claim is premised upon a product’s manufacturing, warning, or design defect, that claim must be brought under the PLA, with damages limited to those available under that statute; CFA claims for the same conduct are precluded.  However, nothing prohibits a claimant from seeking relief under the CFA for deceptive, fraudulent, misleading, and other unconscionable commercial practices in the sale of the product.  Stated differently, if a claim is based on deceptive, fraudulent, misleading, and other unconscionable commercial practices, it is not covered by the PLA and may be brought as a separate CFA claim.  Under those circumstances, PLA and CFA claims may proceed in separate counts of the same suit, alleging different theories of liability and seeking dissimilar damages.

Importantly, the nature of the plaintiff’s damages does not determine whether the cause of action falls under the CFA or PLA.  Rather, it is the theory of liability underlying the claim that determines the recoverable damages.  The Court thus held that “a CFA claim alleging express misrepresentations — deceptive, fraudulent, misleading, and other unconscionable commercial practices — may be brought in the same action as a PLA claim premised upon product manufacturing, warning, or design defects.  In other words, the PLA will not bar a CFA claim alleging express or affirmative misrepresentations.”

Defendant-Operator With Right-of-Way Wins Dismissal

Not every intersection accident is a ‘he said/she said’ toss up for the jury to decide.

The First Department recently held that summary judgment dismissal was properly granted to the defendants, vehicle owner and operator, in an intersection accident where plaintiff’s vehicle was controlled by a stop sign, in the case of Yahaira Lugo v. Daytona Auto Sales, Inc., et al, 123 N.Y.S.3d 496, 2020 N.Y. Slip Op. 03199 (1st Dep’t 2020).  The defendants’ evidence established that the cause of the accident was the negligence of the driver of plaintiff’s vehicle, who failed to obey a stop sign in violation of New York’s Vehicle and Traffic Law Sect. 1142, which statute mandates that the driver of a vehicle approaching a stop sign shall stop and yield the right of way to any vehicle which has entered the intersection from another roadway or which is approaching so closely as to constitute an immediate hazard during the time when such driver is moving across or within the intersection.

In affirming the order granting dismissal, the court in Lugo cited to its prior decision in Namisnak v. Martin, 244 A.D.2d 258, 260, 664 N.Y.S.2d 435 (1st Dep’t 1997) for its reasoning that defendants, with the right-of-way at the intersection where the collision occurred were “entitled to anticipate that other vehicles will obey the traffic laws that require them to yield”.  Id.

The Lugo Court rejected plaintiff’s contention that the defendants’ vehicle may have been driving over the posted speed limit as being insufficient to raise a triable issue of fact as to comparative negligence, since there is no evidence it could have contributed to the accident.  Lugo, 123 N.Y.S.3d 496.

Established precedent is that a “presumption of negligence” arises from a failure to yield the right of way at a stop sign, and that bare speculation that another driver was “going fast” is not enough to overcome the presumption of negligence or to create and issue of fact for trial.  Murchison v. Incognoli, 5 A.D.3d 271, 773 N.Y.S.2d 299 (1st Dep’t 2004).  In another similar stop sign case, one driver’s statement that he may have been driving “five miles over the posted speed limit of 30 miles per hour” was insufficient to raise an issue of fact as to comparative negligence since there is no evidence that it could have contributed to the collision.  Martinez v. Cofer, 128 A.D.3d 421, 8 N.Y.S.3d 212 (1st Dep’t 2015).

The cases highlight how following the rules of the road, and obeying stop signs in particular, can lead to favorable rulings and victory in court.

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