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

Maxus Trust, represented by White, sued YPF, represented by Sidley. Boelter, a partner at Sidley, participated in Sidley’s initial pitch to represent YPF, helped negotiate the engagement letter, worked on motions, was admitted pro hac vice in the proceeding, was copied on correspondence, attended several meetings, and was considered as “an integral part” of YPF’s legal team. She billed 300 hours to the YPF representation.Lauria, a partner in White’s restructuring group, did not record any time related to the case. He was listed as counsel for a creditor during the Chapter 11 proceedings, but never entered an appearance. Sidley knew Boelter and Luria lived together; it is unclear whether YPF knew. Boelter moved to Luria’s firm, White, and immediately went through a conflict-screening process. White implemented an ethical wall on Boelter’s first day; obtained her acknowledgment that she would comply with it; and periodically certified her compliance. White did not give any portion of its fee from the YPF adversary proceeding to Boelter. White gave YPF written notice of Boelter’s employment the day she began with the firm, with an explanation of the firm’s and of Boelter’s compliance with the ABA Model Rules. YPF believed no screen could be good enough and moved to disqualify White from representing the Trust.The Third Circuit affirmed the Bankruptcy Court's denial of the motion. Exceptional circumstances did not exist to impute Boelter’s conflict to the entire firm despite a screen. View "In re: Maxus Energy Corp" on Justia Law

Under the 1982 Victim and Witness Protection Act (VWPA), a court sentencing a defendant convicted of certain crimes could order restitution 18 U.S.C. 3663(a)(1); a restitution order was “a lien in favor of the United States,” that expired 20 years after the entry of the judgment.” The 1996 Mandatory Victims Restitution Act (MVRA) made restitution mandatory and provides that a restitution lien never becomes unenforceable, and a defendant’s liability to pay expires 20 years after the defendant’s release from imprisonment. Days before MVRA took effect, Norwood committed a New Jersey bank robbery and was convicted of federal crimes. His $19,562.87 restitution order was governed by the VWPA. Norwood filed successful habeas petitions. His restitution order was not disturbed, although his sentence was reduced.In 2016, U.S. Attorney’s office sought money from Norwood’s prison account ($6,031.40) to satisfy Norwood’s outstanding restitution. The ensuing dispute continued until the 20-year anniversary of Norwood’s original judgment and restitution order. Under the VWPA, his liability to pay would have expired. The district court held that the government could enforce its lien under the VWPA because it filed its motion to do so before May 30, 2017. The court analogized to the tax code and concluded there was no ex post facto issue. The Third Circuit reversed. Retroactively applying the MVRA to extend the duration of Norwood’s restitutionary liability violates the Ex Post Facto Clause. View "United States v. Norwood" on Justia Law

Barney’s wife got a restraining order against him and temporary custody of their son. She was subsequently found dead near their son’s daycare, her throat cut open. Barney was charged with murder. Barney had a rocky relationship with his defense lawyer, Riley, and claims that he told Riley of his plan to represent himself on July 14, 2005, then wrote the judge a letter. Though Barney had dated the letter July 21, the judge did not get it until August 10, the day before the trial began. In court, the judge held up the letter, explained that he had not read it, and handed it to Riley. Riley promised Barney that he would “deal with” Barney’s request. He never did.After a two-week trial, Barney was convicted of first-degree murder. His conviction was affirmed. In habeas proceedings, the New Jersey Superior Court found that Barney did not “clearly and unequivocally” tell the court or Riley that he wanted to represent himself. The Third Circuit affirmed the denial of federal habeas relief. The state court ruling was not “contrary to, or involved an unreasonable application of, clearly established” Supreme Court precedent, 28 U.S.C. 2254(d). Barney did not establish prejudice in his ineffective assistance claim; the trial court did not get Barney’s request until the eve of jury selection. View "Barney v. Administrator New Jersey State Prisons" on Justia Law

Peralta bought a house by an installment contract with the seller, Recon. He stopped making payments. Recon sued. To obtain a second chance, Peralta agreed that if he breached again, Recon could get a judgment for possession and immediately evict him. Another breach would extinguish any rights that Peralta had in the house. Peralta stopped paying. Recon obtained a judgment for possession. Peralta stayed in the house and filed for Chapter 13 bankruptcy. Peralta argued that Chapter 13 lets a bankrupt homebuyer “cure[]” a “default” on a mortgage during the bankruptcy process until the home “is sold at a foreclosure sale” 11 U.S.C. 1322(c)(1). Pennsylvania treats foreclosed installment contracts like mortgages, so Peralta argued that cure gave him an interest in his property.Reversing the bankruptcy court, the district court and Third Circuit ruled in favor of Rencon. An installment contract never has a “foreclosure sale.” The property's title stays with the seller until the contract is paid off. For installment contracts, the closest analog to a foreclosure sale is a judgment for possession. Recon got a judgment before Peralta tried to cure, so that remedy was unavailable. That judgment was entered before Peralta filed for bankruptcy, so his home was not part of his bankruptcy estate. Mere possession without a good-faith claim to it did not change that. View "In re: Peralta" on Justia Law

Johnson & Johnson's Employee Stock Ownership Plan (ESOP) is an investment option within its retirement savings plans. The ESOP invests solely in J&J stock, which declined in price following news reports accusing J&J of concealing that its baby powder was contaminated with asbestos. J&J denied that its product was contaminated and that it had concealed anything about the product. J&J employees who participated in the ESOP alleged that the ESOP’s administrators, senior officers of J&J, violated their fiduciary duties of prudence under the Employee Retirement Income Security Act, 29 U.S.C. 1002-1003. The Supreme Court has held that a plaintiff bringing such a claim must plausibly allege “an alternative action that the defendant could have taken" consistent with the securities laws, and that a prudent fiduciary in the same circumstances would not have viewed the proposed alternative as more likely to harm the fund than to help it. The J&J plaintiffs proposed that the defendants could have used their corporate powers to make public disclosures to correct J&J’s artificially high stock price earlier or that the fiduciaries could have stopped investing in J&J stock and held all ESOP contributions as cash.The Third Circuit affirmed the dismissal of the suit. A reasonable fiduciary in these circumstances could readily view corrective disclosures or cash holdings as being likely to do the ESOP more harm than good, given the uncertainty about J&J’s future liabilities and the future movement of its stock price. View "Perrone v. Johnson & Johnson" on Justia Law

Clemens, then an employee, provided ExecuPharm with sensitive information, including her address, social security number, bank, and financial account numbers, insurance, and tax information, passport, and information relating to her family. Clemens’s employment agreement provided that ExecuPharm would “take appropriate measures to protect the confidentiality and security” of this information. After Clemens left ExecuPharm, a hacking group (CLOP) accessed ExecuPharm’s servers, stealing sensitive information pertaining to current and former employees, including Clemens. CLOP posted the data on the Dark Web, making available for download 123,000 data files pertaining to ExecuPharm, including sensitive employee information. ExecuPharm notified current and former employees of the breach and encouraged precautionary measures. Clemens reviewed her financial records and credit reports for unauthorized activity; placed fraud alerts on her credit reports; transferred her bank account; enrolled in ExecuPharm’s complimentary one-year credit monitoring services; and purchased three-bureau additional credit monitoring services for herself and her family for $39.99 per month.Clemens's suit under the Class Action Fairness Act, 28 U.S.C. 1332(d), was dismissed for lack of Article III standing. The court concluded that Clemens’s risk of future harm was not imminent, but “speculative.” Any money Clemens spent to mitigate the speculative risk was insufficient to confer standing; even if ExecuPharm breached the employment agreement, it would not automatically give Clemens standing to assert her breach of contract claim. The Third Circuit vacated. Clemens’s injury was sufficiently imminent to constitute an injury-in-fact for purposes of standing. View "Clemens v. Execupharm Inc" on Justia Law

In 2008, Shields was convicted of crack cocaine offenses. His PSR classified him as a career offender based on his 1995 Maryland conviction for robbery with a deadly weapon and his 2002 Maryland conviction for conspiracy to distribute crack cocaine. His Guidelines range was 360 months to life. Shields objected to an enhancement for the use of a firearm in connection with the offense and to the drug quantity attributed to him, which exceeded that found by the jury. The court declined to rule on the objections because neither would change his Guidelines range given his career-offender status. The court sentenced Shields to 360 months in prison. The Fair Sentencing Act of 2010 subsequently reduced the disparities between the sentencing schemes for crack and powder cocaine. Shields became eligible for resentencing in 2018, based on the First Step Act.Shields requested a full sentencing hearing or to file a sentencing memorandum with supplemental documentation “to present evidence of his post-sentence rehabilitation” and to dispute his career-offender status. He believed one of his prior convictions was no longer a predicate offense, and renewed his objections to the enhancements for firearm use and drug weight. The court denied his request for a full hearing and reduced his sentence to 262 months, stating “[t]he First Step Act does not permit the court to consider other statutory or sentencing guideline amendments enacted since" the offense. The Third Circuit vacated. The district court had the discretion to consider Shields’s arguments concerning intervening changes in law and abused its discretion in denying him the opportunity to make other arguments in favor of a downward variance. View "United States v. Shields" on Justia Law

Norton, a 38-year-old Connecticut woman, communicated for several months with a 14-year-old Pennsylvania boy. Their communications became overtly sexual. Norton drove from Connecticut to Pennsylvania and met the minor in a park near his home. Soon after, the minor’s parents discovered Norton’s communications with the minor and notified law enforcement. Norton was convicted of attempted enticement of a minor, 18 U.S.C. 2422(b), and travel to engage in illicit sexual conduct with a minor, 18 U.S.C. 2423(b). She was sentenced to 168 months in prison, 20 years of supervised release, and special assessments of $200 (18 U.S.C. 3013) and $5,000 under the Justice for Victims of Trafficking Act, 18 U.S.C. 3014 (JVTA).The Third Circuit affirmed. The court rejected Norton’s argument that her due process rights were violated because the court sentenced her based on false contentions by the government that she lied when she testified that she had no intention of meeting the minor after lunch and that the evidence showed, contrary to her testimony, that Norton returned to the same park to meet the minor after lunch. The district court did not mention either of the two allegedly materially incorrect facts when responding to Norton’s objection to the two-point enhancement for obstruction of justice or in analyzing the 3553(a) factors. The court upheld a determination that Norton was not indigent for purposes of imposing the JVTA assessment. View "United States v. Norton" on Justia Law

OneMain, a non-bank finance company, loaned Zirpoli $6,200.08, to be repaid at a rate of 26.91% (total $11,364.35). The loan was issued under the Consumer Discount Company Act (CDCA), a consumer protection statute, which creates an exception to Pennsylvania’s usury law. The loan is governed by a disclosure statement, a security agreement, and an arbitration agreement. Later, OneMain sold delinquent accounts to Midland, including Zirpoli’s loan. Midland sued Zirpoli but later dismissed the suit and undertook collection efforts.Zirpoli filed a class action, alleging that Midland’s collection activities constituted an unlawful attempt to collect the loan because Midland does not have a CDCA license and never obtained nor requested approval from the Department of Banking. Midland was, therefore, not lawfully permitted to purchase the loan. Midland moved to compel arbitration. The court denied the motion, focusing on the validity of the assignment from OneMain and Midland. The Third Circuit vacated. The ultimate illegality of a contract does not automatically negate the parties’ agreement that an arbitrator should resolve disputes arising from the contract. The parties to the loan clearly agreed to arbitrate the issue of arbitrability. The arbitration agreement provides that an arbitrator shall resolve the arbitrability of defenses to enforcement, including alleged violations of state usury laws. View "Zirpoli v. Midland Funding LLC" on Justia Law

In 2015, the Ninth Circuit affirmed summary judgment in favor of Guam taxpayers in their class action lawsuit against the territorial government. Guam had excessively withheld income taxes to support government spending. Some taxpayers got their refunds through an “expedited refund” process that devolved into arbitrariness and favoritism. The district court had certified a class of taxpayers who were entitled to but did not receive timely tax refunds.Duncan then filed a purported class action challenging the Virgin Islands' income tax collection practices. Duncan alleged that the Territory owed taxpayers at least $97,849,992.74 in refunds for the years 2007-2017, and that, for the years 2011-2017, the Territory failed to comply with the requirement in Virgin Islands Code title 33, section 1102(b), that the Territory set aside 10 percent of collected income taxes for paying refunds, leaving the required reserve underfunded by $150 million. The district court denied class certification, citing Duncan’s receipt of a refund check from the Territory during the pendency of her lawsuit; the check, while not the amount Duncan claims, called into question Duncan’s standing and made all of her claims atypical for the putative class. The Third Circuit vacated, rejecting the conclusion that the mid-litigation refund check deprived Duncan of standing and rendered all of her claims atypical. In evaluating whether Duncan was an adequate representative, the district court applied an incorrect legal standard. View "Duncan v. Governor of the Virgin Islands" on Justia Law