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

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

A publicly traded reinsurance company experienced significant financial losses over a two-year period due to adverse developments with its largest client, which led to higher-than-expected claim payouts and a dramatic drop in its stock price. Investors, represented by a pension trust and a bank, alleged that the company committed securities fraud by making misleading statements about the adequacy of its reserve funds. Specifically, they claimed the company failed to disclose historical data indicating that its reserves were insufficient, even though it knew of this adverse information.The United States District Court for the District of New Jersey initially denied the company’s motion to dismiss, allowing limited discovery focused on whether the company intentionally omitted the historical loss ratio information. The Magistrate Judge restricted discovery to a narrow scope, declining to require production of all underlying data, and the District Court affirmed this limitation. After this limited discovery, the District Court granted summary judgment for the company, holding that the reserve statements were not misleading as a matter of law because the company had considered the historical data and the omitted information did not “totally eclipse” other factors in the reserve calculations.On appeal, the United States Court of Appeals for the Third Circuit held that the District Court erred in its application of the materiality standard and in denying further discovery. The Third Circuit found that there were genuine disputes of material fact as to whether the omission of adverse historical data was material to investors, given the company’s dependence on its largest client and the significance of historical trends in its reserve-setting process. The court vacated the summary judgment and remanded for full discovery and further proceedings, clarifying that materiality is a context-specific inquiry and that the plaintiffs had presented sufficient evidence to proceed. View "Boilermaker Blacksmith National Pension Trust v. Maiden Holdings Ltd" on Justia Law

Carl Rose was serving a term of supervised release after completing a federal sentence for drug and firearm offenses. During this period, he was alleged to have violated the terms of his supervision by testing positive for marijuana, absconding from supervision, and, most significantly, committing aggravated assault and possessing a firearm. The aggravated assault allegation stemmed from an incident in which a victim reported that Rose entered her bedroom, brandished a firearm, demanded money, and stabbed her multiple times before fleeing. Although state charges for aggravated assault were dismissed when the victim failed to appear in court, Rose pled guilty to prohibited possession of a firearm.The United States District Court for the Eastern District of Pennsylvania held a supervised release revocation hearing. Rose did not contest the firearm possession violation, so the hearing focused on the aggravated assault allegation. The government presented testimony from law enforcement officers and introduced body camera footage showing the victim identifying Rose as her attacker. The victim did not testify at the hearing, and her out-of-court statements were admitted over Rose’s objection. The District Court found that the government had made diligent efforts to locate the victim, who was herself a fugitive, and concluded that her statements were sufficiently reliable and that there was good cause for her absence. The court revoked Rose’s supervised release and sentenced him to 48 months’ imprisonment.On appeal, the United States Court of Appeals for the Third Circuit reviewed whether the District Court erred in admitting the victim’s hearsay statements without live testimony, considering Rose’s confrontation rights. The Third Circuit held that the District Court did not abuse its discretion. It found the victim’s statements reliable due to corroborating evidence and determined that the government had shown good cause for her absence. The judgment of the District Court was affirmed. View "United States v. Rose" on Justia Law

Philadelphia police officers stopped a car driven by Raphael Ross for having illegally tinted windows in a high-crime area. During the stop, Ross appeared extremely nervous, displaying shaking hands, a stammering voice, and erratic movements with his jacket inside the car. After Ross produced expired insurance and registration and claimed to have left his license elsewhere, Officer Smart complimented Ross’s Rolex watch and asked where he worked. Ross replied that he owned a home health aide business. Officer Smart then returned to his patrol car to check Ross’s information, discovering a recent firearm arrest. Meanwhile, Officer Foreman observed continued nervous behavior and noncompliance with her instructions. After backup arrived, officers frisked Ross and searched his car, finding a gun and drugs.Ross was charged in the United States District Court for the Eastern District of Pennsylvania with firearm and drug offenses. He moved to suppress the evidence, arguing that the officer’s questions about his watch and employment unlawfully extended the stop under the Fourth Amendment, as interpreted by Rodriguez v. United States. The District Court denied the motion, finding the brief exchange to be permissible small talk aimed at calming Ross and not an unconstitutional extension of the stop. Ross pleaded guilty but reserved his right to appeal the suppression ruling.The United States Court of Appeals for the Third Circuit reviewed the case. The court held that brief, safety-related small talk—such as complimenting a watch and asking about employment—does not violate the Fourth Amendment if it is intended to deescalate tension and does not measurably prolong the stop. The court found that the officers’ actions were reasonable given Ross’s nervous behavior and affirmed the District Court’s denial of the suppression motion and Ross’s conviction. View "USA v. Ross" on Justia Law

Michael Rivera, a prisoner, filed a complaint alleging that his constitutional rights were violated by police officers during a traffic stop and subsequent search. Initially, Rivera named the New Castle County Police Department and several unidentified “John Doe” officers as defendants. After the police department identified the officers involved, Rivera amended his complaint to name them specifically.The United States District Court for the District of Delaware screened Rivera’s complaint, dismissed the claim against the police department as frivolous, but allowed the claims against the Doe defendants to proceed. The court ordered the police department to identify the officers, which it did. Rivera then amended his complaint to add the identified officers. The officers moved to dismiss, arguing that the amendment was untimely and did not relate back to the original complaint under Federal Rule of Civil Procedure 15(c), because Rivera allegedly knew their identities when he filed the original complaint. The District Court agreed, finding that Rivera “indisputably knew” the officers’ names and thus the amendment did not relate back, rendering the claims untimely. Rivera’s motion for reconsideration was denied, and he appealed.The United States Court of Appeals for the Third Circuit reviewed the District Court’s decision de novo. The Third Circuit held that the District Court applied the wrong legal standard by focusing on Rivera’s knowledge rather than on what the officers knew or should have known, as required by Rule 15(c) and the Supreme Court’s decision in Krupski v. Costa Crociere S.p.A. The Third Circuit also found that the District Court improperly resolved factual disputes against Rivera at the motion to dismiss stage. The Third Circuit vacated the District Court’s dismissal and remanded for further proceedings consistent with its opinion. View "Rivera v. New Castle County Police Department" on Justia Law

The case concerns a taxpayer, Stephanie Murrin, who underpaid her federal income taxes from 1993 to 1999. The underpayment resulted from her tax preparer, Duane Howell, making false or fraudulent entries on her tax returns with the intent to evade tax. Murrin herself did not cause these false entries and did not have any intent to evade tax. More than twenty years later, in 2019, the Internal Revenue Service (IRS) issued a notice of deficiency to Murrin for the underpaid taxes from those years. Murrin did not dispute the amount of tax owed, the accuracy-related penalty, or the interest, but argued that the IRS was barred from assessing the tax by the three-year statute of limitations.The United States Tax Court reviewed the case after Murrin petitioned for a redetermination of the deficiency. The Tax Court held that the exception to the statute of limitations in Internal Revenue Code § 6501(c)(1) applied because the false or fraudulent returns were prepared with the intent to evade tax, even though that intent was held by the preparer and not by Murrin herself. The Tax Court concluded that the IRS’s notice of deficiency was not barred by the statute of limitations, and Murrin appealed.The United States Court of Appeals for the Third Circuit reviewed the Tax Court’s interpretation of § 6501(c)(1) de novo. The Third Circuit held that the statute does not require the taxpayer herself to have the intent to evade tax; rather, the exception to the statute of limitations applies if anyone—such as a tax preparer—prepares a false or fraudulent return with the intent to evade tax. The court affirmed the judgment of the Tax Court, holding that taxpayer intent is not required for the exception to apply. View "Murrin v. Commissioner of Internal Revenue" on Justia Law