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

Kelly was in a collision a drunk driver, who had been drinking at Princeton Tavern. Princeton's dram shop liability policy was issued by State National. Kelly sued Princeton in state court, obtained a default judgment, and settled for $5 million. When that lawsuit was filed, Princeton requested that its broker, Carman, notify State of its obligation to defend and indemnify. Carman did not do so. Lacking notice, State refused to cover Princeton’s liability. Princeton assigned its rights to sue Carman; Kelly sued Carman in state court for negligence and breach of contract and filed a separate state-court action, seeking a declaratory judgment that Carmen's insurer, Maxum, was obligated to defend and indemnify. Maxum removed the Declaratory Action to federal district court, asserting diversity jurisdiction. Kelly and Carman are Pennsylvania citizens. Maxum (a Georgia company) argued that the two are together interested in securing Maxum’s coverage so that diversity of citizenship would exist once Carman was realigned to join Kelly as a plaintiff. The district court remanded to state court, reasoning that the state tort action constituted a parallel proceeding. The Third Circuit reversed. Contemporaneous state and federal proceedings are parallel under the Declaratory Judgment Action when they are substantially similar; the proceedings here were not. The nonexistence of a parallel state proceeding weighed significantly in favor of the district court entertaining the Declaratory Action but did not require it. Considerations of practicality and wise judicial administration counseled against abstention. View "Kelly v. Maxum Specialty Insurance Group" on Justia Law

Consolidated appeals involve allegations that the patent-holders for Lipitor and Effexor XR delayed entry into the market by generic versions of those drugs by engaging in a monopolistic scheme that involved fraudulently procuring and enforcing the underlying patents, then entering into a reverse-payment settlement agreement with a generic manufacturer. In 2013, the Supreme Court recognized that reverse payment schemes can violate antitrust laws and that it is normally not necessary to litigate patent validity to answer the antitrust question. The district judge dismissed several claims. The Third Circuit remanded after rejecting an argument that plaintiffs’ allegations required transfer of the appeals to the Federal Circuit, which has exclusive jurisdiction over appeals from civil actions “arising under” patent law, 28 U.S.C. 1295(a)(1). Not all cases presenting questions of patent law necessarily arise under patent law; here, patent law neither creates plaintiffs’ cause of action nor is a necessary element to any of plaintiffs’ claims. Plaintiffs plausibly allege the existence of agreements between the patent holders and the generic manufacturers. The court remanded one of the Lipitor appeals, brought by California pharmacists, and involving claims solely under California law, for determination of whether remand to state court was appropriate. The Lipitor plaintiffs made plausible allegations of fraudulent patent procurement and enforcement, and other related misconduct. View "In re: Lipitor Antitrust Litigation" on Justia Law

Direct purchasers of Wellbutrin XL, a drug for treating depression, sued, alleging that GSK violated the Sherman Antitrust Act by entering into an unlawful conspiracy with Biovail, GSK’s partner in the development of Wellbutrin XL, to delay the launch of generic versions of the drug. Indirect-purchasers asserted similar theories under state law. The purchasers claim that GSK delayed the launch of generic versions by supporting baseless patent infringement suits and a baseless FDA Citizen Petition aimed at generic drug companies and by entering into an unlawful reverse payment settlement agreement with potential competitors. The district court granted GSK summary judgment, finding insufficient evidence that GSK’s patent litigation was a sham or that the settlement delayed the launch of generic Wellbutrin XL. The court granted GSK’s Daubert motion to exclude the testimony of the purchasers’ economic expert; decertified the indirect-purchaser class for lack of ascertainability; dismissed the indirect-purchaser claims brought under the laws of states that were not the home of a named class representative; and denied Aetna’s motion to intervene. The Third Circuit affirmed. After considering the Supreme Court’s 2013 decision, FTC v. Actavis, the court concluded that the purchasers failed to establish a genuine dispute of fact either as to whether GSK engaged in sham litigation or whether GSK’s actions delayed the launch of generic Wellbutrin XL. View "In re: Wellbutrin XL Antitrust Litigation" on Justia Law

Moon performed at the Breathless Men’s Club in Rahway. She rented performance space in the Club and signed an Independent Dancer Rental Agreement, stating: Dancer understands and agrees that he/she is an independent contractor and not an employee of club. Dancer is renting the performance space for an agreed upon fee previously agreed to by Dancer and Club. … In a dispute between Dancer and Club under this Agreement, either may request to resolve the dispute by binding arbitration. THIS MEANS THAT NEITHER PARTY SHALL HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL – DISCOVERY AND APPEAL RIGHTS ARE LIMITED IN ARBITRATION. ARBITRATION MUST BE ON AN INDIVIDUAL BASIS. THIS MEANS NEITHER YOU NOR WE MAY JOIN OR CONSOLIDATE CLAIMS IN ARBITRATION, OR LITIGATE IN COURT OR ARBITRATE ANY CLAIMS AS A REPRESENTATIVE OR MEMBER OF A CLASS. Moon sued under the Fair Labor Standards Act, 29 U.S.C. 201; the New Jersey Wage Payment Law; and the state Wage and Hour Law. The district court denied a motion to dismiss and ordered limited discovery on the arbitration issue. After discovery, the court granted the Club summary judgment. The Third Circuit reversed. Moon’s claims do not arise out of the contract itself; the arbitration clause does not cover Moon’s statutory wage-and-hour claims. View "Moon v. Breathless Inc" on Justia Law

Creditsmarts operates an internet-based business that helps independent car dealers connect customers with lenders. BMW offers direct automotive financing to customers through “up2drive.” In 2012, BMW and Creditsmarts entered into agreements, under which BMW would offer up2drive loans to borrowers at participating dealerships through Creditsmarts. Creditsmarts subsequently used the services of a fax broadcaster to fax about 21,000 advertisements to dealerships. The advertisements identified BMW and stated, “UpToDrive is looking for your BUSINESS!!” A list of recipients was generated from Creditsmarts’s customer database. Neither Creditsmarts nor Westfax retained lists of recipients. Plaintiff received a fax and alleges that it had no preexisting business relationship with Creditsmarts or BMW and that the fax was unsolicited. Plaintiff brought suit under the Telephone Consumer Protection Act, 47 U.S.C. 227, asserting claims under FRCP 23 on behalf of a class defined as: All auto dealerships that were included in the Creditsmarts database on or before December 27, 2012, with fax numbers … who were sent” BMW faxes on specific dates. The Creditsmarts database was not preserved as of December 2012 but was preserved as of February 2014. The Third Circuit vacated the denial of class certification. Precedent does not categorically preclude affidavits from potential class members, combined with the Creditsmarts database, from satisfying the ascertainability standard. Because the database was not produced during discovery, plaintiff was denied the opportunity to demonstrate whether a reliable, administratively feasible method of ascertaining the class exists View "City Select Auto Sales Inc v. BMW Bank of North America Inc" on Justia Law

Former Howmedica Sales Representatives, all California natives, signed employment agreements with confidentiality, non-compete, and forum-selection clauses, designating New Jersey (or Michigan) as the forum for any litigation arising out of the agreements. After clashes with Howmedica, the Sales Representatives resigned and became independent contractors representing Howmedica’s competitor, DePuy. Some of Howmedica’s customers, previously assigned to the Sales Representatives, followed them. Howmedica suspected that the Sales Representatives and DePuy conspired to convert those customers before the Sales Representatives’ resignations. Howmedica filed suit in New Jersey, joining DePuy’s regional distributor, Golden State as a “necessary party.” The defendants successfully moved to transfer the case to California under 28 U.S.C. 1404(a), which, for “the convenience of parties and witnesses” and “in the interest of justice,” allows transfer to a district where the case “might have been brought.” The Third Circuit directed the district court to transfer claims against only the two corporate defendants who did not agree to any forum-selection clause. Where contracting parties have specified the forum in which they will litigate disputes arising from their contract, federal courts must honor the forum-selection clause “[i]n all but the most unusual cases.” In this case, all defendants sought transfer to one district; some, but not all, defendants are parties to forum-selection clauses. View "In re: Howmedica Osteonics Corp" on Justia Law

PPL hired McNelis as a Nuclear Security Officer in 2009. McNelis had unrestricted access to PPL’s plant, carried a firearm, and was authorized to use deadly force. In 2012, McNelis experienced personal and mental health problems. McNelis was paranoid and had problems with alcohol and bath salts—a synthetic drug that affects the central nervous system. McNelis’s wife moved herself and the children out of the family home. Police received an anonymous 911 call that resulted in a lockdown at his children’s school. McNelis had a three-day stay in an inpatient treatment unit. Pursuant to NRC regulations, McNelis’s unrestricted access was “placed on hold” pending medical clearance. A third-party psychologist interviewed McNelis and performed testing required by PPL policy and NRC regulations and reported that McNelis was not fit for duty. PPL revoked McNelis’s unescorted access authorization and terminated his employment. After his appeal was denied, McNelis sued, claiming his termination violated the Americans with Disabilities Act. The district court held that McNelis was fired because he lacked a legally mandated job requirement: the unrestricted security access authorization that the Nuclear Regulatory Commission requires for armed guards. The Third Circuit affirmed. PPL followed NRC regulation procedures; “[w]hen Congress enacted the ADA, it recognized that federal safety rules would limit application of the ADA as a matter of law.” View "McNelis v. Pennsylvania Power & Light Co" on Justia Law

Martin pleaded guilty to possession with intent to distribute more than 50 grams of crack cocaine, 21 U.S.C. 841(a)(1); (b)(1)(B)(iii). The parties agreed that Martin’s advisory Guidelines range was 70-87 months’ imprisonment and that a sentence of 87 months was appropriate. According to the Probation Office, Martin’s Guidelines range was 188-235 months’ because Martin was a career offender. At sentencing, the district court stated that Martin was a career offender, noting crimes of aggravated assault, resisting arrest, and fleeing a police officer. After considering the 18 U.S.C. 3553 factors, the Court sentenced Martin to 87 months’ imprisonment. Martin did not appeal. In 2014, the Sentencing Commission promulgated Guidelines Amendment 782, retroactively reducing the base offense for many drug quantities, including the drug quantity associated with Martin’s offense. Martin sought a reduction of sentence under 18 U.S.C. 3582(c)(2), citing Amendment 782. The district court found him ineligible for relief because his Guidelines range was based on his status as a career offender rather than the drug quantity. The Third Circuit affirmed. Martin’s status as a career offender meant that he was not eligible for a reduced sentence. View "United States v. Martin" on Justia Law

Defendants were tried together and convicted of several racketeering-related offenses in connection with a loan sharking and illegal gambling operation in Philadelphia. The district court entered preliminary orders of forfeiture making both men jointly and severally liable for more than $5 million of the proceeds from the criminal operation. During the pendency of their appeal, the Supreme Court issued its 2017 "Honeycutt" opinion, reviewing one of the forfeiture statutes at issue in the defendants’ case, 21 U.S.C. 853, and holding that joint and several liability is unauthorized. In light of that holding, the Third Circuit remanded for reconsideration of the forfeiture orders, but otherwise affirmed. The court rejected an argument that the district court violated the Sixth Amendment by applying a “dangerous weapons” sentencing enhancement based on the defendants’ use of an axe to make threats. Defendants argued that the use of the axe constitutes acquitted conduct because it was one of the acts that formed the basis of Count 26, of which they were found not guilty. The court also rejected challenges to the sentencing calculations associated with the RICO conspiracy. View "United States v. Gjeli" on Justia Law

As unclaimed property has become Delaware’s third-largest source of revenue, companies have filed lawsuits challenging the constitutionality of Delaware’s escheat regime. Plains All American Pipeline attacked the constitutionality of several provisions of the Delaware Escheats Law, which provides that a holder of “property presumed abandoned” must file a yearly report with the State Escheator in which it provides information about the property and its possible owner (Del. Code tit. 12, sects. 1142, 1143) and Delaware’s demand that it submit to an abandoned property audit. Because Plains brought suit before Delaware assessed liability based on its audit or sought a subpoena to make its audit-related document requests enforceable, the district court dismissed the suit, finding that the claims were unripe except for an equal protection claim that it dismissed for failure to state a claim. The Third Circuit reversed in part, finding an as-applied, procedural due process claim ripe, but otherwise affirmed. To establish a due process violation, all Plains must show is that it was required to submit a dispute to a self-interested party. No further factual development is needed to address the merits of the claim. View "Plains All American Pipeline LLP v. Cook" on Justia Law