Commercial Litigation Update

The Supreme Court of New Jersey recently issued its decision in Comprehensive Neurosurgical, P.C. v. Valley Hospital, vacating a $24.3 million award to a neurosurgery practice. The Court’s opinion offers valuable insight regarding the scope of implied contractual obligations under New Jersey law, particularly in the hospital industry.

The underlying dispute involved Valley Hospital’s grant of exclusive privileges to a new group of neurosurgeons, which effectively revoked the longstanding privileges held by plaintiffs. These privileges included the right to use specialized medical equipment and treat “unassigned” emergency room patients, an essential part of plaintiffs’ practice. The plaintiffs alleged that Valley’s actions were retaliatory, prompted by plaintiffs’ association with a newly opened nearby hospital. As a result, plaintiffs filed suit against Valley, claiming the hospital’s decision violated public policy and the hospital’s medical staff bylaws. Valley argued that it made a valid administrative healthcare decision because plaintiffs were diverting patients to the newly opened hospital.

Splitting along predictable philosophical lines, the Supreme Court held today in Garland v. Cargill that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) exceeded its statutory authority by issuing a rule that classifies a bump stock as a “machinegun” under 26 U.S.C. §5845, a provision of the National Firearms Act of 1934. Justice Thomas wrote the majority opinion, which was joined by all the Court’s conservatives. Justice Sotomayor, joined by Justices Kagan and Jackson, dissented.

It should be noted that while this decision, negating a Trump-era gun control regulation, certainly will be a centerpiece in the continuing political debate concerning firearms, the Cargill case is not a Second Amendment case. Like a chain of recent cases concerning the scope of congressional delegation to Executive Branch agencies and the clarity of text, this case, however consequential to public safety, is dependent upon the wording of the law that Congress wrote and the ATF’s authority to interpret it.

Of the Supreme Court opinions issued today, the one that will draw the greatest public attention is Food and Drug Administration v. Alliance for Hippocratic Medicine, unanimously holding that the pro-life organizational plaintiffs in the underlying cases lacked Article III standing to challenge the Food and Drug Administration’s (FDA’s) actions regarding the regulation of mifepristone. Used in conjunction with another medicine, mifepristone, also known as RU 486, is taken to end a pregnancy within 70 days of conception. The opinion also resolved the companion case of Danco Laboratories, L.L.C. v. Alliance for Hippocratic Medicine.

What might surprise some observers is that not only was the decision unanimous but the opinion was written by Justice Kavanaugh, a Catholic jurisprudential conservative (Thomas, J., wrote an additional concurring opinion). However, the decision is not at all about reproductive rights, though its outcome surely affects—indeed upholds—them. The reason Justice Kavanaugh wrote the opinion and could obtain the concurrence of all the other Justices is that the gravamen of the case is standing, a constitutional matter that has been an important issue for the Court, particularly for the conservatives aligned here with the expected views of the liberals.

Another Three-for Thursday at the Supreme Court, with none of the decisions a landmark but each of utmost relevance to legal specialists and technicians in the fields of bankruptcy, estate taxation, and Indian affairs.

Truck Insurance Exchange v. Kaiser Gypsum Co., Inc. involves the primary insurer for companies that made and sold asbestos-containing products (“Truck”). Two of those companies filed for Chapter 11 bankruptcy. A resulting plan of reorganization created an Asbestos Personal Injury Trust under 11 U. S. C. §524(g), a provision that allows Chapter 11 debtors with substantial asbestos-related liability to fund a trust and channel all present and future asbestos-related claims into it. The insurer has a contractual obligation to defend asbestos personal injury claims and to indemnify the debtors for up to $500,000 per claim. The debtors were required to pay a $5,000 deductible per claim and cooperate in the defense. Truck sought to oppose the reorganization pursuant to §1109(b) of the Bankruptcy Code, which permits any “party in interest” to “raise” and “be heard on any issue” in a Chapter 11 bankruptcy.

By now, most New York practitioners are aware (or at least have heard) of the recent changes to CPLR 2106, which was amended as of January 1, 2024 to allow “any person” to submit an affirmation “in lieu of and with the same force and effect” as an affidavit in an action in New York.

This was a privilege previously reserved for New York attorneys, certain licensed professionals, and those physically located outside the United States. While the majority of the focus understandably has been on the impact of this legislation on litigants and other individuals who are no longer required to submit affidavits, the amendment also has the serious, but often overlooked, consequence of rendering the form of prior New York attorney affirmations ineffective and not properly sworn unless the affirmations contain the new, revised language required by the amendment.

Once again, the U.S. Supreme Court handed down three decisions on a Thursday, each of them substantively important to the individuals involved, but all of them essentially involving the Supreme Court’s instructing lower courts on how to go about interpreting both statutory mandates and caselaw precedents. Two of the three decisions are unanimous. The third, involving capital punishment, predictably shows a 6–3 split between Court conservatives and liberals.

Of the three cases decided today, the Court’s unanimous decision in Cantero v. Bank of America is likely the one of greatest import to our audience of litigators because it involves the issue of determining federal preemption. Writing for the entire Court, Justice Kavanaugh begins by noting that banks with federal charters, i.e., “national banks,” are primarily subject to federal oversight and regulation, while state-chartered banks are subject to further state oversight and regulation. A federal law, the National Bank Act, especially grants national banks the power to administer home mortgage loans. While the home mortgage loans made by national banks often include escrow accounts that are extensively regulated under the federal Real Estate Settlement Procedures Act of 1974, there is no requirement for national banks to pay interest on escrow balances. New York State law, however, mandates that a lending bank “shall” pay borrowers such interest. In the instant case, several mortgage borrowers brought class action suits against a national bank, demanding payment of interest on their escrow accounts. The U.S. Court of Appeals for the Second Circuit held that because the New York law “would exert control over” national banks’ power “to create and fund escrow accounts,” the state’s law was preempted by the National Bank Act.

The U.S. Supreme Court decided three cases today, one of them on the main sequence of the practices of most of the readers of this blog and the others worth knowing about, both as lawyers and as citizens.

Adding another car to the train of decisions concerning arbitration, namely, what is arbitrable and who decides it, a unanimous Court, per Justice Jackson, has held in Coinbase, Inc. v. Suski, that where parties have agreed to two contracts, one sending disputes concerning arbitrability to arbitration, and another, either explicitly or implicitly, sending such disputes to the courts ...

On May 9, 2024, the U.S. Department of Justice’s Antitrust Division (“DOJ”) announced a new task force to address “pressing antitrust problems in health care markets.” This new initiative, named the Task Force on Health Care Monopolies and Collusion (“HCMC”), will focus on DOJ’s view that there are “widespread competition concerns shared by patients, health care professionals, businesses and entrepreneurs, including issues regarding payer-provider consolidation, serial acquisitions, labor and quality of care, medical billing, health care IT ...

On May 16—for the second time in two weeks—the U.S. Supreme Court, this time unanimously, has taken a lenient, plaintiff-friendly view of whether a filing deadline is jurisdictional in the sense that it is governed by the occurrence of a triggering event or its discovery. In Harrow v. Department of Defense, the Court, per Justice Kagan, held that the 60-day appeal provision regarding a federal Merit Systems Protection Board (the “Board”) decision is not jurisdictional and is subject to equitable exceptions, such as waiver, forfeiture, and equitable tolling. Stuart Harrow ...

New episode of our video podcast, Speaking of Litigation: When it comes to dietary supplement class actions, there’s a little less class and a lot more action.

In this episode of Speaking of Litigation, Epstein Becker Green litigators Teddy McCormick, Jack Wenik, and Robert Lufrano explore the litigious minefield of class action battles, particularly focusing on the challenges faced by companies amid the proliferation of legal opportunists and lawsuits based on U.S. Food and Drug Administration (FDA) warning letters.

From navigating consumer protection statutes to deciphering FDA actions, our panelists discuss the legal intricacies shaping the dietary supplement industry's future. Tune in for an engaging conversation that unpacks the intersection of law, regulation, and commerce in the realm of dietary supplements.