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

In the 1990s, Aldossari’s company, Trans Gulf, entered into an agreement in Saudi Arabia with three other businesses to establish and operate an oil refinery in Saint Lucia, a Caribbean island nation. Crude oil was to be sourced from the Saudi government or its national oil company, Saudi Aramco. The project went forward, but, Aldossari alleged, the owners of the three contract counterparties – one of whom became the Crown Prince of Saudi Arabia –refused to pay Trans Gulf its share of the proceeds. Two decades later, the soon-to-be Crown Prince promised to pay Aldossari but never did. Aldossari, transferred his rights to his minor son, a U.S. citizen.The federal district court dismissed Aldossari’s subsequent tort and contract claims. The Third Circuit affirmed, holding that dismissal of the claims against a deceased defendant was proper because Aldossari failed to allege any basis for exercising subject-matter jurisdiction over those claims. As for the surviving defendants, the lack of any meaningful ties between those defendants and the United States in Aldossari’s claims defeats his effort to sue them in the U.S. The Foreign Sovereign Immunities Act precludes subject-matter jurisdiction over the claims against Saudi Arabia and Saudi Aramco. The case was remanded with directions to dismiss without prejudice since none of the dispositive rulings reach the merits. View "Aldossari v. Ripp" on Justia Law

Clemens, then an employee, provided ExecuPharm with sensitive information, including her address, social security number, bank, and financial account numbers, insurance, and tax information, passport, and information relating to her family. Clemens’s employment agreement provided that ExecuPharm would “take appropriate measures to protect the confidentiality and security” of this information. After Clemens left ExecuPharm, a hacking group (CLOP) accessed ExecuPharm’s servers, stealing sensitive information pertaining to current and former employees, including Clemens. CLOP posted the data on the Dark Web, making available for download 123,000 data files pertaining to ExecuPharm, including sensitive employee information. ExecuPharm notified current and former employees of the breach and encouraged precautionary measures. Clemens reviewed her financial records and credit reports for unauthorized activity; placed fraud alerts on her credit reports; transferred her bank account; enrolled in ExecuPharm’s complimentary one-year credit monitoring services; and purchased three-bureau additional credit monitoring services for herself and her family for $39.99 per month.Clemens's suit under the Class Action Fairness Act, 28 U.S.C. 1332(d), was dismissed for lack of Article III standing. The court concluded that Clemens’s risk of future harm was not imminent, but “speculative.” Any money Clemens spent to mitigate the speculative risk was insufficient to confer standing; even if ExecuPharm breached the employment agreement, it would not automatically give Clemens standing to assert her breach of contract claim. The Third Circuit vacated. Clemens’s injury was sufficiently imminent to constitute an injury-in-fact for purposes of standing. View "Clemens v. Execupharm Inc" on Justia Law

In 2015, the Ninth Circuit affirmed summary judgment in favor of Guam taxpayers in their class action lawsuit against the territorial government. Guam had excessively withheld income taxes to support government spending. Some taxpayers got their refunds through an “expedited refund” process that devolved into arbitrariness and favoritism. The district court had certified a class of taxpayers who were entitled to but did not receive timely tax refunds.Duncan then filed a purported class action challenging the Virgin Islands' income tax collection practices. Duncan alleged that the Territory owed taxpayers at least $97,849,992.74 in refunds for the years 2007-2017, and that, for the years 2011-2017, the Territory failed to comply with the requirement in Virgin Islands Code title 33, section 1102(b), that the Territory set aside 10 percent of collected income taxes for paying refunds, leaving the required reserve underfunded by $150 million. The district court denied class certification, citing Duncan’s receipt of a refund check from the Territory during the pendency of her lawsuit; the check, while not the amount Duncan claims, called into question Duncan’s standing and made all of her claims atypical for the putative class. The Third Circuit vacated, rejecting the conclusion that the mid-litigation refund check deprived Duncan of standing and rendered all of her claims atypical. In evaluating whether Duncan was an adequate representative, the district court applied an incorrect legal standard. View "Duncan v. Governor of the Virgin Islands" on Justia Law

In 2008, Tiversa, a cybersecurity company, informed LabMD, a medical testing business, that it had found LabMD’s confidential patient information circulating in cyberspace and that it could help LabMD respond to the data leak. LabMD’s own investigation revealed no leak. LabMD accused Tiversa of illegally accessing the patient information. Tiversa submitted a tip to the FTC, prompting an investigation. The FTC enforcement action and the reputational damage ruined LabMD. In 2014, a former Tiversa employee disclosed that the patient information did not spread from a leak but that Tiversa had accessed LabMD’s computer files and fabricated evidence of a leak.LabMD sued. In one suit, the district court dismissed claims of defamation and fraud after prohibiting the discovery or use of expert testimony. After finding that LabMD and its counsel breached those discovery limits, the court awarded fees and costs to the defendants, struck almost all of LabMD’s testimonial evidence, and revoked its counsel’s pro hac vice admission. When LabMD’s replacement counsel later tried to withdraw, the court denied that request. LabMD failed to pay the monetary sanctions; the Court held it in contempt. The second lawsuit, asserting similar fraud claims, was dismissed.The Third Circuit vacated in part. The prohibition on expert testimony was unwarranted; the court abused its discretion in imposing sanctions and erred in denying the motion to withdraw. LabMD’s other claims, in that case, were properly dismissed. In the second case, the court affirmed; LabMD did not challenge independently sufficient grounds for the decision. View "LabMD, Inc v. Tiversa Holding Corp" on Justia Law

A yacht owned by Raiders ran aground. Raiders had insured the vessel with GLI, which denied coverage stating the yacht’s fire-extinguishing equipment had not been timely recertified or inspected notwithstanding that the vessel’s damage was not caused by fire. GLI sought a declaratory judgment that Raiders’ alleged failure to recertify or inspect its fire-suppression equipment rendered the policy void from its inception. Raiders responded with five counterclaims, including three extra-contractual counterclaims arising under Pennsylvania law for breach of fiduciary duty, insurance bad faith, and breach of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.Concluding the policy’s choice-of-law provision mandated the application of New York law and precluded Raiders’ Pennsylvania law-based counterclaims, the district court dismissed those claims. The court rejected Raiders’ argument that applying New York law would contravene Pennsylvania public policy, thereby making the choice-of-law provision unenforceable under Supreme Court precedent (Bremen (1972)), which held that under federal admiralty law a forum-selection provision is unenforceable “if enforcement would contravene a strong public policy of the forum in which suit is brought.” The Third Circuit vacated. Bremen’s framework extends to the choice-of-law provision at issue; the district court needed to consider whether Pennsylvania has a strong public policy that would be thwarted by applying New York law. View "Great Lakes Insurance SE v. Raiders Retreat Realty Co LLC" on Justia Law

PPG, a Pittsburgh company, developed a new kind of plastic for airplane windows, “Opticor™ A former PPG employee, Rukavina, agreed to share proprietary information concerning Opticor with TMG, a China-based manufacturer. TMG contacted the PPG subcontractor that made Opticor window molds, asking it to manufacture the same molds, attaching photographs and drawings from a proprietary report. The subcontractor alerted PPG, which notified the FBI, which executed warrants to search Rukavina’s email account and residence. Rukavina was charged with criminal theft of trade secrets.PPG filed a civil action against TMG, under RICO, 18 U.S.C. 1962(c)-(d) and Pennsylvania law. TMG did not respond to the complaint, nor did it answer requests for admissions. More than a year after TMG should have appeared the clerk entered a default. PPG asserted actual damages of $9,909,687.31. Four months later, TMG appeared and unsuccessfully moved to set aside the default. The court held that PPG had sufficiently established TMG’s liability and was entitled to treble damages, an injunction, and attorneys’ fees, costs, and expenses. The court found that $8,805,929 of the claimed actual damages were supported by sufficient evidence and entered judgment for $26,417,787.The Third Circuit affirmed. TMG effectively conceded the complaint’s allegations. Under the Uniform Trade Secrets Act, it can be appropriate to measure unjust enrichment from a misappropriated trade secret by looking at development costs that were avoided but would have been incurred if not for the misappropriation. The district court carefully analyzed such evidence; its methodology and conclusion are sound. View "PPG Industries Inc v. Jiangsu Tie Mao Glass Co Ltd" on Justia Law

ESML filed for Chapter 11 bankruptcy. Chippewa funded ESML’s exit from bankruptcy. The plan and confirmation order discharged all claims against ESML arising before the plan’s effective date and enjoined actions against ESML and Chippewa by holders of those claims. The Court retained jurisdiction over matters arising under the Bankruptcy Code or arising in or related to the Chapter 11 cases or plan. ESML emerged from bankruptcy as Mesabi. During the bankruptcy case, Chippewa sought to acquire ESML. Its affiliate, ERPI, agreed to engage Riley as its exclusive financial advisor. Riley would receive a “Restructuring Fee” if ERPI successfully acquired ESML. One day before the plan’s effective date, Riley, ERPI, and Chippewa entered an amendment that purported to bind ERPI, Chippewa, and the post-effective date Mesabi. After a debt financing transaction closed, Riley sought payment from Chippewa and Mesabi of a $16 million "success fee." Mesabi refused to pay, Riley filed suit and a FINRA arbitration. Mesabi filed a Bankruptcy Court adversary complaint, maintaining the fee had been discharged.The Bankruptcy Court dismissed the adversary proceeding for lack of jurisdiction. The Third Circuit reversed. The Bankruptcy Court had jurisdiction to interpret and enforce the discharge and injunction provisions of its plan and confirmation order. This matter falls within the category of “core proceedings.” Executing the relevant amendment a day before the plan’s effective date may hint that Chippewa and ERPI tried to circumvent the bankruptcy process. View "Mesabi Metallics Co. LLC v. B. Riley FBR Inc." on Justia Law

The consumers had rental applications denied based on inaccurate consumer reports generated by a consumer reporting agency, RealPage, which would not correct the reports unless the consumers obtained proof of the error from its sources. The identity of RealPage’s sources was not included in the disclosures to the consumers, despite their requests for their files. The consumers sued under the Fair Credit Reporting Act, 15 U.S.C. 1681, to disclose on request “[a]ll information in the consumer’s file at the time of the request” and “[t]he sources of th[at] information,” seeking damages and attorneys’ fees for themselves and on behalf of a purported class and subclass.The district court denied their Rule 23(b)(3) motion for class certification, citing the Rule’s predominance and superiority requirements and finding that their proposed class and subclass were not ascertainable. The Third Circuit vacated. The district court based its predominance analysis on a misinterpretation of Section 1681g(a), erroneously concluding that individualized proof would be needed to distinguish requests for “reports” from those for “files.” The court also misapplied ascertainability precedents. The consumers have standing, having made the requisite showing of the omission of information to which they claim entitlement, “adverse effects” that flow from the omission, and the requisite nexus to the protected “concrete interest.” View "Kelly v. RealPage Inc" on Justia Law

Attorneys Blume, Cozen, and Madonia were involved in the sale to The Institutes of LLCs owned by the Shareholders. Blume also served on the board of directors and as General Counsel for one of the LLCs, assisting the Shareholders in making business decisions. Unbeknownst to the Shareholders, Cozen represented The Institutes in several matters, including negotiating the price for their transaction. After the deal closed, the Shareholders allegedly determined that they had sold the LLCs at a price substantially below their fair market value and that the attorneys had wrongfully secured a favorable outcome for The Institutes by using confidential client information.Shareholder Potter sued in the Shareholders' names, claiming breach of fiduciary duty and professional malpractice, although he identified the harm as “the difference in the true value of the [LLCs] and the purchase price” that was to be paid to the LLCs themselves. The lawyers argued that under the “shareholder standing rule,” the individuals did not have the legal right to bring the entities' claims in their own names. The district court dismissed the complaint for lack of jurisdiction, stating that the Shareholders “lack[ed] Article III standing." The Third Circuit vacated. The third-party standing rule is merely prudential, not constitutional and jurisdictional, and is properly considered under Rule 12(b)(6), not Rule 12(b)(1). There are different considerations in deciding a motion to dismiss under Rule 12(b)(6) that could produce a different outcome in this case. View "Potter v. Cozen & O'Connor" on Justia Law

In its North Carolina bankruptcy proceedings, Bestwall wanted access to data owned by 10 trusts created to process asbestos-related claims against other companies. Bestwall was facing asbestos liability and wanted the data in order to calculate a settlement trust authorized by 11 U.S.C. 524(g). The data is held by the trusts’ claims processing agent, located in Delaware, which opposed Bestwall’s request. The Bankruptcy Court authorized the issuance of subpoenas. Once Bestwall served those subpoenas, the trusts asked the District Court for the District of Delaware to quash the subpoenas, repeating the same arguments that had been made in the Bankruptcy Court. Asbestos claimants whose information was in the database also joined in the motion to quash. The district court quashed the subpoenas.The Third Circuit reversed and remanded with instructions to enforce the subpoenas as originally ordered. Allowing litigants to invoke issue preclusion on a motion to quash is also consistent with the doctrine’s “dual purposes” of “protect[ing] litigants from the burden of relitigating an identical issue with the same party or his privy” and “promot[ing] judicial economy by preventing needless litigation.” Bestwall may invoke collateral estoppel as a counter to arguments previously litigated in the North Carolina Bankruptcy Court. View "In re: Bestwall LLC" on Justia Law