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

A company sought approval to construct electricity transmission lines in Pennsylvania as part of a larger project selected through a federally supervised regional planning process. The project was designed to alleviate regional congestion on the electricity grid, which would lower wholesale electricity costs in certain states but increase costs for some Pennsylvania consumers. The regional transmission organization (PJM), acting under Federal Energy Regulatory Commission (FERC) rules, selected the project using a benefit-cost methodology approved by FERC.The Pennsylvania Public Utility Commission (PUC) reviewed the company’s applications for siting and eminent domain authority. After an evidentiary hearing, an administrative law judge recommended denial, finding that the project was no longer needed due to decreased congestion and that the benefit-cost analysis used by PJM was deficient under Pennsylvania law. The PUC adopted this recommendation, denied the applications, and rescinded the company’s provisional certificate of public convenience. The company appealed to the Pennsylvania Commonwealth Court, which affirmed the PUC’s decision. The company then pursued federal constitutional claims in the United States District Court for the Middle District of Pennsylvania, reserving those issues in state court.The United States Court of Appeals for the Third Circuit reviewed the case. It held that the PUC’s order was preempted under the Supremacy Clause of the U.S. Constitution because it posed an obstacle to federal objectives established by Congress and implemented by FERC—specifically, the regional planning and congestion-reduction process. The court found that the PUC’s independent “need” determination, which second-guessed PJM’s FERC-approved methodology, impermissibly conflicted with federal law. The Third Circuit affirmed the District Court’s judgment for the company and did not reach the dormant Commerce Clause issues. View "Transource Pennsylvania LLC v. DeFrank" on Justia Law

Marquis Smalls pleaded guilty in 2013 to conspiring to distribute heroin and was sentenced by the United States District Court for the District of New Jersey to 110 months’ imprisonment followed by five years of supervised release. His supervised release was conditioned on compliance with certain terms, including not committing new crimes or illegally possessing controlled substances. After his release in December 2020, Smalls repeatedly violated these conditions, resulting in multiple periods of home detention. In June 2024, he was arrested by state officials on heroin-trafficking charges, and the United States Probation Office charged him with eight violations of supervised release, successfully petitioning for a federal arrest warrant. Upon release from state custody, Smalls was transferred to federal custody and presented before the District Court for an initial appearance, where he was ordered detained pending a final revocation hearing. Smalls waived his right to a preliminary hearing.Smalls later moved for release from custody, citing a district court opinion from the District of Connecticut in United States v. Mercado, which held that no statute authorized pre-revocation detention for supervised release violations. The District Court for the District of New Jersey denied Smalls’s motion, finding it had authority to detain him under Federal Rule of Criminal Procedure 32.1(a)(6) and 18 U.S.C. § 3143(a)(1), based on flight risk and danger to the community. Smalls appealed to the United States Court of Appeals for the Third Circuit, which denied his motion for release in a summary order. Smalls then filed a petition for rehearing.The United States Court of Appeals for the Third Circuit granted the petition for rehearing to provide a precedential explanation but again denied Smalls’s motion for release. The court held that 18 U.S.C. § 3143(a)(1) authorizes detention of a defendant alleged to have violated supervised release pending revocation proceedings, as such detention is part of the execution of the original sentence. The court affirmed the District Court’s authority to detain Smalls pending his final revocation hearing. View "USA v. Smalls" on Justia Law

Two pharmaceutical companies challenged a federal program created by the Inflation Reduction Act of 2022, which directs the Centers for Medicare and Medicaid Services (CMS) to negotiate prices for certain high-expenditure prescription drugs lacking generic competition. Under this program, manufacturers of selected drugs must either negotiate a price with CMS or face steep excise taxes on all sales of those drugs, unless they withdraw all their products from specific Medicare and Medicaid programs. Both companies had drugs selected for negotiation and, while litigation was pending, agreed to participate and reached negotiated prices.The United States District Court for the District of New Jersey resolved the cases on cross-motions for summary judgment, as the parties agreed there were no material factual disputes. The District Court ruled in favor of the government, holding that the program did not violate the Takings Clause, the First Amendment, or the unconstitutional conditions doctrine. The companies appealed, and the United States Court of Appeals for the Third Circuit consolidated the appeals.The Third Circuit affirmed the District Court’s orders. It held that participation in Medicare and the negotiation program is voluntary, so there is no physical taking under the Fifth Amendment. The court found that economic incentives to participate do not amount to legal compulsion. It also held that the program’s requirements do not compel speech in violation of the First Amendment, as any speech involved is incidental to the regulation of conduct and participation is voluntary. Finally, the court concluded that the program does not impose unconstitutional conditions, as any compelled speech is limited to the contracts necessary to effectuate the program and does not restrict speech outside those contracts. The court affirmed summary judgment for the government. View "Bristol Myers Squibb Co v. Secretary United States Department of HHS" on Justia Law

Eileen Adams and her husband lost their New Jersey home to foreclosure after a series of events involving the transfer and assignment of their mortgage. The mortgage, originally held by AmTrust Bank, was assigned to EverBank after AmTrust’s failure, and then to Nationstar Mortgage. Adams defaulted on the mortgage, leading EverBank to initiate foreclosure proceedings. Although Adams answered the foreclosure complaint, she did not oppose summary judgment, which was granted in favor of EverBank. Subsequent assignments and litigation ensued, but Adams and her husband ultimately lost their appeals in the New Jersey courts, including a denial of review by the Supreme Court of New Jersey.After exhausting state-court remedies, Adams and her husband filed multiple bankruptcy petitions in an effort to prevent the foreclosure sale. In the most recent Chapter 13 case, Nationstar moved for relief from the automatic stay to proceed with the sale. The United States Bankruptcy Court for the District of New Jersey granted Nationstar’s motion. Adams appealed to the United States District Court for the District of New Jersey, which affirmed the Bankruptcy Court’s order and dismissed the appeal for lack of jurisdiction under the Rooker-Feldman doctrine, reasoning that Adams was seeking to overturn a state-court judgment.The United States Court of Appeals for the Third Circuit reviewed the case and held that, while the District Court erred in applying the Rooker-Feldman doctrine to dismiss for lack of jurisdiction, Adams’s claims were nonetheless precluded under New Jersey law. The Third Circuit clarified that Rooker-Feldman is a narrow doctrine and does not bar jurisdiction in this context; instead, principles of claim preclusion apply because Adams’s arguments had already been litigated and decided in state court. The Third Circuit affirmed the District Court’s order insofar as it upheld the Bankruptcy Court’s decision to lift the automatic stay. View "In re: Adams" on Justia Law

Walmart, a national pharmacy operator, was investigated by the U.S. Attorney’s Office for the Eastern District of Texas from 2016 to 2018 regarding its opioid dispensing practices. The investigation included raids, subpoenas, and meetings where prosecutors indicated a possible indictment, but ultimately, the Department of Justice declined to prosecute criminally, though a civil investigation continued. In 2020, a news article revealed the investigation, causing Walmart’s stock price to drop. Later that year, the DOJ filed a civil lawsuit against Walmart for alleged violations of the Controlled Substances Act.Investors who owned Walmart stock during the relevant period filed a putative securities fraud class action in the United States District Court for the District of Delaware. They alleged that Walmart’s public filings failed to adequately disclose the government investigation, violating Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5, and that Walmart’s statements about its “reasonably possible” liabilities and compliance with accounting rules (ASC 450) were misleading. The District Court granted Walmart’s motion to dismiss, finding no actionable misrepresentation or omission, and denied plaintiffs’ request to further amend their complaint.The United States Court of Appeals for the Third Circuit reviewed the case de novo. The court held that Walmart’s omission of the investigation from its disclosures before June 4, 2018, was not misleading because the investigation did not constitute a “reasonably possible” material liability at that stage. After June 4, 2018, Walmart’s disclosures sufficiently informed investors about the existence and potential impact of government investigations. The court also found no violation of ASC 450 and affirmed the District Court’s denial of leave to amend, concluding that further amendment would be futile. The Third Circuit affirmed the dismissal of all claims. View "In re Walmart Inc. Securities Litigation" on Justia Law

Two business compliance companies entered into a partnership to develop a software product, with one company providing “white-label” services to the other. The partnership was formalized in a written agreement, but disputes arose over performance, payment for out-of-scope work, and the functionality of the software integration. As the relationship deteriorated, the company that had sought the services began developing its own infrastructure, ultimately terminating the partnership and launching a competing product. The service provider alleged that its trade secrets and proprietary information were misappropriated in the process.The United States District Court for the Eastern District of Pennsylvania presided over a jury trial in which the service provider brought claims for breach of contract, trade secret misappropriation under both state and federal law, and unfair competition. The jury found in favor of the service provider, awarding compensatory and punitive damages across the claims. The jury specifically found that six of eight alleged trade secrets were misappropriated. The defendant company filed post-trial motions for judgment as a matter of law, a new trial, and remittitur, arguing insufficient evidence, improper expert testimony, and duplicative damages. The District Court denied these motions.On appeal, the United States Court of Appeals for the Third Circuit reviewed the District Court’s rulings. The Third Circuit held that the defendant had forfeited its argument regarding the protectability of the trade secrets by not raising it with sufficient specificity at trial, and thus assumed protectability for purposes of appeal. The court found sufficient evidence supported the jury’s finding of misappropriation by use, and that the verdict was not against the weight of the evidence. The court also found no reversible error in the admission of expert testimony. However, the Third Circuit determined that the damages awarded for trade secret misappropriation and unfair competition were duplicative, and conditionally remanded for remittitur of $11,068,044, allowing the plaintiff to accept the reduced award or seek a new trial on damages. View "Harbor Business Compliance Corp v. Firstbase IO Inc" on Justia Law

An electronics technician employed by a regional transit authority was killed while working at a maintenance yard. His estate, through its administrator, brought suit against the transit authority and its parent entity, seeking recovery under the Federal Employers Liability Act (FELA), which provides a federal cause of action for employees of “common carriers by railroad” injured or killed during their employment. The transit line in question, known as the Speed Line, operates a 14.5-mile route between Philadelphia, Pennsylvania, and Lindenwold, New Jersey, providing frequent, high-capacity passenger service within a single metropolitan area. The Speed Line uses a third-rail electric system incompatible with other regional railroads, does not carry freight, and is not integrated with other rail lines.The United States District Court for the District of New Jersey initially denied the defendants’ motion to dismiss for lack of subject-matter jurisdiction, allowing jurisdictional discovery. After discovery, the District Court granted the renewed motion to dismiss, holding that the Speed Line is an urban rapid transit system rather than a railroad, and therefore FELA does not apply. The estate appealed this decision.The United States Court of Appeals for the Third Circuit reviewed the District Court’s legal conclusions de novo and its factual findings for clear error. The Third Circuit affirmed the District Court’s judgment, holding that the Speed Line is not a “common carrier by railroad” within the meaning of FELA. The court reasoned that the Speed Line’s services—short-haul, high-frequency passenger transportation within a single urban area—and its lack of integration with other railroads or freight operations, place it outside the scope of FELA. The court concluded that, as a rapid transit system, the Speed Line is not subject to FELA, and thus the federal courts lack subject-matter jurisdiction over the estate’s FELA claim. View "Estate of Schroeder v. Port Authority Transit Corp." on Justia Law

Two employees of a debt-collection firm, one of whom was out sick with COVID-19, collaborated to resolve an urgent licensing issue for their employer. The employee at home, unable to access her work computer, asked her colleague to log in using her credentials and retrieve a spreadsheet containing passwords for various company systems. The colleague, with express permission, accessed the computer and emailed the spreadsheet to the employee’s personal and work email accounts. Both actions violated the employer’s internal computer-use policies. Separately, the employee at home had, over several years, moved accounts into her workgroup to receive performance bonuses, believing she was eligible for them. Both employees also alleged persistent sexual harassment at work, which led to internal complaints, one employee’s resignation, and the other’s termination.After these events, the employer, National Recovery Agency (NRA), sued both employees in the United States District Court for the Middle District of Pennsylvania, alleging violations of the Computer Fraud and Abuse Act (CFAA), federal and state trade secrets laws, civil conspiracy, breach of fiduciary duty, and fraud. The employees counterclaimed for sexual harassment and related employment claims. On cross-motions for summary judgment, the District Court entered judgment for the employees on all claims brought by NRA, finding no violations of the CFAA or trade secrets laws, and stayed the employees’ harassment claims pending appeal.The United States Court of Appeals for the Third Circuit reviewed the case. It affirmed the District Court’s judgment in full. The Third Circuit held, first, that the CFAA does not criminalize violations of workplace computer-use policies by employees with authorized access, absent evidence of hacking or code-based circumvention. Second, it held that passwords protecting proprietary business information do not, by themselves, constitute trade secrets under federal or Pennsylvania law. The court also affirmed the dismissal of the state-law tort claims. View "NRA Group LLC v. Durenleau" on Justia Law

A Pennsylvania resident, along with several organizations, challenged the state’s requirement that mail-in ballots be discarded if the return envelope is missing a handwritten date or contains an incorrect date. The plaintiffs argued that this “date requirement” led to thousands of otherwise valid ballots being rejected in recent elections, often without notice to the affected voters or an opportunity to cure the error. The date field on the return envelope does not determine whether a ballot is timely or whether the voter is eligible, and the state’s election system already records the actual receipt date of each ballot.The United States District Court for the Western District of Pennsylvania reviewed the case after extensive discovery. Only two county election boards defended the date requirement, while most did not. The District Court found that the date requirement was not justified by the state’s interests in election efficiency, solemnity, or fraud prevention. The court noted that the requirement imposed a minimal but real burden on voters, as it led to the rejection of thousands of ballots, and that the state had not shown the requirement meaningfully advanced its asserted interests. The court granted summary judgment for the plaintiffs and enjoined enforcement of the date requirement, but did not prohibit the inclusion of a date field on return envelopes.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court’s judgment. The Third Circuit held that, under the Anderson-Burdick framework, the date requirement imposed a minimal burden on the right to vote, but that burden was not justified by the state’s interests. The court found no meaningful connection between the date requirement and election administration, solemnity, or fraud prevention, and concluded that discarding ballots for minor date errors was unconstitutional. The judgment of the District Court was affirmed. View "Eakin v. Adams County Board of Elections" on Justia Law

Two individuals operated a large-scale heroin trafficking operation, transporting significant quantities of heroin from New Jersey to Pennsylvania. Law enforcement, using information from an informant, initiated an investigation that included wiretaps on the suspects’ phones. The wiretap application was signed by the First Deputy Attorney General, acting on the authority of the Pennsylvania Attorney General, who was out of the country at the time. The investigation led to the arrest of both men, the seizure of heroin, cash, and firearms, and the discovery of their involvement in witness tampering, including the murder and attempted murder of two women connected to the case.The United States District Court for the Western District of Pennsylvania denied the defendants’ motion to suppress the wiretap evidence, finding that the First Deputy Attorney General was properly authorized under state law to submit the application. After a jury trial, both defendants were convicted of drug and firearm offenses, with one also convicted of witness tampering resulting in death and attempted murder. The court sentenced one defendant to 380 months in prison and the other to life imprisonment plus additional consecutive terms. Both appealed, raising issues regarding the wiretap’s legality, alleged constructive amendment of the indictment, jury instructions, sufficiency of the evidence, and sentencing errors.The United States Court of Appeals for the Third Circuit affirmed the convictions and sentences for one defendant in full. For the other, the court affirmed all convictions and sentences except for the consecutive 25-year sentence imposed for using a firearm to commit murder under 18 U.S.C. § 924(j). The court held that, in light of the Supreme Court’s decision in Lora v. United States, a consecutive sentence is not mandatory under § 924(j), and thus vacated and remanded for resentencing on that count. All other claims for relief were rejected. View "USA v. Perrin" on Justia Law