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

BIC, which has its principal place of business in New Jersey, distributed machines manufactured by BIL, BIC’s parent entity located in Japan. In 2001 BIC began distributing the Brother 3220C, a printer, fax machine, scanner and copier, accompanied by a Limited Warranty and User Manual drafted by BIL in Japan and translated by BIC. Huryk alleges that from 2002 to 2005, BIC and its executives in New Jersey, knew about but concealed information regarding defects in the 3220C that caused printer heads to fail and caused the machines to purge excess amounts of ink when not used frequently enough. The district court dismissed his putative class action claim under the New Jersey Consumer Fraud Act, N.J. Stat. 56:8 on the ground that South Carolina law, not New Jersey law, applied. The Third Circuit affirmed, noting that South Carolina was the place where Huryk acted in reliance upon BIC’s representations, the place where Huryk, a domiciliary of South Carolina, received the representations, and the place where a tangible thing which is the subject of the transaction between the parties was situated at the time. View "Maniscalco v. Brother Int'l Corp." on Justia Law

The New Jersey Sports and Exposition Authority, a state agency which owned a leasehold interest in the East Hall, also known as “Historic Boardwalk Hall”, on the boardwalk in Atlantic City, was tasked with restoring it. After learning of the market for federal historic rehabilitation tax credits (HRTCs) among corporate investors, and of the additional revenue which that market could bring to the state through a syndicated partnership with one or more investors, NJSEA created Historic Boardwalk Hall, LLC (HBH) and sold a membership interest to a subsidiary of Pitney Bowes. Transactions admitting PB as a member of HBH and transferring ownership of East Hall to HBH were designed so that PB could earn the HRTCs generated from the East Hall rehabilitation. The IRS determined that HBH was simply a vehicle to impermissibly transfer HRTCs from NJSEA to PB and that all HRTCs taken by PB should be reallocated to NJSEA. The Tax Court disagreed. The Third Circuit reversed. PB, in substance, was not a bona fide partner in HBH. View "Historic Boardwalk Hall, LLC v. Comm'r of Internal Revenue" on Justia Law

The business proprietor, Calabrese, filed for reorganization of the business under Chapter 11 of the Bankruptcy Code. After failure to confirm a reorganization plan, the bankruptcy was converted to Chapter 7. He also filed an individual petition under Chapter 13. The State of New Jersey Department of Taxation filed several secured proofs of claim in the individual bankruptcy. As proprietor of a restaurant, Calabrese was required to collect sales tax from customers. N.J. Stat. 54:32B-3(c)(1), 54:32B-12(a), 54:32B-14(a). Calabrese successfully moved to have the claims reclassified as unsecured. New Jersey filed amended proofs alleging that Calabrese owes $63,437.19 in taxes collected while operating his business from 2003 to 2009. The Bankruptcy Court held the taxes at issue are trust fund taxes under 11 U.S.C. 507(a)(8)(C) rather than excise taxes under 507(a)(8)(E) and, therefore, not dischargeable. The district court and Third Circuit affirmed. Public policy concerns weigh against Calabrese, primarily because sales taxes collected by a retailer never become the property of the retailer; it retains those funds in trust for the state. View "In Re: Calabrese" on Justia Law

Plaintiff, a former assistant branch manager at Enterprise, filed a nationwide class action, claiming that Enterprise violated the Fair Labor Standards Act, 29 U.S.C. 207(a)(1), by failing to pay required overtime wages. The district court held that the parent company, which is the sole stockholder of 38 domestic subsidiaries, was not a “joint employer,” and granted summary judgment in favor of the parent company. The Third Circuit affirmed after examining a number of factors concerning the relationship between the parent company and the direct employer. View "In Re: Enter. Rent-A-Car Wage & Hour Emp't Practices Litig." on Justia Law

Ford provides a warranty, entitling buyers of new vehicles to have Ford repair or replace defective components at any Ford dealer, regardless of where they purchased the vehicle. Ford reimburses dealers, providing a mark-up of 40% over cost for most parts. However, under the New Jersey Franchise Protection Act, Ford must reimburse dealers for parts at the "prevailing retail rate," charged customers for non-warranty work. Ford implemented a Dealer Parity Surcharge to recoup the increased cost. Ford calculated, for each New Jersey dealer, the cost of increased warranty reimbursements and divided by the number of vehicles purchased by that same dealer. That amount constituted the surcharge added to the wholesale price of every vehicle. The Third Circuit affirmed summary judgment that DPS violated the NJFPA. Ford devised a new system, NJCS, under which Ford calculated its total cost of complying with the NJFPA and divided by the number of wholesale vehicles sold in the state. A dealer’s total NJCS increased in proportion to the number of vehicles it purchased, regardless of how many warranty repairs it submitted. The district court found that NJCS violated NJFPA. The Third Circuit reversed in part, holding that the scheme does not violate the statute. View "Liberty Lincoln-Mercury Inc. v. Ford Motor Co." on Justia Law

The Fair and Accurate Credit Transactions Act, 15 U.S.C. 1681, provides that merchants who accept credit or debit cards shall not print the expiration date of the cards upon any receipt provided to the cardholder at the point of the sale. The district court found no willful violation where a retailer printed the expiration month, but not the year, of the credit card on a receipt. The Third Circuit affirmed, finding that the retailer's interpretation of the law was erroneous, but not objectively unreasonable. View "Long v. Tommy Hilfiger U.S.A., Inc." on Justia Law

Harold and his son William started a corporation, operated by William. Harold made loans to the corporation. When the corporation ceased operating William and his wife formed PCI-2 to take its place; despite an agreement, Harold's loans were not repaid and Harold made loans to PCI-2, lending about $300,000 to PCI-1 and PCI-2. William and his wife acquired other corporations and substantial real estate holdings. One business, WEL, issued one share of stock to Harold and nine shares to Harold as custodian for William's infant son, L.L. Harold was a director of WEL. William and his wife divorced. In 2004, Harold filed a loan repayment lawsuit against WEL and PCI-2; William did not defend, asserting there was no money. Harold obtained default judgments of $1,107,550 and $1,204,439, commenced execution proceedings against property that WEL owned, and obtained approximately $320,000 in proceeds. In the Bankruptcy Court, a custodian for shares owned by L.L. sought to recover $345,000 from Harold, claiming that Harold breached his fiduciary duties owed to L.L. The Bankruptcy Court and the district court rejected the claim. The Third Circuit reversed. Harold breached his duties as a WEL director and as a custodian for L.L.'s shares. View "In re: Lampe, Jr" on Justia Law

Plaintiffs alleged that De Beers coordinated worldwide sales of diamonds by executing agreements with competitors, setting production limits, restricting resale within regions, and directing marketing, and was able to control quantity and prices by regimenting sales to preferred wholesalers. Plaintiffs claimed violations of antitrust, consumer protection, and unjust enrichment laws, and unfair business practices and false advertising. De Beers initially refused to appear, asserting lack of personal jurisdiction, but entered into a settlement with indirect purchasers that included a stipulated injunction. De Beers agreed to jurisdiction for the purpose of fulfilling terms of the settlement and enforcement of the injunction. The district court entered an order, approving the settlement and certifying a class of Indirect Purchasers in order to distribute the settlement fund and enforce the injunction. De Beers then entered into an agreement with direct purchasers that paralleled the Indirect Purchaser Settlement. The Third Circuit remanded the certification of two nationwide settlement classes as inconsistent with the predominance inquiry mandated by FRCP 23(b)(3), but, on rehearing, vacated its order. The court then affirmed the class certifications, rejecting a claim that the court was required to ensure that each class member possesses a colorable legal claim. The settlement was fair, reasonable, and adequate. View "Sullivan v. DB Inv., Inc." on Justia Law

Defendant is a payroll processing firm that collects information about its customers' employees, which may include names, addresses, social security numbers, dates of birth, and bank account information. In 2009, defendant suffered a security breach. It is not known whether the hacker read, copied, or understood the data. Defendant sent letters to the potential identity theft victims and arranged to provide the potentially affected individuals with one year of free credit monitoring and identity theft protection. Plaintiffs, employees of a former customer filed a class action, which was dismissed for lack of standing and failure to state a claim. The Third Circuit affirmed. Allegations of hypothetical, future injury do not establish standing under the "actual case of controversy" requirement of Article III. View "Reilly v. Ceridian Corp." on Justia Law

Shareholders implemented a plan to obtain majority ownership and buy out non-participating shareholders. Among other claims, non-participants allege that the participant-directors influenced a special committee formed to consider the fair value of shares held by non-participants. A state appraisal action is ongoing. The federal district court dismissed a suit alleging breach of fiduciary duty and unjust enrichment. The Third Circuit reversed and remanded. The Pennsylvania Supreme Court has not address whether a statute providing for appraisal of the value of shares of minority shareholders who are "squeezed out" in a cash-out merger precludes all other remedies; the court predicted that it would hold that the statute does not exclude the possibility of other claims.