Business Law

Published on: February 1, 2019

Employees’ Duty of Loyalty, Competition and Customer Lists

the-dollar-3125419__340-300x200 Some of the areas in which businesses make their largest investments of time and expense are trade secrets (including customer lists) customer relations and client development, and employee development. However, these interests may conflict, especially when highly placed employees leave a firm. This is an area of potentially bitter dispute in New Jersey business law and employment law.

Businesses have many trade secrets, but the most important of these is often information regarding its customers. Because of intense competition, and the time, effort and expense which businesses invest in cultivating their clients, customer lists, especially customer lists in service industries, are protected by the common law and New Jerseys Trade Secrets Act.

Businesses also invest significant expense in training and developing their employees, even aside from salary and benefits. Thus, New Jersey business law and employment law imposed a duty of loyalty on employees, even those who do not have a restrictive covenant. This duty of loyalty prohibits employees from competing with their employers while they are employed. An employee may not induce her employer’s employees or customers to leave her employer, nor may she appropriate her employer’s trade secrets. The employee may plan to leave, and if the employee does not have a restrictive covenant she can even seek employment with competitors or even set up a business entity which will compete with the employer after she leaves. However, the employee cannot go beyond the planning stage while still employed.

Published on: January 30, 2019

New Jersey Supreme Court Clarifies Rules on Business to Business Consumer Fraud

by Maurice W. McLaughlin

New Jersey’s Consumer Fraud Act provides some of the strongest consumer protections in the United States. These protections have long been extended to consumers which tow-truck-309953__340-300x176 are business entities. It is one of the strongest of New Jersey’s business law. However, the parameters of when a business, as opposed to a person, was acting as a “consumer,”have yielded conflicting decisions. The Supreme Court of New Jersey has recently issued an important decision affirming business to business consumer fraud, and establishing a test to clarify when a business should be considered to be a “consumer,” and when goods are considered “merchandise” invoking the protection under the Consumer Fraud Act.

The All The Way Towing Case: Background

On January 24, 2019, the New Jersey Supreme Court issued its opinion in the case of All the Way Towing, LLC v. Bucks County International, Inc. In that case All the Way Towing (ATW) , a limited liability company in the towing business, ordered an “International” brand all wheel drive truck from Bucks County International, Inc. (BCI), with an autoloader tow body manufactured by another company, Dynamic Towing Equipment and Manufacturing, Inc. (Dynamic). ATW spent several months negotiating the price and specifications with BCI’s salesperson, and then placed a $10,000 deposit.

Published on: December 20, 2018

New Jersey Contract Law Provides Remedies to Third-Party Beneficiaries

by Maurice W. McLaughlin

rules-1339917__340-300x231 Very often, a person or business will want to confer a benefit on a third party but will not be able to do so itself, for a variety of reasons. So then, to make sure the benefit will be conferred, it will enter into a contract with a person or business which has the ability to confer the benefit. The question, then, is what rights does the third-party beneficiary have?

Let’s say Sam wants to build a deck for his friend Joe’s house, but Sam is an incompetent carpenter. So Sam signs a contract with Acme Building Contractors, Inc., in which Acme agrees to build a deck on Joe’s house, and Sam agrees to pay Acme $5000. Sam pays Acme in full but it never builds the deck, and then Sam dies. Now Acme has $5000 and Joe doesn’t have a deck. Does Joe have any remedies to enforce Sam’s contract with Acme? That all depends on whether Joe can be considered a third-party beneficiary under New Jersey law. The basic answer is yes, if Sam and Acme intended Joe to be a third-party beneficiary.

New Jersey Law Expressly Allows Third-Party Beneficiaries to Enforce Contracts

Published on: December 4, 2018

New Court Rules Streamline New Jersey Business Litigation

by McLaughlin & Nardi, LLC

tax-739107__340-300x200 New Jersey’s Supreme Court adopted new rules which became effective September 1, 2018. These rules amend New Jersey’s Rules of Court to make the litigation of complex business law matters more efficient. This article discusses some of the major changes the new rules have brought about.

Background

In 2000, the Supreme Court revised the discovery procedures in New Jersey’s Court Rules for civil cases. These amendments were adopted because the courts in various counties had developed different discovery procedures. The Supreme Court’s aim was to standardize these rules so that litigants would get the same level playing field in every county throughout the state. However, in adopting three basic case tracks, the Court may have gone too far in limiting judges’ ability to manage complex business law cases. The Supreme Court therefore explored establishing a separate track for complex commercial cases.

Published on: November 28, 2018

Key Documents and Considerations when Purchasing a Franchise in New Jersey

by Jennifer C. Meusel

italian-food-2361054__340-300x200 Before you enter into an agreement to purchase a franchise, it is vital to review and understand the documents you are being required to sign. You will be required to execute the following documents:

1) The Franchise Disclosure Document, previously known as the Uniform Franchise Offering Circular, provides information regarding the franchise’s history, the nature of the business and the products or services it provides, as well as the costs and fees imposed the franchisor, the operational requirements, and historical financial information.

It will, of course, state that past success does not guarantee future success, but it should give you details of the business up to the present date. It must include mandatory disclosures pursuant to the Code of Federal Regulations, Volume 16, Part 436, see The Franchise Rule Compliance Guide.

Published on: September 17, 2018

Protecting Business Information Under the New Jersey Trade Secrets Act and With Confidentiality/Non-Disclosure Agreements

by Maurice W. McLaughlin

confidential-1726367__340-300x300 Businesses entering into negotiations with other businesses or persons often need to give the other party confidential information. For example, a business will need to give a potential buyer information regarding its revenue, expenses, customers, formulas, payroll, vendors, and pricing so that the potential buyer can formulate an offer during the due diligence period. If the deal falls through the seller will rightly want to ensure that the buyer which backed can’t use this information to compete with it or disclose it to competitors or customers.

Fortunately, New Jersey business law gives such companies two important tools to protect their information: The New Jersey Trade Secrets Act and enforceable confidentiality agreements (also known as non-disclosure agreements, or “NDA’s”).

The New Jersey Trade Secrets Act

Published on: August 17, 2018

The Extent of State University’s Immunity from Local Governance

by Pauline M.K. Young

baltimore-city-hall-1482793__340-300x205 Montclair State University has spent the last decade or so trying to obtain approval from the County of Passaic and the City of Clifton to construct a roadway which would intersect with a county road. Both the County and the City raised concerns about the proposed development and Montclair State made significant efforts in an attempt to address those concerns. In 2014, Montclair State submitted an application to Passaic County for a permit to install traffic controls at the intersection.

Montclair State did not seek permission from Clifton or Clifton’s Land Use Board based upon belief that, as a state organization, it was not subject to local regulations. Montclair State asserted this position largely based upon the 1972 New Jersey Supreme Court case of Rutgers v. Piluso.

The question in the Rutgers case was whether Rutgers University was subject to zoning ordinances of the town where it was located, Piscataway. Piscataway had an ordinance which restricted the number of matriculating students’ “family dwellings” Rutgers could have. When Rutgers sought to build more, the town denied the request, citing the ordinance. Rutgers then brought a suit seeking a determination from the court that Rutgers was not subject to local zoning ordinances because it was an instrumentality of the State of New Jersey.

Published on: June 15, 2018

Sports Gambling in New Jersey

by Pauline M.K. Young

horse-3433879__340-300x262
New Jersey has been trying to legalize sports betting for years. One of the primary hurdles for that legalization has been the federal Professional and Amateur Sports Protection Act (PASPA). That law, enacted by Congress in 1992, make it unlawful for a government entity to authorize, operate, etc., gambling on competitive games in which athletes participate. PASPA – also known as the Bradley Act – excluded Oregon, Delaware, Montana, and Nevada from its sports betting prohibitions. New Jersey (and any other state which had licensed casino gambling) had a 1-year window to pass laws permitting sports betting. However, New Jersey did not pass such a law within that window of time.

Later, in 2011, New Jersey voters approved an amendment to the state constitution to permit the legislature to create laws to permit sports gambling. (Sports gambling would still not be permitted for college sporting events taking place in the State of New Jersey or involving a New Jersey team.)

In 2012 the first Sports Wagering Act was introduced to permit betting on sports at racetracks and casinos. That Act was challenged by virtually all major sports associations (NFL, MLB, NHL, etc.) and ultimately struck down by the District Court as violating PASPA.

Published on: June 1, 2018

The Use of Custom and Usage in Interpreting Commercial Contracts Under New Jersey Business Law

by Maurice W. McLaughlin

Enforceable contracts are the bedrock of a strong economy. If contracts were not enforced, parties could not rely on the other side performing because there would be no remedy if they breached. Therefore, commerce would break down. Enforceable contracts are so important to the economy, in fact, that the freedom to contract is included in both the New Jersey and United States Constitutions. Before a contract can be enforced, however, the parties and the reviewing court must figure out what the contract means. When the terms are clear this normally isn’t a problem. However, when the contract is ambiguous, or even just a part of it is unclear, the question becomes what evidence may be admitted to determine the meaning and intent of the contract.

As I’ve written earlier, New Jersey courts generally adhere to the “parole evidence rule,” which holds that when there is a clear, unambiguous contract, extrinsic, or external, evidence beyond the four walls of the contract is inadmissible to prove what the contract means. However, in New Jersey business law, the exceptions come close to swallowing the rule. Indeed, the New Jersey Supreme Court held as far back as 1953, in the case of Atlantic Northern Airlines v. Schwimmer, that all evidence is relevant if it will assist the trier of fact in determination what the parties to a contract intended and what the contract means – even if that evidence is extrinsic.

The question, then, is what sort of extrinsic evidence is admissible? In the case of commercial contracts, one source of evidence is custom and usage.

Published on: May 16, 2018

Construction Lien Law: Timing is Key

by Robert Chewning, Esq.

McLaughlin & Nardi’s New Jersey construction attorneys represent owners, contr house-construction-3370969__340-300x197 actors and building suppliers in the prosecution and defense of construction lien claims.

As discussed in McLaughlin & Nardi’s overview of construction liens, they can be powerful tools for construction contractors, subcontractors, and suppliers who are experiencing difficulties in getting paid for the work that they have performed.

However, when considering whether to proceed with filing a construction lien for either a commercial or residential project, it is important to know that the contractor (“claimant”) act promptly once it starts to experience payment issues.