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

Grace operated a Montana asbestos facility, 1963-1990. Facing thousands of asbestos-related suits, Grace filed for Chapter 11 bankruptcy. Its reorganization plan provided for a several-billion-dollar asbestos personal-injury trust to compensate existing and future claimants. All asbestos-related personal injury claims were to be channeled through the trust (“Grace Injunction,” 11 U.S.C. 524(g)(4)). CNA provided Grace's general liability, workers’ compensation, employers’ liability, and umbrella insurance policies, 1973-1996 and had the right to inspect the operation and to make loss-control recommendations. After 26 years of litigation regarding the scope of CNA’s coverage of Grace’s asbestos liabilities, a settlement agreement ensured that CNA would be protected by Grace’s channeling injunction. CNA agreed to contribute $84 million to the trust.The “Montana Plaintiffs,” who worked at the Libby mine and now suffer from asbestos disease, sued in state court, asserting negligence against CNA based on a duty to protect and warn the workers, arising from the provision of “industrial hygiene services,” and inspections. The Bankruptcy Court initially concluded that the claims were barred by the Grace Injunction but on remand granted the Montana Plaintiffs summary judgment.The Third Circuit vacated. Section 524(g) channeling injunction protections do not extend to all claims brought against third parties. To conform with the statute, these claims must be “directed against a third party who is identifiable from the terms of such injunction”; the third party must be “alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the debtor”; and “such alleged liability” must arise “by reason of” one of four statutory relationships, including the provision of insurance to the debtor. The Bankruptcy Court erred in anlyzing the “derivative liability” and “statutory relationship” requirements. While the claims meet the derivative liability requirement, it is unclear whether they meet the statutory relationship requirement. View "In re: WR Grace & Co" on Justia Law

Icker, a part-time uniformed police officer, twice pulled over a woman who was driving alone at night and detained her, claiming that she appeared intoxicated or that he could smell marijuana. Icker handcuffed each woman and searched her car, claiming to find incriminating evidence. The women had criminal histories. He advised each that charges could put them in violation of their supervision or bond. Icker indicated that he wanted oral sex and transported each victim in his police cruiser to a location where the woman performed oral sex on him. Icker also groped or harassed three other women, using his authority as a police officer. Icker pleaded guilty to two counts of depriving the victims of their civil right to bodily integrity, 18 U.S.C. 242. The plea agreement recommended 144 months' imprisonment and included several conditions of supervised release but did not refer to the Sex Offender Registration and Notification Act (SORNA), 34 U.S.C. 20901. Icker waived his right to appeal.The Third Circuit vacated the imposition of a condition of supervised release that required Icker to register as a sex offender under SORNA “as directed by the probation officer, the Bureau of Prisons, or any state sex offender registration agency.” Convictions under section 242 are not SORNA “sex offenses.” Icker was not given notice of any potential SORNA requirements in signing his appellate waiver. Any attempted delegation of Icker’s status as a “sex offender” to a third party was an improper delegation of Article III powers. View "United States v. Icker" on Justia Law

The Third Circuit denied a petition for review challenging the BIA's ruling that petitioner's conviction for aggravated identity theft in violation of 18 U.S.C. 1028A(a)(1) is a crime involving moral turpitude (CIMT), thus making him removable pursuant to 8 U.S.C. 1227(a)(2)(A)(ii). The court applied the modified categorical approach and concluded that petitioner pleaded guilty to violating section 1028A with the predicate felony of bank fraud, an undeniable CIMT. The court explained that that, by itself, is sufficient to support the BIA's ruling that petitioner's 1028A(a)(1) conviction constituted a CIMT because it requires fraudulent intent. Because this conviction is petitioner's second CIMT, the court concluded that the BIA did not err in concluding that he is removable under section 1227 (a)(2)(A)(ii). View "Sasay v. Attorney General of the United States" on Justia Law

The Third Circuit affirmed the district court's application of a sentencing enhancement for possession of a dangerous weapon under USSG 2D1.1(b)(1). The court concluded, in United States v. Drozdowski, 313 F.3d 819, 823 (3d Cir. 2002), that spatial proximity of guns to drugs is not necessary to establish a connection between firearms to a drug offense under USSG 2D1.1(b)(1). Although the connection is so tenuous as to place it on the outer edge of the sentencing enhancement, the court concluded that defendant has not carried his burden of proving that the connection was clearly improbable, which is the test applied.In this case, defendant had a small arsenal of weapons and ammunition in the same house where law enforcement observed him agreeing to provide several pounds of meth. Furthermore, he has neither credibly rebutted any of the Government's evidence nor offered any plausible alternative explanation for why he possessed the weapons. Therefore, the court cannot say that the connection between the guns and the drugs was clearly improbable. View "United States v. Denmark" on Justia Law

Arrington claims he stopped engaging in drug activity after he was released from prison on parole in 2007. The government contends Arrington became a Pennsylvania drug supplier. In 2009, the police arrested Arrington’s co-conspirators. Arrington helped them attempt to escape apprehension. He abandoned his parole appointments and fled the state. Arrington was subsequently charged with possession with the intent to distribute controlled substances, conspiracy to do the same, and traveling in interstate commerce with the intent to facilitate unlawful activity. His co-conspirators testified against him. Arrington claims he told his attorney, Kress, that he wanted to testify to explain that he absconded from parole not because of his involvement in drug trafficking; Kress did not honor this request because doing so would open Arrington to cross-examination, which might enable the government to introduce evidence of his prior convictions. Kress allegedly never sought Arrington's consent to waive his right to testify or explained that the decision was his to make. However, during his closing argument, Kress covered some of the material to which Arrington claims he would have testified.Arrington moved to vacate his convictions under 28 U.S.C. 2255, arguing that Kress was ineffective for unilaterally waiving his right to testify. The Third Circuit affirmed the denial of relief. The bar for obtaining an evidentiary hearing on a section 2255 motion is low but Arrington does not meet it, because his claim conclusively fails Strickland’s prejudice prong. View "United States v. Arrington" on Justia Law

When Aleckna filed for Chapter 13 bankruptcy, she still owed the University (CCU) tuition. The filing of her bankruptcy petition imposed an “automatic stay” of all collection actions against her. While her case was pending, Aleckna, who had completed her coursework, asked CCU for a copy of her transcript. The University would only provide her with an incomplete transcript that did not include her graduation date, explaining that a “financial hold” had been placed on her account. Aleckna filed a counterclaim in the Bankruptcy Court arguing that CCU violated the automatic stay by refusing to provide her with a complete certified transcript, 11 U.S.C. 362(a)(6).The Bankruptcy Court found in Aleckna’s favor, concluding that she was entitled to receive her complete transcript, plus damages and attorneys’ fees because CCU’s violation was “willful.” The district court and Third Circuit affirmed. Section 362(k) provides that an individual who commits a willful violation is liable for damages and attorneys’ fees unless “such violation is based on an action taken by an entity in the good faith belief” that the stay had terminated. Precedent establishes a “willfulness” defense that is distinct from one of good faith but CCU failed to show that the law regarding the transcript issue was sufficiently unsettled to establish a lack of willfulness within the meaning of that precedent. View "In re: Aleckna" on Justia Law

The Arbitration Board, in its Merits Award, held that Verizon violated a Collective Bargaining Agreement (CBA) with its Union by contracting with common carriers to deliver FiOS TV set-top boxes to “existing customers” for self-installation, work that used to be performed exclusively by Union Service Technicians. Months later, the Board, in creating a “remedy,” expanded the scope of the violation to include deliveries to both existing and new customers and also the accompanying self-installations.The Third Circuit affirmed the district court in vacating the Remedy Award to the extent that it awards damages for work that falls beyond the outer bounds of the Merits Award--the delivery of boxes to existing customers. The deference given to arbitration awards is almost unparalleled, but not absolute. An arbitrator’s powers are limited by the parties’ agreement, which is made against a background of default legal rules. Under these default rules, an arbitrator who has decided an issue is prohibited from revising that decision without the consent of the parties. He can decide other issues submitted by the parties, correct clerical errors, and clarify his initial decision— but nothing more. The Board improperly awarded punitive damages, which are not permitted under the CBA. View "Verizon Pennsylvania LLC v. Communications Workers of America" on Justia Law

Harper runs deliveries under the “Amazon Flex” program, which supplements Amazon’s traditional delivery services. Interested drivers use an app to sign up to drive packages from Amazon warehouses, affiliated grocers, and participating restaurants to home shoppers. Harper signed up, clicking on a brightly colored button stating, “I AGREE AND ACCEPT” following the Terms of Service. The Terms included an arbitration provision with an “opt-out” process and specified that Washington law applies. Harper filed a putative class action on behalf of similarly situated New Jersey Amazon Flex drivers, alleging that Amazon misclassified them as independent contractors when they really are employees. Amazon moved to compel arbitration under the Federal Arbitration Act. Harper cited the exemption for a “class of workers engaged in foreign or interstate commerce,” 9 U.S.C. 1, noting that the drivers make some deliveries across state lines. Amazon argued that the claim is also arbitrable under state law. The district court ordered discovery to determine whether Harper falls within the FAA exception, declining to reach Amazon’s alternative state law argument.The Third Circuit vacated. Federal courts sitting in diversity must decide state law claims, including state arbitrability, even where the FAA may apply. That is a threshold inquiry, ensuring prompt review of state law claims, particularly before turning to discovery to sort through a comparatively complex federal question. View "Harper v. Amazon.com Services, Inc." on Justia Law

Under 8 U.S.C. 1226(c), the government must detain noncitizens who are removable because they committed certain specified offenses or have connections with terrorism, and it must hold them without bond pending their removal proceedings. In 2012, the plaintiffs filed a habeas petition on behalf of a putative class of noncitizens who are detained under section 1226(c) in New Jersey, contending that it violates due process to mandatorily detain noncitizens who have substantial defenses to removal and that the procedure for conducting “Joseph” hearings is constitutionally inadequate.The Third Circuit held that section 1226(c) is constitutional even as applied to noncitizens who have substantial defenses to removal. For those detainees who contend that they are not properly included within section 1226(c) and are therefore entitled to a Josepth hearing, the government has the burden to establish the applicability of section 1226(c) by a preponderance of the evidence and the government must make available a contemporaneous record of the hearing, consisting of an audio recording, a transcript, or their functional equivalent. Section 1252(f)(1) does not authorize classwide injunctions, so the court reversed the district court’s order in part. View "Gayle v. Warden Monmouth County Correctional Institution" on Justia Law

In March 2010, Orrstown made a stock offering at $27 per share. SEPTA invested some of its pension funds in Orrstown stock during this offering and later purchased Orrstown stock on the open market. In 2011-2012 Orrstown made disclosures concerning its financial health. Orrstown’s stock price dropped following each disclosure falling to $8.20 by April 2012.SEPTA filed a purported class action in May 2012, on behalf of a “Securities Act Class" of investors who purchased Orrstown stock “in connection with, or traceable to,” Orrstown’s 2010 Registration Statement, and the “Exchange Act Class” of investors who later purchased Orrstown stock on the open market. A first amended complaint added the Underwriters and the Auditor. The district court dismissed the amended complaint without prejudice for failure to meet pleading requirements. SEPTA filed its Second Amended Complaint in February 2016. The court dismissed all Securities Act claims against Orrstown but did not dismiss the Exchange Act claims except for some individual Orrstown officers. The court dismissed all claims against the Underwriters and the Auditor. The parties began discovery, which triggered a lengthy process in which the parties sought to have federal and state regulators review the relevant documents. In April 2019, SEPTA moved for leave to file a Third Amended Complaint, arguing it had identified evidence to support previously-dismissed claims through discovery.The court granted SEPTA’s motion despite the expiration of the three-year (Securities Act) and five-year (Exchange Act) repose periods. The Third Circuit affirmed. Federal Rule of Civil Procedure 15(c), which provides an exception more commonly applied to statutes of limitations, also allows amendment of a pleading after the expiration of a repose period here because the Rule’s “relation-back” doctrine leaves the legislatively-mandated deadline intact and does not disturb any of the defendants’ vested rights. View "Southeastern Pennsylvania Transportation Authority v. Orrstown Financial Services Inc." on Justia Law