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

Plaintiffs alleged pharmaceutical manufacturers stalled the release of clinical trial results for their blockbuster anti-cholesterol drugs, tried to change the study's endpoint to produce more favorable results, concealed their role in the change, and that the delay allowed one company to raise $4.08 billion through a public offering, which the company used to purchase another company to lessen its reliance on the drugs. Amid press reports and a congressional investigation, the companies released the clinical trial results, which allegedly caused their stock prices to plummet, amounting to about a $48 billion loss in market capitalization. Investors filed suit. The court denied defendants’ motions to dismiss under the Private Securities Litigation Reform Act’s heightened pleading standard, denied defendants’ motion for summary judgment, and granted class certification.Investors were provided with Rule 23(c)(2) notice of their right to opt-out: “you will not be bound by any judgment in this Action” and “will retain any right you have to individually pursue any legal rights.” After the opt-out period, the court approved settlements, offering opt-out investors 45 days to rejoin and share in the recovery, while stating that opt-outs “shall not be bound” to the settlement. Sixteen opt-out investors filed suits, tracking the class action claims, and adding a New Jersey common law fraud claim. After the Supreme Court held that American Pipe tolling does not extend to statutes of repose, plaintiffs were left with only their state-law claims. The court dismissed those as barred by the Securities Litigation Uniform Standards Act, 15 U.S.C. 10 78bb(f)(5)(B)(ii)(II). The Third Circuit reversed, finding that the class actions and the opt-out suits were not “joined, consolidated, or otherwise proceed[ing] as a single action for any purpose.” View "North Sound Capital LLC v. Merck & Co., Inc" on Justia Law

Garrett sued under 42 U.S.C. 1983, claiming deliberate indifference to his serious medical needs and retaliation. Garrett alleged that, while incarcerated, he had been prescribed a wheelchair and walker. When he was transferred to SCI Houtzdale in 2014, medical staff allegedly discontinued Garrett’s use of a walker and wheelchair, forbade him from receiving walking assistance from other inmates, and discontinued his “psych” medication. He acknowledged in his complaint that he had filed grievances but the grievance process was not complete. The district court dismissed many of pro se Garrett’s claims for failure to exhaust administrative remedies under the Prison Litigation Reform Act (PLRA), 42 U.S.C. 1997e(a), and dismissed the remainder for failure to satisfy the Federal Rules of Civil Procedure “short and plain statement” requirement, Rule 8. The Third Circuit vacated. Garrett’s original complaint was defective because, as a prisoner when he filed it, he failed to first exhaust his administrative remedies. Two years later, Garrett filed an amended and supplemental complaint (TAC) under Rule 15, which superseded Garrett’s prior complaints. The TAC’s claims relate back to the original complaint because they concern the same core operative facts. When he filed the TAC, Garrett was no longer a prisoner and was not subject to the PLRA’s administrative exhaustion requirement. The TAC cured the original filing defect. The claims in Garrett’s pro se complaint are sufficiently “short” and “plain” and adequately put the defendants on notice of Garrett’s claims. View "Garrett v. Wexford Health" on Justia Law

Pulitzer Prize-winning journalist Golden was researching Golden’s then-forthcoming book, Spy Schools: How the CIA, FBI, and Foreign Intelligence Secretly Exploit America’s Universities. Golden requested documents from public universities, including three requests to the New Jersey Institute of Technology (NJIT) under New Jersey’s Open Public Records Act, N.J. Stat. 47:1A-1–47:1A-13 (OPRA). Many of the NJIT documents originated with the FBI and were subject to prohibitions on public dissemination. The FBI directed NJIT to withhold most of the records. NJIT obliged, claiming exemption from disclosure. After this suit was filed, NJIT and the FBI reexamined the previously withheld records and produced thousands of pages of documents, formerly deemed exempt. Golden then sought prevailing plaintiff attorneys’ fees under OPRA. The district court denied the fee motion. The Third Circuit reversed. Under the catalyst theory, adopted by the Supreme Court of New Jersey, plaintiffs are entitled to attorneys’ fees if there exists “a factual causal nexus between [the] litigation and the relief ultimately achieved” and if “the relief ultimately secured by plaintiffs had a basis in law.” Before Golden filed suit, NJIT had asserted OPRA exemptions to justify withholding most of the requested records. Post-lawsuit, NJIT abandoned its reliance on those exemptions and produced most of the records. Golden’s lawsuit was the catalyst for the production of documents and satisfied the test. That NJIT withheld records at the behest of the FBI does not abdicate its role as the records custodian. View "Golden v. New Jersey Institute of Technology" on Justia Law

Charte, a district manager, became aware of American Tutor’s questionable billing and recruiting practices and expressed her concerns to the company's officers. Charte was terminated. Charte contacted the New Jersey Department of Education and the U.S. Department of Education about the practices she had observed. American Tutor sued Charte in state court for defamation, tortious interference with advantageous economic relations, and product disparagement. While that state lawsuit was pending, Charte brought this qui tam action on behalf of the United States. As required by the False Claims Act, 31 U.S.C. 3729(a)(1)(A), the action remained under seal for seven years while the government investigated. The state court action was dismissed after the parties settled. The federal government did not intervene. The district court unsealed the complaint, then found that the qui tam action was barred by New Jersey’s equitable entire controversy doctrine. The Third Circuit vacated, finding the doctrine inapplicable. The qui tam suit did not belong to Chartre when she entered into the settlement agreement; she could not unilaterally settle and dismiss the qui tam claims during the government’s investigation. Charte followed every statutory requirement, including filing the qui tam action under seal and not disclosing its existence; she was “not trying to hide the ball.” Application of the entire controversy doctrine to this case, where the relator was the defendant in a previously filed private suit, would incentivize potential False Claims Act defendants to “smoke out” qui tam actions by suing potential relators and then quickly settling. View "Charte v. American Tutor Inc" on Justia Law

GN and Plantronics manufacture telephone headsets, selling the headsets to customers through distributors. Under the voluntary Plantronics-Only Distributor (POD) program, distributors receive incentives such as favorable credit terms, rebates, and website support in exchange for not purchasing headsets directly from other manufacturers and not marketing competitors’ products on resellers’ websites. GN sent Plantronics a demand letter and filed suit in 2012, alleging that Plantronics’ POD program constituted monopolization.Plantronics issued a litigation hold to relevant employees, provided training sessions to ensure compliance, and sent quarterly reminders requiring acknowledgment of compliance. Plantronics’ Senior Vice President of Sales, Houston, nonetheless instructed employees to delete emails that referenced Plantronics’ competitive practices or its competitors. In 2014, Plantronics’ Associate General Counsel learned of Houston’s conduct, instituted a litigation hold on Houston’s assistant, and requested back-up tapes of Houston’s email account. Plantronics engaged its discovery vendor and a leading forensics expert to try to recover Houston’s emails. Some were recovered. The spoliation, however, continued. Plantronics did not complete its recovery efforts and destroyed the back-up tapes. During depositions, Plantronics executives were evasive. GN moved for a default liability judgment in light of the spoliation.The district court found that Plantronics acted in “bad faith” with an “intent to deprive GN” but denied the motion and issued a permissive adverse inference instruction to the jury, fined Plantronics three million dollars, and ordered it to pay GN’s spoliation-related fees. GN subsequently unsuccessfully sought to present evidence of spoliation. The jury returned a verdict in favor of Plantronics. The Third Circuit reversed in part and remanded for a new trial, after upholding the denial of the motion for default judgment. The court committed reversible error when it excluded GN’s expert testimony on the scope of Plantronics’ spoliation. View "GN Netcom Inc. v. Plantronics Inc." on Justia Law

Hill built Commerce Bank from a single commercial bank location in 1973 by emphasizing customer loyalty through initiatives such as extended hours, quick account openings, and free perks. His success brought personal acclaim. The relationship between Hill and Commerce soured, culminating in Hill’s 2007 termination and TD Bank’s acquisition of Commerce for $8.5 billion. The publication of a book Hill had written during his Commerce tenure was canceled. In 2012, Hill wrote a new book. TD filed a copyright lawsuit alleging that parts of the 2012 book infringe the earlier book. In enjoining Hill from publishing or marketing his book, the district court concluded that TD owned the copyright under a letter agreement and that Hill’s book irreparably violated its “right to not use the copyright.” The Third Circuit vacated the injunction, reasoning that the district court had made “sweeping conclusions” that would justify the issuance of an injunction in every copyright case. Instead of employing “categorical rule[s]” that would resolve the propriety of injunctive relief “in a broad swath of cases,” courts should issue injunctive relief only upon a sufficient showing that such relief is warranted under particular circumstances. Although the agreement between the parties did not vest initial ownership of the copyright by purporting to designate the manuscript a work “for hire,” it did transfer any ownership interest Hill possessed to TD, so Hill’s co-ownership defense fails. View "TD Bank NA v. Hill" on Justia Law

In 2010, Pennsylvania inmate Houser sued prison officials (42 U.S.C.1983), claiming deliberate indifference to his medical needs. Houser unsuccessfully requested appointed counsel. Discovery proceeded. The defendants moved for summary judgment in 2013. Houser filed opposition papers pro se but again moved to appoint counsel. The court denied the defendants’ motions, granted Houser’s motion, and conducted a search to secure pro bono counsel. After two attorneys declined the case, Reed Smith assumed Houser’s representation and devoted over 1,000 hours to the case before moving to withdraw based on fundamental disagreements with Houser on strategy, a breakdown in communication, and an irremediably broken attorney-client relationship. The court told Houser that it could not dictate strategy, and stated: “We’re not going to ask anyone else... do you want to ... represent yourself?” Houser never gave a straightforward answer. The court granted Reed Smith’s motion. Houser unsuccessfully requested that the court put him back on the “appointment of counsel” list and stay the case. Noting that the case was five years old, the court pushed the trial to December 2015. In October 2015, Houser unsuccessfully moved to appoint counsel. A jury returned a verdict for the defendants. Houser unsuccessfully moved for a new trial based on the denial of his motion to appoint counsel. Houser moved to reconsider, arguing his claims had merit and involved “medical issues that were complex including requiring an expert” and the “conflicting testimony of multiple witness[es].” The Third Circuit affirmed the denial of the motion; denying Houser new counsel was not an abuse of discretion. View "Houser v. Folino" on Justia Law

In 2005-2006, Blake and Orkis took out mortgages from JP Morgan to buy homes. In 2013, they filed a class action against JP Morgan under the Real Estate Settlement and Procedures Act, alleging a scheme to refer homeowners to mortgage insurers in exchange for streams of kickbacks. The Act has a one-year statute of limitations that runs from the date of the violation, 12 U.S.C. 2614. Blake and Orkis argued that, rather than the limitations period running from the mortgage closing, each kickback separately violated the Act and had its own limitations period. The Third Circuit accepted that argument. While the kickbacks ended more than a year before they sued, they attempted to piggyback on a different class action filed in 2011 that raised the same claims against JP Morgan but was dismissed. As members of that putative class, they argued, the limitations period should toll for them under the Supreme Court’s 1974 “American Pipe & Construction” decision. The Third Circuit affirmed the dismissal of their suit, citing the Supreme Court’s 2018 holding in “China Agritech” that a timely class action should never toll other class actions under American Pipe, which applies only to toll individual claims. View "Blake v. JP Morgan Chase Bank NA" on Justia Law

GSK's drug Avandia is indicated to treat Type II diabetes. Health insurance plans contend that GSK concealed evidence of Avandia’s cardiovascular risk, promoted Avandia as providing cardiovascular benefits, and reaped billions of dollars in profits. In 2007, an independent researcher published an article claiming that Avandia increased the risk of heart attack and cardiovascular disease. The FDA investigated, and the Senate Finance Committee released a report. Plaintiffs’ suits under the Racketeer Influenced and Corrupt Organizations Act (RICO) and state consumer protection laws became part of multi-district litigation (MDL). A protective order (PTO) covered discovery of confidential materials. GSK sought summary judgment on the consumer protection claims on preemption grounds and argued that the RICO claims should be dismissed for failing to identify a distinct RICO enterprise. The parties filed documents under seal pursuant to the PTO. Neither raised any issue as to the confidentiality of the sealed exhibits. The court granted GSK summary judgment. After the plans appealed, GSK sought to maintain the confidentiality of certain sealed documents that had been filed in connection with the summary judgment motion. The court unsealed its own summary judgment opinion but maintained the confidentiality of the remaining documents and directed GSK to file a redacted statement of undisputed material facts. The Third Circuit vacated and remanded. The district court failed to apply the presumption of public access and, instead, applied the Federal Rule of Civil Procedure 26 standard for a protective order. View "In re: Avandia Marketing Sales Practices & Products Liability Litigation" on Justia Law

Hildebrand was hired by the Allegheny County District Attorney’s Office in 2005, after 15 years as an undercover Pittsburgh detective. He performed satisfactorily and without incident for four years. In 2009, he was assigned a new supervisor. From that time until his 2011 termination, Hildebrand alleges he was subject to several forms of age-based discrimination. In 2013, Hildebrand sued the DA’s Office for age discrimination under 29 U.S.C. 621 and constitutional violations under 42 U.S.C. 1983, claiming that the office had an established practice of targeting older detectives to force them out of their jobs. After appeals, Hildebrand’s remaining claim stagnated for three years until 2018, after the death of Hildebrand’s former supervisor, a key witness. The delay was caused by clerical error. The district court then dismissed for failure to prosecute (FRCP 41(b)). The Third Circuit vacated and remanded, finding that the district court failed to properly consider the “Poulis” factors. There was no evidence that Hildebrand was personally responsible for the delay; Hildebrand’s conduct was not delinquent at any other point. There is no evidence that the delay was part of any bad-faith tactic. While prejudice to the DA’s Office bears substantial weight in favor of dismissal, it is not dispositive of the appropriateness of imposing the harshest sanction; evidentiary or other sanctions may have been sufficient. View "Hildebrand v. Allegheny" on Justia Law