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

The National Firearms Act requires ATF permission for manufacture of a firearm, 26 U.S.C. 5822. Separately, the Gun Control Act, prohibits private manufacture of machineguns, with exceptions for government entities and machineguns lawfully possessed before 1986, 18 U.S.C. 922(o). Watson, as sole trustee of the Watson Family Gun Trust, applied to permit an M-16-style machinegun. An ATF examiner mistakenly approved the application. Watson had a machinegun manufactured. Weeks later, ATF informed Watson that the approval was mistaken. Watson argued that the trust was not a “person” under the Act. ATF explained that although a trust is not a “person” under the Act, a trust cannot legally make or hold property, so it considers the individual acting on behalf of the trust. Watson surrendered his gun under protest, then filed suit, claiming that the provisions are a de facto ban on an entire class of arms in violation of the Commerce Clause and the Second, Ninth, and Tenth Amendments; due process violations; equal protection violations; and detrimental reliance. The government initiated a forfeiture action. The district court held that Watson had standing, but failed to state a claim. The Third Circuit affirmed. The Second Amendment does not protect the possession of machineguns; a trust is not exempt from Section 922(o) because a trust is not an entity distinct from its trustees and cannot own property. View "United States v. One Palmetto State Armory PA 15 Machinegun" on Justia Law

The apartment building, constructed in 1912, was used first as a factory, before it was abandoned. Goldtex purchased the the building in 2010 and hired KlingStubbins to design a plan to convert the entire building into rental apartment units and retail space. The building was almost gutted for conversion into a residential building with 163 apartment units and ground floor retail space that began accepting tenants in 2013. A housing advocacy group filed suit alleging violation of the design and accessibility requirements of the Fair Housing Act (FHA), 42 U.S.C. 3604(f)(3)(C). The district court dismissed, citing HUD’s interpretation of the provision—which exempts converted buildings from the accessibility requirements if they were constructed prior to March 13, 1991. The Third Circuit affirmed, finding the agency’s interpretation entitled to deference. The interpretations are reasonable and reflect a legitimate policy choice by the agency in administering an ambiguous statute. View "Fair Hous. Rights Ctr. v. Post Goldtex GP LLC" on Justia Law

Between 2002-2006, Lucht purchased treated lumber for a deck on his vacation home in the Virgin Islands. The lumber allegedly decayed prematurely and he began replacing boards in 2010; he claims he did not discover the severity of the problem until the fall of 2011. Lucht sued the retailer, wholesaler, and treatment company of the lumber in February 2013, alleging a Uniform Commercial Code contract claim; a common law contract claim; a breach of warranty claim; a negligence claim; a strict liability claim; and a deceptive trade practices claim under the Virgin Islands Deceptive Trade Practices Act. The district court rejected the claims as time-barred. The Third Circuit affirmed, citing the “‘gist of the action doctrine,” which bars plaintiffs from bringing a tort claim that merely replicates a claim for breach of an underlying contract. View "MRL Dev. I, LLC v. Whitecap Inv. Corp" on Justia Law

Between 1945 and the mid-1970s, Hassell was employed as an electrician by the Railroad, responsible for the maintenance and repair of passenger railcars designed and manufactured by defendants' predecessors. Steam pipes running underneath those railcars were insulated with material containing asbestos. As a consequence of his exposure to asbestos, Hassell contracted asbestosis and mesothelioma. He died in 2009, during the pendency of his lawsuit. Defendants argued that state law claims were preempted by the Locomotive Boiler Inspection Act (LIA), 49 U.S.C. 20701, the Safety Appliance Act, 49 U.S.C. 20301, and the Federal Railroad Safety Act (FRSA), 49 U.S.C. 20101. The district court held that Hassell’s claims were preempted by the LIA. The Third Circuit vacated, noting the lack of evidence supporting defendants’ assertion that the railcar pipes at issued formed an “interconnected system” with the locomotive. Even assuming that evidence for the “interconnected system” could have been gleaned from the record, Hassell produced evidence from a former Railroad supervisor showing that, instead of being connected to locomotives, the pipes were connected to “power cars” that separately supplied steam heat to the passenger coaches. There was a genuine dispute material fact precluding summary judgment. View "In Re: Asbestos Prods. Liability Litig." on Justia Law

Net Pay managed clients’ payrolls and handled their employment taxes pursuant to a “Payroll Services Agreement,” which required clients to provide their employee payroll information and gave clients the option of authorizing Net Pay to transfer funds from their bank accounts into Net Pay’s account and to remit those funds to the clients’ employees, the IRS, and other taxing authorities. The Agreement established an independent contractor relationship between Net Pay and its clients. About three months before it filed its Chapter 7 petition, Net Pay transferred $32,297 on behalf of Altus; $5,338 on behalf of HealthCare Systems; $1,143 on behalf of Project Services; $352.84 for an unknown client; and $281.13 for another unknown client. The next day, Net Pay informed its clients that it was ceasing operations. The trustee for Net Pay sought to recover the five payments, arguing that they were avoidable preferential transfers, 11 U.S.C. 547(b). The district court concluded that four of the transfers were not subject to recovery, being below the minimum amount established by law ($5,850), and that distinct transfers may be aggregated only if “‘transactionally related’ to the same debt.” Because the IRS applied the entire $32,297 toward Altus’s trust fund tax obligations, the court held that the payment was not avoidable. The Third Circuit affirmed. Net Pay lacked an equitable interest in the Altus funds by operation of 26 U.S.C. 7501(a). View "In Re: Net Pay Solutions Inc" on Justia Law

Giant Eagle, a chain of supermarkets, pharmacies, gas stations, and convenience stores, uses the accrual method of accounting. Its customer-loyalty “fuelperks!” program links customers’ rewards at the pump to prior grocery purchases; “discounts expire on the last day of the month, 3 months after they are earned.” On its 2006 and 2007 corporate income tax returns, Giant Eagle claimed a deduction for the discounts its customers had accumulated but, at year’s end, had not yet applied to fuel purchases. Giant Eagle computed the deduction by ascertaining the face value of the discounts, multiplying that by the historical redemption rate of discounts in their expiring month, and multiplying that product by the average number of gallons purchased in a discounted fuel sale. The IRS disallowed the deductions, which totaled $3,358,226 and $313,490. The Tax Court upheld the denial. The Third Circuit reversed. Accrual method taxpayers are expressly permitted to deduct expenses before they are paid, if “all events have occurred which determine the fact of liability and the amount of such liability can be determined with reasonable accuracy.” In the realm of recurring expenses, an anticipated liability may be deemed “incurred” even if the predicate costs are not themselves incurred during the year a deduction is claimed. View "Giant Eagle Inc v. Internal Revenue Serv." on Justia Law

Davis and his wife purchased a Philadelphia rental property in 1997 1997. A longtime member of the U.S. Army Reserve, Davis was called to active duty in 2004. A few months later, the Davises transferred the property to Global LLC, owned and managed by Davis, to “insulate themselves from liability” because “his wife was unable to manage the property.” In 2009, Davis and Global asked the Philadelphia Department of Revenue to reduce Global’s property tax debt, citing the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. 3901, which limits interest imposed on a servicemember’s delinquent property taxes during active duty to a rate of six percent and forbids additional penalties. The Department denied this request, stating that the SCRA does not apply to a business owned by a servicemember and that Davis should file an abatement petition with the Philadelphia Tax Review Board. The Review Board denied that petition. Two years later the city initiated foreclosure proceedings; the state court entered judgment in the city’s favor. Davis and Global filed suit under 42 U.S.C. 1983. The Third Circuit affirmed dismissal. SCRA extends only to servicemembers; a corporation is not a “servicemember” under the statute. View "Davis v. City of Philadelphia" on Justia Law

Sanofi has sold Lovenox, an anticoagulant drug, in the U.S. since 1993. Fragmin, a competing injectable, sold only abroad until 2005, when Eisai obtained a U.S. license. Some Fragmin indications overlap Lovenox’s indications. The relevant product market also includes two other injectable anticoagulant drugs. In 2005-2010, Lovenox had the most indications of the four drugs, the largest sales force, and a market share of 81.5% to 92.3%. Fragmin had the second largest market share at 4.3-8.2%. In 2005-2010, Sanofi offered the “Lovenox Acute Contract Value Program.” Eisai alleged anticompetitive conduct by: market share and volume discounts, a restrictive formulary access clause, and aggressive sales tactics in marketing the Program. The Third Circuit affirmed summary judgment in favor of Sanofi. What Eisai called “payoffs” were only discounts Sanofi offered its customers; what Eisai called “agreements with hospitals to block access” were actually provisions proscribing customers from favoring competing drugs over Lovenox. What Eisai called “a campaign of ‘fear, uncertainty, and doubt’” was simply Sanofi’s marketing. Under the rule of reason, there was no evidence that Sanofi’s actions caused broad harm to the competitive nature of the anticoagulant market. If Sanofi’s conduct caused damage to its competitors, that is not a harm for which Congress has prescribed a remedy. View "Eisai Inc v. Sanofi Aventis U.S. LLC" on Justia Law

An arrest warrant issued for Rivera, a homicide suspect. U.S. Marshal Duncan received information from another officer and from street informants that Rivera was “staying” or “residing” at a Harrisburg address. Officers arrived at the apartment and knocked. They received no response but heard noises, indicating that a person was inside and forcibly entered the home. Rivera did not live there and was not present. The officers saw Algarin, and, during a protective sweep, saw sandwich baggies, a razor blade, and what appeared to be powder cocaine. An officer obtained a search warrant while the others waited at the apartment. During the subsequent search, officers discovered incriminating items, including car keys, which opened a stolen Mazda found across from the apartment. Algarin, who had no outstanding warrants, was charged with distribution and possession with intent to distribute cocaine, 21 U.S.C. 841(a)(1) and (b)(1)(A)(ii). During a hearing on a motion to suppress, Duncan testified that he had checked records, but was unable to recall whether he had identified the apartment's renter. The Third Circuit vacated Algarin’s conviction. Officers need an arrest warrant and a search warrant to apprehend a suspect at what they know to be a third party’s home. If the suspect resides at the address, officers need only an arrest warrant and reason to believe that the individual is present. Here, officers acted on information short of the probable cause standard with respect to Rivera’s residence. View "United States v. Vasquez-Algarin" on Justia Law

The Sunrise Motel's owner told Bensalem Township police that he had seen a woman he believed to be a prostitute being picked up by a green Cadillac. Later that day, a “tip” was called in, that a man at the nearby Knights Inn, driving a green Cadillac, was in possession of drugs. That evening, officers observed a green Cadillac outside the nearby Neshaminy Inn and learned that it was registered to Murray in Room 302. The officers knew that Murray had rented rooms at the Knights Inn, paying cash. Officers knocked at Room 302. A woman wearing lingerie (Burns) answered the door, and asked if the officer was “looking for a date.” The officers then proceeded to the Knights Inn, where they saw the Cadillac in front of Room 158, a woman leaving Room 158, and Murray inside the room. Later, at the Neshaminy Inn, Burns admitted the officers and stated that she was a prostitute and that a drug dealer that provided her with drugs. She later testified that she had made the “tip” call because she felt she was in danger. Murray arrived; officers patted him down and found large amounts of cash and hotel keys. Murray attempted to flee. With warrants, the officers found 192 grams of crack cocaine at the Knights Inn. Murray entered a guilty plea, preserving his right to appeal the denial of his motion to suppress. The Third Circuit affirmed; the officers did not violate the Fourth Amendment when they entered the room or when they frisked Murray., View "United States v. Murray" on Justia Law