This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.

Assembly Judiciary Committee okays NJSBA bill to end double taxation of fees

A bill that would end the practice of taxing attorneys' fees awarded in civil rights and employment discrimination and retaliation cases was unanimously voted out of the Assembly Judiciary Committee last week. S-784 (Sarlo)/A-3614 (Burzichelli) was drafted by the NJSBA's Labor and Employment Law Section, which seeks the same treatment for attorneys' fees as the federal tax law. The federal law only taxes the receiving entity for the portion of the recovery.

New Jersey tax law requires that it tax both the attorney or the law firm that receives the fees from a recovery and the victim, who never sees that portion of the recovery. The NJSBA drafted a bill that would require the attorney or law firm be taxed on those fees, and not the victim.

Assemblyman Michael Patrick Carroll commented favorably on the bill, citing to the unfair tax treatment of plaintiffs in qui tam claims, and asked about the double recovery of taxes on attorneys' fees in other cases. Justin Burns, of McMoran, O'Connor, Bramley & Burns, P.C., a member of the NJSBA's Labor and Employment Law Section, testified about the unfair treatment and the association's support that victims pay taxes only on what they receive.

In addition, an amendment was made to the bill this year to include the recovery on qui tam claims. Following the controversial Appellate Division decision in Kite v. Division of Taxation, Docket No. A-3349-15T3, in February of this year, the bill was amended to also end the unfair tax treatment on the first filed qui tam plaintiff who is taxed on the entire recovery, including attorneys' fees and costs, even if there are multiple qui tam plaintiffs. In Kite, there were three qui tam plaintiffs, but only the first filed qui tam plaintiff was taxed on the entire recovery, while the other two plaintiffs were not.

The Senate has already passed the bill, which faces a full vote in the Assembly before landing on the governor's desk to be signed into law. The NJSBA is closely watching the bill.

Editor's note: The NJSBA argued a trio of amicus cases on Sept. 12. The following is the second installment of coverage. An upcoming edition of the Capitol Report will cover the arguments made before the New Jersey Supreme Court in Amanda Kernahan v. Home Warranty Administrator of Florida, Inc. and Choice Home Warranty.

Court considers scientific reliability of Alcotest results in faulty calibration cases

The NJSBA joined with other attorneys in urging the Supreme Court to adopt a special master's report concluding that the use of a National Institute of Standards and Technology (NIST)-traceable thermometer in the calibration of an Alcotest machine, used to test a defendant's blood alcohol content in a driving while intoxicated prosecution, is a necessary component for blood alcohol readings from the machine to be proffered as scientifically reliable evidence. The state argued that use of the thermometer was just a precautionary quality check, and should not be required to render the machine scientifically reliable.

The debate arose in State v. Cassidy, Docket No. 078390, where a State Police sergeant failed to properly calibrate Alcotest instruments by not testing the simulator solutions with a NIST-traceable thermometer before calibrating the machine. That testing is one of the steps required by the Supreme Court in State v. Chun, where the Alcotest was deemed scientifically reliable so long as a number of conditions, including using a NIST-traceable thermometer during calibration, were met.

Last fall, the Court remanded the matter to Special Master Joseph F. Lisa, who issued a 200-page report after holding hearings and reviewing briefs and other documents submitted by the parties. In his report, Judge Lisa concluded: “The evidence raises substantial doubts about the scientific reliability of breath test results produced by Alcotest devices calibrated without the use of a NIST-traceable thermometer.”

If the Court adopts the special master's conclusion, it must also consider what remedies to provide the nearly 20,000 defendants who could potentially be affected by the outcome. Jeff Gold, arguing on behalf of the NJSBA, urged that affected defendants be notified and be permitted to take action to reopen their cases. Additional remedies were outlined in the NJSBA brief submitted to the Court and authored by Gold, Arnold N. Fishman and Miles S. Winder.