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

In 1998, Pennsylvania and 45 other states entered into a settlement agreement with certain cigarette manufacturers, who agreed to disburse funding to the states to cover tobacco-related healthcare costs. Pennsylvania’s 2001 Tobacco Settlement Act established the "EE Program" to reimburse participating hospitals for “extraordinary expenses” incurred for treating uninsured patients according to a formula. The Department of Human Services (DHS) determines the eligibility of each hospital for EE Program payments. The Pennsylvania Auditor General reported that for Fiscal Years 2008-2012, some participating hospitals received disbursements for unqualified claims, and recommended that DHS claw back funds from overpaid hospitals and redistribute the money to hospitals that had been underpaid. DHS followed that recommendation for fiscal years prior to 2010 but discovered methodological discrepancies and discontinued the process for Fiscal Years 2010-2012.Plaintiffs, on behalf of all “underpaid” hospitals, sued an allegedly overpaid hospital, alleging conspiracy to defraud the EE Program in violation of RICO, 18 U.S.C. 1961–1964. The plaintiffs alleged that the defendants submitted fraudulent claims for reimbursement, in violation of the wire fraud statute, 18 U.S.C. 1343 (a RICO predicate offense). The Third Circuit reversed the dismissal of the claims, finding that the theory of liability adequately alleges proximate causation. No independent factors that accounted for the plaintiffs’ injury and no more immediate victim was better situated to sue. View "St. Lukes Health Network, Inc. v. Lancaster General Hospital" on Justia Law

Seighman pleaded guilty to a counterfeiting conspiracy, a Class D felony carrying a maximum prison term of 60 months. He was sentenced to 30 months’ imprisonment followed by 36 months of supervised release. After his release, Seighman bought heroin, tested positive for opiates, and failed to comply with drug treatment. The court revoked Seighman’s supervision and sentenced him to another 24 months’ imprisonment plus 12 months of supervised release. After his second release from prison, Seighman transitioned to Renewal, a residential reentry center. The Probation Office petitioned the court to issue a warrant for Seighman because he brought heroin into Renewal. The Probation Office calculated Seighman’s revocation sentencing range as 21–27 months. Seighman objected, arguing that because his counterfeiting conviction permitted a maximum of 60 months' imprisonment, he could be sentenced to no more than six months (having served 54 months). The Third Circuit affirmed his 24-month sentence. In its 2019 decision, “Haymond,” the Supreme Court found subsection (k) of the supervised release statute (18 U.S.C. 3583) unconstitutional in requiring a mandatory minimum term of imprisonment of ‘‘not less than 5 years’’ upon a judge’s finding that a defendant ‘‘commit[ted] any’’ listed ‘‘criminal offense,’’ without granting a defendant the rights that accompany a new criminal prosecution. Subsection (g), which Seighman challenged, applies to other offenses and does not limit the judge’s discretion in the same “manner” as subsection (k). View "United States v. Seighman" on Justia Law

In 2001, Birt was arrested following a traffic stop. A state trooper found 186.5 grams of crack cocaine in the trunk. Birt was charged under 21 U.S.C. 841(a)(1). Birt pled guilty. His plea agreement stated that “[t]he maximum penalty for [his] offense is imprisonment for a period of 20 years [and] a fine of $1 million dollars,” plus supervised release and collateral consequences, set forth in 21 U.S.C. 841(b)(1)(C). The district court imposed the 20-year maximum sentence, which the Third Circuit affirmed. In 2012, the district court reduced Birt’s sentence to 210 months under Amendment 750 to the Sentencing Guidelines. The Third Circuit affirmed.Birt later sought resentencing under the First Step Act. The district court held that Birt was not convicted of a “covered offense” and was not entitled to relief. The Third Circuit affirmed. “Covered offenses,” under the First Step Act, are offenses that have had their penalty provisions modified by the Fair Sentencing Act. The penalties for Birt’s statute of conviction have not been modified, so the First Step Act has no applicability to Birt’s case. Birt’s statute of conviction is "a tight combination of subsections (a)(1) and (b)(1)(C) of section 841, not section 841(a)(1) in isolation or section 841 as a whole." View "United States v. Birt" on Justia Law

J.L. and D.W. were covered by employer-sponsored Aetna insurance plans that provided out-of-network benefits only in cases of “Urgent Care or a Medical Emergency” (J.L.) or not at all (D.W.). J.L. needed bilateral breast reconstruction surgery and there were no in-network physicians available to perform the procedure. D.W. required facial reanimation surgery—a niche procedure performed by only a few U.S. surgeons. Both were referred for treatment to the Plastic Surgery Center, an out-of-network New Jersey medical practice. The Center negotiated with Aetna, which agreed to pay a “reasonable amount.” The Center billed $292,742 for J.L.’s services, Aetna paid only $95,534.04. Of the $420,750 the Center billed for D.W.’s services, Aetna paid only $40,230.32.The district court dismissed common law breach of contract, promissory estoppel, and unjust enrichment claims, holding that section 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1000, expressly preempted all claims. The Third Circuit reversed as the breach of contract and promissory estoppel claims, which do not require impermissible “reference to” ERISA plans. The claims, as pleaded, plausibly seek to enforce obligations independent of the plan and do not require interpretation or construction of ERISA plans. The claims plausibly arise out of a relationship that ERISA did not intend to govern. View "Plastic Surgery Center, P.A. v. Aetna Life Insurance Co" on Justia Law

The Union sought confirmation of an arbitration award under the Federal Arbitration Act, 9 U.S.C. 9. Section 9 provides that a district court “must grant” a confirmation order for an award upon application where the award has not been “vacated, modified, or corrected” under the Act. UPS, the loser in arbitration, opposed confirmation and filed a cross-motion to dismiss, arguing that the district court did not have subject-matter jurisdiction because there was no case or controversy as required by Article III of the Constitution, given that UPS agreed to abide by the award and corrected any subsequent violations.The Third Circuit reversed. The district court had subject matter jurisdiction to confirm the award even in the absence of a new dispute about it. The confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court. Confirmation is the process through which a party to arbitration completes the award process under the Act, as the award becomes a final and enforceable judgment, 9 U.S.C. 13. The Act not only authorizes but mandates, that district courts confirm arbitration awards by converting them into enforceable judgments through a summary proceeding. View "Teamsters Local 177 v. United Parcel Service" on Justia Law

The plaintiffs obtained payday loans from AWL, an online entity owned by the Otoe-Missouria Tribe of Indians. The loan agreement stated that the loan was governed by tribal law and that the borrowers consented to the application of tribal law. The plaintiffs filed a purported class action, asserting that AWL charged unlawfully high interest rates, in violation of federal and Pennsylvania law, including the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-1968. The defendants moved to compel arbitration. The district court denied their motion, holding that the loan agreements, which provided that only tribal law would apply in arbitration, stripped the plaintiffs of their right to assert statutory claims and were therefore unenforceable. The Third Circuit affirmed. Because AWL permits borrowers to raise disputes in arbitration only under tribal law, and such a limitation constitutes a prospective waiver of statutory rights, its arbitration agreement violates public policy and is therefore unenforceable. View "Williams v. Medley Opportunity Fund II, LP" on Justia Law

The Baptistes filed suit on behalf of a class of homeowner-occupants and renters (about 8,400 households) claiming interference with the use and enjoyment of their homes and loss in property value caused by noxious odors and other air contaminants emanating from the 224-acre Bethlehem Landfill. The Third Circuit reversed the dismissal of the suit. While everyone in the community—including visitors, commuters, and residents—may suffer from having to breathe polluted air in public spaces, the Baptistes have identified cumulative harms that are unique to residents, such as the inability to use and enjoy their outdoor spaces. These injuries are above and beyond any injury to the public; the Baptistes sufficiently alleged a “particular damage” to sustain a private claim for public nuisance. They also stated a claim for private nuisance. Pennsylvania law does not reject a private nuisance claim on the ground that the property affected was too far from the source of the alleged nuisance. Nor does Pennsylvania law condition an individual’s right to recover private property damages on a nuisance theory on the size of the nuisance or the number of persons harmed, as opposed to the nature of the rights affected or the degree of the harm suffered. The question remains whether the Baptistes have sufficiently pleaded a cognizable injury to state an independent negligence claim. View "Baptiste v. Bethlehem Landfill Co." on Justia Law

Schneider, a longtime Hay employee, was elevated to CEO in 2001. Hay terminated Schneider in 2003 for “good cause.” Schneider sued in the Labor Court of Germany and in the Netherlands. The Dutch courts found that under Dutch law there had been no valid resolution approving Schneider’s termination. In 2012, the German trial court dismissed Schneider’s claims. The German Higher Regional Court reversed in part in 2014, giving preclusive effect to the Dutch court’s findings concerning Schneider’s contract. The Hay entities were required to pay Schneider over $13 million.In 2004, Hay filed suit in the Eastern District of Pennsylvania, alleging nine causes of action with varying degrees of overlap with the German litigation. After the German proceedings became final, the district court lifted a stay and granted Schneider summary judgment, holding that Hay’s claims were precluded by the German judgment, assuming that the relevant inquiry was whether Hay could have brought its claims as counterclaims in the German litigation.The Third Circuit reversed in part. Under Pennsylvania preclusion law, the correct question is whether Hay was required to bring its claims as counterclaims in the German litigation. Under German law, Hay was not required to plead these claims as counterclaims in the German litigation. Since Hay’s contract assignment claim seeks to functionally undo the German litigation, however, the court affirmed summary judgment on that claim. View "Hay Group Management Inc v. Schneider" on Justia Law

Santos, a native of the Dominican Republic, became a lawful permanent U.S. resident in 2006. In 2017, he pleaded guilty to possessing marijuana with intent to deliver. If that crime is the “aggravated felony,” “illicit trafficking in a controlled substance” he is removable, 8 U.S.C. 1227(a)(2)(A)(iii). Santos was taken to the Pike County Correctional Facility, 8 U.S.C. 1226(c). In 2018, an IJ ordered Santos removed. While awaiting the BIA’s decision on remand from the Third Circuit, Santos filed this federal habeas petition, arguing that the Due Process Clause guarantees a bond hearing to an alien detained under section 1226(c) once his detention becomes “unreasonable.” The district court denied relief, finding no evidence that the government had “improperly or unreasonably delayed the regular course of proceedings, or that [it] ha[d] detained him for any purpose other than the resolution of his removal proceedings.” The BIA then held that Santos’s conviction was not an aggravated felony and remanded for a hearing on his application for cancellation of removal. The IJ denied that application, leaving Santos in prison (then more than 30 months). The Third Circuit reversed; his detention has become unreasonable and Santos has a due process right to a bond hearing, at which the government must justify his continued detention by clear and convincing evidence. View "Santos v. Warden Pike County Correctional Facility" on Justia Law

The Council handles contracts for over 200 New Jersey municipalities, police departments, and school districts. Mid-American sells bulk road salt. The Council's members estimated their salt needs for the 2016-17 winter. The Council issued a comprehensive bid package, anticipating the need for 115,000 tons of rock salt. MidAmerican won the contract, which stated: There is no obligation to purchase [the estimated] quantity. As required by the contract, Mid-American obtained a performance bond costing $93,016; imported $4,800,000 worth of salt from Morocco; and paid $31,250 per month to store the salt and another $58,962.26 to cover it. Mid-American incurred at least another $220,000 in finance costs and additional transportation costs. Council members purchased less than five percent of the estimated tonnage. Mid-American claims “several” Council members purchased salt from MidAmerican’s competitors, who lowered their prices after MidAmerican won the contract.Mid-American sued the Council and 49 of its members, alleging breach of contract, breach of the covenant of good faith and fair dealing, and bad faith under UCC Article 2. The Third Circuit affirmed the denial of relief. No valid requirements contract existed here because the contract was illusory. These sophisticated parties were capable of entering into precisely the contract they desired. Neither the Council nor its members ever promised to purchase from Mid-American all the salt they required View "Mid-American Salt LLC v. Morris County Cooperative Pricing Council" on Justia Law