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

Arianna Holding Company purchased a tax lien on a piece of property owned by the Hacklers and eventually obtained title to the Hacklers’ property via foreclosure proceedings. Shortly after Arianna obtained title, the Hacklers filed for Chapter 13 bankruptcy and sought to void the transfer of the title as preferential, 11 U.S.C. 547(b). The Bankruptcy Court and the district court ruled in favor of the Hacklers. The Third Circuit affirmed. The title transfer meets 547(b)’s requirements for avoidance. The transfer was made to or for the benefit of a creditor, was made for an antecedent debt, was made while the debtor was insolvent, was made on or within 90 days before filing for bankruptcy, and enabled the creditor to receive more than it would have received in a Chapter 7 liquidation proceeding. The petition and schedules listed the value of the property at $335,000, which far exceeded the value of the liens against the property; Arianna filed a proof of claim for $42,561.21 and other liens totaled no more than $89,000. The Hacklers’ Chapter 13 plan proposed to pay Arianna’s claim in full. Federalism concerns raised by Arianna cannot overcome the plain language of the Code. View "In Re: Hackler" on Justia Law

Chang filed a qui tam action against the Center, asserting claims on behalf of the United States and the state under the False Claims Act (FCA). and the Delaware False Claims Act. Chang alleged that the Center had sought and received funding from the state and federal governments by misrepresenting material information. Both governments declined to intervene as plaintiffs. Chang filed an amended complaint and the Center answered. Nearly three years after Chang filed his original complaint, the U.S. and Delaware moved to dismiss the case, asserting that they had investigated Chang’s allegations and discovered them to be “factually incorrect and legally insufficient.” The court granted the motions without conducting an in-person hearing or issuing a supporting opinion. The Third Circuit affirmed. If the government chooses not to intervene, the relator may still “conduct the action” but the government may still “dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion,” 31 U.S.C. 3730(c)(2)(A). Chang never requested a hearing; the FCA does not guarantee an automatic in-person hearing to relators before their cases may be dismissed. View "Chang v. Children's Advocacy Center of Delaware" on Justia Law

Plaintiffs alleged pharmaceutical manufacturers stalled the release of clinical trial results for their blockbuster anti-cholesterol drugs, tried to change the study's endpoint to produce more favorable results, concealed their role in the change, and that the delay allowed one company to raise $4.08 billion through a public offering, which the company used to purchase another company to lessen its reliance on the drugs. Amid press reports and a congressional investigation, the companies released the clinical trial results, which allegedly caused their stock prices to plummet, amounting to about a $48 billion loss in market capitalization. Investors filed suit. The court denied defendants’ motions to dismiss under the Private Securities Litigation Reform Act’s heightened pleading standard, denied defendants’ motion for summary judgment, and granted class certification.Investors were provided with Rule 23(c)(2) notice of their right to opt-out: “you will not be bound by any judgment in this Action” and “will retain any right you have to individually pursue any legal rights.” After the opt-out period, the court approved settlements, offering opt-out investors 45 days to rejoin and share in the recovery, while stating that opt-outs “shall not be bound” to the settlement. Sixteen opt-out investors filed suits, tracking the class action claims, and adding a New Jersey common law fraud claim. After the Supreme Court held that American Pipe tolling does not extend to statutes of repose, plaintiffs were left with only their state-law claims. The court dismissed those as barred by the Securities Litigation Uniform Standards Act, 15 U.S.C. 10 78bb(f)(5)(B)(ii)(II). The Third Circuit reversed, finding that the class actions and the opt-out suits were not “joined, consolidated, or otherwise proceed[ing] as a single action for any purpose.” View "North Sound Capital LLC v. Merck & Co., Inc" on Justia Law

While investigating reports that Aviles was conducting a drug-trafficking operation, the Lebanon County Drug Task Force obtained a warrant to search Aviles’s residence. In the probable cause affidavit, officers relied upon information gathered through multiple controlled buys conducted by confidential informant “RCI-1,” describing the dates of the buys, the affiants and their Task Force experience, and a general explanation of controlled buys, including the use of recorded Task Force currency. In the resulting searches, officers recovered large quantities of controlled substances, drug paraphernalia, and firearms. Aviles and 12 co-defendants were arrested and charged. Aviles unsuccessfully moved to suppress the evidence, claiming the officers included false information in their affidavit and omitted other information. He argued that, while the general description of controlled buys represented that currency is exchanged for drugs, some of Aviles’s buys may have involved RCI-1’s exchanging prescription drugs instead of currency. He claimed that RCI-1 had conducted additional drug-related transactions with Aviles outside of the controlled buys. The court conducted an evidentiary hearing, allowing both parties to question the officers but refusing the defense’s request to question RCI-1 based on concerns regarding her identity. Convicted, Aviles was sentenced to life imprisonment under the Controlled Substances Act, 21 U.S.C. 841(b); the court found that Aviles’s prior state court convictions qualified as “felony drug offenses.” The Third Circuit affirmed the denial of the motion to suppress but, holding that at least two of his prior convictions do not qualify as felony drug offenses, vacated the sentencing order. View "United States v. Aviles" on Justia Law

The Federal Arbitration Act (FAA), 9 U.S.C. 1–16, places certain arbitration agreements on equal footing with all other contracts, requiring courts to enforce such agreements according to their terms. Section 2 provides that the FAA covers “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce,” but section 1 states that “nothing” in the FAA “shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Singh brought this putative class action on behalf of New Jersey Uber drivers, alleging that Uber misclassified them as independent contractors rather than employees, which resulted in their being deprived of overtime compensation and incurring business expenses for Uber's benefit. Singh opposed a motion to compel arbitration, arguing that, to the extent that he had an agreement with Uber, it fell within the “any other class of workers” portion of section 1. The court dismissed, concluding that clause only extends to transportation workers who transport goods. The Third Circuit disagreed, citing its “longstanding precedent,” to hold that the residual clause of section 1 may extend to a class of transportation workers who transport passengers if they are engaged in interstate commerce or in work so closely related thereto as to be in practical effect part of it. The court remanded for resolution of the engaged-in-interstate-commerce inquiry. View "Singh v. Uber Technologies, Inc." on Justia Law

Garrett sued under 42 U.S.C. 1983, claiming deliberate indifference to his serious medical needs and retaliation. Garrett alleged that, while incarcerated, he had been prescribed a wheelchair and walker. When he was transferred to SCI Houtzdale in 2014, medical staff allegedly discontinued Garrett’s use of a walker and wheelchair, forbade him from receiving walking assistance from other inmates, and discontinued his “psych” medication. He acknowledged in his complaint that he had filed grievances but the grievance process was not complete. The district court dismissed many of pro se Garrett’s claims for failure to exhaust administrative remedies under the Prison Litigation Reform Act (PLRA), 42 U.S.C. 1997e(a), and dismissed the remainder for failure to satisfy the Federal Rules of Civil Procedure “short and plain statement” requirement, Rule 8. The Third Circuit vacated. Garrett’s original complaint was defective because, as a prisoner when he filed it, he failed to first exhaust his administrative remedies. Two years later, Garrett filed an amended and supplemental complaint (TAC) under Rule 15, which superseded Garrett’s prior complaints. The TAC’s claims relate back to the original complaint because they concern the same core operative facts. When he filed the TAC, Garrett was no longer a prisoner and was not subject to the PLRA’s administrative exhaustion requirement. The TAC cured the original filing defect. The claims in Garrett’s pro se complaint are sufficiently “short” and “plain” and adequately put the defendants on notice of Garrett’s claims. View "Garrett v. Wexford Health" on Justia Law

The Natural Gas Act (NGA), 15 U.S.C. 717, allows private gas companies to exercise the federal government’s power to take property by eminent domain, if the company has a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission (FERC); was unable to acquire the property by contract or reach agreement about the amount to be paid; and the value of the property exceeds $3,000. PennEast, scheduled to build a pipeline through Pennsylvania and New Jersey, obtained federal approval for the project and filed suit under the NGA to condemn and gain immediate access to properties along the pipeline route, including 42 properties owned, at least in part, by New Jersey or arms of the state. New Jersey sought dismissal, citing the Eleventh Amendment. The district court ruled in favor of PennEast. The Third Circuit vacated. The Eleventh Amendment recognizes that states enjoy sovereign immunity from suits by private parties in federal court. New Jersey has not consented to PennEast’s condemnation suits and its sovereign immunity has not been abrogated by the NGA. The federal government’s power of eminent domain and its power to hale sovereign states into federal court are separate and distinct. In the NGA, Congress has delegated only the power of eminent domain. View "In re: PennEast Pipeline Co. LLC" on Justia Law

The Third Circuit granted a petition for review challenging the BIA's decision affirming the IJ's denial of petitioner's application for withholding of removal under the Immigration and Nationality Act (INA) and the Convention Against Torture (CAT). The court held that the IJ and BIA erred in deciding that petitioner's conviction for conspiracy to commit wire fraud is a conviction for a particularly serious crime, making him ineligible for withholding of removal. In this case, the IJ and BIA failed to correctly apply the analysis articulated in In re N-A-M-, skipping right over the preliminary consideration of elements. Therefore, on remand, the agency should first determine whether the elements of petitioner's offense potentially fall within the ambit of a particularly serious crime. Only then may it proceed to consider the facts and circumstances particular to petitioner's case.The court also held that the IJ failed to observe the rule articulated in Abdulai v. Ashcroft, 239 F.3d 542, 554 (3d Cir. 2001), requiring immigration judges to notify a noncitizen in removal proceedings that he is expected to present corroborating evidence before finding that failure to present such evidence undermines his claim. Therefore, the court must remand for a new corroboration determination. View "Luziga v. Attorney General" on Justia Law

Under the now-repealed 8 U.S.C. 1432(a)(2), a “child” born outside of the U.S. to noncitizen parents became a citizen upon the naturalization of her surviving parent if one of her parents was deceased. Section 1101(c)(1) defined “child” as including a child born out of wedlock only if the child was legitimated under the “law of the child’s residence or domicile” or “the law of the father’s residence or domicile . . . except as otherwise provided in” section 1432, which exempted mothers of born-out-of-wedlock children from the legitimation requirement. That affirmative steps to verify paternity, including legitimation, may be taken if a citizen-parent is an unwed father has withstood constitutional scrutiny, on the basis that the relation between a mother and a child “is verifiable from the birth.” Tineo was born in the Dominican Republic to noncitizen parents who never married. His father moved to the U.S. and naturalized. His noncitizen mother died. At the time, under the laws of either the Dominican Republic or New York, legitimation could only occur if his birth parents married. Tineo’s father was forever precluded from having his son derive citizenship through him, despite being a citizen and having cared for his son. Threatened with removal, Tineo brought a Fifth Amendment challenge on behalf of his now-deceased father. The Third Circuit held that, in this circumstance, the interplay of the statutory sections are inconsistent with the equal-protection mandate of the Due Process Clause. View "Tineo v. Attorney General United States" on Justia Law

Velazquez and his girlfriend had a physical altercation. He threatened her at his preliminary hearing and, from prison, sent threatening letters. Velazquez refused to enter his detention cell; the guard sustained scratches during the struggle. Velazquez was charged with burglary, intimidating a witness, terroristic threats, harassment, and aggravated assault. Due to Velazquez’s history of mental illness, his attorney advised him to enter a guilty but mentally ill (GBMI) plea under Pennsylvania law, waiving the right to a jury trial. If that plea is accepted, the defendant may receive mental health treatment while serving her sentence. A judge may not accept a GBMI plea unless she examines certain reports, holds a hearing, and determines that the defendant was mentally ill at the time of the offense. If the judge does not accept the GBMI plea, the right to a jury trial is returned. Velazquez’s GBMI plea was not accepted. The judge did not examine reports nor hold a hearing and did not determine whether Velazquez was mentally ill. Velazquez’s right to trial was not reinstated. The judge recorded that Velazquez had entered a normal guilty plea. Counsel did not object. The Third Circuit granted relief on Velazquez’s habeas petition, finding ineffective assistance of counseI. The district court had habeas jurisdiction although the petitioner merely asserted that the wrong guilty plea was entered. The requisite prejudice can be shown although the appropriate plea would not have resulted in a reduced sentence. View "Velazquez v. Superintendent Fayette SCI" on Justia Law