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

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

In 2006, Sambare, a citizen of Burkina Faso, was admitted to the U.S. as a lawful permanent resident. Sambare was subsequently convicted of credit card theft and forgery. In 2013, when Sambare returned from visiting his mother in Ghana, ICE asserted that Sambare was inadmissible under 8 U.S.C. 1182(a)(2)(A)(i)(I), having been convicted of “crime[s] involving moral turpitude.” Sambare obtained a waiver of inadmissibility, 8 U.S.C. 1182(h), which restored his status as a lawful permanent resident. In 2015, Pennsylvania police stopped Sambare in his vehicle after he allegedly made an illegal U-turn. Sambare, who initially provided a false name, admitted that he had smoked marijuana before driving. Sambare tested positive for marijuana in his system and pleaded guilty to driving under the influence of a Schedule I controlled substance. The Immigration Court found that Sambare was removable because his conviction was for a “violation of . . . any law or regulation of a State . . . relating to a controlled substance . . . , other than a single offense involving possession for one’s own use of 30 grams or less of marijuana,” 8 U.S.C. 1227(a)(2)(B)(i). The Third Circuit dismissed Sambare’s petition for review, agreeing that Sambare’s conviction “is associated with the prohibition of driving, operating, or actual physical control of the movement of a vehicle . . . while there is a controlled substance in the individual’s blood,” which “is more serious than simple possession. View "Sambare v. Attorney General United States" on Justia Law

Defendants maintain a database of healthcare providers, containing contact information, demographics, specialties, education, and related data. Defendants sell and license the database typically to healthcare, insurance, and pharmaceutical companies, who use it to update their provider directories, identify potential providers to fill gaps in their networks, and validate information when processing insurance claims. One way defendants update and verify the information in their database is to send unsolicited faxes to listed providers, requesting them to correct outdated or inaccurate information. The faxes inform the recipients that: As part of ongoing data maintenance of our Optum Provider Database product, Optum regularly contacts healthcare practitioners to verify demographic data regarding your office location(s). This outreach is independent of and not related to your participation in any Optum network.... This data is used by healthcare-related organizations to aid in claims payment, assist with provider authentication and recruiting, augment their own provider data, mitigate healthcare fraud and publish accurate provider directories....There is no cost to you to participate in this data maintenance initiative. This is not an attempt to sell you anything.” Having received such faxes, Mauthe sued under the Telephone Consumer Protection Act, 47 U.S.C. 227 (TCPA). The Third Circuit affirmed the rejection of his suit on summary judgment, finding that the faxes were not “advertisements” under the TCPA. They did not attempt to influence the purchasing decisions of any potential buyer. View "Robert W. Mauthe, M.D. P.C. v. Optum, Inc." 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

Trant and Ashby had a heated encounter at a gas station in Bovoni, St. Thomas, that ended with each displaying his pistol. After law enforcement officers looked into these events, Trant was convicted as a convicted felon in possession of a firearm, 18 U.S.C. 922(g)(1). The Third Circuit affirmed. The district court did not abuse its discretion by granting the government’s motion to re-open its case-in-chief because Trant was not prejudiced. The motion was made before Trant had the opportunity to present his evidence, thereby giving him the opportunity to respond and also limiting any disruption to the proceedings. The court rejected Trant’s argument that the court should have permitted him to question Ashby about his possession of a firearm, suggesting it was probative of Ashby’s character for untruthfulness and necessary for the jury to evaluate Ashby’s credibility. The implausible nature of Ashby’s having an ulterior motive for testifying hardly made it “obvious” that Trant had the right to ask Ashby about the latter’s illegal possession of a firearm. Trant’s conviction was supported by sufficient evidence. View "United States v. Trant" on Justia Law

A Controlled Foreign Corporation’s income is not taxable to its domestic shareholders unless the income is distributed to them. CFC shareholders began taking loans either from the CFC or from third-party financial institutions using the CFC’s assets as collateral or having the CFC guarantee the loans to obtain a monetary return on their foreign investment. The Revenue Act of 1962 requires the inclusion in the domestic shareholder’s annual income of any increase in investment in U.S. properties made by a CFC it controls, 26 U.S.C. 956(c)(1)(C), and provides that a CFC shall be considered as holding an obligation of a U.S. person if such CFC is a pledgor or guarantor of such obligations. IRS regulations determine when a CFC’s pledge or guarantee results in the CFC being deemed the holder of the loan, and how much of the “obligation” a CFC pledgor or guarantor is deemed to hold, 26 C.F.R. 1.956-2(c)(1) and 1.956-1(e)(2). Through the SIH family, Appellant owns two CFCs. Another SIH affiliate, SIG, borrowed $1.5 billion from Merrill Lynch in 2007 in a loan guaranteed by over 30 SIH affiliates, including the CFCs that Appellant owns. Although the loan dwarfed the CFCs’ assets (roughly $240 million), Merrill Lynch insisted on having the CFCs guarantee. In 2011, when the CFCs distributed earnings to Appellant, their domestic shareholder, the IRS determined that Appellant should have reported the income at the time the CFCs guaranteed the SIG loan, treating each CFC as if it had made the entire loan directly, though the amount included in Appellant’s income was reduced from the $1.5 billion principal of the loan to the CFCs’ combined “applicable earnings.” This resulted in an additional tax of $378,312,576 to Appellant. The IRS applied the then-applicable 35% rate for ordinary income. The Tax Court and Third Circuit ruled in favor of the IRS, rejecting Appellant’s challenges to the validity of the regulations and the use of the ordinary income tax rate. View "SIH Partners LLLP v. Commissioner of Internal Revenue" on Justia Law

Inmate Bailey-Snyder was moved to administrative segregation after federal corrections officers found a homemade shank on his person. He remained in the Special Handling Unit (SHU) pending investigation. Ten months later, Bailey-Snyder was indicted for possession of a prohibited object in prison. He filed several motions for extensions before moving to dismiss, citing his placement in isolation as the start of the speedy trial clock. The district court denied the motion. At trial, defense counsel cross-examined the officers who found the shank regarding incentive programs for recovering contraband. The government elicited that the programs do not reward individual contraband recoveries. Neither officer discussed the potential consequences of planting a shank. The defense rested without offering testimony or evidence. During summation, the prosecutor stated: “The defendant is guilty of his crime." The court concluded that the prosecutor expressed personal belief in the defendant’s guilt; the prosecutor had to make a corrected statement to the jury. In closing, the government argued: “[i]t’s conjecture to say that these correctional officers would put their jobs, their careers, their livelihoods on the line to possibly plant a shank on this defendant to maybe, maybe, have a little notch to get a promotion.” The defense unsuccessfully objected, claiming the government was “arguing a fact not in evidence.” Bailey-Snyder was sentenced to 30 months’ imprisonment, consecutive to his underlying sentence. The Third Circuit affirmed. An inmate’s placement in isolation, while under investigation for a new crime, does not trigger his right to a speedy trial under the Sixth Amendment or the Speedy Trial Act. There was no improper vouching or cumulative error in Bailey-Snyder’s trial. View "United States v. Bailey-Snyder" on Justia Law

Plaintiffs sought to represent a proposed class of 20,000 current and former Penn employees who participated in Penn's Retirement Plan since August 2010. The Plan is a defined contribution plan under 29 U.S.C. 1002(34), tax-qualified under 26 U.S.C. 403(b), offering mutual funds and annuities. The University matches employees’ contributions up to 5% of compensation. As of December 2014, the Plan offered 48 Vanguard mutual funds, and 30 TIAA-CREF mutual funds, fixed and variable annuities, and an insurance company separate account. In 2012, Penn organized its investment fund lineup into four tiers, ranging from lifecycle or target-date funds for the “Do-it-for-me” investor to the option of a brokerage account window for the “self-directed” investor looking for additional options. Plan participants could select a combination of funds from the investment tiers. TIAA-CREF and Vanguard charge investment and administrative fees. The district court dismissed plaintiffs’ suit for breach of fiduciary duty, prohibited transactions, and failure to monitor fiduciaries under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001-1461, which alleged that defendants failed to use prudent and loyal decision-making processes regarding investments and administration, overpaid certain fees by up to 600%, and failed to remove underperforming options from the Plan’s offerings. The Third Circuit reversed and remanded the dismissal of the breach of fiduciary duty claims. While the complaint may not have directly alleged how Penn mismanaged the Plan, there was substantial circumstantial evidence from which the court could “reasonably infer” that a breach had occurred. View "Sweda v. University of Pennsylvania" on Justia Law

The Passaic County Sheriff’s Office hired Tundo and Gilgorri as corrections officers on a trial basis. They were often absent and were frequently reprimanded for insubordination and incompetence. They were fired as part of a mass layoff before they had completed their 12-month trial period. Months later, Passaic County needed more employees. The Civil Service Commission created lists of former officers whom it might rehire, including Tundo and Gilgorri. Passaic County tried to remove the two from the lists based on their work history. The Commission blocked this attempt, restored them to the eligible list, and ordered Passaic County to place them in “a new 12-month working test period.” Passaic County then offered to rehire the two and asked them to complete a re-employment application, which asked them to agree not to sue Passaic County. They refused to complete the application. The Commission then removed them from the list. The Third Circuit affirmed the summary judgment rejection of their 42 U.S.C. 1983 due process claims. The Commission has many ways to take anyone off its lists and did not promise that the two would stay on the lists nor constrain its discretion to remove them. Because there was no mutually explicit understanding that they would stay on the lists, the men had no protected property interest in doing so. View "Tundo v. County of Passaic" on Justia Law

Multidistrict litigation was formed to handle claims filed by former professional football players against the NFL based on concussion-related injuries. The district court (Judge Brody) approved a settlement agreement, effective January 2017. The Third Circuit affirmed; the Supreme Court denied certiorari. Under the agreement, approximately 200,000 class members surrendered their claims in exchange for proceeds from an uncapped settlement fund. Class members had to submit medical records reflecting a qualifying diagnosis. The Claims Administrator determines whether the applicant qualifies for an award. In March 2017, the claims submission process opened for class members who had been diagnosed with a qualifying illness before January 7, 2017. Other class members had to receive a diagnosis from a practitioner approved through the settlement Baseline Assessment Program (BAP). Class members could register for BAP appointments beginning in June 2017. While waiting to receive their awards, hundreds of class members entered into cash advance agreements with litigation funding companies, purporting to “assign” their rights to settlement proceeds in exchange for immediate cash. Class members did not assign their legal claims against the NFL. Judge Brody retained jurisdiction over the administration of the settlement agreement, which included an anti-assignment provision.Class counsel advised Judge Brody that he was concerned about predatory lending. Judge Brody ordered class members to inform the Claims Administrator of all assignment agreements, and purported to void all such agreements, directing a procedure under which funding companies could accept rescission and return of the principal amount they had advanced. The Third Circuit vacated. Despite having the authority to void prohibited assignments, the court went too far in voiding the cash advance agreements and voiding contractual provisions that went only to a lender’s right to receive funds after the player acquired them. View "In Re: National Football League Players Concussion Injury Litigation." on Justia Law