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

In 2008, Chesapeake, as “Lessee,” entered into oil and gas leases with northeastern Pennsylvania landowners. The Leases indicate that they were “prepared by” Chesapeake and include a provision, stating that, in the event of a disagreement between “Lessor” and “Lessee” concerning “this Lease,” performance “thereunder,” or damages caused by “Lessee’s” operations, “all such disputes” shall be resolved by arbitration “in accordance with the rules of the American Arbitration Association.” In 2013, Scout purchased several leases and began receiving royalties from Chesapeake. In 2014, Scout filed an arbitration demand on behalf of itself and similarly situated lessors, alleging that Chesapeake paid insufficient royalties. Chesapeake objected to class arbitration and sought a declaratory judgment, arguing that “[it] did not agree to resolve disputes arising out of the leases at issue in ‘class arbitration,’ nor did Chesapeake agree to submit the question of class arbitrability ... to an arbitrator.” The district court and Third Circuit ruled in favor of Chesapeake, finding that the issue of arbitrability is a question for the court. Based on the language of the Leases, the nature and contents of the AAA rules, and existing case law, the Leases did not “clearly and unmistakably” delegate the question of class arbitrability to the arbitrators. View "Chesapeake Appalachia LLC v. Scout Petroleum, LLC" on Justia Law

The members of the Pennsylvania Public Utility Commission (PPUC) and Core Communications, Inc., appealed a District Court’s grant of summary judgment in favor of AT&T Corp. Core billed AT&T for terminating phone calls from AT&T’s customers to Core’s Internet Service Provider (ISP) customers from 2004 to 2009. When AT&T refused to pay, Core filed a complaint with the PPUC, which ruled in Core’s favor. AT&T then filed suit in federal court seeking an injunction on the ground that the PPUC lacked jurisdiction over ISP-bound traffic because such traffic is the exclusive province of the Federal Communications Commission. After review of the matter, the Third Circuit found that the FCC’s jurisdiction over local ISP-bound traffic was not exclusive and the PPUC orders did not conflict with federal law. As such, the Court vacated the District Court’s order and remanded this case for entry of judgment in favor of Core and the members of the PPUC. View "AT&T Corp v. Core Communications Inc" on Justia Law

Whether a third-party payer (TPP) will cover the cost of a member’s prescription depends on whether that drug is listed in the TPP’s formulary. Pharmacy Benefit Managers prepare TPPs’ formularies of drugs approved for use by TPP members by analyzing research regarding a drug’s cost effectiveness, safety and efficacy. In 1999, the FDA approved Avandia as a prescription for type II diabetes. TPPs included Avandia in their formularies and covered Avandia prescriptions at a favorable rate. GSK downplayed concerns about Avandia’s heart-related side effects. In 2010, the FDA restricted access to Avandia in response to increasing evidence of its cardiovascular risks. TPPs (union health and welfare funds) sued GSK on behalf of themselves and similarly situated TPPs. asserting that GSK’s failure to disclose Avandia’s significant heart-related risks violated the Racketeer Influenced and Corrupt Organizations Act based on predicate acts of mail fraud, wire fraud, tampering with witnesses, and use of interstate facilities to conduct unlawful activity. They also claimed unjust enrichment and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and other states’ consumer protection laws. The Third Circuit affirmed the district court’s finding that the TPPs adequately alleged the elements of standing. View "In Re: Avandia Mktg.,Sales Practices & Prod. Liab." on Justia Law

In 2003, Foy was charged in Pennsylvania with threatening a federal official, 18 U.S.C. 115(a)(1)(B). The government also sought revocation of probation imposed by a Texas district court. The Pennsylvania court found that Foy was incapable of assisting in his defense and committed him for 120 days (18 U.S.C. 4241(d)). In 2005, the court found that Foy continued to be incompetent and that there was no substantial probability that he would attain competency in the foreseeable future. The government successfully moved to dismiss the criminal complaint. Three years later the Pennsylvania court terminated Foy’s Texas probation. The warden at the Missouri Federal Medical Center certified that Foy was suffering from a mental disease or defect so that his release would pose a substantial risk and that suitable arrangements for state custody were not available. A Missouri district court ordered Foy committed under section 4246(d). The Eighth Circuit affirmed. Annual reports have recommended Foy’s conditional release. Rather than accept a conditional release, Foy sought unconditional release by instituting proceedings in both district courts.The Pennsylvania court denied his FRCP 60(d)(3) motion and declined to vacate the order of civil commitment. The Third Circuit vacated, finding that the Pennsylvania court lacked jurisdiction because Foy’s commitment is currently pursuant to a Missouri order. View "United States v. Foy" on Justia Law

Lincoln Benefit Life sought a declaratory judgment voiding two $6.65 million life insurance policies, which, it alleged, were procured by fraud and for the benefit of third-party investors who have no prior relationship to the individual whose life was insured. The defendants included a corporation, which procured the policies, and two LLCs that were the record owners and beneficiaries. Federal subject-matter jurisdiction was premised on diversity of citizenship. The court dismissed, holding that Lincoln Benefit was required to allege the citizenship of each member of each LLC to plead complete diversity, and denied a request for jurisdictional discovery, reasoning that it would waste judicial resources and constitute an impermissible exercise of jurisdiction to order discovery when the plaintiff had not adequately alleged jurisdiction. The Third Circuit vacated. A plaintiff need not affirmatively allege the citizenship of each member of an unincorporated association to get past the pleading stage. If the plaintiff is able to allege in good faith, after a reasonable attempt to determine the identities of those members, that it is diverse from all of those members, its complaint will survive a facial challenge to subject-matter jurisdiction. If the defendant then mounts a factual challenge, the plaintiff is entitled to limited discovery. View "Lincoln Benefit Life Co v. AEI Life, LLC" on Justia Law

In 2003, the Pennsylvania Supreme Court amended its Rules of Civil Procedure to require malpractice plaintiffs to file a certificate of merit (COM) within 60 days of bringing suit, under penalty of dismissal. Five years later, to dismissal of meritorious claims due to technical oversights, the Court amended the Rules again, setting conditions that had to be met before a defendant could seek dismissal. The Third Circuit previously held that the COM requirement is substantive state law that must be applied by a federal court sitting in diversity. Schmigel sued Dr. Uchal, who performed Schigel’s laparoscopic adjustable gastric band surgery in Pennsylvania before moving to Florida. Realizing that no COM had been filed, Uchal waited out the 60-day window, then filed a motion to dismiss. The next day, Schmigel’s counsel filed an “answer,” attaching the missing COM, and arguing that Uchal had not waited 30 days after giving notice of the deficiency to allow for cure before filing his motion to dismiss, The district court dismissed. The Third Circuit reversed, finding that conditions precedent to dismissing an action for failure to comply with the COM requirement, including fair notice to a plaintiff, are substantive law that must be applied in federal court. View "Schmigel v. Uchal" on Justia Law

Before 2003 Doe pled guilty to two simple assaults in Pennsylvania. In 2003, he pled guilty in federal court to distribution and possession with intent to distribute at least five grams of crack cocaine. His sentence as a career offender occurred under precedent categorically designating his prior convictions as crimes of violence. He did not appeal his 262-month sentence. In 2004 the government moved to reduce Doe’s sentence for “substantial assistance” in a different criminal investigation. While that Rule 35 motion was pending, Doe filed a section 2255 motion arguing that his assault convictions were not crimes of violence. The 2008 Supreme Court decision, Begay, held that a DUI conviction is not a “violent felony” under the Armed Career Criminal Act (ACCA) because it does not involve “purposeful, violent, and aggressive conduct.” The career-offender Sentencing Guideline was similar to the ACCA. In 2009, the district court granted Doe Rule 35 relief; counsel withdrew the 2255 motion. The Third Circuit then held that courts must inquire into the part of the statute to which the defendant actually pled guilty to determine whether the career-offender enhancement applies. In 2012 Doe filed a section 2255 motion, again raising his Begay argument. The statute of limitations on Doe’s Begay argument expired in 2009, when he withdrew his 2008 motion. The court concluded that there was no basis to toll the limitations period because Doe’s 2008 counsel was not deficient. The Third Circuit remanded. The court noted that while Doe has been released from prison, his case is not moot; proceeded under an assumption that the 2255 motion was not a second or successive motion over which the district court lacked jurisdiction; held that Doe had not procedurally defaulted his claim; and held that claims of Begay error are cognizable on collateral review. View "United States v. Doe" on Justia Law

During his employment with a subsidiary of Santander Holdings, Stevens received treatment for ankylosing spondylitis, a chronic inflammatory disease, and participated in a short-term disability plan (STD) and a long-term disability plan (LTD). When Stevens’ condition worsened, Liberty Mutual, the administrator of Santander’s plans, initially awarded STD benefits to Stevens, then determined that Stevens no longer suffered from a qualifying disability and terminated his benefits. Stevens sued under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001. The district court found that Liberty Mutual’s decision to terminate Stevens’s STD benefits was arbitrary and capricious and remanded with instructions to reinstate Stevens’s STD benefit payments retroactively and to determine his eligibility for LTD benefit payments. The Third Circuit dismissed an appeal for lack of jurisdiction, finding that the remand order to the plan administrator was not a “final decision” appealable pursuant to 28 U.S.C. 1291 at that time. The district court retained jurisdiction over the case and the order is not yet appealable. View "Stevens v. Santander Holdings USA Inc." on Justia Law

More than 200 foreign agricultural workers allege they were exposed to the pesticide DBCP on banana farms throughout Central America, in the 1960s through the 1980s, resulting in health problems. Litigation began in 1993 with a putative class against Dole and related companies in Texas state court. Numerous suits were filed (and consolidated) in 2011 in the Eastern District of Louisiana against Dole and others. The court agreed granted Dole summary judgment based on the statute of limitations; the Fifth Circuit affirmed. Meanwhile, in 2012, several actions were filed in the District of Delaware against the same defendants and alleging the same causes of action. Dole moved to dismiss the Delaware lawsuits, arguing for the application of the first-filed rule. The court held that the rule applied while the case was on appeal to the Fifth Circuit and dismissed, reasoning that “one fair bite at the apple is sufficient.” Delaware subsequently dismissed other defendants. The Third Circuit affirmed: where there is federal concurrent jurisdiction over a matter, “the court which first ha[d] possession of the subject must decide it.” Plaintiffs conceded that the Delaware cases were “materially identical” to those previously filed in Louisiana. Concurrent jurisdiction existed at the time. View "Chavez v. Dole Food Co., Inc" on Justia Law

Clash is best known as the voice of Sesame Street’s Elmo. Stephens and Clash met in 2004 when Stephens was 16 years old and Clash was 44. Stephens claims Clash was immediately interested in a sexual relationship and arranged by telephone to have Stephens transported from Pennsylvania to New York City by chauffeured car. They engaged in a “pattern of sexual activity . . . over a period of years.” Although he was “a compliant victim showered with attention and affection,” Stephens contends that he “did not become aware that he had suffered adverse psychological and emotional effects” until 2011. Stephens also claimed that Clash “compelled [Stephens] to engage in sexual contacts by intellectual, emotional and psychological force.” Stephens filed suit in 2013, nine years after the relationship began, and seven years after Stephens turned 18, alleging claims under 18 U.S.C. 2255(a) and sexual battery under state law. The court dismissed the claims as untimely, applying the discovery rule; the complaint demonstrated that he “discovered or should have discovered his injury in or before July 2006.” The Third Circuit affirmed. Given that section 2255 creates a cause of action only for violations occurring while the victim was a minor, Clash’s sexual relationship with Stephens was not actionable after 2006. View "Stephens v. Clash" on Justia Law