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

The FBI recruited Fairview Township Police Officer Baker’s fellow officer, Bennage, to assist in an investigation into allegations that Baker was involved in stealing drug proceeds. Baker learned that Bennage had found cash on a drug-overdose victim; Baker texted, “Where’s mine? LOL.” Bennage responded that others had been watching. Baker responded, “next time. LOL.” Days later, after Bennage and other officers discovered multiple stacks of cash during a search, Baker sent Bennage a text saying that he would help with the evidence and “don’t get greedy, be smart.” Baker told Bennage to put his share in a toolbox in Baker’s truck. Less than a month later, the FBI and Bennage executed an undercover operation in which Bennage and Baker stopped an FBI agent traveling with $15,000, posing as a drug trafficker. Bennage took the ‘trafficker’ in for booking, leaving Baker alone with the vehicle. Baker searched the car. He discovered the $15,000. FBI cameras recorded the process. Baker took $3,000. He later confessed to the thefts and was convicted of stealing or embezzling public money, 18 U.S.C. 641. The Third Circuit affirmed, upholding the trial court’s refusal to give an entrapment jury instruction and a jury instruction requiring the government to prove that he had an intent to permanently, rather than temporarily, deprive the government of its money, and its refusal to allow Mrs. Baker to testify about the financial burden of her cancer-related medical bills. View "United States v. Baker" on Justia Law

James arranged to sell cocaine to a DEA confidential informant, took a bag containing 12 kilograms of cocaine to a hotel room where the informant was staying, and negotiated a price of $13,500. DEA agents immediately arrived and arrested James. James, who apparently had no criminal history, was charged with conspiracy to distribute narcotics, 21 U.S.C. 846, and possession with intent to distribute narcotics, section 841(a)(1). After being thoroughly questioned by the judge, James agreed to the government’s statement of facts and entered a plea of guilty to Count 1, which the court accepted. Months later, before sentencing, James filed a pro se “motion to dismiss counsel based upon ineffectiveness of counsel,” asserting his innocence, and claiming duress and that he did not understand the plea agreement. Newly-appointed counsel moved to withdraw the plea and argued entrapment. The court denied the motion, reasoning that “an entrapment defense is a claim of legal innocence, not factual innocence,” and James had failed to assert factual innocence. The Third Circuit affirmed. Even if James’s assertion of legal innocence (entrapment) were sufficient, bald assertions of innocence are insufficient to permit a defendant to withdraw his guilty plea. The court noted his earlier admissions, including that he negotiated the price on a per-kilo basis; James’s statements during the plea hearing indicate that his plea was knowing, voluntary, and fully informed. View "United States v. James" on Justia Law

Brooks, Debtor's CEO, was charged with financial crimes. In class action and derivative lawsuits, Debtor proposed a global settlement that indemnified Brooks for liability under the Sarbanes Oxley Act (SOX), 15 U.S.C. 7243. Cohen, Debtor’s former General Counsel and a shareholder, claimed that the indemnification was unlawful. The district court approved the settlement, Cohen, represented by CLM, appealed. The Second Circuit vacated, noting that the EDNY would determine CLM’s attorneys’ fees award. Debtor initiated Chapter 11 bankruptcy proceedings. The Bankruptcy Court confirmed Debtor’s liquidation plan, with a trustee to pursue Debtor’s interest in recouping its losses from the ongoing actions.Brooks died in prison. Because his appeal had not concluded, some of his convictions and restitution obligations were abated. Stakeholders negotiated a second global settlement agreement, under which $142 million of Brooks’ restrained assets were to be distributed to his victims; $70 million has been remitted to Debtor. The Bankruptcy Court awarded CLM fees for the SOX 304 claim; the amount would be determined if Debtor received any funds on account of the claim. CLM’s Fee Appeal remains pending at the district court.CLM requested a $25 million reserve for payment of its fees. The Bankruptcy Court ordered Debtor to set aside $5 million. CLM’s Fee Reserve Appeal remains pending. CLM then moved, unsuccessfully, for a stay of Second Settlement Agreement distributions. In its Stay Denial Appeal, CLM’s motion requesting a stay of distributions was denied. The Third Circuit affirmed. The $5 million reserve is sufficient. A $5 million attorneys’ fees award for 1,502.2 hours of legal work totaling $549,472.61 of documented fees would yield an hourly rate of $3,328.45 and a lodestar multiplier of over nine. In common fund cases where attorneys’ fees are calculated using the lodestar method, multiples from one to four are the norm. View "SS Body Armor I, Inc. v. Carter Ledyard & Milburn, LLP" on Justia Law

Baloga, a school district custodian since 1999 and vice president of the custodial union since 2010, claimed that the Pittston District and its maintenance director, Serino, violated his First Amendment rights by retaliating against him based on his union association and related speech. The relationship between the union and the District—and, in particular, Serino—was strained. Baloga had filed a grievance about a scheduling change and was subsequently transferred. The district court rejected the claims on summary judgment, concluding that Baloga’s activity was not constitutionally protected because it did not implicate a matter of public concern. The Third Circuit reversed in part. Where a public employee asserts retaliation in violation of the First Amendment as a free speech claim and a pure union association claim, those claims must be analyzed separately. Consistent with longstanding Supreme Court precedent, there is no need to make a separate showing of public concern for a pure union association claim because membership in a public union is “always a matter of public concern.” Baloga raised a triable issue about whether he was retaliated against based solely on his union association. View "Baloga v. Pittston Area School District" on Justia Law

Greene and his girlfriend, Manley, traveling in a van without its lights on, were stopped by Hanover Township Officer Stefanowicz. Manley was driving, but was unable to produce a driver’s license, vehicle registration, or proof of insurance. She gave Stefanowicz a rental car agreement in the name of Hurtudo-Moreno that listed no other authorized drivers. Stefanowicz smelled unburnt marijuana emanating from the vehicle. Greene was “repeatedly seeking to leave... and reaching for his waistband.” Stefanowicz executed a “Terry” pat-down, and felt a bulge, the seal of a plastic baggie, and the texture of its contents. Stefanowicz immediately recognized the bag as marijuana and placed Greene under arrest. Stefanowicz searched the van and found bullets in the glove box and in Manley’s purse. Walking to the squad car, Greene was bending over and walking in unusual ways. Another officer searched Greene further and located a loaded, stolen handgun in his groin area. The police arrested Manley. Greene expressed concern for Manley and volunteered that he would “take the hit” for the gun.The Seventh Circuit affirmed the denial of his suppression motions and his conviction (18 U.S.C. 922(g)(1)). Stefanowicz’s response to Greene's question about the charges Manley faced did not constitute the functional equivalent of interrogation. Greene asked for the information; his response was unforeseeable. Stefanowicz’s answer was brief, accurate, and unrelated to the gun and bullets. Greene was not “emotionally upset or overwrought.” The “plain-feel doctrine” permits an officer to seize an object when, given his training and experience, he develops probable cause to believe it is contraband by the time he concludes it is not a weapon and “in a manner consistent with a routine frisk.” View "United States v. Greene" on Justia Law

Heraeus, a German company, develops and produces bone cement, using copolymers. Biomet also sells bone cement and uses the same copolymers, which it buys from Esschem, a Pennsylvania company. Heraeus holds trade secrets related to the bone cement, including specifications for the copolymers. The trade secrets changed hands during joint ventures before allegedly falling into Esschem’s possession. Heraeus analyzed samples of Biomet’s bone cement in 2005 and discovered that it was virtually identical to Heraeus’ bone cement and that Esschem was manufacturing Biomet's copolymers. Heraeus sued Biomet in Germany in 2008, and brought discovery suits in the U.S. against Esschem and Biomet. By March 2011, Esschem produced e-mail chains between employees of Biomet and Esschem concerning the copolymers. During proceedings against Biomet, that information was corroborated. Heraeus contends it was not until then (December 2011), that it had sufficient information to believe that Esschem had actively participated in the misappropriation of its trade secrets. Less than three years later, Heraeus sued Esschem under the Pennsylvania Uniform Trade Secrets Act (PUTSA) which gives a plaintiff three years from when “the misappropriation was discovered or by the exercise of reasonable diligence should have been discovered” to bring suit. The district court ruled that the limitations period had run because Heraeus was aware of the facts supporting its claims by January 2009. The Third Circuit reversed in part, holding that Pennsylvania applies the rule of separate accrual to continuing trade secret misappropriations, Heraeus may sue for misappropriations that occurred within the three-year period before filing. The court agreed that alleged misappropriations more than three years before Heraeus filed suit are time-barred. View "Heraeus Medical GMBH v. Esschem Inc" on Justia Law

In 2014, A.M. defrauded two banks and their customers, using skimming devices and PIN-pad overlays on ATMs. He was charged with 19 counts of bank fraud and aggravated identity theft, 18 U.S.C. 1028A and 1344. He pleaded guilty to only one count of each. A.M. objected to his guideline calculation for the bank-fraud conviction because it included a two-level enhancement for using “device-making equipment” to make counterfeit debit cards, U.S.S.G. 2B1.1(b)(11)(A)(i). He argued that his conviction for aggravated identity theft precluded that enhancement. The court disagreed but, because of A.M.’s cooperation, sentenced him to only 10 months’ imprisonment on that count. A.M. objected that the government had not also moved for a departure below the mandatory minimum sentence for his aggravated-identity-theft sentence. The court found that identity theft is an especially severe crime and sentenced A.M. to the mandatory minimum sentence of two years’ consecutive imprisonment. The Third Circuit affirmed. While device-making equipment can copy means of identification, it is not itself a means of identification, so the device-making enhancement was proper. The law empowers courts to depart below a statutory minimum only “[u]pon motion of the Government,” 18 U.S.C. 3553(e). The government made no such motion with respect to aggravated identity theft. View "United States v. Meireles-Candel" on Justia Law

StoneMor sells funeral products and services and is required by state law to hold in trust a percentage of proceeds from “pre-need sales.” Under Generally Accepted Accounting Principles (GAAP), preneed sales held in trusts may not be represented as current revenue StoneMor issued nonGAAP financials that represented pre-need sales as a portion of current revenue; borrowed cash to distribute to investors the proceeds of preneed sales in the same quarter the sale was made; and used proceeds from equity sales to pay down the borrowed cash that funded those distributions. In 2016, StoneMor announced that it would restate about three years of previously-reported financial statements. Under GAAP regulations, StoneMor was temporarily prohibited from selling units and receiving corresponding equity proceeds. Plaintiffs allege that this prohibition caused StoneMor’s October 2016 unit distribution to fall by nearly half; StoneMor blamed the cut on salesforce issues. StoneMor’s unit price dropped by 45%. Investors sued under the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), and Rule 10b-5, alleging that Defendants made false or misleading statements, with scienter, which Plaintiffs relied on to their financial detriment. The Third Circuit affirmed the dismissal of the case for failure to satisfy the heightened pleading standards of the Private Securities Litigation Reform Act, 15 U.S.C. 78u-4. In a securities fraud case, a defendant’s sufficient disclosure of information can render alleged misrepresentations immaterial. StoneMor’s disclosures sufficiently informed reasonable investors of the risks inherent in its business. View "Fan v. Stonemor Partners LP" on Justia Law

Beers was involuntarily committed to a psychiatric inpatient hospital in, 2005, after he told his mother that he was suicidal and put a gun in his mouth. Beers has had no further mental health issues. Beers challenged federal law prohibiting the possession of firearms by anyone who has previously been adjudicated as mentally ill or committed to a mental institution, 18 U.S.C. 922(g)(4), arguing that, as applied to him, it violates the Second Amendment. Beers claimed that, although he was previously involuntarily institutionalized, he has since been rehabilitated, which distinguishes his circumstances from those in the historically-barred class. The Third Circuit rejected his arguments, noting that the traditional justification for disarming mentally ill individuals was that they were considered dangerous to themselves and/or to the public at large. Courts are ill-equipped to determine whether any particular individual who was previously deemed mentally ill should have his firearm rights restored. View "Beers v. Attorney General United States" on Justia Law

In 2010, Pennsylvania inmate Houser sued prison officials (42 U.S.C.1983), claiming deliberate indifference to his medical needs. Houser unsuccessfully requested appointed counsel. Discovery proceeded. The defendants moved for summary judgment in 2013. Houser filed opposition papers pro se but again moved to appoint counsel. The court denied the defendants’ motions, granted Houser’s motion, and conducted a search to secure pro bono counsel. After two attorneys declined the case, Reed Smith assumed Houser’s representation and devoted over 1,000 hours to the case before moving to withdraw based on fundamental disagreements with Houser on strategy, a breakdown in communication, and an irremediably broken attorney-client relationship. The court told Houser that it could not dictate strategy, and stated: “We’re not going to ask anyone else... do you want to ... represent yourself?” Houser never gave a straightforward answer. The court granted Reed Smith’s motion. Houser unsuccessfully requested that the court put him back on the “appointment of counsel” list and stay the case. Noting that the case was five years old, the court pushed the trial to December 2015. In October 2015, Houser unsuccessfully moved to appoint counsel. A jury returned a verdict for the defendants. Houser unsuccessfully moved for a new trial based on the denial of his motion to appoint counsel. Houser moved to reconsider, arguing his claims had merit and involved “medical issues that were complex including requiring an expert” and the “conflicting testimony of multiple witness[es].” The Third Circuit affirmed the denial of the motion; denying Houser new counsel was not an abuse of discretion. View "Houser v. Folino" on Justia Law