Constitutional Right to Jury Trial Trumps NJ Alternative Dispute Resolution Statute

by Dennis C. Linken on February 11, 2013

Business attorney NYCA recent decision of the New Jersey Supreme Court found it unconstitutional to deny a party a jury trial in disputes of less than $25,000 involving damage to public utility underground facilities.  The Court concluded, without dissent, that applying a statutory provision, N.J.S.A. 48:2-80(d) (Section 80(d)), requiring that such disputes be resolved through a dispute resolution process violated the right to a jury trial afforded under the New Jersey Constitution for such cases.  N.J. Const. art. I, ¶9.

The case was instituted by Jersey Central Power & Light Company (JCP&L), following damage to its underground facilities when a contractor, Melcar Utility Co. (Melcar), working on behalf of Verizon New Jersey Inc. (Verizon), cut JCP&L’s lines.  JCP&L brought suit in the New Jersey Superior Court, Law Division, Special Civil Part, alleging negligence on the part of Verizon and Melcar; Melcar subsequently brought a third-party action against Utiliquest, the entity hired by JCP&L to mark the location of JCP&L’s underground facilities.

The legal framework of the case surrounded New Jersey’s Underground Facility Protection Act (UFPA), N.J.S.A. 48:2-73 to -91.  Recognizing the potentially dangerous consequences which could occur as a result of damage to a public utility’s underground facilities, the Legislature enacted the UFPA to establish a scheme of requiring mark-outs of such underground equipment prior to underground excavation or construction.  This so-called “One-Call Damage Prevention System” (One-Call System) requires that an excavator provide notice to the One-Call System at least three business days prior to the commencement of work.  N.J.S.A. 48:2-82.  The UFPA then requires that, within three business days of receipt of a notice of intent to excavate, the owner of an underground facility “[m]ark, stake, locate or otherwise provide” the location of its underground facilities in the area of the planned excavation.  N.J.S.A. 48:2-80(a)(2).  Significant penalties are provided under the UFPA for failure to comply.

Under N.J.S.A. 48:2-80(d), an underground facility operator is liable to an excavator for damage sustained by the excavator as a result of a failure to mark or locate the operator’s underground facilities.  By the same token, Section 80(d) imposes liability upon the excavator for any negligent damage to the underground facilities.  Section 80(d) further provides that “[a]ny dispute arising out of the provisions of this Subsection, where the claim is less than $25,000, shall be subject to an alternative dispute resolution process as established within the Office of Dispute Settlement in the Office of the Public Defender.”  The provision also permits -- but does not mandate -- an alternative dispute resolution process for amounts greater than $25,000 and further provides that, in all cases, the parties can agree upon another alternative dispute resolution party, should they so choose.

On the day of trial, Melcar, the excavator, moved to dismiss the matter before the court for lack of jurisdiction, contending that, under N.J.S.A. 48:2-80(d), the case had to be heard by the Office of Dispute Settlement (ODS).  Following subsequent briefing and argument, the court granted the motion and dismissed JCP&L’s complaint without prejudice.

On appeal, the Appellate Division, in a short, unpublished opinion, affirmed the trial court’s Order.  The Supreme Court thereafter granted JCP&L’s Petition for Certification.

JCP&L contended that N.J.S.A. 48:2-80(d) does not require that claims of less than $25,000 be submitted to the ODS, but rather that such submission is permissible.  In the alternative, JCP&L argued that if Section 80(d) were to be interpreted as mandating resolution by the ODS in such matters, the provision must be declared unconstitutional.

While the Supreme Court found that the plain language of the statute evidenced a legislative intent to subject all Section 80(d) matters involving damages of less than $25,000 to the ODS process, it also concluded that mandatory referral to ODS violated the right to a jury trial afforded under the New Jersey Constitution.  Noting that such protection applies to civil cases only where the right to a jury trial existed at common law and that it does not normally apply to cases in equity, the Court concluded that the nature of the action in question – a claim of negligence premised on a common law cause of action – necessarily invoked the constitutional right to a jury trial.  The failure of the Legislature in enacting Section 80(d) served to “ignore the right to a civil jury trial” and could not be countenanced, nor, concluded the Court, could it insert such right in the statute.  Rather, a statutory “fix” lay within the domain of the Legislature.

If you have any questions about the decision or would like to discuss how it may impact your business, please contact me, Dennis Linken, or the Scarinci Hollenbeck attorney with whom you work. 

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