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

Epsilon, an Ohio corporation with a principal place of business in Texas, entered into Joint Operating Agreements (JOAs) with companies, including Chesapeake, an LLC whose sole member is an Oklahoma citizen, to develop natural gas in Pennsylvania. The JOAs require Chesapeake to “have full control of all operations on the Contract Area.” Chesapeake can be removed as Operator for good cause by a vote of the other JOA parties. The JOAs allow the “Non-Operator parties” to propose new well sites. The others have 30 days to decide whether to participate. The work is then ordinarily performed by Chesapeake. If Chesapeake does not approve the project, the Consenting Parties designate a Consenting Party as Operator. Chesapeake opposed wells proposed by Epsilon, then blocked Epsilon from operating the proposed project unilaterally.Epsilon sought a declaration to drill without Chesapeake’s participation. Chesapeake moved to dismiss the suit for failure to join the other JOA co-signatories. The district court dismissed for failure to state a claim. The Third Circuit remanded. The other contracting parties are required (Fed. R. Civ. P. 19(a)(1)). A declaratory judgment interpreting the JOAs to authorize a single Consenting Party to propose the drilling of a new well would affect all their interests. However, other Absent JOA Parties are citizens of Texas who cannot be feasibly joined without defeating diversity and destroying subject matter jurisdiction. Deciding whether to proceed without them requires findings by the trial judge. View "Epsilon Energy USA Inc. v. Chesapeake Appalachia LLC" on Justia Law

Pretrial detainee Wilson complained to Philadelphia Federal Detention Center medical staff about a lump on his testicle in November 2017. They allegedly stated that such a lump was probably cancerous. Wilson subsequently complained that his condition worsened but received no further treatment. Wilson was transferred to Bureau of Prisons custody, where a urologist determined in February 2018 that the lump was cancerous. Wilson's right testicle was surgically removed. Wilson believed that if his cancer had been addressed earlier, treatment would not have involved chemotherapy and surgery.Wilson alleged medical negligence under the Federal Tort Claims Act (FTCA). The court granted extensions for Wilson (pro se) to act on Pennsylvania Rule 1042.3, which requires medical malpractice plaintiffs to certify either that they have expert support for their claims or will proceed without an expert. Wilson explained that he wanted an expert but conceded the impossibility of obtaining one during the pandemic prison lockdowns. He stated that his medical records would demonstrate that his injury “was not inevitable" and specifically identified documents as discoverable material to substantiate his allegations, The court granted the government summary judgment stating that, while a factfinder could find without expert testimony that the delay in treatment was unreasonable, the issue of whether the delay caused the need to remove Wilson’s testicle required expert testimony.The Third Circuit reversed, finding that the FTCA does not incorporate Rule 1042.3. Wilson did not otherwise have an adequate opportunity to seek out an expert or conduct discovery due to his unique position as a pro se inmate during the pandemic. View "Wilson v. United States" on Justia Law

In 2022, New Jersey passed a law, N.J. Stat. 2C:58-33(a), that empowers only the state’s Attorney General to sue gun-industry members whose “unlawful … or unreasonable” conduct “contribute[s] to a public nuisance in [New Jersey] through the sale, manufacturing, distribution, importing, or marketing of a gun-related product.” It requires industry members to “establish, implement, and enforce reasonable controls” on these activities. The Attorney General has not attempted to enforce the law. Four months after the law was passed, the Foundation, a trade group of gun makers, retailers, and other industry members, filed suit, claiming that the law is preempted by the federal Protection of Lawful Commerce in Arms Act, 15 U.S.C. 7901–7903, and violates due process, the First and Second Amendments, and the dormant Commerce Clause. The Foundation moved for a preliminary injunction, attaching declarations that gunmakers “will continually be at risk of litigation and potential liability unless [they] cease[] doing business.” They gave no factual detail.The Third Circuit held that the challenges must be dismissed. “Pre-enforcement challenges are unusual,” the plaintiff must show that the stakes are high and close at hand. This suit “falls far short of even the “normal” pre-enforcement challenge.” A brand-new civil tort statute, without more, does not justify a federal court’s intervention. View "National Shooting Sports Foundation v. Attorney General New Jersey" on Justia Law

MAE and Zaycosky entered an employment contract. They could not agree on when Zaycosky promised to start his employment, so MAE sued in the state court venue prescribed in the contract. Zaycosky removed the case to federal court. MAE moved for remand to enforce the contract’s forum-selection clause. The district court remanded. MAE timely submitted a petition for costs and fees and an affidavit supporting its request for $29,517.25. Zaycosky argued that the court lacked authority under 28 U.S.C. 1447(c) to award costs and attorney fees for a remand based on a forum-selection clause, and, alternatively, that a fee award was not warranted because he had an objectively reasonable basis for removal.The Third Circuit vacated the award. Section 1447(c) allows fee shifting only for remands where the removal failed to meet the statutory requirements or where the court lacks subject matter jurisdiction over the removed case. A forum-selection clause is not a removal defect and does not deprive the district court of subject matter jurisdiction, the district court cannot remand and award attorney fees under 28 U.S.C. 1447(c). View "Medical Associates of Erie v. Zaycosky" on Justia Law

Wolff received a settlement from the other driver, following a car accident. Aetna sought to collect some of the settlement funds to recoup the disability benefits it had paid to Wolff under her employer's disability plan. In a putative class action, Wolff alleged that Aetna had no right to recoupment and that Aetna’s disability plans utilized standard form language without meaningful variation both within and between employers. Wolff sought to certify a nationwide class composed of all employees who had enrolled in an Aetna standard form disability plan, who were allegedly coerced into repaying a portion of their disability payments from injury recoveries. Aetna argued that the language varied from plan to plan, so Wolff could not demonstrate the cohesiveness required for class certification. Federal Rule 23(b)(3) requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.”The district court certified the class. Aetna did not challenge the order within Rule 23(f)’s 14-day period. Three weeks later, Wolff filed a proposed class notice. Aetna filed objections, including proposed minor modifications to the class definition. After the court revised the definition, Aetna filed a 23(f) petition, which the Third Circuit denied. A modified class certification order triggers a new 23(f) petition period only when the modified order materially alters the original order granting (or denying) class certification. The revision in this case did not effect such a material change. View "Wolff v. Aetna Life Insurance Co" on Justia Law

This consolidated case concerns three appeals from orders entered by magistrate judges in the Western District of Pennsylvania in cases filed under 42 U.S.C. 1983. One case was involuntarily dismissed without prejudice for failure to prosecute; in the others, magistrates entered summary judgment for all defendants.Under 28 U.S.C. 636, precise limits govern a magistrate judge’s jurisdiction absent parties’ consent. A magistrate judge can oversee pretrial discovery even without the consent of the parties, but he cannot grant summary judgment or involuntarily dismiss a case; those limits dissolve if the parties voluntarily consent to a magistrate judge’s final judgment jurisdiction.The Third Circuit dismissed one appeal for lack of jurisdiction because all parties did not consent and, therefore, the magistrate judge lacked the power to involuntarily dismiss the case. However, the magistrate judges were empowered to enter summary judgment in the other cases because all parties either expressly or impliedly consented. The court then affirmed summary judgment based on the plaintiffs’ failure to exhaust administrative remedies. View "Prater v. Pennsylvania Department of Corrections" on Justia Law

For many years, Zurn, a manufacturer of plumbing products and accessories, has faced multiple lawsuits in which claimants allege bodily injury or wrongful death caused by asbestos in its products. To cover litigation costs, Zurn used various insurance policies issued by various insurance companies. Eventually, Zurn was told by its primary and umbrella insurers that Zurn had exhausted the limits of liability under those policies. When Zurn’s excess policy insurers refused to pay, Zurn sought a declaratory judgment that it had exhausted the limits of liability under its primary and umbrella policies and that Zurn’s excess policy insurers had a duty to defend and pay defense costs in the underlying asbestos suits. After discovery, the district court interpreted the meaning of various primary, umbrella, and excess policies, and determined the scope of some duties insurers have under them.One excess policy insurer—American Home—appealed several partial summary judgment orders. The Third Circuit dismissed the appeal for lack of jurisdiction. American Home does not challenge orders that are functionally equivalent to an injunction, No part of the declaration-granting orders compels American Home “to undertake the defense” of Zurn. View "Zurn Industries Inc v. Allstate Insurance Co" on Justia Law

Gillette, a serial sex offender, received a 27-year sentence for sex crimes. After his release, he never registered as a sex offender. On a tip, law enforcement found that Gillette had been living with a 15-year-old boy and had engaged in sexual contact with that child and another child. Gillette was convicted on 20 counts of territorial-law offenses; federal charges were dismissed. The court sentenced Gillette to 155 years’ imprisonment. The Third Circuit affirmed.Gillette filed a habeas petition in the Virgin Islands Superior Court. At Gillette’s request, the Superior Court issued a subpoena duces tecum to the U.S. Attorney’s Office (USAO). As required by Department of Justice regulations, the USAO requested that Gillette submit “a summary of the information” sought “and its relevance to the proceeding.” Gillette instead moved for contempt and sanctions against the USAO for failing to respond to his subpoena. The USAO then removed the proceedings to federal court and successfully moved to quash the subpoena. The Third Circuit dismissed Gillette’s appeal for lack of jurisdiction. The government never waived its sovereign immunity concerning non-monetary actions against it, so the Superior Court lacked jurisdiction over the USAO; the district court derived its jurisdiction over Gillette’s subpoena-enforcement action from 28 U.S.C. 1442(a)(1) and also lacked jurisdiction. View "Gillette v. Golden Grove Adult Correctional Facility" on Justia Law

An Asset Purchase Agreement provided that the sellers could receive variable payments (Earn-Out Consideration) if the post-merger company (IAS) achieved specific benchmarks. Section 2.6(c) specifies that IAS had to provide the sellers with the computation for each period, to become final unless they submitted a “notice of disagreement.” Any disagreement would be settled according to Section 2.3(e),” which refers to resolution by an accounting firm. Section 11.17, however, directs the parties generally to use non-binding mediation, followed by litigation if mediation fails.IAS determined that the company did not meet its targets. The sellers claim that IAS intentionally prevented the company from hitting its targets. Negotiations failed. The sellers sued for breach of contract and tortious interference; later, they filed a notice of disagreement and sought a declaration that the lawsuit was outside the scope of sections 2.3(e) and 2.6(d). IAS sought to compel arbitration under 2.3(e). The district court held that the Agreement contained a valid agreement to arbitrate. An accounting firm subsequently determined that the sellers had no right to Earn-Out Consideration. The district court entered judgment for IAS.The Third Circuit vacated. The Purchase Agreement contains an agreement to submit narrow disputes to an accounting firm for expert determination, not arbitration. Although the statement of IAS’s financial benchmarks becomes final after the expert completes its accounting analysis, the authority to resolve legal questions—like whether IAS violated the duty of good faith— remains with the courts. View "Sapp v. Industrial Action Services LLC" on Justia Law

The Culps each received $8,826.30 to settle a lawsuit and reported their payments as “Other income,” “PRIZES, AWARDS” in their 2015 tax return. In 2017 the IRS proposed to increase their taxes owed for 2015 to reflect a perceived underpayment, giving the Culps 30 days to respond and stating it would send a notice of deficiency if they failed to do so. The Culps did not respond. The IRS mailed a notice of deficiency, informing the Culps of their right to file a petition in the Tax Court within 90 days. In May 2018, the IRS sent the Culps another letter stating they owed only $2,087 in 2015 taxes, penalties, and interest—less than the amount previously assessed. Again they failed to respond. The IRS levied on their property, collecting approximately $1,800 from the Culps’ Social Security payments and 2018 tax refund.The Culps filed a petition in the Tax Court, which dismissed their petition for lack of jurisdiction, reasoning its “jurisdiction depends upon the issuance of a valid notice of deficiency and the timely filing of a petition,” 26 U.S.C. 6212, 6213, 6214. It found the petition untimely because the Culps did not file it within 90 days of the date the IRS sent the second notice of deficiency. The Third Circuit reversed. Congress did not clearly state that section 6213(a)’s deadline is jurisdictional; non-jurisdictional time limits are presumptively subject to equitable tolling. That presumption was not rebutted. View "Culp v. Commissioner of Internal Revenue" on Justia Law