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

Upshur and Thompson operated a trust; people wired fees to Upshur and allowed the defendants to file tax forms representing that the Trust had withheld income tax on their behalf, hopefully yielding sizable refunds. The defendants themselves also participated. Though this scheme was largely unsuccessful, the IRS issued one $1.5 million refund but, realizing, its mistake, froze the payment. In another scheme, they made large fraudulent tax overpayments, hoping to generate refunds. This scheme apparently did not generate any payments from the IRS, but the two schemes, together, resulted in over $325 million in fraudulent tax claims.Upshur was convicted of conspiracy to defraud the United States and eight counts of aiding and assisting in the preparation of false tax returns, 18 U.S.C. 371, 26 U.S.C. 7206(2). The court recognized there was no actual loss to the U.S. Treasury, and calculated Upshur’s base offense level under U.S.S.G. 2T1.4 using the intended-loss figure of $325 million, for a Guidelines range of 324-348 months. The Third Circuit affirmed his 84-month sentence. The court acknowledged its 2022 “Banks” holding that for theft offenses, absent Guideline text extending “loss” to intended loss, U.S.S.G. 2B1.1’s loss table reached only actual loss. However. the texts of sections 2T1.1 and 2T1.4, applicable to tax fraud, indicated that 2T4.1’s loss table covers the loss the perpetrator intended. View "United States v. Upshur" on Justia Law

Nucera was charged with committing a hate crime, depriving another of his civil rights, and making false statements to the FBI, arising from actions he took as a police officer arresting Stroye. His jury engaged in heated deliberations with racial tensions playing a major role. Credibility determinations were crucial, and jurors were deeply divided over whom and what to believe.The Third Circuit rejected Nucera’s claims of jury misconduct. Nucera offers only post-verdict affidavits from jurors who say they experienced racial vitriol, intimidation, and other misconduct that occurred during the jury deliberations. When parties challenge a verdict, Federal Rule of Evidence 606(b) bars a court from considering a juror’s statement or affidavit unless it satisfies either an exception in the Rule or a constitutional exception created by the Supreme Court (Peña-Rodriguez, 2017), for evidence of racial bias. The latter exception is narrow and specific: it requires a clear statement that a juror voted for a conviction based on racial animus toward, or stereotypes about, the defendant. None of Nucera’s evidence satisfies the Rule 606(b) exceptions nor does it fit the Peña-Rodriguez exception. The court also affirmed a ruling that limited Nucera’s use of the victim’s out-of-court statement and the court’s jury instructions about unanimity. The court vacated Nucera’s sentence; the district court erred in applying the Sentencing Guidelines. View "United States v. Nucera" on Justia Law

A group consisting primarily of union health and welfare insurance plans claims that Abbvie, the manufacturer of the drug Niaspan, paid off a potential manufacturer of a generic version of the drug to delay the generic’s launch. This putative class action was brought to recover damages based on the allegedly inflated prices charged by Abbvie in violation of state antitrust and consumer protection laws. The district court denied a motion for class certification, finding that the class was not ascertainable.The Third Circuit affirmed, declining to reconsider its “ascertainability” requirement. The court rejected an argument that the district court’s factual findings were clearly erroneous because the court misunderstood their proposed methodology, overstated the prevalence of intermediaries in the pharmacy benefit managers’ data, and failed to consider the use of affidavits as a means of identifying class members. The court further noted that the new suggestion concerning affidavits was not properly put before the district court. The district court properly concluded that the proposed data matching technique is unreliable. View "In Re: Niaspan Antitrust Litigation" on Justia Law

Corsica, Pennsylvania, with 357 residents and two businesses, is governed by a seven-person Council that meets once a month. In 2009, the Council hired Laird as secretary/treasurer—the Borough’s only paid staff position— at $12.50 per hour. Laird was the point person for Borough audits; only Laird and the Council President were authorized to sign Borough checks. Though two signatures were required, the President “common[ly]” provided Laird with signed blank checks. Between 2009-2017, Laird wrote unauthorized checks from the Borough’s bank account to herself and her husband. She paid her personal expenses by electronically transferring Borough funds and used the Borough’s credit card to purchase personal items. Laird embezzled $345,600.79. The Borough had to double property taxes to recoup some of its losses.Laird pleaded guilty to 26 counts of wire fraud, 18 U.S.C. 1343, without a plea agreement. The PSR recommended a two-level increase under U.S.S.G 3B1.3 for Laird’s abuse of a position of trust and a 12-level increase under section 2B1.1(b)(1)(G) for loss between $250,000-$550,000. After decreasing three levels for Laird’s acceptance of responsibility, the PSR calculated a Guidelines sentencing range of 27-33 months’ imprisonment. The district court concluded that Laird’s legitimate salary did not reduce the total loss below $250,000 and applied the abuse-of-trust enhancement. The Third Circuit affirmed Laird’s 21-month sentence and a $266,050.79 restitution order. View "United States v. Laird" on Justia Law

Askew formed Vantage to trade securities. He recruited investors, including the plaintiffs. Vantage filed a Securities and Exchange Commission (SEC) Form D to sell unregistered securities in a 2016 SEC Rule 506(b) stock offering. The plaintiffs became concerned because Askew was not providing sufficient information but they had no right, based on their stock agreements, to rescind those investments. They decided to threaten litigation and to report Vantage to the SEC to pressure Askew and Vantage to return their investments. Before filing suit, the plaintiffs engaged an independent accountant who reviewed some of Vantage’s financial documents and concluded that he could not say “whether anything nefarious is going" on but that the “‘smell factor’ is definitely present.”The Third Circuit affirmed summary judgment for the defendants in subsequent litigation. The district court then conducted an inquiry mandated by the Private Securities Litigation Reform Act (PSLRA) and determined that the plaintiffs violated FRCP 11 but chose not to impose any sanctions. The Third Circuit affirmed that the plaintiffs violated Rule 11 in bringing their federal securities claims for an improper purpose (to force a settlement). The plaintiffs’ Unregistered Securities and Misrepresentation Claims lacked factual support. Askew was not entitled to attorney’s fees because the violations were not substantial. The PSLRA, however, mandates the imposition of some form of sanctions when parties violate Rule 11 so the court remanded for the imposition of “some form of Rule 11 sanctions.” View "Scott v. Vantage Corp" on Justia Law

Current or former Uber drivers from different states agreed to Uber’s “Technology Services Agreement” as a condition of using Uber’s platform. The agreement requires drivers to resolve disputes with Uber on an individual basis through final and binding arbitration. Drivers may opt-out by sending Uber an email or letter. Singh’s class action alleged Uber had violated New Jersey wage and hour laws by misclassifying drivers as independent contractors, failing to pay them the minimum wage, and failing to reimburse them for business expenses. Calabrese’s class action, which was joined to Singh’s, sought to proceed collectively under the Fair Labor Standards Act.The district court ruled in Uber’s favor, compelling arbitration, having defined the relevant class as Uber drivers nationwide. The court found that interstate "rides constitute just 2% of all rides, resemble in character the other 98% of rides, and likely occur due to the happenstance of geography” for purposes of the exception in the Federal Arbitration Act (FAA) for arbitration agreements contained in the “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” 9 U.S.C. 1. The Third Circuit affirmed. The drivers' work is centered on local transportation. Most Uber drivers have never made an interstate trip. When Uber drivers do cross state lines, they do so only incidentally. They are not “engaged in foreign or interstate commerce.” View "Singh v. Uber Technologies, Inc" on Justia Law

Diaz was convicted of conspiracy to distribute and possess with intent to distribute heroin and cocaine and was sentenced to 33 months’ incarceration followed by 36 months’ supervised release. During that period of supervised release, Scranton Police Officers responded to a report of a physical, domestic incident involving Diaz’s then-girlfriend, Fernandez. Other violations of supervised release included possessing and using marijuana. During a probable cause and detention hearing, Magistrate Saporito heard testimony from Fernandez that she was not scared of Diaz. Saporito imposed a no-contact condition. Fernandez's testimony in the detention hearing was proven false. Diaz had called Fernandez and persuaded her to recant her statements to the police. Saporito ordered Diaz to be detained until his final revocation hearing.At the final supervised release violation hearing, Judge Mannion sentenced Diaz to the statutory maximum of 24 months’ incarceration followed by another two years’ supervised release. Mannion reimposed the no-contact order to apply during Diaz’s incarceration and his new term of supervised release. The Third Circuit vacated in part. The district court lacked either statutory or inherent authority to impose the custodial no-contact order. The court upheld the condition of Diaz’s second period of supervised release as narrowly tailored and sufficiently connected to the 18 U.S.C. 3553(a) factors. View "United States v. Santos Diaz" on Justia Law

Cortez-Amador, age 16, fled from Guatemala in 2016, following his father’s murder by gang members. He entered the U.S. without inspection and was placed by in his sister’s custody. In 2020, USCIS granted him Special Immigrant Juvenile Status (SIJS), which is available after a juvenile court finds it would not be in the child’s best interest to return to their country of last habitual residence. An SIJS recipient may pursue legal permanent residency.In 2019, while awaiting his SIJS classification, Cortez-Amador was charged with sexual assault on a child under the age of 13. He pleaded guilty to nonsexual child endangerment and admitted giving the alleged victim a cigarette. He was sentenced to 364 days' incarceration. Charged as removable, Cortez-Amador argued that his SIJS exempted him from removal; he should be granted an adjustment of status; and he was entitled to asylum (8 U.S.C. 1158), withholding of removal (1231(b)(3)), and/or Convention Against Torture (CAT) protection because the group that killed his father would target him in Guatemala.An IJ denied relief. The BIA affirmed, agreeing that SIJS parole applies for adjustment of status only, not removal; that the IJ properly exercised its discretion in denying an adjustment of status; and that any harm did not rise to the level of past persecution, so Cortez-Amador had no objectively reasonable fear of future harm. The Third Circuit rejected a petition for review, stating that the agency decisions do not reflect any error of law or are otherwise supported by substantial evidence. View "Cortez-Amador v. Attorney General United States of America" on Justia Law

The IRS investigated the companies to determine whether they are liable for penalties for promoting abusive tax shelters. Summonses led to the production of documents in 2014, including email chains involving the Delaware Department of Insurance, relating to the issuance of certificates of authority to the companies' clients and to a meeting with the Department’s Director of Captive and Financial Insurance Products. The IRS issued an administrative summons to the Department for testimony and records relating to filings by and communications with the companies. “Request 1” seeks all e-mails between the Department and the companies related to the Captive Insurance Program. The Department raised confidentiality objections under Delaware Insurance Code section 6920. The IRS declined to abide by section 6920's confidentiality requirements. The Department refuses to produce any response to Request 1.The government filed a successful petition to enforce the summons. The Sixth Circuit affirmed, rejecting the Department’s argument that, under the McCarran-Ferguson Act (MFA), 15 U.S.C. 1011, Delaware law embodied in section 6920 overrides the IRS’s statutory authority to issue and enforce summonses. While the MFA does protect state insurance laws from intrusive federal action when certain requirements are met, before any such reverse preemption occurs, the conduct at issue (refusal to produce summonsed documents) must constitute the “business of insurance” under the MFA. That threshold requirement was not met here. View "United States v. State of Delaware Department of Insurance" on Justia Law

The Department of Transportation (DOT) provides funds for state transportation projects. States that receive federal transportation funds must set participation goals for disadvantaged business enterprises (DBEs)--for-profit small businesses “at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged” and “[w]hose management and daily business operations are controlled by one or more of the socially and economically disadvantaged individuals who own it.” States certify businesses as DBEs.The defendants were convicted of conspiracy to commit wire fraud, 18 U.S.C. 1349, and wire fraud, section 1343, arising out of DOT-financed contracts for work in Philadelphia that included DBE requirements. The Defendants' bids committed to working on the projects with Markias, a company that had prequalified as a DBE. During the performance of their contracts, the Defendants submitted false documentation regarding Markias’ role; PennDOT awarded the Defendants DBE credits and paid them based on their asserted compliance with the DBE requirements. Markias did not do any work on the projects or supply any of the materials. The Defendants arranged for the actual suppliers to send their invoices to Markias, which then issued its own invoices, adding a 2.25% fee.The Third Circuit affirmed the convictions but vacated the forfeiture order and loss calculation. The court acknowledged the complex nature of this fraud in this and commended the attempt to determine the amount of loss for sentencing purposes, and the amount to be forfeited. View "United States v. Kousisis" on Justia Law