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

For 20 years, the vendor (SDM) provided food services at Drexel University in Philadelphia. In 2014 the university announced that it would competitively bid the contract for on-campus dining. The same vendor ultimately won that competition but about two years into the contract’s 10-year duration, the vendor sued the university for fraud, multiple breaches of contract, and alternatively for unjust enrichment. The university responded with fraud and breach-of-contract counterclaims. Only a few of the vendor’s breach-of-contract claims and portions of the university’s breach-of-contract claim survived summary judgment. The parties referred the remaining claims and counterclaims to arbitration and jointly moved to dismiss them. The district court granted that motion and entered final judgment, which the parties appealed, primarily to dispute the summary judgment ruling.The Third Circuit affirmed summary judgment in Drexel’s favor on SDM’s unjust enrichment and punitive damages claims, summary judgment in SDM’s favor on Drexel’s fraudulent inducement claim, and the district court’s decision to deny Drexel’s motion to strike declarations by SDM witnesses under the sham affidavit rule. The court vacated an order granting summary judgment to Drexel on SDM’s claims for fraudulent inducement, breach of contract for failure to renegotiate in good faith, and breach of a supplemental agreement for the Fall 2016 Semester. The surviving claims were remanded to the district court. View "SodexoMAGIC LLC v. Drexel University" on Justia Law

About 100 Pennsylvania landowners filed a class-action complaint, alleging that EQT has been storing natural gas in six separate storage fields, thereby utilizing the landowners’ underground pore space without providing them compensation. Months later, all landowners except for Laudato voluntarily dismissed their claims without prejudice. Laudato later moved for class certification, seeking approval of a class of: All persons and/or entities that own and/or owned real property—and/or natural gas storage rights to real property—located within the certificated boundaries of one or more of the Gas Storage Fields for any period of time, not before Defendants’ inception of the respective gas. The district court, exercising federal-question jurisdiction over claims under the Natural Gas Act, 15 U.S.C. 717–17z, agreed to class certification but rejected Laudato’s proposed class definition, refusing to grant other downstream requests such as the appointment of a class representative, the appointment of class counsel, and certain issues’ certification. The court directed the parties to meet and confer “regarding the establishment of an appropriate class definition.”The Third Circuit granted a petition for review, holding that because the order clearly implicates Rule 23(f), it had jurisdiction and that interlocutory review was appropriate. View "Laudato v. EQT Corp." on Justia Law

In 2017, a man was found dead next to 22 small wax bags containing fentanyl-laced heroin, stamped “WI FIGHT?” He had overdosed on fentanyl and heroin. Officers determined that M.M. was the victim’s drug dealer. Charged with intent to distribute a controlled substance, 21 U.S.C. 841(a)(1), and distribution of a controlled substance resulting in death, section 841(b)(1)(C), M.M. entered into a plea agreement. Pursuant to 18 U.S.C. 3553(e), the government recommended a departure below the applicable mandatory minimum sentence of 240 months if M.M. provided “substantial assistance.”M.M. invoked section 3553(a)'s factors, including his addiction and psychological issues related to his upbringing. The court granted the downward departure motion after evaluating M.M.’s cooperation and addressing those factors but without specifying the basis of the departure. The government challenged the 120-month sentence under Rule 35(a), arguing that section 3553(e) does not allow a court to reduce a sentence below a statutory mandatory minimum based on considerations unrelated to substantial assistance. The District Court agreed that clear error had occurred and clarified that M.M.’s substantial assistance entitled him to a departure to 180 months’ imprisonment. The Third Circuit vacated. The authority to amend a sentence under Rule 35(a) is very narrow and there was no clear error in the original sentence. View "United States v. Minichella" on Justia Law

Jaffal, born in Jordan, sought a declaration that he is entitled to derivative U.S. citizenship under former 8 U.S.C. 1432(a), which provides that “a child born outside the United States automatically acquires United States citizenship if, while the child is under the age of eighteen, the parent with legal custody of the child is naturalized while that child’s parents are legally separated.” Jaffal’s father was naturalized when Jaffal was 17 years old. Jaffal presented evidence that he was in the sole legal custody of his father when his father was naturalized and his parents were separated. The district court declined to accept Jaffal’s evidence of his parents’ divorce because there was no evidence that Jaffal’s mother participated in the Jordanian divorce.The Third Circuit reversed and remanded with instructions to issue a judgment declaring Jaffal to be a national of the United States. If a §section1432(a) petitioner establishes that a valid, legal separation was effectuated under the relevant state or foreign nation’s law, he has met the burden of establishing a legal separation. Jordanian courts had the authority to alter Jaffal’s parents’ marriage. The Jordanian divorce established Jaffal’s parents’ legal separation as a matter of law. View "Jaffal v. Director Newark New Jersey Field Office Immigration & Customs Enforcement" on Justia Law

Venezuela expropriated mining rights owned by Crystallex, a Canadian mining company. After prevailing in an arbitration proceeding, Crystallex obtained a $1.4 billion judgment. In an execution action, Crystallex seeks to auction shares owned by Venezuela’s state-owned energy company, PDVS, to satisfy its judgment against Venezuel, including PDVSA’s shares in PDVH, a Delaware holding company that owns CITGO, a U.S. petroleum refiner (one of PDVSA’s most important U.S. assets). The district court held that it had jurisdiction to enforce the judgment against Venezuela and that PDVSA could not assert sovereign immunity as a defense and ordered PDVH’s registered agent to retain the stock until further order. In an earlier appeal, the Third Circuit affirmed.Political conditions changed in Venezuela. The Office of Foreign Assets Control (OFAC), which administers U.S. economic sanctions, prohibited the transfer of assets without OFAC approval. On remand, PDVSA, PDVH as the garnishee, and CITGO asked the district court to quash the writ of attachment. The United States filed a statement of interest urging the court not to authorize a contingent sale of the shares.The district court refused to quash the attachment and decided “to set up the sales procedures and then to follow them to the maximum extent that can be accomplished without a specific license from OFAC,” including appointing a special master. The Third Circuit dismissed an appeal for lack of jurisdiction. The district court has not reached a final decision. 28 U.S.C. 1291. View "Crystallex International Corp v. Bolivarian Republic of Venezue" on Justia Law

The Halls sued Millersville University under Title IX, 20 U.S.C. 1681, after their daughter, Karlie, was murdered in her dorm room by her boyfriend, Orrostieta. Orrostieta had previously been removed from campus at Karlie’s request and, on the night of the murder, a resident assistant heard Karlie scream but did not follow up. Despite finding genuine issues of material fact, the district court granted Millersville summary judgment, holding that Millersville lacked notice it could face liability under Title IX for the actions of a non-student guest.The Third Circuit reversed. Millersville had adequate notice it could be liable under Title IX for its deliberate indifference to known sexual harassment perpetrated by a non-student guest. Title IX’s plain terms notify federal funding recipients that they may face monetary liability for intentional violations of the statute; it is an intentional violation of Title IX’s terms for a funding recipient to act with deliberate indifference to known sexual harassment where the recipient exercises substantial control over the context in which the harassment occurs and the harasser, even if they are a third party. Millersville’s own Title IX policy thus contemplated Title IX liability could result from the actions of third parties such as “visitors” like Orrostieta. The court agreed that factual disputes preclude summary judgment. View "Hall v. Millersville University" on Justia Law

EBEWC, a beauty salon, was charged with violating 29 U.S.C. 158(a)(1) and (3), by implying that employees would be discharged if they engaged in union or protected concerted activity, soliciting employee assistance in ascertaining union support, issuing a handbook rule subjecting employees to discipline for gossiping or complaining about EBEWC’s rules or procedures, and discharging an employee for engaging in concerted employee activities. EBEWC signed a settlement agreement. The National Labor Relations Board concluded EBEWC violated that agreement by failing to “fully comply” with a provision requiring EBEWC to text the requisite notice to its employees. Pursuant to the settlement agreement, the Board then found the complaint's allegations true, made factual findings and conclusions of law consistent with those allegations, and granted a “full remedy” for the violations.The Third Circuit granted EBEWC’s petition for review and denied the Board’s application for enforcement. The Board took drastic action although EBEWC purportedly “defaulted” merely by sending the requisite notice to its employees by e-mail instead of by text message. The settlement agreement explicitly provided for notice by text but there is no indication that texting, as opposed to some other method of electronic communication, had any real significance to EBEWC, its employees, or the Board. EBEWC otherwise fully complied with the agreement. The Board overreached and acted punitively. View "East Brunswick European Wax Center, LLC v. National Labor Relations Board" on Justia Law

Desu co-owned Heights Pharmacy with Desai. Desai collected Heights' cash earnings and deposited a small portion of that cash into the pharmacy’s bank account, leaving the rest undeposited. After paying for certain items from the undeposited cash, such as part of Desai’s salary, Desai split the undeposited cash between herself and Desu. Desai kept the cash earnings off the general ledger. The underreporting on Heights Pharmacy’s tax returns led to underreported net income on Desu’s individual tax returns. Following a government investigation, Desai pleaded guilty and testified against Desu. Desu also co-owned Arthur Avenue Pharmacy, with Pujara. Desu and Pujara also kept the cash earnings off Arthur’s general ledger. Pujara testified against Desu, who was convicted under 18 U.S.C. 371 for conspiracy to impede the lawful government functions of the IRS and willfully assisting in the preparation and presentation of materially false tax returns.The Third Circuit affirmed, rejecting arguments that the jury received a faulty government exhibit for use in its deliberations; two counts in the indictment fail to state an offense; the district court erred in excluding testimony regarding the Desais’ cash transactions on relevancy grounds; the district court erred in denying a “Franks” evidentiary hearing; the government constructively amended the indictment; and the district court erred at sentencing by failing to account for certain deductions and exclusions in Desu’s income when calculating the tax loss. View "United States v. Desu" on Justia Law

Vitamin Energy is the defendant in 5-hour Energy’s 2019 lawsuit under the Lanham Act for trademark infringement, false designation of origin, false advertising, and trademark dilution; 5-hour also made claims under Michigan law for trademark infringement, indirect trademark infringement, and unfair competition. Vitamin Energy was insured by Evanston. In a declaratory judgment action, the district court decided Evanston had no duty to defend. The Third Circuit vacated. Pennsylvania law imposes on insurers a broad duty to defend lawsuits brought against those they insure. An insured’s burden to establish its insurer’s duty to defend is light, and Vitamin Energy has carried it. The policy excludes coverage for Advertising Injury, defined as an injury “arising out of oral or written publication of material that libels or slanders.” While some allegations of the complaint involve disparagement, others do not. An underlying complaint need only contain at least one allegation that falls within the scope of the policy’s coverage for the duty to defend to be triggered. The duty to defend is broader than the duty to indemnify. Similarly, exclusions for suits based on “Intellectual Property,” “Incorrect Description,” “Failure to Conform,” and “Knowing” actions do not defeat the duty to defend. View "Vitamin Energy LLC v. Evanston Insurance Co" on Justia Law

The Unions represented employees at Care One facilities. Care One sued the Unions for damages arising from actions that allegedly amounted to a pattern of racketeering under the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. 1961, based upon its characterization of these actions as “extortionate.”The district court dismissed the complaint, reasoning that no reasonable juror could conclude that the vandalism underlying Care One’s claims could be attributed to union members and that other actions the Unions undertook to exert pressure on Care One—including advertisements, picketing, and attempts to invoke regulatory and legislative processes—were not “extortionate.” The court further concluded that Defendants lacked the specific intent to deceive and were entitled to summary judgment on mail and wire fraud claims. The Third Circuit affirmed. Labor tactics, such as the Unions engaged in here, are not extortionate. As long as unions pursue legitimate labor objectives, their coercive tactics are not subject to liability. The court noted that an investigation by the Connecticut State’s Attorney closed without identifying any suspects, let alone any union-member suspects; union membership alone would not tie the actions of any such members to the Unions. There is no admissible evidence that the Unions authorized the acts of sabotage and vandalism. View "Care One Management LLC v. United Healthcare Workers East" on Justia Law