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

Taxpayers (married couples) had an interest in real estate that was condemned by Pennsylvania for construction of a highway. The state agreed to pay $40.9 million, with interest, in five yearly installments. During the first three years of the agreement, the taxpayers excluded the interest from their federal income taxes as exempt under 26 U.S.C. 103, which permits exclusion of interest payments that are obligations of the state. The IRS issued to each couple a deficiency notice for $2.3 million, which was affirmed by the Tax Court. The Third Circuit reversed in part. Negotiations between the parties transformed the state's interest obligation from mandatory to voluntary. The purpose underlying Section 103 was "well served" in this case; the state was able to obtain credit from the taxpayers at a lower rate of interest than it otherwise might have had to if the condemnation proceeding had been completed. View "DeNaples v. Comm'r of Internal Revenue" on Justia Law

In 2007, the HHS Office of Inspector General conducted a nationwide audit to determine whether states were complying with the requirements to reimburse the federal share of recovered AFDC overpayments made before October 1, 1996. The audit found that the Pennsylvania DPW had recovered $10,598,095 in AFDC overpayments from October 1, 1996 through June 30, 2006, but had not reimbursed ACF for the federal share of $5,609,572. DPW appealed a reimbursement request, challenging HHS authority to conduct the audit, but not the audit findings. The appeals board and district court upheld the HHS determination, rejecting an argument that the Personal Responsibility and Work Opportunity Reconciliation Act, 42 U.S.C. 601, designates a procedure established by the Single Audit Act, 31 U.S.C. 7501-7507 as the exclusive audit procedure. Under the SAA, "[e]ach non-Federal entity" that expends at least $300,000 of federal awards in a fiscal year "shall have either a single audit or a program-specific audit made for such fiscal year in accordance with the requirements of this chapter." The Third Circuit affirmed, also rejecting claims under FOIA and that DPW was entitled to retain the federal share of the AFDC overpayment recoveries under substantive law. View "Commonwealth of PA v. Sebelius" on Justia Law

Petitioner left Syria because of fears relating to indebtedness and was admitted to the U.S. as a nonimmigrant in 2000. He became acquainted with men involved in the September 11 attacks and later voluntarily provided the FBI with information. In October 2001 the INS issued a Notice to Appear charging petitioner as removable. He sought asylum and withholding of removal and relief under the Convention Against Torture and was transferred to FBI custody on a material witness warrant. The IJ granted the application for asylum (8 U.S.C. 1158), withholding of removal (8 U.S.C. 1231(b)(3)(A)), and withholding of removal pursuant to the CAT, finding that he belonged to the social group of "hopeless debtors," persecuted in Syria. Three years later, ICE indicated that his application might have been fraudulent and that petitioner might pose a threat to national security. The BIA reopened "sua sponte" and remanded. The district court dismissed, for lack of jurisdiction, a "Petition for Writ of Habeas Corpus and Stay of Removal Proceedings." The Third Circuit reversed concluding that, under these unusual circumstances, the district court has jurisdiction to review the BIA decision to reopen pursuant to 28 U.S.C. 1331 and the Administrative Procedure Act, 5 U.S.C. 701.View "Chehazeh v. Attorney Gen. of the U.S." on Justia Law

The company, which issues preprinted travelers' checks, challenged 2010 N.J. Laws Chapter 25, amending New Jersey's unclaimed property statute, N.J. Stat. 46:30B, to retroactively reduce the period after which travelers checks are presumed abandoned from 15 years to three years, after which the funds must be turned over to the state. The district court denied an injunction. The Third Circuit affirmed, rejecting arguments under the Due Process Clause, the Contract Clause, the Takings Clause, and the Commerce Clause. The law has a rational basis. It does not substantially impairment contractual relationships; while the company has the right to use and invest TC funds until the date the TC is cashed or sold, the duration of use is further subject to the lawful abandonment period set by unclaimed property laws. The company has no investment-backed expectation with respect to the longer period of investment.The law does not directly regulate sales in other states.View "Am. Express Travel Related Servs. v. Sidamon-Eristoff" on Justia Law

Merchants challenged 2010 N.J. Laws Chapter 25, amending the unclaimed property statute, N.J. Stat. 46:30B, to provide for escheat of stored value cards (gift cards). Chapter 25 presumes cards to be abandoned after two years of inactivity and requires issuers to transfer remaining value to the state. Issuers must obtain name and address of the purchaser or owner of each card. If the issuer's state exempts cards from its unclaimed property statute, unredeemed balances of cards previously-issued in New Jersey, where information was not recorded, must be reported to New Jersey. The address where the card issued or sold is presumed to be the owner's domicile. The district court enjoined retroactive application of Chapter 25 and prospective enforcement of the place-of-purchase presumption, but declined to enjoin data collection and two-year abandonment provisions. The Third Circuit affirmed. Chapter 25 substantially impaired contractual relationships by imposing unexpected obligations and did not reasonably accommodate the rights of the parties in light of the public purpose. The abandonment period is not preempted by the Credit CARD Act, 15 U.S.C. 1693l-1(c). The place-of-purchase presumption is preempted by federal common law, under which the first opportunity to escheat belongs to the state of the last known address of the creditor, shown by the debtor's records. If the primary rule does not apply, the right to escheat is with the state in which the debtor is incorporated. View "NJ Retail Merch. Assoc. v. Sidamon-Eristoff" on Justia Law

Defendants were convicted of honest services fraud, 18 U.S.C. 1346, mail fraud ("traditional" fraud), 18 U.S.C.1341, and conspiracy, 18 U.S.C. 371, based on a defendant (city councilman) taking official actions in exchange for gifts. Their appeal claimed that the 2010 Supreme Court decision, Skilling v. U.S., affected the law of honest services fraud. The Third Circuit vacated and remanded. While the evidence was sufficient to convict on each count, the Skilling decision made jury instructions on honest services fraud incorrect. The jury should have been instructed on a bribery theory but not on a conflict-of-interest theory. The error was not necessarily harmless; the law of honest services fraud depends on intent and finding intent requires a jury to make reasonable inferences. Evidence of honest services fraud overlapped substantially evidence submitted on traditional fraudView "United States v. Wright" on Justia Law

Decedent was treated at a non-profit clinic, by volunteer physicians. The U.S. Department of Health and Human Services deemed those physicians to be Public Health Service employees (Public Health Service Act, 42 U.S.C. 233(o)), immune from suit under the Federal Tort Claims Act, 28 U.S.C. 1346, 2671-2680. A suit against the U.S. was the exclusive remedy for alleged malpractice at the clinic. Decedent also treated at a facility where physicians did not enjoy those protections. Her estate sued the U.S., the clinic, the other facility, the doctors at that facility, and their physicians' group. The district court granted summary judgment for the clinic, predicated on immunity under the New Jersey Charitable Immunity Act (NJCIA), and ultimately dismissed. The Third Circuit affirmed, except for remanding with respect to the physicians' group. The trial court properly held that the U.S. was immune from suit under the NJCIA, which provides that a similarly-placed private employer would be entitled to the defense. The court properly held that the treatment provided constituted emergency medicine, so that N.J. Stat. 2A:53A-41 applied and one of plaintiff's experts was not qualified to testify. The court erred in not considering treatment by a physicians' assistant in considering claims against her employer, the physicians' group.View "Lomando v. United States" on Justia Law

In 2008 the Third Circuit ruled that the Federal Communications Commission's imposition of a $550,000 fine on CBS was arbitrary. The fine was based on a 2004 incident: the exposure, for nine-sixteenths of one second, of Janet Jackson's bare right breast during the live halftime performance of Super Bowl XXXVIII. The Supreme Court remanded for consideration under its 2009 ruling in F.C.C. v. Fox Television Stations, Inc., which concerned the FCC's decision to abandon its "fleeting words" safe harbor for expletives that are not repeated. On remand, the Third Circuit readopted its earlier holding that the penalty on CBS amounted to an unannounced policy change.The evidence weighed against the FCC contention that its restrained enforcement policy for fleeting material extended only to fleeting words and not to fleeting images. View "CBS Corp. v. Fed. Commc'n Comm'n" on Justia Law

The former Pennsylvania State Senator was sentenced to 55 months' imprisonment, a $411,000 fine, and $2,340,839 in restitution, after conviction on 137 counts of fraud, tax evasion, and obstruction of justice. His former aide was sentenced to imprisonment of one year and one day, a $45,000 fine, and joint and several restitution of up to $792,802, after conviction on 45 counts. The Third Circuit affirmed the senator's conviction, but vacated both sentences. The court acted within its discretion in admitting evidence concerning the state Ethics Act. The content and enforcement of the Act were relevant to the claim that there were rules that the senator broke repeatedly, that those rules were clear enough for him to understand, and to show that he was deceiving the Senate when he misrepresented or omitted aspects of his actions and expenditures to avoid the perception that he had violated those rules. A juror's social media comments did not merit a new trial, nor did another juror's exposure to excluded evidence. The district court's failure to calculate a final guidelines range left the court unable to review the procedural and substantive bases of the sentence and affects the substantial rights of the parties; the court abused its discretion with respect to several aspects of sentencing.

The Secretary of Labor cited the refinery for nine "serious" violations of the asbestos in construction standard, which prescribes protective requirements based on measurable concentration of asbestos fibers to which employees are or may be exposed. The ALJ affirmed the violations and the classification. The Occupational Safety and Health Review Commission reduced the classification to "other than serious" under 29 U.S.C. 666, in part because the Secretary failed to present case-specific evidence of possible employee exposure to asbestos. The Third Circuit vacated and remanded for the citations to be affirmed as "serious." Precedent only requires that there could be exposure to asbestos that is substantially probable to lead to serious harm. Applying this standard, the violations were "serious;" there is no need for case-specific evidence. If the Secretary has shown violations of regulations involving Class II work and the presence of asbestos, the burden shifts to the employer to show that the violations were not "serious."