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

A restaurant and bar in Pennsylvania employed bartenders and servers who participated in a tip pool, which was allegedly distributed in part to a salaried manager, contrary to federal and state wage laws. An employee who worked there from September 2021 to December 2022 filed suit in the United States District Court for the Eastern District of Pennsylvania, alleging violations of the Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act (PMWA). The claims centered on the manager’s alleged receipt of tip-pool funds intended for bartenders. The plaintiff sought damages and styled the case as a hybrid action: an FLSA collective action under § 216(b) and a Rule 23(b)(3) class action for the state law claim.The parties stipulated to conditional certification of an FLSA collective, and notice was sent to potential members, ten of whom opted in. After discovery, the parties reached a settlement agreement, proposing a Rule 23(b)(3) class settlement that would release wage-and-hour claims, including unasserted FLSA claims, for all class members who did not opt out. The District Court held a hearing focused on whether class members who had not opted into the FLSA collective could be required to release FLSA claims through the class settlement. The District Court denied preliminary approval, reasoning that § 216(b) prohibited such releases, and denied reconsideration, certifying the legal question for interlocutory appeal.The United States Court of Appeals for the Third Circuit reviewed the certified question de novo. It held that § 216(b) of the FLSA establishes only the mechanism for litigating FLSA claims, not the conditions for waiving them, and does not prohibit the release of unasserted FLSA claims in a Rule 23(b)(3) opt-out class settlement. The Court vacated the District Court’s order and remanded for a full fairness inquiry under Rule 23. View "Lundeen v. 10 West Ferry Street Operations LLC" on Justia Law

A real estate investment trust that specializes in purchasing and leasing properties to cannabis companies was defrauded by one of its tenants, Kings Garden, which submitted fraudulent reimbursement requests for capital improvements. The trust paid out over $48 million based on these requests before discovering irregularities, such as forged documentation and payments for work that was not performed. After uncovering the fraud, the trust sued Kings Garden and disclosed the situation to the market, which led to a decline in its stock price.Following these events, several shareholders filed a putative class action in the United States District Court for the District of New Jersey, alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The shareholders claimed that the trust and its executives made false or misleading statements about their due diligence, tenant monitoring, and the nature of reimbursements, and that these misstatements caused their losses when the fraud was revealed. The District Court dismissed the complaint with prejudice, finding that while some statements could be misleading, the plaintiffs failed to plead facts giving rise to a strong inference of scienter, as required by the Private Securities Litigation Reform Act.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s dismissal. The Third Circuit held that most of the challenged statements were either non-actionable opinions, not false or misleading, or not sufficiently specific. For the one statement plausibly alleged to be false or misleading, the court found that the facts did not support a strong inference that the statement’s maker acted with scienter. The court also rejected the application of corporate scienter and found no basis for control-person liability under Section 20(a) in the absence of a primary violation. View "Handal v. Innovative Industrial Properties Inc" on Justia Law

A group of insurance policyholders, known as subscribers, challenged the actions of a company that manages a reciprocal insurance exchange. The subscribers alleged that the company, acting as attorney-in-fact, breached its fiduciary duty by setting its management fee at the maximum allowed percentage and by failing to implement procedures to address conflicts of interest in 2019 and 2020. These claims arose after the company had previously changed its fee practices, which had already prompted earlier lawsuits by other subscribers over different time periods and types of fees.Prior to the current appeal, the United States District Court for the Western District of Pennsylvania had dismissed earlier lawsuits—Beltz and Ritz—on grounds including the statute of limitations and claim preclusion. In the Ritz case, the court found that the claims were precluded because they could have been brought in the earlier Beltz litigation, and that the parties were in privity. The Stephenson plaintiffs, whose claims were based on later events, filed suit in state court. The company then sought and obtained a preliminary injunction from the District Court to prevent the Stephenson plaintiffs from proceeding, arguing that the prior federal judgments had preclusive effect.The United States Court of Appeals for the Third Circuit reviewed the District Court’s order granting the preliminary injunction. The Third Circuit held that the prior federal judgments did not have claim or issue preclusive effect over the Stephenson plaintiffs’ claims, as those claims were based on events that occurred after the earlier lawsuits were filed. The court concluded that the District Court abused its discretion in granting the preliminary injunction and vacated the order, remanding the case for further proceedings. View "Erie Indemnity Co v. Stephenson" on Justia Law

Two men were apprehended by the United States Coast Guard in international waters south of Puerto Rico after being observed jettisoning bales of cocaine from a vessel that lacked any indication of nationality. The Coast Guard recovered approximately 306 kilograms of cocaine and eventually transported the men, including the appellant, to St. Thomas in the U.S. Virgin Islands. The government asserted that the men were never brought to Puerto Rico, though the appellant disputed this. A grand jury in the District of the Virgin Islands indicted the appellant on multiple drug trafficking charges under the Maritime Drug Law Enforcement Act (MDLEA), as well as related offenses.The appellant moved to dismiss the indictment for improper venue, arguing that the MDLEA’s “any district” venue provision was unconstitutional and that venue was proper in Puerto Rico, where he claimed he was first brought. He also sought a pretrial evidentiary hearing on venue and the issuance of subpoenas for Coast Guard witnesses. The United States District Court of the Virgin Islands denied these motions, holding that the MDLEA’s venue provision was constitutional and that the Virgin Islands was a proper venue. The court also found that mere passage through Puerto Rico’s territorial waters did not constitute being “first brought” there under 18 U.S.C. § 3238, and denied the request for an evidentiary hearing, finding no colorable factual dispute that would affect the outcome.On appeal, the United States Court of Appeals for the Third Circuit reviewed the District Court’s decisions. The Third Circuit held that the MDLEA’s “any district” venue provision is constitutional, both facially and as applied, for offenses committed on the high seas. The court also found that the District Court did not abuse its discretion in denying a pretrial evidentiary hearing on venue. Accordingly, the Third Circuit affirmed the District Court’s orders. View "USA v. Cuevas-Almonte" on Justia Law

A federal inmate serving a 210-month sentence challenged the method used by the Federal Bureau of Prisons (BOP) to calculate his good conduct time credits under 18 U.S.C. § 3624(b)(1), as amended by the First Step Act of 2018. The inmate argued that, following the amendments, he should receive a full 54 days of good conduct time credit for the last six months of his sentence, rather than a prorated amount. The BOP, however, interpreted the amended statute to require prorating the credit for any partial year, resulting in the inmate receiving 26 days of credit for the final six months instead of 54.The United States District Court for the District of New Jersey denied the inmate’s habeas petition. The court found that the plain language of the amended statute allowed for proration of good conduct time credits for partial years. As an alternative basis, the District Court also relied on Chevron deference to uphold the BOP’s interpretation. The court rejected the inmate’s additional claims under the Administrative Procedure Act (APA) and the Due Process Clause, finding them either precluded by statute or inapplicable to the rulemaking context.On appeal, the United States Court of Appeals for the Third Circuit reviewed the statutory interpretation de novo. The Third Circuit affirmed the District Court’s judgment, holding that the First Step Act’s amendments, while deleting the word “prorated,” introduced language (“for each year”) that sets a rate of 54 days per year, thereby requiring proration for any partial year. The court concluded that the statute’s natural reading supports the BOP’s method of prorating credits for the last portion of a sentence. The Third Circuit also rejected the inmate’s constitutional and APA-based arguments, and found no basis for applying the rule of lenity. View "Thieme v. Warden Fort Dix FCI" on Justia Law

Jose Montanez, an inmate in Pennsylvania state prisons, experienced sudden paralysis and incontinence while incarcerated at SCI-Huntingdon. After collapsing in his cell, he was taken to the medical unit but received minimal assistance and was denied hospital care. He was left in his cell, unable to walk or reach the toilet, for three days before receiving an MRI that revealed spinal cord stenosis and edema, necessitating surgery. Following surgery and a brief rehabilitation, Montanez was returned to prison, where he suffered a fall and herniated a disc. He alleged that prison medical staff denied him adequate pain medication and accommodations for his disabilities, such as a double mattress, mobility aids, and access to physical therapy.Montanez filed a pro se complaint in the United States District Court for the Middle District of Pennsylvania, asserting claims under the Eighth Amendment, the Americans with Disabilities Act (ADA), and the Rehabilitation Act (RA) against the Commonwealth of Pennsylvania, its employees, Wellpath Care LLC (a private medical contractor), and Wellpath employees. The District Court dismissed all claims with prejudice, finding the complaint insufficient to state a claim and denying leave to amend, citing futility.The United States Court of Appeals for the Third Circuit reviewed the case de novo. The court held that Montanez’s complaint, liberally construed, stated viable Eighth Amendment claims against certain individual defendants (Dr. Mahli, Nurse Wagman, and Administrator Ellers), a Section 504 RA claim against Wellpath, and ADA and RA claims against the Commonwealth. The court found that the District Court erred in dismissing these claims and in denying leave to amend for other claims, as amendment would not be futile. The Third Circuit affirmed in part, reversed in part, and remanded with instructions to allow Montanez to amend his complaint. View "Montanez v. Price" on Justia Law

A member of the Pennsylvania House of Representatives used public funds and the resources of the House Democratic Caucus to send five pre-recorded, automated phone calls to constituents. These calls provided information about public health resources, employment opportunities, and community events. The calls were approved and administered by House staff, who determined that each served a clear legislative purpose and public benefit. The recipient of these calls, Andrew Perrong, filed suit, alleging that the calls violated the Telephone Consumer Protection Act (TCPA), which generally prohibits automated or pre-recorded calls made by “any person.”The United States District Court for the Eastern District of Pennsylvania denied the legislator’s motion for summary judgment. The court held that the legislator was a “person” under the TCPA and could be sued in his individual capacity, even though the calls were made as part of his official duties. The District Court also found that the suit was not barred by Eleventh Amendment sovereign immunity, reasoning that the Commonwealth of Pennsylvania was not the real party in interest, and that qualified immunity did not apply because the statutory prohibition was clear.On appeal, the United States Court of Appeals for the Third Circuit reviewed the statutory question and the immunity defenses. The Third Circuit held that the TCPA’s use of the term “person” does not clearly and unmistakably include state legislators acting in their official capacity when performing legitimate government functions. The court reasoned that longstanding interpretive presumptions, constitutional federalism principles, and statutory context all support excluding such official acts from the statute’s reach. As a result, the court reversed the District Court’s denial of summary judgment, holding that the TCPA’s robocall restriction does not apply to calls made by state legislators in connection with their legitimate government functions. View "Perrong v. Bradford" on Justia Law

Novo Nordisk, a pharmaceutical manufacturer, challenged the implementation of the Drug Price Negotiation Program established by the Inflation Reduction Act of 2022. The Program requires the Department of Health and Human Services, through the Centers for Medicare and Medicaid Services (CMS), to negotiate prices for certain high-expenditure drugs covered by Medicare. In the first round of selections, CMS grouped six of Novo Nordisk’s insulin aspart products as a single “negotiation-eligible drug” and selected them for price negotiation. Novo Nordisk signed the required agreements to participate but subsequently filed suit, arguing that CMS’s grouping of its products and the procedures used to implement the Program violated statutory and constitutional provisions.The United States District Court for the District of New Jersey granted summary judgment in favor of the government. The court found it lacked subject matter jurisdiction to review CMS’s decision to treat the six products as one drug due to a statutory bar on judicial review. It also held that Novo Nordisk lacked standing to challenge the identification of more than ten drugs for the initial pricing period. The court rejected Novo Nordisk’s claims under the unconstitutional conditions doctrine, the Due Process Clause, the nondelegation doctrine, and the First Amendment, concluding that the Program did not deprive the company of a protected property interest, that Congress provided an intelligible principle to guide CMS, and that the Program primarily regulated conduct rather than speech.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s judgment. The Third Circuit held that the statutory bar on judicial review precluded consideration of Novo Nordisk’s challenge to the grouping of its products. The court also held that CMS was authorized to implement the Program through guidance for the initial years without notice and comment rulemaking, that the Act did not violate the nondelegation doctrine or the Due Process Clause, and that Novo Nordisk’s First Amendment claim was foreclosed by precedent. View "Novo Nordisk Inc. v. Secretary US Dept & Health and Human Services" on Justia Law

A Nigerian citizen who became a lawful permanent resident of the United States in 2005 was placed in removal proceedings after being convicted of conspiracy to commit passport fraud. He had lived in the U.S. for many years, had a long-term partner, and was the father of four U.S. citizen children. His conviction stemmed from a scheme to obtain fraudulent U.S. passports for noncitizens, for which he was sentenced to 27 months in prison. After serving his sentence and briefly fleeing to Canada, he was returned to the U.S. and charged as inadmissible for committing a crime involving moral turpitude. In removal proceedings, he applied for asylum, withholding of removal, and protection under the Convention Against Torture (CAT), claiming past persecution and fear of future harm in Nigeria due to his former union activities and threats from a militia group.An Immigration Judge (IJ) found him inadmissible, denied all forms of relief, and determined that his conviction constituted a particularly serious crime, barring asylum and withholding. The IJ also found his and his partner’s testimony not credible and denied CAT relief, concluding he had not shown a likelihood of torture with government acquiescence. The Board of Immigration Appeals (BIA) affirmed, agreeing with the IJ’s findings and further holding that the absence of an interpreter did not violate due process, that the conviction was a particularly serious crime, and that he was not eligible for a waiver of inadmissibility.The United States Court of Appeals for the Third Circuit reviewed the case. The court held that the BIA misapplied the legal standard for determining a particularly serious crime by failing to consider the elements of the underlying substantive offense in the conspiracy conviction. The court also found that the BIA did not properly analyze the CAT claim under the required legal framework and failed to consider eligibility for a waiver of inadmissibility. The court denied the due process claim but vacated the BIA’s decision and remanded for further proceedings, ordering a stay of removal pending the outcome. View "Amos v. Attorney General United States of America" on Justia Law

Natalya Shvets was convicted by a jury in 2014 for healthcare fraud and conspiracy to commit healthcare fraud, stemming from her role as a nurse at Home Care Hospice, Inc. (HCH). Evidence showed she and other employees created false records for high-priced “continuous care” services, resulting in fraudulent bills submitted to Medicare. Shvets was ordered to pay $253,196 in restitution, jointly and severally with eight other defendants, for her involvement in 52 false bills. The broader scheme allegedly caused $16.2 million in losses to Medicare, with seventeen individuals ordered to pay varying restitution amounts.After sentencing in the United States District Court for the Eastern District of Pennsylvania, Shvets moved for an accounting and to declare her restitution judgment satisfied, arguing that payments by herself and her jointly liable co-defendants had collectively exceeded $253,196. The District Court, relying on United States v. Sheets, held that Shvets’s judgment would not be satisfied until she personally paid the full amount or until all defendants collectively paid $16.2 million. The Clerk of Court, using a complex allocation method, also reported Shvets’s balance as outstanding, but the District Court did not resolve whether the Clerk’s method was correct.On appeal, the United States Court of Appeals for the Third Circuit affirmed in part, vacated in part, and remanded. The Court held that sentencing judges may issue “hybrid” restitution orders under the Mandatory Victim Restitution Act, combining joint and several liability with apportioned liability. The Court found the District Court erred by applying the Sheets rule, which conflicted with the language of Shvets’s judgment. The Third Circuit directed the District Court to determine whether the Clerk’s accounting method is fair and appropriate, and to decide if Shvets’s restitution judgment has been satisfied. View "United States v. Shvets" on Justia Law