Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

A Texas-based company distributed files online that enabled the 3D printing of functional, untraceable firearms. After New Jersey’s Attorney General issued a cease-and-desist letter and the state legislature enacted a statute prohibiting the distribution of such files to unlicensed individuals, the company and an affiliated nonprofit restricted New Jersey residents from accessing these files. The plaintiffs challenged the actions, alleging violations of the First, Second, and Fourteenth Amendments.Initially, the plaintiffs filed suit in the Western District of Texas, which dismissed the case for lack of personal jurisdiction. Plaintiffs then filed a similar suit in the District of New Jersey, alleging the statute constituted criminal censorship. After complex procedural maneuvers—including appeals and transfers between Texas and New Jersey, and requests for retransfer—the litigation proceeded in the District of New Jersey, which consolidated the relevant cases.The United States Court of Appeals for the Third Circuit reviewed the District of New Jersey’s decision to dismiss the complaint with prejudice. The Third Circuit affirmed the lower court’s rulings. It held that the district court did not abuse its discretion in denying retransfer to Texas. The court further held that the plaintiffs lacked standing to bring a Second Amendment claim, as there were no allegations that any plaintiff or member was prevented from 3D-printing a firearm. The court also found the statute was not void for vagueness under the Due Process Clause, as it provided fair notice of prohibited conduct. Finally, the court held that plaintiffs failed to plead sufficient facts showing that the computer code at issue was expressive and entitled to First Amendment coverage, as the complaint did not detail the nature or expressive use of the files. The dismissal with prejudice was affirmed. View "Defense Distributed v. Attorney General New Jersey" on Justia Law

Tammy Knieling worked as a chef and deck hand on a chartered boat owned by William Poston and captained by Don Fung Fook. During a voyage, Knieling broke and dislocated her left middle finger while following an order to release the dinghy line. Despite the injury, she continued her work and did not miss any wages. After returning ashore, she was treated for the injury, which resulted in permanent loss of some range of motion. A medical expert suggested possible future treatments, including exercises, injections, and potentially surgery, but could not confirm if she had reached maximum medical improvement or if further treatments would be necessary or effective.Knieling brought suit against both Fook and Poston in the District Court of the Virgin Islands, which conducted a bench trial. The District Court dismissed her claims against Fook but found Poston liable under the Jones Act for negligence, awarding past medical expenses and pain and suffering. The court also found Poston liable for medical expenses under admiralty law but determined Knieling had already recovered these. It declined to award her living expenses, punitive damages, or attorney’s fees, finding she neither took time off work nor incurred additional living costs, and that Poston’s delay in payment was not in bad faith.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s judgment. The Third Circuit held that Knieling could not recover maintenance because she did not miss work or incur additional living expenses. The court also held that her claim for future medical expenses was too speculative, as there was insufficient evidence regarding her need for further treatment. However, if she requires curative treatment in the future, she may bring a new claim. Finally, the court affirmed the denial of punitive damages, attorney’s fees, and costs due to the absence of bad faith by the defendants. View "Knieling v. Fook" on Justia Law

Dameia Smith, an IRS tax examining clerk, was involved in a series of criminal acts beginning with the armed robbery of a restaurant employee in September 1998. After learning that the victim was cooperating with authorities, Smith accessed the IRS database to obtain her address and expressed intentions to prevent her from testifying, including stating he would kill her. In January 1999, Smith drove to the victim’s home with a firearm and attempted to persuade a friend to kill her; when the friend refused, Smith coerced him into an attempted bank robbery. The plan failed, and Smith was arrested after his friend began cooperating with law enforcement.Smith was tried in the United States District Court for the Eastern District of Pennsylvania on six counts, including Hobbs Act robbery, unauthorized computer access, solicitation to commit murder of a federal witness, attempted murder of a federal witness, and using a firearm during and in relation to a crime of violence under 18 U.S.C. § 924(c). The jury initially convicted Smith only of unauthorized computer access, but on retrial, convicted him on all charges. Smith’s § 924(c) conviction was predicated on either solicitation or attempted murder, with a general verdict form not specifying which. The District Court imposed a lengthy sentence and later denied Smith’s motion for relief under 28 U.S.C. § 2255, finding attempted murder of a federal witness was a crime of violence under the elements clause. Subsequent remands and appeals followed Supreme Court decisions narrowing the scope of qualifying predicates for § 924(c).On appeal, the United States Court of Appeals for the Third Circuit held that attempted murder of a federal witness categorically qualifies as a “crime of violence” under 18 U.S.C. § 924(c)'s elements clause because it necessarily requires proof of the attempted use of physical force. The court also found no reasonable probability that Smith’s § 924(c) conviction was based solely on solicitation, an invalid predicate, rendering any instructional error harmless. The Third Circuit affirmed the District Court’s denial of relief. View "USA v. Smith" on Justia Law

Several shareholders of Paya Holdings, Inc.—who were originally sponsors of a special purpose acquisition company that merged with Paya—held “Earnout Shares” subject to contractual transfer restrictions. Under the Sponsor Support Agreement (“SSA”), these shares could not be transferred until October 2025 unless a “Change in Control” occurred and the price per share exceeded $15.00. If the price was below $15.00, the Earnout Shares would be automatically forfeited prior to consummation of the change. In January 2023, Nuvei Corporation agreed to purchase all Paya shares for $9.75 per share in a tender offer. The offer required that tendered shares be freely transferable. The appellants attempted to tender their Earnout Shares, but Nuvei rejected them, citing the SSA’s restrictions.The shareholders sued Nuvei in the U.S. District Court for the District of Delaware, alleging that Nuvei violated the SEC’s Best Price Rule, which requires the highest consideration paid to any shareholder in a tender offer to be paid to all shareholders of that class. The District Court dismissed the suit for failure to state a claim, reasoning that no consideration was actually paid to the appellants because their shares were not validly tendered due to the transfer restrictions.On appeal, the U.S. Court of Appeals for the Third Circuit affirmed the District Court’s dismissal. The Third Circuit held that the Best Price Rule does not require a tender offeror to purchase shares that are subject to self-imposed transfer restrictions. The Rule mandates equal payment only for shares “taken up and paid for” pursuant to a tender offer, and it is silent regarding whether offerors must accept all tendered shares. Therefore, Nuvei was not required to purchase the appellants’ restricted shares, and dismissal of their claim was proper. View "Abramowski v. Nuvei Corp" on Justia Law

Essintial Enterprise Solutions, LLC, a staffing and services company, received a $7 million Paycheck Protection Program (PPP) loan during the COVID-19 pandemic. The company calculated its loan amount based on its reported payroll costs, which included payments made to both employees and independent contractors. After the loan was issued and the company applied for forgiveness, its bank approved forgiveness of the full amount. However, the Small Business Administration (SBA) reviewed the forgiveness request and determined that payments made to independent contractors were not eligible as “payroll costs” under the CARES Act, resulting in only partial forgiveness. The SBA forgave approximately $3.7 million and denied forgiveness for the remainder that was based on contractor payments.Essintial challenged the SBA’s decision by filing suit in the United States District Court for the Middle District of Pennsylvania. The company argued that the SBA’s interpretation of “payroll costs” was erroneous and violated the Administrative Procedure Act (APA). The District Court agreed with Essintial, granting summary judgment in its favor. It held that the SBA’s exclusion of independent contractor payments from payroll costs was arbitrary and capricious, and ordered full loan forgiveness for Essintial.On appeal, the United States Court of Appeals for the Third Circuit reviewed the statutory definition of “payroll costs” in the CARES Act de novo. The Third Circuit held that the SBA’s interpretation was correct: payments to independent contractors by a business are not included as “payroll costs” for PPP loan forgiveness purposes. The court concluded that the CARES Act provides two separate definitions of “payroll costs” depending on the borrower’s type, and Essintial’s payments to independent contractors did not qualify. The Third Circuit reversed the District Court’s judgment and remanded for further proceedings. View "Essintial Enterprise Solutions LLC v. SBA" on Justia Law

Two individuals, one a Nigerian citizen and another a Jamaican citizen, were held in U.S. immigration detention for extended periods following the completion of criminal sentences or pending immigration proceedings. Both petitioned for writs of habeas corpus in the United States District Court for the Western District of Pennsylvania, challenging their prolonged detention without individualized bond hearings as violations of their Fifth Amendment rights. The District Court granted both petitions, ordered bond hearings, and both individuals were subsequently released on bond.Following their success, each petitioner sought attorneys’ fees and costs under the Equal Access to Justice Act (EAJA). The District Court found that the government’s position in opposing the habeas petitions was not "substantially justified" and awarded fees: $18,224.58 to the Nigerian petitioner and $15,841.60 to the Jamaican petitioner. The government appealed these fee awards to the United States Court of Appeals for the Third Circuit.The United States Court of Appeals for the Third Circuit addressed whether a habeas corpus petition challenging immigration detention under 28 U.S.C. § 2241 qualifies as a “civil action” under the EAJA, thus entitling prevailing parties to attorneys’ fees and costs. The Third Circuit held that such habeas actions are indeed “civil actions” within the meaning of the EAJA, relying on longstanding legal tradition and statutory interpretation. The court further affirmed that the government’s position in the Nigerian petitioner’s case was not substantially justified, due to the lengthy detention without a bond hearing. Accordingly, the Third Circuit affirmed the District Court’s awards of attorneys’ fees and costs to both petitioners. View "Michelin v. Warden Moshannon Valley Correctional Center" on Justia Law

Three parents of students in Philadelphia challenged the School District’s 2022 Admissions Policy for four selective public high schools. Prior to 2022, admissions decisions were made by individual schools using academic criteria, attendance, and sometimes additional requirements such as interviews and writing samples. After a report identified geographic disparities in school representation, and following the School District’s public commitments to anti-racism and equity, a new centralized policy was adopted. This policy introduced revised academic standards, eliminated certain prior requirements, and implemented a zip code preference favoring applicants from six areas with high Black and Hispanic populations. Qualified applicants from these zip codes received automatic admission, while others had to enter a lottery for remaining seats.The parents, whose children lived outside the preferred zip codes and met the new criteria but were not admitted to their first-choice schools, filed suit in the United States District Court for the Eastern District of Pennsylvania. They alleged violations of Title VI, the Equal Protection Clause, and related state constitutional provisions, arguing that the new process was racially discriminatory. The District Court granted summary judgment for the School District, finding that no reasonable factfinder could conclude the policy had a racially discriminatory purpose or impact. The court applied rational basis review, holding the policy was rationally related to legitimate interests such as increasing access for underrepresented geographic areas.On appeal, the United States Court of Appeals for the Third Circuit held that, viewing the evidence in the light most favorable to the parents, a reasonable factfinder could conclude the Admissions Policy had both discriminatory purpose and impact. The Third Circuit vacated the District Court’s judgment and remanded for further proceedings, directing that strict scrutiny must be applied if a discriminatory purpose and impact are found. View "Sargent v. School District of Philadelphia" on Justia Law

The appellant in this case was the sole owner and operator of a clean energy startup. In order to attract investment, he provided prospective investors with forged business agreements, altered financial statements, and other documents that misrepresented the company’s assets, operational history, and business relationships. He also fabricated the signatures of various business partners and used personal information of others without authorization. Investors provided nearly $1 million based on these representations. The appellant then diverted a substantial portion of the funds for personal use, including the purchase of a residence, and obscured these transactions through rapid transfers among several accounts. He continued to mislead investors about the use of their funds and the status of the business. When questioned by federal agents, he made a series of false statements regarding his activities.A grand jury in the U.S. District Court for the Middle District of Pennsylvania indicted the appellant on multiple counts, including wire fraud, mail fraud, aggravated identity theft, money laundering, unlawful monetary transactions, obstruction of justice, and making false statements. After a nine-day jury trial, the jury found him guilty on all counts. The District Court sentenced him to 72 months’ imprisonment and ordered restitution of approximately $1.2 million, including attorneys’ fees incurred by victims.The United States Court of Appeals for the Third Circuit reviewed the case. On appeal, the appellant challenged the sufficiency of the evidence, the jury instructions, the constitutionality of the aggravated identity theft statute, denial of a good faith instruction, and the restitution order. The Court held that a general Rule 29 motion does not preserve all sufficiency arguments for appeal and found no plain error in the conviction. It also found the jury instructions and statute to be proper and the denial of the good faith instruction not to be an abuse of discretion. However, the Court held that the Mandatory Victims Restitution Act does not authorize restitution for attorneys’ fees, vacated that portion of the restitution order, and remanded for entry of an amended judgment. All other aspects of the conviction and sentence were affirmed. View "United States v. Abrams" on Justia Law

Rodney Phath applied for a truck driving position with Central Transport LLC. He had the necessary qualifications and disclosed during the hiring process that he had a fifteen-year-old armed robbery conviction, for which he had served six years in prison. Upon learning of this conviction, Central Transport immediately decided not to hire him. Phath then filed a lawsuit, alleging that Central Transport violated a Pennsylvania statute that restricts how employers may use criminal history information in employment decisions.The United States District Court for the Eastern District of Pennsylvania dismissed Phath’s claim. The court reasoned that the Pennsylvania Criminal History Record Information Act did not apply in this instance because Central Transport had learned of Phath’s conviction directly from him, rather than from a state agency’s records.On appeal, the United States Court of Appeals for the Third Circuit reviewed the matter de novo. The Third Circuit held that the Act’s protections are triggered whenever an employer receives information that is part of an applicant’s criminal history record information file, regardless of the source of that information. The court concluded that nothing in the statute requires the information to come specifically from a state agency’s file. Thus, by learning of Phath’s conviction—even through his own disclosure—Central Transport was subject to the Act’s provisions, including restrictions on how it may use that information and requirements for notifying the applicant if rejected on that basis.As a result, the Third Circuit reversed the District Court’s dismissal and remanded the case for further proceedings, holding that the Act applies even when an applicant self-discloses criminal history information. View "Phath v. Central Transport LLC" on Justia Law

A minor league baseball team in Oregon lost its longstanding affiliation with a Major League Baseball (MLB) club after MLB restructured its relationship with minor league teams in 2020. The team’s owner alleges that a minority owner of an MLB franchise, who also served on the board and a negotiation committee of the national minor league association, acted to reduce the number of minor league clubs for personal gain, which resulted in the team’s exclusion from the new affiliation structure. The owner claims that the association’s rules left it dependent on the board and committee members to protect its interests.The United States District Court for the District of New Jersey dismissed the owner’s complaint, finding that it failed to plausibly allege the existence of a fiduciary relationship between the board member and the team. The owner appealed, arguing that fiduciary duties arose under Florida’s non-profit statute, by contract, or by implication due to the structure of the association and the interactions between the parties.The United States Court of Appeals for the Third Circuit reviewed the District Court’s dismissal de novo. The Third Circuit held that Florida’s non-profit statute does not create a fiduciary duty from a director to the members of the non-profit, only to the corporation itself. The court also found no express or implied fiduciary duty arising from contractual provisions or the surrounding circumstances. The court distinguished direct and derivative actions and concluded that the complaint did not allege facts to support a direct or implied fiduciary relationship. Accordingly, the Third Circuit affirmed the District Court’s dismissal of the complaint for failure to state a claim. View "Sports Enterprises Inc v. Goldklang" on Justia Law