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

Ricketti, a podiatrist, hired Plishchuk as an associate. In addition to his own practice, Ricketti treated patients at Restorix wound care center. Ricketti regularly sent Plishchuk to Restorix to treat patients. Ricketti terminated Plishchuk’s employment for allegedly failing to comply with regulatory requirements. Plishchuk continued treating Ricketti’s patients at Restorix. After Plishchuk stopped treating patients, Restorix allegedly prevented Ricketti from practicing there. Ricketti sued Plishchuk, claiming breaches of contract, the covenant of good faith and fair dealing, and the duty of loyalty; tortious interference with economic advantage; and conversion, but did not join Restorix, nor inform the court that they should have been joined. The parties settled. Ricketti filed another suit naming Restorix and its manager, without Plishchuk, alleging the same causes of action and facts. The court dismissed, holding that the entire controversy doctrine barred Ricketti’s second suit. The Third Circuit vacated and remanded for evaluation of the party joinder issue under the summary judgment standard. The court should enter judgment for defendants on those grounds only if it finds that this is a successive action, that failure to disclose defendants as potentially liable parties in the Plishchuk action was inexcusable, and that this omission substantially prejudiced defendants. View "Ricketti v. Barry" on Justia Law

SEB distributes household products under several brand names, including electric steam irons sold under the Rowenta brand name. Euro-Pro distributes household appliances under the Shark brand name. The Shark packaging states: “MORE POWERFUL STEAM vs. Rowenta®†† at half the price.” The “††”refers to a fine-print footnote on the package’s bottom, stating that the claim is “††[b]ased on independent comparative steam burst testing to Rowenta DW5080 (grams/shot).” The packaging also asserts “#1 MOST POWERFUL STEAM*” with a fine-print reference on the bottom stating it “*[o]ffers more grams per minute (maximum steam setting while bursting before water spots appear) when compared to leading competition in the same price range, at time of printing.” SEB directed its internal laboratory to conduct tests, which showed that the Rowenta performed the same as the Shark. SEB commissioned an independent laboratory to conduct tests, which showed that the Rowenta outperformed the Shark. SEB claimed false advertising under the Lanham Act, 15 U.S.C. 1125(a), and unfair competition under Pennsylvania common law. The Third Circuit affirmed entry of an injunction, agreeing that the packaging’s definition of a claim term applies to the claim’s explicit message and that the court properly disregarded consumer survey evidence offering alternative meanings. View "Groupe SEB USA Inc v. Euro Pro Operating, LLC" on Justia Law

In 2012 Schmidt, a former shareholder in Genaera, a biotechnology company that dissolved in 2009 and liquidated its assets, brought suit on behalf of himself and other former shareholders against the liquidating trustee (Argyce); the Genaera Liquidating Trust; Argyce’s CEO and Genaera’s former CFO; former major Genaera shareholders Xmark and BVF; former Genara directors and officers (D&O defendants); and the purchasers of certain Genaera assets. The complaint alleged that the liquidating trustee and the D&O defendants breached their fiduciary duties by disposing of promising drug technologies in tainted insider deals for far less than their true value and that Xmark and BVF aided and abetted this behavior so that companies they controlled could acquire Genaera’s assets at fire sale prices. Schmidt did not dispute the applicability of the two-year statute of limitations and that he filed suit more than two years after the assets were sold, but argued that the limitations period should be tolled under Pennsylvania’s discovery rule because he could not have been aware of the insider nature of the sales or that the assets were sold for below actual value until he learned the details of the sales, and subsequent market events suggested to him that the assets were quite valuable. The district court dismissed. The Third Circuit reversed in part, stating that it was premature to determine whether Schmidt exercised reasonable diligence. View "Schmidt v. Skolas" on Justia Law

Between 2008 and 2011, Viacom Inc. paid three senior executives more than $100 million in bonus or incentive compensation. Compensation exceeding $1 million paid by a corporation to senior executives is not normally deductible under federal tax law, but a corporate taxpayer may deduct an executive’s otherwise nondeductible compensation over $1 million if an independent committee its board of directors approves the compensation on the basis of objective performance standards and the compensation is “approved by a majority of the vote in a separate shareholder vote” before being paid. In 2007, a majority of Viacom’s voting shareholders approved such a plan. Shareholder Freedman sued, claiming that Viacom’s Board failed to comply with the terms of the Plan and that, instead of using quantitative performance measures, the Board partially based its awards on qualitative, subjective factors, destroying the basis for their tax deductibility. Freedman claimed that this caused the Board to award executives more than $36 million of excess compensation. The plan was reauthorized in 2012. The district court dismissed. The Third Circuit affirmed. With respect to his derivative claim, Freedman did not make a pre-suit demand to the Board or present sufficient allegations explaining why a demand would have been futile. With respect to his direct claim regarding participation by stockholders without voting rights, federal law does not confer voting rights on shareholders not otherwise authorized to vote or affect Delaware law permit ting corporations to issue shares without voting rights. View "Freedman v. Redstone" on Justia Law

Fair Wind owns sailing schools, including one in St. Thomas, Virgin Islands. In 2007 Fair Wind hired Bouffard as a captain and instructor, under a contract precluding Bouffard from joining a competitor within 20 miles of the St. Thomas school for two years after the end of his employment. In 2010, relying on Bouffard View "Fair Wind Sailing Inc v. Dempster" on Justia Law

VICI, a sports car racing team, sought T-Mobile’s sponsorship for the 2009-2011 Le Mans racing seasons. The companies entered into an agreement that required VICI to field one T-Mobile-sponsored racecar during the 2009 season and two during each of the 2010 and 2011 seasons and required VICI to display T- Mobile’s logo. The agreement provides that “VICI grants to [T-Mobile] the right to be the exclusive wireless carrier supplying wireless connectivity for the Porsche, Audi and VW telematics programs.” The Agreement had a force majeure clause, a severability clause, and a “Limitation of Liabilities.” VICI worked with T-Mobile to secure telematics business from VW, Audi, and Porsche. In July 2009, T-Mobile’s sponsored racecar sustained damage from an accident and was not able to race while undergoing repairs. On January 5, 2010, VICI sent a notice of default, indicating that T-Mobile had failed to pay $7 million due under the agreement. On January 7, T-Mobile sent a letter terminating the Agreement, stating that VICI made a material representation that VICI had authority to bind Audi, VW and that VICI failed, without justification or notice, to race at a key event where T-Mobile hosted business guests. The district court awarded VICI $7 million in damages. The Third Circuit affirmed the award of $7, but vacated with regard to VICI’s damages resulting from T- Mobile’s failure to make the 2011 payment. On remand, the court should consider an award of attorney’s fees to VICI in light of its reassessment of the 2011 damages issue. View "VICI Racing LLC v. T-Mobile USA Inc." on Justia Law

In 2009, to “preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology,” Delaware granted the Court of Chancery power to arbitrate business disputes. That Court then created an arbitration process as an alternative to trial for certain disputes, 10 DEL. CODE tit. 10, 349; Del. Ch. R. 96-98. To qualify for arbitration, at least one party must be a business entity formed or organized under Delaware law, and neither can be a consumer. Arbitration is limited to monetary disputes that involve an amount of at least one million dollars. The fee for filing is $12,000, and the arbitration costs $6,000 per day after the first day. Arbitration begins approximately 90 days after the petition is filed. The statute and rules bar public access. Arbitration petitions are confidential and are not included in the public docketing system. Attendance at proceedings is limited to parties and their representatives, and all materials and communications produced during the arbitration are protected from disclosure in judicial or administrative proceedings. The Coalition challenged the confidentiality provisions. The district court found that Delaware’s proceedings were essentially civil trials that must be open to the public, under the First Amendment. The Third Circuit affirmed. View "Delaware Coal. for Open Gov't v. Strine" on Justia Law

In 2007, Gager applied for a line of credit to purchase computer equipment. The application required that she provide her home phone number. Gager listed her cellular phone number without stating that the number was for a cellular phone, or indicating that Dell should not use an automated telephone dialing system to call her at that number. Gager defaulted on the loan Dell granted. Dell began using an automated telephone dialing system to call Gager’s cell phone, leaving pre-recorded messages concerning the debt. In 2010, Gager sent a letter, listing her phone number and asking Dell to stop calling it regarding her account. The letter did not indicate that the number was for a cellular phone. Dell continued to call, using an automated telephone dialing system. Gager filed suit, alleging that Dell violated the Telephone Consumer Protection Act of 1991, 47 U.S.C. 227(b)(1)(A)(iii). The district court dismissed on the theory that she could not revoke her consent once it was given. The Third Circuit reversed. The fact that Gager entered into a contract with Dell does not exempt Dell from the TCPA. Dell will still be able to call Gager about her delinquent account, but not using an automated dialing system. View "Gager v. Dell Fin. Servs. LLC" on Justia Law

In the 1960s, the founder’s sons (plaintiff and his brothers) joined the business, later incorporated as MBP. The business grew to have annual sales of $60 million. Plaintiff served as vice-president, secretary, and a member of the board of directors, and was a shareholder. Plaintiff had a “spiritual awakening” in 1995. He claims that the change resulted in antagonism toward him. Plaintiff delivered a eulogy at his father’s 2009 funeral, which upset family members. Days later, plaintiff received notice of termination of his employment and that various benefits would cease. The letter explained that “[y]our share of any draws from the corporation or other entities will continue to be distributed to you.” Plaintiff continued on the board of directors until August, 2009, when the shareholders did not re-elect him. Plaintiff filed charges of religious discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-2(a)(1) and of hostile work environment. The district court dismissed, finding that he was not an employee under Title VII and did not establish existence of a hostile work environment. The Third Circuit affirmed, stating that it was clear that plaintiff was entitled to participate in development and governance of the business. View "Mariotti. v. Mariotti Bldg. Prods., Inc." on Justia Law

Wiest worked in Tyco’s accounting department for 31 years, until his termination in 2010. Beginning in 2007, Wiest refused to process reimbursement claims that he believed were unlawful or constituted “parties” at resorts. Wiest sued Tyco and its officers and directors under the whistleblower protection provisions in Section 806 of the Sarbanes-Oxley Act, 18 U.S.C. 1514A, and under Pennsylvania law. The district court dismissed the federal whistleblower claims and declined to exercise supplemental jurisdiction. The Third Circuit reversed in part, holding that the court erred in requiring that Wiest allege that his communications to his supervisors “definitively and specifically relate to” an existing violation of a particular anti-fraud law, as opposed to expressing a reasonable belief that corporate managers are taking actions that could run afoul of a particular anti-fraud law. View "Wiest v. Lynch" on Justia Law