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

The then-president’s 2018 decision, following the resignation of Jeff Sessions, to rely on his authority under the Federal Vacancies Reform Act, 5 U.S.C. 3345-3349d, to bypass the Department of Justice’s order of succession and to select an employee (Whitaker) rather than a Presidentially appointed and Senate-confirmed officer to oversee the Department of Justice raised significant and largely unresolved constitutional and statutory questions. Kajmowicz sued Whitaker; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); the Director of ATF, the United States of America, and the Attorney General of the United States, contending that Whitaker’s unlawful service as Acting Attorney General rendered a rule he promulgated concerning the scope of the term “machinegun” under the Gun Control Act of 1968 invalid.The Third Circuit affirmed the dismissal of the suit without addressing the legality of Whitaker’s designation as Acting Attorney General. Attorney General William Barr ratified the rule at issue; as long as he did so effectively, the rule may stand even if Whitaker served in violation of the Vacancies Reform Act or the Appointments Clause. The ratification forecloses Kajmowicz’s challenge. View "Kajmowicz v. Whitaker" on Justia Law

Attorney Avenatti rose to public prominence in 2018 by representing “Stormy Daniels,” with whom then-President Trump had allegedly had an extra-marital affair. His subsequent arrest received extensive media coverage, including by Fox News and its individual employees. Avenatti sued Fox and several individuals in Delaware Superior Court. His initial complain described allegedly defamatory statements made by Hunt but did not name Hunt as a Defendant.Days later, Fox removed the case to federal court claiming complete diversity. Avenatti filed an amended complaint in the district court. Because the amended complaint was entered within 21 days, Avenatti did not require leave of court or the opposing parties, Fed. R. Civ. P. 15(a)(1)(A). The amended complaint named Hunt—a California resident, as was Avenatti—as a Defendant and alleged that Hunt had published an article online about Avenatti’s arrest which included the same defamatory accusations previously attributed to the other Defendants. Avenatti moved to remand the case back to state court, citing Hunt’s shared California citizenship as destroying diversity.The Third Circuit affirmed the district court’s denial of the remand motion, citing the court’s discretionary authority under Rule 21 to drop Hunt from the litigation to restore complete diversity. The court employed “an open-ended balancing test" for considering post-removal amendments that add nondiverse parties and found that Hunt had been joined to defeat diversity and Avenatti would not be prejudiced by Hunt’s excision. View "Avenatti v. Fox News Network LLC" on Justia Law

Adam saw advertisements for free samples of beauty products, which implied that she need only pay for shipping and handling. Adam ordered two free samples and purchased another item. She was charged $9.94 for shipping and $14.99 for the purchased item. Soon thereafter, Adam was unexpectedly charged $92.94, which resulted in an overdraft of her checking account. A company representative told Adam that “she had agreed" to pay the full amount if she kept the "free samples" and that Adam would need to return the items before refunds could be issued. Adam, not trusting the company, refused to return the items, then called her bank, which temporarily reversed the charge but ultimately reinstated it. Adam contends that her bank was misled by the “false-front scheme” and that the charge would have been reversed but for the defendants’ misrepresentations.Adam filed a putative class-action suit, alleging violations of (or conspiracy to violate or aiding and abetting violation of): multiple California laws; the Electronic Fund Transfer Act, 15 U.S.C. 1693–1693r; the RICO Act, 18 U.S.C. 1961–1968; and consumer laws. The Third Circuit reversed the dismissal of the suit. Adam has standing; she was not made whole by the refund offer; she has neither received a refund nor accepted any alternative. Defendants’ conduct could provide but-for causation for Adam’s financial harm and a restitution order would redress that harm. View "Adam v. Barone" on Justia Law

Four defendants, who have multiple ties to organized crime, were convicted for their roles in the unlawful takeover and looting of FirstPlus Financial, a publicly traded mortgage loan company. Their scheme began with the defendants’ and their co-conspirators’ extortion of FirstPlus’s board of directors and its chairman, using lies and threats to gain control of the company. Once they forced the old leadership out, the defendants drained the company of its value by causing it to enter into expensive consulting and legal-services agreements with themselves, causing it to acquire (at vastly inflated prices) shell companies they personally owned, and using bogus trusts to funnel FirstPlus’s assets into their own accounts. They ultimately bankrupted FirstPlus, leaving its shareholders with worthless stock.Each defendant was convicted of more than 20 counts of criminal behavior and given a substantial prison sentence. In a consolidated appeal, the Third Circuit affirmed, rejecting challenges to the investigation, the charges and evidence against them, the pretrial process, the government’s compliance with its disclosure obligations, the trial, the forfeiture proceedings, and their sentences. The government conceded that the district court’s assessment of one defendant’s forfeiture obligations was improper under a Supreme Court decision handed down during the pendency of this appeal and remanded that assessment. View "United States v. Scarfo" on Justia Law

Rodriguez pleaded guilty to conspiracy to distribute and possess with intent to distribute more than 100 grams of heroin and possession with intent to distribute an unspecified amount of heroin and more than 50 grams of methamphetamine. He was sentenced to 262 months’ imprisonment, based on a 262–327-month Sentencing Guidelines range that reflects sentence enhancements for being the organizer or leader of a criminal activity involving five or more participants and for maintaining premises for distributing drugs.The Third Circuit affirmed. The district court found that Rodriguez “set the prices,” “issue[d] edicts,” “dictated to whom and for how much the drugs were to be sold,” and provided drugs to his co-conspirators for distribution and did not clearly err by applying the “leader” sentence enhancement. The court also upheld the application of the “premises” enhancement. Rodriguez directed the activities at the premises in question and those premises were one of the “places where essential parts of drug operation[s] were conducted.” The ownership of premises was not dispositive. View "United States v. Rodriguez" on Justia Law

Under Pennsylvania law, a court may appoint a custodian to take control of a corporation if the corporation’s board of directors is deadlocked or if the directors’ acts are illegal, oppressive, fraudulent, or wasteful. The eight-person FRBK Board of Directors became evenly split into two factions until one of the Hill Directors died. The Madonna Directors immediately used their new numerical advantage to start rearranging the bank’s leadership and took steps to fill the Board vacancy with an ally.The Hill Directors sued. Within hours, the district court ordered the Madonna Directors to cease their actions. Nine days later, without an evidentiary hearing or fact-finding, the court appointed a custodian to take control of FRBK and to hold a special shareholders’ meeting to fill the vacant Board seat. The following month, the court – without prompting from any shareholder or Board member – directed the custodian to add a Board seat and to fill that seat at the special shareholders’ meeting.The Third Circuit reversed. The decision to displace the corporate governance structure of a publicly-traded company did not reflect the required caution, circumspection, or justification for such a drastic step. FRBK’s bylaws describe how the Board should proceed after the death of a director. The Madonna Directors followed those instructions. The court abused its discretion by hastily supplanting the Bylaws with its own process. There was no deadlock, illegality, oppression, or any other ground for appointing a custodian. View "Hill v. Cohen" on Justia Law

In 2007, Transit was awarded an exclusive license to bring telecommunications services to 277 New York City subway stations. Transit subcontracted with Fiber-Span, to develop remote fiber nodes to amplify telecommunication signals in the first six subway stations to receive service. Fiber-Span agreed to subsidize certain developmental costs, hoping to be selected as the contractor for the remaining 271 subway stations. Transit agreed that, if Fiber-Span was not selected to supply nodes for the remaining stations, Transit would reimburse those front-loaded costs. The relationship deteriorated. Transit asserted that Fiber-Span remained in breach of contract even after attempts to remediate problems but nevertheless took the network live. Transit insisted that Fiber-Span replace the nodes. Fiber-Span said it would do so only after it was awarded a contract for the remaining stations. Transit continued to use the nodes for two more years, then sued in New York state court. Fiber-Span filed for bankruptcy.The Third Circuit concluded Transit’s decision to keep using the nodes was consistent with the acceptance of non-conforming goods. Fiber-Span breached the contract; the damages must reflect the difference in value between what Transit received and what it was promised, which is less than what the bankruptcy and district courts awarded. Transit was not required to compensate Fiber-Span for not selecting it to provide nodes for the remaining subway stations. Transit’s claim to the payment on Fiber-Span's performance bond is time-barred. View "In re: Fiber-Span Inc" on Justia Law

In February 2016, C.M. was six years old and in first grade, when he exhibited behavioral problems. The school district determined that he was ineligible for special education and related services because he was not disabled and did not need them. The child’s parents disagreed and sought redress under the Individuals with Disabilities Education Act (IDEA) and section 504 of the Rehabilitation Act. In their administrative grievance, they asserted that the school district violated its statutory obligation to identify, locate, and evaluate children with disabilities, thereby denying their child his statutory right to a free appropriate public education (FAPE). The parents’ claims did not succeed at the administrative level or in the district court. In April 2017, C.M. was diagnosed with autism. The school developed an individualized education program, which his parents agreed to in August 2017, shortly before their son entered third grade. In July 2019, C.M. enrolled in a private school.The Third Circuit affirmed summary judgment in favor of the school district; the district did not violate its “child find” obligations nor deprive C.M. of a FAPE before April 2017. The parents have not exhausted administrative remedies on their claim for tuition reimbursement. View "J. M. v. Summit City Board of Education" on Justia Law

For several years, Adair sold prescription opioid pills in Pittsburgh. She pleaded guilty to a 10-count indictment. At sentencing, the court increased her offense level by four points for being an organizer or leader of extensive criminal activity, U.S.S.G. 3B1.1(a). Although Adair timely pleaded guilty, the government did not move for a one-point reduction for acceptance of responsibility, section 3E1.1(b). The district court calculated Adair’s Sentencing Guidelines range as 188-235 months and granted a downward variance so that Adair received a 168-month prison term for the longest of her concurrent sentences.The Third Circuit affirmed, upholding the imposition of a four-point increase for the organizer-leader enhancement and rejecting an argument that the court should have compelled the government to move for a one-point reduction for acceptance of responsibility. View "United States v. Adair" on Justia Law

The Third Circuit denied Petitioner's petition for review challenging his expedited removal by the Department of Homeland Security (DHS) based on Petitioner's Pennsylvania conviction for receiving stolen property, holding that Petitioner's state conviction was an aggravated felony under the Immigration and Nationality Act (INA), 8 U.S.C. 1101(a)(43)(G).In 2020, DHS initiated expedited removal proceedings against Petitioner, a native and citizen of Mexico, alleging that Petitioner was charged with being deportable under the INA as an alien "convicted of an aggravated felony" because he had been convicted of receiving stolen property. Petitioner requested withholding of removal, arguing that his Pennylvania receiving stolen property conviction was not an aggravated felony under the INA. DHS disagreed, and the immigration judge (IJ) upheld the determination. The Third Circuit denied Petitioner's petition for review, holding that the Pennsylvania offense was sufficient to constitute an aggravated felony under 8 U.S.C. 1101(a)(43)(G). View "Jacome v. Attorney General United States" on Justia Law