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

The case involves the Hertz Corporation and its affiliates, which filed for Chapter 11 bankruptcy protection in May 2020 due to financial difficulties exacerbated by the COVID-19 pandemic. Hertz emerged from bankruptcy a year later with a reorganization plan that promised to leave all creditors unimpaired, meaning their rights would not be altered. However, the plan paid unsecured noteholders post-petition interest at the federal judgment rate rather than the higher contract rate and did not include certain make-whole fees (Applicable Premiums) for early redemption of the notes.The United States Bankruptcy Court for the District of Delaware initially ruled that the noteholders were not entitled to the contract rate of interest or the make-whole fees, considering the latter as unmatured interest disallowed under § 502(b)(2) of the Bankruptcy Code. The court also ruled that the noteholders were not entitled to early redemption fees on the 2024 notes. The noteholders appealed, arguing that as creditors of a solvent debtor, they were entitled to post-petition interest at the contract rate and the make-whole fees.The United States Court of Appeals for the Third Circuit reviewed the case and determined that the make-whole fees (Applicable Premiums) must be disallowed as they fit the definition of unmatured interest under § 502(b)(2). However, the court agreed with the noteholders that they were entitled to post-petition interest at the contract rate because Hertz was solvent. The court emphasized the absolute priority rule, which requires that creditors be paid in full before equity holders receive any distribution. The court concluded that the Bankruptcy Code incorporates this rule, and thus, the noteholders must receive contract rate interest, including the Applicable Premiums, to comply with the absolute priority rule and fulfill the plan's promise to leave their rights unaltered. The court affirmed in part and reversed in part the Bankruptcy Court's decisions. View "The Hertz Corporation v. Wells Fargo Bank, N.A." on Justia Law

Quintez Talley, an incarcerated individual, sought in forma pauperis (IFP) status to appeal without prepaying filing fees. The appellees argued that the "three strikes" provision of the Prison Litigation Reform Act (PLRA) barred Talley from proceeding IFP, claiming that three of his previous cases were dismissed on grounds that qualify as strikes under the PLRA. Talley contended that only one of these cases constituted a strike.The United States District Court for the Western District of Pennsylvania dismissed Talley's federal claim for failure to state a claim and his medical malpractice claim for not complying with Pennsylvania procedural rules. The court did not dismiss the entire action on strike-qualifying grounds, so this case did not count as a strike. In another case, the United States District Court for the Eastern District of Pennsylvania dismissed Talley's complaint for failure to state a claim but granted him leave to amend. Talley did not amend within the deadline, but the court did not formally close the case before Talley filed his notice of appeal, so this case also did not count as a strike. In a third case, the same court dismissed Talley's claims for failure to state a claim and noted his failure to file a certificate of merit for his medical malpractice claim. This dismissal was on strike-qualifying grounds, making it a strike.The United States Court of Appeals for the Third Circuit reviewed the case and determined that only one of Talley's previous cases constituted a strike. The court held that the dismissal of the medical malpractice claim for procedural non-compliance did not qualify as a strike, and the case where Talley was given leave to amend but did not do so was not formally closed, thus not a strike. The court granted Talley's motion to proceed IFP, allowing him to appeal without prepaying filing fees. View "Talley v. Pillai" on Justia Law

Levi Werley was seriously injured while riding an uninsured dirt bike. After the insurance of the driver who struck him did not fully compensate for his injuries, Levi’s parents sought underinsured motorist (UIM) benefits under their own automobile insurance policies. Their insurer, Mid-Century Insurance Company, paid $250,000 under one policy but denied an additional $250,000 under another policy, citing a household vehicle exclusion. The Werleys argued that this exclusion was invalid and unenforceable.The United States District Court for the Eastern District of Pennsylvania agreed with the Werleys, ruling that the household vehicle exclusion was invalid under Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL). The court held that the exclusion acted as a de facto waiver of stacking, which is not permissible under the MVFRL. Consequently, the court granted summary judgment in favor of the Werleys, entitling them to the additional UIM benefits.The United States Court of Appeals for the Third Circuit reviewed the case and vacated the District Court’s order. The Third Circuit held that the household vehicle exclusion in the Multi-Vehicle Policy was valid and enforceable. The court distinguished this case from precedents like Gallagher v. GEICO Indemnification Co. and Donovan v. State Farm Mut. Auto. Ins. Co., noting that the Werleys had never paid premiums for UIM coverage on the dirt bike. The court emphasized that exclusions limiting UIM coverage are generally enforceable unless they act as impermissible de facto waivers of stacking, which was not the case here. The Third Circuit remanded the case with instructions to enter judgment in favor of Mid-Century. View "Mid-Century Insurance Co v. Werley" on Justia Law

In two separate class actions, Kenneth Hasson and Jordan Schnur alleged that FullStory, Inc. and Papa John’s International, Inc. unlawfully wiretapped their online communications using FullStory’s Session Replay Code. This code intercepts detailed user interactions on websites without user consent. Hasson, a Pennsylvania resident, claimed FullStory wiretapped him while he browsed Mattress Firm’s website. Schnur, also from Pennsylvania, alleged similar wiretapping by Papa John’s website.The United States District Court for the Western District of Pennsylvania dismissed both cases for lack of personal jurisdiction. In Hasson’s case, the court found that FullStory, a Delaware corporation with its principal place of business in Georgia, did not have sufficient contacts with Pennsylvania. The court denied Hasson’s request for jurisdictional discovery. In Schnur’s case, the court ruled that Papa John’s, also a Delaware corporation with its principal place of business in Georgia, did not expressly aim its conduct at Pennsylvania, despite operating numerous restaurants in the state.The United States Court of Appeals for the Third Circuit reviewed these dismissals. The court affirmed the dismissal in Schnur’s case, agreeing that Schnur failed to show that Papa John’s expressly aimed its conduct at Pennsylvania under the Calder “effects” test. The court noted that merely operating a website accessible in Pennsylvania does not establish personal jurisdiction.However, the court vacated the dismissal in Hasson’s case and remanded it for further consideration. The court held that the District Court should have also considered whether personal jurisdiction was proper under the traditional test as articulated in Ford Motor Co. v. Montana Eighth Judicial District Court. This test examines whether the defendant purposefully availed itself of the forum and whether the plaintiff’s claims arise out of or relate to the defendant’s contacts with the forum. The court instructed the District Court to reassess FullStory’s contacts with Pennsylvania under this framework. View "Hasson v. Fullstory Inc" on Justia Law

In 2015, Eddie Williams was prosecuted in Pennsylvania for crimes related to a dispute over illegal drug profits, resulting in one death and one serious injury. Williams, along with Rick Cannon and Akeita Harden, was implicated in the incident. Cannon pleaded guilty to multiple charges, including homicide, and Williams was tried jointly with Harden. During the trial, the judge read Cannon's Criminal Information, which included charges naming Williams as a co-conspirator, to the jury. Williams was found guilty on all counts and sentenced to life imprisonment plus additional years.Williams filed a Post-Conviction Relief Act (PCRA) petition in 2017, arguing ineffective assistance of counsel due to his attorney's failure to object to the reading of Cannon's Criminal Information. The PCRA court denied the petition, and the Pennsylvania Superior Court affirmed. The Pennsylvania Supreme Court denied further appeal. Williams then filed a habeas corpus petition in the United States District Court for the Middle District of Pennsylvania, which granted relief, finding a violation of the Confrontation Clause and ineffective assistance of counsel.The United States Court of Appeals for the Third Circuit reviewed the case. The court held that the reading of Cannon's Criminal Information, which included testimonial statements implicating Williams, violated the Confrontation Clause. The court also found that Williams's counsel was ineffective for failing to object to the reading, which prejudiced Williams's defense. The Third Circuit affirmed the District Court's decision to grant habeas relief, concluding that the errors had a substantial and injurious effect on the jury's verdict. The case was remanded for the District Court to issue a writ of habeas corpus. View "Williams v. District Attorney Lebanon County" on Justia Law

Andrew Morgan, a millwright laborer, was employed by Allison Crane & Rigging LLC until his termination on November 18, 2020. Morgan injured his lower back on September 29, 2020, and was diagnosed with a bulged or herniated disc by a chiropractor. He was placed on light duty and given restrictions on bending and lifting. Despite these accommodations, Morgan was terminated, allegedly for failing to follow company policies and not showing up for work on November 17, 2020. Morgan filed a lawsuit claiming disability-based discrimination, retaliation, and failure to accommodate under the ADA and PHRA, as well as wrongful discharge under Pennsylvania common law.The United States District Court for the Middle District of Pennsylvania granted summary judgment in favor of Allison Crane. The court held that Morgan did not establish an actual or perceived disability under the ADA and PHRA, as his testimony about the chiropractor's diagnosis was inadmissible hearsay and he failed to provide necessary medical evidence. The court also found that Morgan's back pain was transitory and minor, thus not qualifying as a disability. Additionally, the court dismissed Morgan's wrongful discharge claim for lack of prima facie evidence of protected activity.The United States Court of Appeals for the Third Circuit reviewed the case and found that the District Court applied an incorrect legal standard. The Third Circuit clarified that under the ADA Amendments Act of 2008, temporary impairments can qualify as disabilities if they substantially limit major life activities. The court reversed the District Court's dismissal of Morgan's back pain-based discrimination claims, vacated the dismissal of his retaliation and failure to accommodate claims, and affirmed the dismissal of his wrongful discharge claim. The case was remanded for further proceedings consistent with the Third Circuit's opinion. View "Morgan v. Allison Crane & Rigging LLC" on Justia Law

Michael Hughes and Nashadeem Henderson committed two armed robberies in 2016. In the first incident, they robbed a drug dealer, with Hughes pulling a gun and demanding drugs and cash. When the dealer resisted, Henderson shot him in the leg. Four days later, they robbed a pizza delivery driver, with Henderson shooting the driver in the leg while Hughes took cash from his pockets. Hughes was convicted of two counts of Hobbs Act robbery and two gun charges under 18 U.S.C. § 924(c).The United States District Court for the Eastern District of Pennsylvania instructed the jury that Hughes could be convicted under § 924(c) if he had either completed or attempted the robberies. Hughes did not object to this instruction at trial. The jury found Hughes guilty on all counts. Hughes appealed, arguing that the jury instructions were incorrect and that there was insufficient evidence to support his convictions.The United States Court of Appeals for the Third Circuit reviewed the case. The court acknowledged that the District Court erred by instructing the jury that attempted Hobbs Act robbery could support a § 924(c) charge, as the Supreme Court had later clarified in United States v. Taylor that attempted Hobbs Act robbery is not a crime of violence. However, the Third Circuit found that this error did not prejudice Hughes because the evidence overwhelmingly showed that he completed the robberies. The court also found sufficient evidence to support Hughes's involvement in both robberies and the impact on interstate commerce.The Third Circuit held that the erroneous jury instruction did not affect the trial's outcome and affirmed Hughes's convictions and sentence. View "USA v. Hughes" on Justia Law

Dyax Corporation performed research for Ares Trading S.A. and licensed patents to Ares, including some held by Cambridge Antibody Technology (CAT Patents). Ares used Dyax’s research to develop a cancer drug, Bavencio, and agreed to pay royalties to Dyax based on the drug’s sales. The royalty obligation outlasted the lifespan of the CAT Patents. The District Court held that Ares’ royalty obligation was not unenforceable under Brulotte v. Thys Co., which prohibits royalties that extend beyond a patent’s expiration.The United States District Court for the District of Delaware found that Ares’ royalty obligation did not violate Brulotte because it was not calculated based on activity requiring the use of inventions covered by the CAT Patents after their expiration. The court characterized the royalties as deferred compensation for Dyax’s pre-expiration research. Additionally, the court noted that Ares’ royalty obligation could run until the latest-running patent covered in the agreement expired, which included patents other than the CAT Patents.The United States Court of Appeals for the Third Circuit affirmed the District Court’s decision. The Third Circuit held that Ares’ royalty obligation was not calculated based on activity requiring post-expiration use of the CAT Patents, and thus, Brulotte did not apply. The court emphasized that the royalties were based on sales of Bavencio, which did not require the use of the CAT Patents after their expiration. The court also rejected Ares’ argument that Dyax violated the implied covenant of good faith and fair dealing, noting that Ares received all the benefits promised under the agreement. The court concluded that Dyax did not breach any obligations under the agreement, and Ares’ royalty obligation remained enforceable. View "Ares Trading SA v. Dyax Corp" on Justia Law

Plaintiffs Tommy Coleman and Jason Perkins, who worked as oil and gas pipeline inspectors for System One Holdings, LLC, were paid a flat daily rate without overtime compensation, even when working over forty hours a week. They filed a lawsuit claiming this violated the Fair Labor Standards Act (FLSA) and sought unpaid overtime on behalf of themselves and a putative class of similarly compensated inspectors.The United States District Court for the Western District of Pennsylvania reviewed the case. System One moved to dismiss and compel arbitration, arguing that the plaintiffs had signed arbitration agreements enforceable under the Federal Arbitration Act (FAA). The plaintiffs countered that they fell under the transportation workers' exemption to the FAA. The District Court, following the precedent set in Guidotti v. Legal Helpers Debt Resolution, L.L.C., ordered limited discovery into the arbitrability of the claims before deciding on the motion to compel arbitration. System One's motion for reconsideration of this order was denied.The United States Court of Appeals for the Third Circuit reviewed the case to determine if it had jurisdiction over the interlocutory appeal from the District Court's order. The Third Circuit held that it lacked appellate jurisdiction because the District Court's order did not formally deny the motion to compel arbitration but rather deferred its decision pending limited discovery. The court emphasized that the FAA permits appeals from specific types of orders, and the order in question did not fall within those categories. Consequently, the appeal was dismissed for lack of jurisdiction. View "Coleman v. System One Holdings LLC" on Justia Law

In 2020, Christopher Lamont Stimpson, Jr. contacted Benuel Stoltzfus, an Amish man in Lancaster County, Pennsylvania, to purchase five French bulldog puppies for $23,500. On the day of the sale, Stimpson and his associate, Wilbert Artis, visited the Stoltzfus home. After inspecting the puppies, Stimpson agreed to the purchase, but before the money count was complete, Artis took the puppies to their vehicle. A struggle ensued when Stimpson attempted to leave with the cash, during which he allegedly brandished a handgun. Stimpson and Artis fled with the puppies and most of the cash, leaving the Stoltzfus family with $4,140.The United States District Court for the Eastern District of Pennsylvania convicted Stimpson of Hobbs Act robbery and interstate transportation of stolen goods. Stimpson filed a motion to suppress evidence obtained from search warrants on social media accounts, arguing they were overbroad and lacked probable cause. The District Court denied the motion, but the government did not use the evidence obtained from the warrants at trial. Stimpson was convicted by a jury without the suppressed evidence.The United States Court of Appeals for the Third Circuit reviewed the case. Stimpson appealed the denial of his suppression motion and the application of a sentencing enhancement under USSG §2B3.1(b)(2)(D) for using a dangerous weapon. The Third Circuit found the suppression issue moot since the evidence was not used at trial. The court also upheld the sentencing enhancement, concluding that the District Court did not err in finding by a preponderance of the evidence that Stimpson used a dangerous weapon during the robbery.The Third Circuit affirmed Stimpson’s conviction and sentence. View "USA v. Stimpson" on Justia Law