New Jersey Business Attorneys

Published on: April 13, 2020

Bankruptcy Considerations During the Coronavirus (COVID-19) Part 1: Chapter 11 Bankruptcy

The Coronavirus (COV-19) has had a negative impact on everyone physically, mentally, and financially. Businesses are no different. Small and medium sized businesses are especially vulnerable in these troubled times. They are faced with difficult decisions such as whether to temporarily lay off their employees or which bills to pay when little or no revenue is being received.

At McLaughlin & Nardi, LLC, we focus a portion of our practice on advising small and medium sized businesses when faced with these difficult financial decisions. When a business becomes overwhelmed and unable to meet its financial obligations, filing a Chapter 11 bankruptcy may be a great means to get the business back on track.

Published on: March 31, 2020

Federal Coronavirus Stimulus Act Provides Benefits for Struggling Businesses

by Pauline M.K. Young

As a result of the coronavirus (“COVID19”), the federal government has taken significant action to provide relief to individuals and business struggling with civil-service-jobs-1-300x200 economic hardships as a result of lost business during widespread closures and stay-at-home orders. The first major legislation passed by the federal government was the Families First Coronavirus Response Act which provided job protection and paid leave provisions. Now, the government has recently passed the Coronavirus Aid, Relief, and Economic Security Act (also known as the “CARES Act”).

The CARES Act provides for approximately $2 trillion in relief aid through expanded unemployment assistance, individual relief checks, tax credits, loans, and grants to businesses which were closed or significantly effected by COVID-19, and funding to hospitals and health care facilities.

Small businesses in particular which are struggling with the current situation economically should look into applying for one or more of these relief options. For example, a business may apply for a $10,000 immediate advance to cover emergency costs that they are unable to pay because of the COVID-19 situation. Expenses covered would, of course, have to be legitimate business costs such as payroll and utilities.

Published on: June 3, 2019

Third Circuit Issues Important Decision on Non-Solicitation and Non-Compete Agreements Under New Jersey Employment Law

by Maurice W. McLaughlin

desk-3491990__340-290x300
The United States Third Circuit Court of Appeals (which hears appeals from the federal district courts in New Jersey, Delaware, Pennsylvania and the United States Virgin Islands) recently had the opportunity to address the state of New Jersey employment law on restrictive covenants in the case of ADP, LLC v. Rafferty.

Background

In the Rafferty case, two ADP employees, Kristi Mork and Nicole Rafferty, agreed to restrictive covenants in exchange for an award of company stock. Because they were high performing employees, they agreed to restrictions in exchange for the stock award which were more onerous than lower performing employees were required to agree to. The restrictions applied whether they quit or were fired.

Published on: March 26, 2019

NJDEP Effective Competition Analysis for A-901 Asset Transfer Approval

by Jennifer C. Meusel

site-2293451__340-300x200 When a solid waste collection company enters into a contract to transfer ownership of assets, a petition for approval must be submitted the New Jersey Department of Environmental Protection. Assets may not be transferred until this approval is obtained. One area which the NJDEP evaluates prior to issuing such an approval is the impact of the transfer upon effective competition. This is a very detailed analysis which can be time consuming.

The solid waste industry serves a dynamic market and the NJDEP must continually evaluate the market to ensure that there are multiple companies serving the customers in each market. The controlling case law is found in United States v. Philadephia Nation Bank, 374 U.S. 321 (1963), in which the United States Supreme Court held that any sale which results in one company controlling thirty percent or more of the market and results in a significant increase in the concentration of companies in that market creates a lessening of effective competition. When that is found it creates a presumption which is rebutted if it is shown that the sale is not likely to have such anti-competitive effects.

When the NJDEP performs an analysis of effective competition, it will only prohibit asset transfers if the transfer increases the company’s level of concentration in the market to an extent that could facilitate collusion among a small number of remaining competitors. The NJDEP considers the following factors to determine effective competition: 1) the size of the company compared to the other companies providing the same service in the markets affected by the transfer; 2) the percentage of customers in the affected markets which will be served by the company after the transfer; and 3) this Herfindahl- Hirschman Index (HHI) of market concentration.

Published on: March 7, 2019

New Jersey’s Appellate Division Issue Decision Important to Construction Contractors

by Maurice W. McLaughlin

construction-645465__340-300x200 A recent decision in the case of Jacobs v. Mark Lindsay and Son Plumbing & Heating, Inc., by the Appellate Division of New Jersey’s Superior Court examined the interplay between two very important laws – New Jersey’s Consumer Fraud Act and the criminal “theft of services statute” in the context of a dispute between a contractor which wanted to get paid, and a homeowner who didn’t believe the contractor had earned his fee. It contains important lessons for residential construction contractors.

The Consumer Fraud Act and Theft of Services

New Jersey’s Consumer Fraud Act prohibits merchants from engaging in “unconscionable commercial practices.” The Consumer Fraud Act applies to “home improvement contractors,” and regulations issued by the Division of Community Affairs extend the Consumer Fraud Act’s protections to specific requirements for contracts for “home improvement” work, including having a signed, written contract in the first place. The New Jersey Criminal Code makes theft of services a criminal offense.

Published on: February 19, 2019

New Jersey Raises Minimum Wage

by Maurice W. McLaughlin

Background

On February 4, 2019, Governor Phil Murphy signed legislation which will raise the minimum wage in increments culminating in a minimum wage of $15 per hour on January 1, 2024. The new law puts New Jersey at the forefront of the “living wage” movement, while the phase in is designed to lessen the impact on small businesses. The new law amends the New Jersey Wage and Hour Law, which governs minimum wage and overtime requirements.

The legislation is the result of negotiations between the Governor and Legislature lasting more than a year. The amendment was praised by labor unions and most Democrats in the state, but opposed by the New Jersey Chamber of Commerce and most Republicans.

Published on: February 1, 2019

Employees’ Duty of Loyalty, Competition and Customer Lists

by Maurice W. McLaughlin

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: May 31, 2017

Confidentiality Privileges in Internal Employer Investigations

by Pauline M.K. Young

puzzle-693873__340-300x228 An attorney-client relationship involves the reasonable reliance by an individual (the client) on the professional knowledge and/or skills of an attorney who is aware of and accepts responsibility for that reliance. While a written agreement is not required for this relationship to exist, there must be some mutual understanding, consensus, and/or act manifesting the acknowledgement of the relationship.

One of an attorney’s obligations to a client the duty to maintain the confidentiality of communications with the client. The New Jersey Supreme Court has said that:

Such an obligation is necessary for several reasons. Persons who seek legal advice must be assured that the secrets and confidences they repose with their attorney will remain with their attorney, and their attorney alone. Preserving the sanctity of confidentiality of a client’s disclosures to his attorney will encourage an open atmosphere of trust, thus enabling the attorney to do the best job he can for the client.

Published on: March 20, 2017

Lost Profits as Commercial Damages and The New Business Rule

by Maurice W. McLaughlin

document-428335__340-300x200 In a business dispute, a prevailing party is awarding damages awarded damages it can prove, typically awarded lost profits. The “New Business Rule,” however, has traditionally including recovery of lost profits for “new” businesses, because their lack of a track record makes estimating lost profits too speculative. The is a longstanding rule in New Jersey commercial litigation. However, several newer cases indicate that it may be on the way out and indeed may already be dead, and in any event courts strain to avoid its application. This is logical, because another guiding principal of New Jersey business law is that equity requires that courts try to prevent a wrongdoer from profiting from its misdeeds at the expense of an innocent party. The new cases lead to the conclusion that that it is questionable whether the New Business Rule remains valid at all.

Lost Profits as a Measure of Damages.

When one party to a contract breaches a contract the other party may recover compensatory damages, which are the natural, probable and foreseeable consequences of that breach. As New Jersey’s Supreme Court explained “[T]he goal is to put the injured party in as good a position as if performance had been rendered.” Lost profits are one of main elements which businesses can recover as compensatory damages in a breach of contract lawsuit.