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Metro, a managing clerk at a New York City law firm, engaged in a five-year scheme in which he disclosed material nonpublic information concerning corporate transactions to his friend Tamayo. Tamayo told his stockbroker, Eydelman, who made trades for Tamayo, himself, his family, his friends, and other clients. Metro did not hold the involved stocks himself and did not collect proceeds but relied on Tamayo to reinvest the proceeds from their unlawful trades in future insider trading. During the government’s investigation, Tamayo promptly admitted his role in the scheme and cooperated with the government. The insider trading based on Metro’s tips resulted in illicit gains of $5,673,682. The court attributed that entire sum to Metro in determining his 46-month sentence after Metro pled guilty to conspiracy to violate securities laws, 18 U.S.C. 371, and insider trading, 15 U.S.C. 78j(b) and 78ff. Metro denies being aware of Eydelman’s existence until one year after he relayed his last tip to Tamayo, and contends that he never intended any of the tips to be passed to a broker or any other third party. The Third Circuit vacated the sentence. The district court failed to make sufficient factual findings to support the attribution of the full $5.6 million to Metro and gave too broad a meaning to the phrase “acting in concert.” View "United States v. Metro" on Justia Law

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More than 10 years ago, Tatis incurred a debt of $1,289.86 to Bally Fitness. Allied, a debt collector, sent Tatis a letter dated May 18, 2015 stating: “[The creditor] is willing to accept payment in the amount of $128.99 in settlement of this debt. You can take advantage of this settlement offer if we receive payment of this amount or if you make another mutually acceptable payment arrangement within 40 days.” The six-year New Jersey limitations period for debt-collection actions had already run. Tatis filed a class action, alleging that Allied’s letter violated the Fair Debt Collection Practices Act (15 U.S.C. 1692) because Tatis interpreted the word “settlement” to mean that she had a “legal obligation” to pay and the letter “[f]alsely represent[ed] the legal status of the debt" made “false threats to take action that cannot legally be taken,” and used “false representations and/or deceptive means to collect or attempt to collect." The Third Circuit reversed the dismissal of the suit. Collection letters may violate the FDCPA by misleading or deceiving debtors into believing they have a legal obligation to repay time-barred debts even when the letters do not threaten legal action. The least-sophisticated debtor could plausibly be misled by the specific language used in Allied’s letter. View "Tatis v. Allied Interstate LLC" on Justia Law

Posted in: Banking, Consumer Law

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More than 10 years ago, Tatis incurred a debt of $1,289.86 to Bally Fitness. Allied, a debt collector, sent Tatis a letter dated May 18, 2015 stating: “[The creditor] is willing to accept payment in the amount of $128.99 in settlement of this debt. You can take advantage of this settlement offer if we receive payment of this amount or if you make another mutually acceptable payment arrangement within 40 days.” The six-year New Jersey limitations period for debt-collection actions had already run. Tatis filed a class action, alleging that Allied’s letter violated the Fair Debt Collection Practices Act (15 U.S.C. 1692) because Tatis interpreted the word “settlement” to mean that she had a “legal obligation” to pay and the letter “[f]alsely represent[ed] the legal status of the debt" made “false threats to take action that cannot legally be taken,” and used “false representations and/or deceptive means to collect or attempt to collect." The Third Circuit reversed the dismissal of the suit. Collection letters may violate the FDCPA by misleading or deceiving debtors into believing they have a legal obligation to repay time-barred debts even when the letters do not threaten legal action. The least-sophisticated debtor could plausibly be misled by the specific language used in Allied’s letter. View "Tatis v. Allied Interstate LLC" on Justia Law

Posted in: Banking, Consumer Law

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During Greene’s 1996 trial for murder, robbery, and conspiracy, the prosecution introduced the redacted confessions of Greene’s non-testifying codefendants. Pennsylvania’s High Court summarily dismissed an appeal in which Greene argued that the U.S. Supreme Court’s 1998 "Gray" holding, decided after the Superior Court rejected Greene’s Confrontation Clause claim, entitled him to relief. Pennsylvania courts also rejected his post-conviction petitions. The U.S. Supreme Court upheld the denial of Greene's 2004 habeas petition, noting that Gray had not sought certiorari relief after the Pennsylvania Supreme Court dismissed his appeal and did not assert his “Gray” claim in his state post-conviction petition. Three years later, Greene filed a pro se Rule 60(b)(6) motion to vacate, arguing that appellate counsel rendered ineffective assistance in failing to advise Greene to petition the U.S. Supreme Court, citing the Court’s 2012 decision (Martinez v. Ryan) that “[w]here, under state law, claims of ineffective assistance of trial counsel must be raised in an initial-review collateral proceeding, a procedural default will not bar a federal habeas court from hearing a substantial claim of ineffective assistance at trial if, in the initial-review collateral proceeding, there was no counsel or counsel in that proceeding was ineffective.” The Third Circuit affirmed the denial of relief, citing the Supreme Court’s 2017 holding (Davila v. Davis) that “a federal court [may not] hear a substantial, but procedurally defaulted, claim of ineffective assistance of appellate counsel when a prisoner’s state post-conviction counsel provides ineffective assistance by failing to raise that claim.” View "Greene v. Superintendent Smithfield SCI" on Justia Law

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Purchasers of egg products accused suppliers of conspiring to reduce the supply of eggs and increase the price for egg products in violation of the Sherman Act, 15 U.S.C. 1. Plaintiffs alleged that the producers conspired to reduce the population of egg-laying hens, resulting in a reduced supply of eggs and, given the inelasticity of demand, supra-competitive prices. A trade association coordinated a certification program under which participants had to increase their cage sizes and not replace hens that died. Plaintiffs alleged that the proffered animal welfare rationale was a pretext to reduce supply. The district court, citing a bar on indirect purchaser actions, concluded that the purchaser-plaintiffs lacked standing. The Third Circuit reversed. As a matter of first impression, a direct purchaser of a product that includes a price-fixed input has antitrust standing to pursue a claim against the party that sold the product to the purchaser, where the seller is a participant in the price-fixing conspiracy, but the product also includes some price-fixed input supplied by a third-party non-conspirator. The direct relationship between the purchasers and their suppliers and the fact that the suppliers are alleged price-fixing conspirators, not merely competitors of those conspirators, are key factors. Regardless of who collected the overcharge, the purchasers’ econometric analysis purports to show the “difference between the actual [supracompetitive] price and the presumed competitive price” of the egg products they purchased. This purported difference, and the purchasers’ resulting injury, was allegedly a direct and intended result of the suppliers’ conspiracy. View "In Re: Processed Egg Products Antitrust Litigation" on Justia Law

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The Sauter Estate filed a complaint in the Southern District of New York against Citigroup, Banamex and Banamex U.S.A., seeking information pertaining to Sauter’s accounts. The Estate's amended complaint added Grupo as a defendant and added a claim for Racketeer Influenced and Corrupt Organizations Act Infractions, 18 U.S.C. 1961-1968. After defendants moved to dismiss, the Estate filed a notice of voluntary withdrawal under Federal Rule of Civil Procedure 41(a)(1)(A)(i). The defendants unsuccessfully moved to vacate that notice and to dismiss with prejudice and requested sanctions under 28 U.S.C. 1927 and the court’s “inherent powers to impose sanctions as a deterrent against continued vexatious litigation." The court noted that the Federal Rules provide safeguards in case the plaintiff commences a second action, including ordering plaintiff to pay all of defendants’ costs and fees in the dismissed action, Fed. R. Civ. P. 41(a)(1)(B)(d). The Estate subsequently filed a complaint in the Delaware District Court, naming only Citigroup. Citigroup moved for costs, including attorneys’ fees, under Rule 41(d). The district court granted the motion for costs but concluded that because the plain language of Rule 41(d) does not provide for an award of attorneys’ fees. The Third Circuit affirmed. Attorneys’ fees may only be awarded as “costs” under Rule 41(d) when the substantive statute under which the lawsuit was filed defines costs to include attorneys’ fees; no such statute is involved here. View "Garza v. Citigroup Inc" on Justia Law

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St. Peter’s, a non-profit healthcare entity, runs a hospital, employing over 2,800 people, with ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most Board of Governors members and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s sought a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33), continuing to pay ERISA-mandated insurance premiums while the application was pending. In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan. The Third Circuit initially affirmed the denial of a motion to dismiss, concluding that St. Peter’s was not a church. The court reversed, following a June 5, 2017, order by the Supreme Court of the United States. View "Kaplan v. Saint Peter's Healthcare System" on Justia Law

Posted in: ERISA

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St. Peter’s, a non-profit healthcare entity, runs a hospital, employing over 2,800 people, with ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most Board of Governors members and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s sought a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33), continuing to pay ERISA-mandated insurance premiums while the application was pending. In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan. The Third Circuit initially affirmed the denial of a motion to dismiss, concluding that St. Peter’s was not a church. The court reversed, following a June 5, 2017, order by the Supreme Court of the United States. View "Kaplan v. Saint Peter's Healthcare System" on Justia Law

Posted in: ERISA

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Migliaro purchased a Standard Flood Insurance Policy (SFIP) under the National Flood Insurance Program, 42 U.S.C. 4011(a), from Fidelity for his property, which sustained flood damage in October 2012's Hurricane Sandy. Fidelity’s adjuster recommended a payment of $90,499.11, which Fidelity paid. Five months later, Migliaro submitted a proof of loss, claiming an additional $236,702.57. On July 15, 2013, Fidelity sent Migliaro a letter titled “Rejection of Proof of Loss,” stating: This is not a denial of your claim. Your field adjuster provided you with an estimate and Proof of Loss regarding covered damages. If there are additional covered damages identified, please forward documentation and they will be considered. Migliaro did not provide additional documentation or submit a second proof of loss but filed suit. Migliaro's July 2015 complaint was dismissed as untimely. Because SFIP claims are ultimately paid by the government, SFIPs are identical and state: You may not sue ... unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year after the date of the written denial of all or part of the claim. The Third Circuit affirmed. Although the rejection of a proof of loss is not per se a denial of the claim, it does constitute a denial if the policyholder treats it as such by filing suit against the carrier. View "Migliaro v. Fidelity National Indemnity Insurance Co." on Justia Law

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Bradley was Director of Budget and Financial Planning at the West Chester University of Pennsylvania (WCU). During preparation of a budget report for the Pennsylvania State System of Higher Education, Bradley was instructed to increase a line item by several million dollars, to “swing” a multi-million dollar surplus to a multi-million dollar deficit. She was told that the report “was a political document[,] and if you don’t present this deficit, your appropriation money is at risk.” At a meeting of WCU’s Budget Committee, Bradley stated that alterations were “unethical and quite frankly, [possibly] illegal.” Her supervisor expressed his displeasure, stating that her “future was at risk.” Bradley subsequently circulated a memorandum documenting her concerns. Two years later, Bradley was assisting with a meeting of WCU’s Enrollment Committee. She presented her supervisor’s proposed budget, then answered a question and presented an alternate budget, which, she believed, “presents reality.” Although she was expected to speak at a presentation the next day, Bradley refused to do so unless she could present her version of the budget. Her supervisor told Bradley that her contract would not be renewed. Arguing that her termination was in retaliation for speech protected by the First Amendment, she sued. The Third Circuit affirmed dismissal. The institutional defendants were entitled to Eleventh Amendment immunity; her speech was pursuant to her official duties, and, therefore not constitutionally protected. View "Bradley v. West Chester University of Pennsylvania" on Justia Law