Category: General Litigation

Slow Down You’re Moving Too Fast: Third Circuit Directs District Court to Resolve Motion to Compel Arbitration Before Motion to Dismiss

Slow Down You’re Moving Too Fast: Third Circuit Directs District Court to Resolve Motion to Compel Arbitration Before Motion to Dismiss

In a recent decision, the Third Circuit made it abundantly clear that a motion to compel arbitration must be decided before a Rule 12(b)(6) motion to dismiss. Joshua Silfee filed a lawsuit against ERG Staffing Service, his former employer, in the Middle District of Pennsylvania, claiming the company’s payroll policies violated state law because workers were required to use a fee-carrying debit card. ERG filed a motion to compel arbitration pursuant to Section 4 of the Federal Arbitration Act, asserting that the arbitration agreement between Silfee and ERG’s payroll vendor precluded the suit against ERG. ERG also filed a Rule 12(b)(6) motion to dismiss Silfee’s complaint based on the merits of his state law claims against the company. The district court decided to delay consideration of ERG’s motion to compel arbitration and denied the company’s motion to dismiss the case. ERG appealed. The Third Circuit concluded that the district judge erred in delaying the arbitrability inquiry, explaining that arbitrability is a “gateway” issue and that, after a motion to compel arbitration is filed, a court “must refrain from further action until it determines arbitrability.” The Third Circuit noted that “[t]he seeds of the District Court’s confusion may have been sown...

Third Circuit Clarifies Focus of Preliminary Injunction Standard

Third Circuit Clarifies Focus of Preliminary Injunction Standard

Describing its precedent as “confus[ing]” and “inconsistent,” the Third Circuit recently clarified the test for deciding whether to issue a preliminary injunction. Since the 1970’s, courts in the Third Circuit have decided preliminary injunction applications based upon the following factors: (1) the likelihood of success on the merits; (2) whether the movant will be irreparably harmed in the absence of relief; (3) the possibility of harm to others from grant or denial of the relief; and (4) the public interest. However, courts differed as to how these four factors should be applied. In Reilly v. City of Harrisburg, the Third Circuit shed light on how these factors are to be weighed and, at least in part, who bears the burden on each. The Third Circuit held that a movant seeking a preliminary injunction bears the burden of “meet[ing] the threshold for the first two ‘most critical’ factors.” To satisfy the first prong, the movant “must demonstrate that it can win on the merits” by showing that its chances of success are “significantly better than negligible but not necessarily more likely than not.” To satisfy the second prong, however, the movant must show “that it is more likely than not to...

Do You Like What You’re Reading? Rate Our Blog: The ABA Journal’s “Web 100” Award

Do You Like What You’re Reading? Rate Our Blog: The ABA Journal’s “Web 100” Award

Thank you for visiting the Gibbons Business Litigation Alert blog! Content on our site, authored by members of the Gibbons Business & Commercial Litigation Department, provides timely analysis and discussion on legal and business developments within the vast litigation arena. How are we doing? To review our blog and nominate the Gibbons Business Litigation Alert for this year’s ABA Journal’s “Web 100” award, please visit abajournal.com/blawgs/web100 and share why you are a “fan” of our site (Please note: the voting process closes on Sunday, July 30). Thank you in advance for your support.

Wrap Up of United States Supreme Court’s 2016-17 Term

Wrap Up of United States Supreme Court’s 2016-17 Term

With the close of the United States Supreme Court’s 2016-17 term, we offer this wrap up of the term’s most important business and commercial cases (excluding patent cases): Kindred Nursing Ctrs, L.P. v. Clark: The Supreme Court continued its full-throated support of arbitration agreements, again rejecting a state supreme court’s effort to apply an ostensibly arbitration-neutral rule of law to invalidate an arbitration agreement. In Kindred, the Kentucky Supreme Court held that an arbitration agreement signed by an attorney-in-fact under a broad power of attorney was invalid because the power of attorney did not expressly give the attorney-in-fact the right to waive the principal’s right to a jury trial. According to the Kentucky Supreme Court, to grant an attorney-in-fact the authority to waive a “fundamental constitutional right,” a power of attorney must grant that authority expressly and unambiguously. Because the right to access the courts and the right to a jury trial are such “fundamental constitutional rights” and because the power of attorney did not expressly and unambiguously waive them, the attorney-in-fact was not authorized to agree to arbitrate the principal’s claims, and no enforceable arbitration agreement was created. The Supreme Court found that the Kentucky Supreme Court’s facially arbitration-neutral...

U.S. Supreme Court Requires Schools to Provide a Special Needs Student More Than a “De Minimis” Education

U.S. Supreme Court Requires Schools to Provide a Special Needs Student More Than a “De Minimis” Education

On March 22, 2017, the United States Supreme Court handed down a unanimous ruling in Endrew F., et al. v. Douglas County School District RE-1. In a decision that will have far-reaching implications in the area of special education, the Court held that the Individuals with Disabilities Education Act (“IDEA”) “requires that students with disabilities be provided with an educational program that is reasonably calculated to enable a child to make progress appropriate in light of the child’s circumstances.” In 1982, the Supreme Court determined in Board of Ed. of Hendrick Hudson Central School Dist., Westchester Cty. v. Rowley that the IDEA requires that every child be provided with a free and appropriate public education (“FAPE”). The Rowley Court did not, however, adopt a standard for determining whether a child is receiving a sufficient educational benefit to satisfy this mandate. Rather, the Court stated that a child has received a FAPE if the Individual Education Plan (“IEP”) provides an education program “that is reasonably calculated to enable the child to receive educational benefits,” and otherwise limited its analysis to the facts of the Rowley case. Endrew F., an autistic child, was enrolled in a public school and educated pursuant to...

The Power of New York’s Borrowing Statute

The Power of New York’s Borrowing Statute

On October 11, 2016, the Supreme Court of New York, Appellate Division, First Department, decided 2138747 Ontario, Inc. v. Samsung C&T Corp., et al., which serves as a reminder to attorneys that New York’s borrowing statute applies even where the parties agreed to a New York choice-of-law provision. The borrowing statute, CPLR 202, provides that, when a non-New York resident sues on a cause of action accruing outside New York, the complaint must be filed timely under the statute of limitations of both New York and the jurisdiction where the cause of action accrued. The statute’s underlying objective is to prevent forum shopping by nonresident plaintiffs. In Ontario, the plaintiff, a corporation formed under the law of Ontario, Canada, was a creditor of SkyPower Corporation, a bankrupt Canadian renewable energy developer. SkyPower’s bankruptcy trustee assigned to the plaintiff all of its claims against the defendants. The plaintiff then sought damages against the defendants for a breach of a nondisclosure and confidentiality agreement (NDA), which contained a broad New York choice-of-law provision. The plaintiff’s complaint was untimely under Ontario’s two-year statute of limitations but was timely under New York’s six-year statute of limitations. The trial court found that Ontario’s two-year statute...

New Jersey Appellate Division Holds Consumer Fraud Act Plaintiffs Can Recoup Attorneys’ Fees for Successfully Defending Against Counterclaims 0

New Jersey Appellate Division Holds Consumer Fraud Act Plaintiffs Can Recoup Attorneys’ Fees for Successfully Defending Against Counterclaims

In an issue of first impression, the New Jersey Appellate Division held in Garmeaux v. DNV Concepts, Inc. t/a The Bright Acre that a prevailing plaintiff in a Consumer Fraud Act (“CFA”) case is entitled to recover attorneys’ fees expended to defend an “inextricably intertwined” counterclaim. The to-be-published opinion also reaffirmed that New Jersey does not impose a strict proportionality requirement on attorney fee awards.






Third Circuit Holds That Challenges to the Validity of  a Contract Containing an Arbitration Provision Can Only Be Adjudicated by the Arbitrator 0

Third Circuit Holds That Challenges to the Validity of a Contract Containing an Arbitration Provision Can Only Be Adjudicated by the Arbitrator

In a recent precedential decision, South Jersey Sanitation Co., Inc. v. Applied Underwriters Captive Risk Assurance Co., Inc., the Third Circuit held that although arbitration agreements may be invalidated by generally applicable contract defenses, like fraud, in order for the court to decide the issue, the challenge “must focus exclusively on the arbitration provision, rather than on the contract as a whole.” “If the challenge encompasses the contract as a whole, the validity of that contract, like all other disputes arising under the contract, is a matter for the arbitrator to decide.”






11th Circuit’s Stay Suggests that the FTC’s Final Order Against LabMD May Itself be “Unfair” and “Unreasonable” 0

11th Circuit’s Stay Suggests that the FTC’s Final Order Against LabMD May Itself be “Unfair” and “Unreasonable”

As reported on this blog on September 27, 2016, the FTC issued a Final Order holding that LabMD’s data security practices were “unreasonable” and constituted an “unfair” business practice in violation of Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §45(a) and (n). The findings were a clear signal of the FTC’s expanding efforts to regulate data security and to incentivize companies handling sensitive data to implement and maintain strong data security practices. On Thursday, November 10, 2016, the 11th Circuit stayed enforcement of the FTC’s Final Order pending a full hearing and final decision on LabMD’s appeal, and called into question the validity of the FTC’s conclusions as to what may constitute an actionable “privacy harm” following a data security breach.






The FTC Confirms That Mere Disclosure of Health Information is a “Substantial Injury” Justifying Sanctions for “Unreasonable” Data Security Practices 0

The FTC Confirms That Mere Disclosure of Health Information is a “Substantial Injury” Justifying Sanctions for “Unreasonable” Data Security Practices

The Federal Trade Commission (“FTC” or “the Commission”) recently confirmed that disclosure of sensitive consumer data as a result of inappropriate data security practices may be deemed an “unfair act or practice” in violation of the Federal Trade Commission Act (“FTC Act”). This decision is important because the FTC reached this conclusion with no evidence of actual economic or physical harm, or any actual health and safety risks as a result of the disclosure. The Commission’s decision is also notable because it emphasizes the FTC’s expanding reach in the regulation of data security.