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

Kivisto, co-founder and former President and CEO of SemCrude, an Oklahoma-based oil and gas company, allegedly drove SemCrude into bankruptcy through his self-dealing and speculative trading strategies. SemCrude’s Litigation Trust sued Kivisto, and the parties reached a settlement agreement and granted a mutual release of all claims. A month later, a group of SemCrude’s former limited partners (Oklahoma Plaintiffs) sued Kivisto in state court, alleging breach of fiduciary duty, negligent misrepresentation, and fraud. The Bankruptcy Court for the District of Delaware granted Kivisto’s emergency motion to enjoin the state action, finding that the Oklahoma Plaintiffs’ claims derived from the Litigation Trust’s claims. The district court reversed, concluding that the claims were possibly direct and remanded. The Third Circuit concluded that the claims are derivative and reversed. Even if Kivisto owed the Oklahoma Plaintiffs unique, individual fiduciary duties in addition to the duties owed to them as unitholders, they could show neither that they were injured separately from the company or all other unitholders on the basis of that misconduct, nor that they were entitled to recovery of the units they allegedly would not have contributed or would have sold but for Kivisto’s misconduct. View "In re: Semcrude L.P." on Justia Law

Devon acquired the rights to distribute robotic medical devices, CytoCare and i.v. Station, from Robotics. DeViedma, Robotics's general counsel, negotiated the contracts. Each contained an arbitration clause. Robotics later agreed to provide management consulting services through DeViedma. DeViedma allegedly obstructed a possible sub-licensing contract with McKesson; Devon failed to make franchise payments, leading Robotics to draw down a $5 million line of credit from Itochu, guaranteed by Devon. Itochu eventually sued Devon. The parties terminated the management consulting services. Robotics terminated Devon's CytoCare contract and entered into an agreement with McKesson. Robotics also alleged breaches of the i.v. Station agreement. DeViedma e-mailed hospital customers telling them that Devon faced financial difficulties and lacked staff qualified to manage i.v. Station installations. Devon sued DeViedma and McKesson, claiming breach of fiduciary duty, tortious interference with current and prospective contractual relations, defamation, and conspiracy. The court rejected a motion to dismiss in favor of arbitration. DeViedma did not appeal that order. Extensive litigation followed. DeViedma later moved for summary judgment on the remaining claims for breach of fiduciary duty and tortious interference with contractual relations. The court rejected his arguments in favor of arbitration. The Third Circuit dismissed DeViedma’s interlocutory appeal, rejecting an argument that the denial of summary judgment was an appealable order under the Federal Arbitration Act, 9 U.S.C. 16(a)(1)(C). View "Devon Robotics LLC v. DeViedma" on Justia Law

In February 2009, Santini was working at his family’s Harmony Township, New Jersey dairy farm, when a fight broke out. Santini and 10 others witnessed the fight. About 20 local and state police officers arrived after the fight ended. Santini, standing outside of the milk house, spoke with a Greenwich Township officer about what he had witnessed. According to Santini, State Trooper Fuhrmann yelled at Santini to take his hands out of his pockets. Santini maintains that he complied and explained that his hands were cold because he had been working all day milking cows. Fuhrmann responded: “I don’t care. Keep them where I [can] see them.” Santini continued to try to warm his hands and Fuhrmann continued to object. Santini told Fuhrmann that he was going to return to work because he had already told the other officers his story and began to walk away. Santini claims he was kicked, punched, and held on the ground, then was sprayed with pepper spray and handcuffed. His medical records from the incident reveal no lasting injuries. The Troopers’ story differs from Santini’s. The district court rejected Santini’s civil rights suit on summary judgment. The Third Circuit vacated, finding material issues of fact as to whether Santini’s constitutional rights were violated. View "Santini v. Fuentes" on Justia Law

Consumers from six states filed suit, alleging that Volvo sold certain vehicles with defective sunroof drainage systems. The Third Circuit vacated the grant of class certification after holding that unnamed, putative class members need not establish Article III standing. The class certification opinion rejected plaintiffs’ proposal of a nationwide class and the application of New Jersey law to all claims, and directed that “the law of the state of each subclass should be applied to the subclass’s claims,” but the court did not identify which claims would be subject to class treatment. The court remanded to allow the district court to define the class membership, claims, and defenses, and so that it may rigorously analyze predominance in the first instance. View "Neale v. Volvo Cars N. Am." on Justia Law

Debtor, a billing services technology company, is a limited liability business and its sole member is Joli, Inc. Heverly owns 75 percent of Joli. A printing company holds the single largest claim against Debtor and the Debtor’s CEO, Heverly’s husband, for $9,359,630.91, arising from a judgment. Debtor filed a voluntary Chapter 11 petition. Debtor’s unsecured claims, not including the printing claim, total less than $1.3 million. Debtor filed a Fourth Amended Plan of Reorganization, under which a third-party, One2One (Plan Sponsor) would acquire a membership interest in Debtor. A Plan Support Agreement provided the Plan Sponsor with the exclusive right to purchase 100% of Debtor’s equity for $200,000. Neither the Plan Sponsor nor any third-party was to contribute any additional capital. The Plan incorporated the terms of the Committee Agreement concerning distributions and the waiver of preference actions against unsecured creditors. Over the objection of the printing company, the bankruptcy judge entered a Confirmation Order. The district court affirmed. The Third Circuit declined to overrule its 1996 adoption of the doctrine of equitable mootness, but concluded that the district court abused its discretion under that precedent and remanded for consideration of the merits of the printing company appeal. View "In re: One2One Communications" on Justia Law

In 2011 Lehman filed suit, claiming Gateway was obliged to make good on mortgage loans that Lehman’s subsidiary purchased almost 10 years earlier from Arlington Capital. In 2007 contracts, Arlington agreed to indemnify Lehman for losses on those loans. The following year, Arlington sold its assets to Gateway. The district court held that although it was clear Arlington was liable to Lehman on three loans, it was unclear whether Gateway was liable for Arlington’s debts and a trial was necessary to determine whether a de facto merger had taken place between Gateway and Arlington. After considering the evidence, the court concluded that a de facto merger had occurred and held Gateway for $450,000 plus interest. The Third Circuit affirmed. Gateway violated FRCP 10 when it failed to include in the appellate record a transcript necessary to evaluate its principal claim, so that claim forfeited. Gateway’s other claims lacked merit. View "Lehman Bros. Holdings Inc v. Gateway Funding Diversified Mortg. Servs., LP" on Justia Law

Plaintiffs are direct purchasers of traditional blood reagents, used to test blood compatibility between donors and recipients, from Immucor and OrthoClinical (defendants). By 1999, the entire domestic supply of that product was under defendants’ control. In 2000, defendants’ executives attended a trade meeting at which plaintiffs assert the conspiracy began. Defendants soon began rapidly increasing prices. By 2009, many prices had risen more than 2000%. Following a Department of Justice probe, private suits were filed, transferred by the Judicial Panel on Multidistrict Litigation, and consolidated. Plaintiffs sought damages under the Clayton Act, 15 U.S.C. 15, for alleged horizontal price fixing in violation of the Sherman Act, 15 U.S.C. 1. After preliminary approval of plaintiffs’ settlement with Immucor, the court certified plaintiffs’ class of “[a]ll individuals and entities who purchased traditional blood reagents in the United States directly from Defendants ... at any time from January 1, 2000 through the present.” Plaintiffs relied in part on expert testimony to produce their antitrust impact analyses and damages models, which Ortho challenged. The Supreme Court subsequently decided Comcast v. Behrend, which reversed Behrend v. Comcast, on which the district court relied in granting class certification. The Third Circuit vacated, reasoning that the court had no opportunity to consider the implications of Comcast; a court must resolve any Daubert challenges to expert testimony offered to demonstrate conformity with Rule 23 View "In re: Blood Reagents Antitrust Litig." on Justia Law

CCC, an investment fund incorporated in Guernsey, a British Crown dependency in the English Channel, invested in residential mortgage-backed securities issued by Fannie Mae and Freddie Mac. Moonmouth purchased CCC shares for $60 million under a 2006 Subscription Agreement, which contained a forum selection clause giving Delaware state courts exclusive jurisdiction over any action and specifying that Delaware law was to govern. In 2008, CCC entered liquidation. A Guernsey court appointed liquidators, who sued Carlyle and others (plaintiffs in this action) in Guernsey for breach of fiduciary duties owed to CCC. Subsequent Transfer Agreements involving the parties released then-existing claims against Carlyle. In 2012, a Dutch law firm representing Moonmouth sent letters alleging that plaintiffs took unacceptable risks in connection with CCC-managed investments and that they would hold plaintiffs liable for damages sustained by investors in connection with CCC. Plaintiffs sought to enforce the Subscription Agreement’s forum selection clause and the Transfer Agreements’ releases. After removal to federal court, the district court remanded to state court. The Third Circuit affirmed. The Subscription Agreement’s forum selection clause pertains to the case, may be enforced against defendants, and may be invoked by plaintiffs; the Transfer Agreement provides an alternative ground supporting remand. View "Carlyle Inv, Mgmt., LLC v. Moonmouth Co., SA" on Justia Law

The Bureau of Prisons terminated Kannikal on September 3, 1999. In 2001, Kannikal filed a formal complaint with the EEOC, but he did not receive an administrative hearing until 2006. Kannikal’s case was then held in abeyance because it was considered part of a pending class action complaint. In 2007, the Department of Justice informed Kannikal that his case would no longer be held in abeyance. Kannikal asked the EEOC about his case status in 2008 and 2009, but never received a response. He filed suit on March 28, 2012. The district court dismissed, citing 28 U.S.C. 2401(a), which provides that “every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.” The court held that Kannikal’s cause of action accrued on October 17, 2001, 180 days after he filed his EEOC complaint, and expired six years later. The Third Circuit vacated, finding that section 2401’s six-year limitations period does not apply to suits brought under Title VII. View "Kannikal v. Att'y Gen. of the United States" on Justia Law

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