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November 17, 2017
  Spay v. CVS Caremark Corporation - Third Circuit
Headline: Use of Dummy Prescriber IDs Found Immaterial in Claim against CVS Caremark Corporation for Violation of False Claims Act

Area of Law: Civil

Issue(s) Presented: (1) Did the District Court erroneously grant Defendant CVS Caremark Corporation's motion for summary judgment where the District Court relied on the government knowledge inference doctrine in dismissing Plaintiff's claim?

Brief Summary: From 2006 to 2007, Defendant CVS Caremark Corporation submitted approximately 4,500 Prescription Drug Event records to Centers for Medicare and Medicaid Services ("CMS") using dummy Prescriber IDs. Spay filed suit against Caremark, claiming that Caremark violated the False Claims Act ("FCA") by submitting false information to CMS. The District Court granted Caremark's motion for summary judgment, primarily relying on the "government knowledge inference" doctrine. The District Court found that CMS knew about the dummy IDs but paid them anyway. On appeal, the Third Circuit adopted the government knowledge inference doctrine that had been developed in other Circuits and applied a two-part test to determine whether the government knowledge inference doctrine was appropriate. The Third Circuit determined that under this test the government knowledge inference did not apply, but it affirmed the District Court's decision on other grounds. In reaching its decision, the Court addressed whether materiality was a required element for Spay's claim under the False Claims Act. Ultimately, the Court concluded that it was, and that Caremark's submission of dummy Prescriber IDs was not material to the government's decision to pay the claims substantiated by the PDE records. Therefore, despite the fact that the government knowledge inference doctrine did not apply, summary judgment in the Defendant's favor was proper.


Extended Summary:

Processing payment for claims made under Medicare Part D involves two steps: (1) the pharmacy claim, which the pharmacy submits to its Pharmacy Benefit Manager ("PBM"); and (2) the Prescription Drug Event ("PDE") record, which the Sponsor submits to Centers for Medicare and Medicaid Services ("CMS"), a governmental entity. Each year, Sponsors submit PDE records to CMS during a reconciliation process, seeking to recover the difference between the Sponsor's actual costs during the year and any amount it already received from CMS. Defendant CVS Caremark Corporation ("Caremark") was one of the largest PBMs in the United States from 2006 to 2007. During that time, Caremark submitted approximately 4,500 Prescription Drug Event records to CMS on behalf of its Sponsors. Spay filed suit against Caremark, claiming that Caremark violated the False Claims Act ("FCA") by submitting false information to CMS, which resulted in CMS paying the Sponsors more than they were actually entitled to receive.

Spay's main argument involved the submission of "dummy" Prescriber ID numbers. A Prescriber ID is a number issued to each individual with prescribing authority. If a PDE record was submitted without a Prescriber ID number, the electronic system CMS used to process payment would automatically reject the PDE, preventing payment to the dispensing pharmacy for the corresponding prescription. In an effort to reduce the number of legitimate claims that were bounced out due to the lack of a Prescriber ID, Caremark created a dummy Prescriber ID which it used to submit PDE records to CMS for payment. In total, Caremark generated about 4,500 PDE records using 56 different dummy Prescriber IDs. Spay filed his lawsuit against Caremark based on six issues, including the use of dummy Prescriber IDs. Spay claimed that Caremark used dummy IDs on a large number of its PDE record submissions, while falsely certifying the accuracy of the records.

The District Court granted Caremark's motion for summary judgment, primarily relying on the "government knowledge inference" doctrine. The "government knowledge inference" doctrine states, "when the government knows and approves of facts underlying an allegedly false claim prior to presentment, an inference arises that the claim was not knowingly submitted, regardless of whether the claim itself is actually false." The District Court found that (1) CMS knew about the dummy IDs; (2) paid all of the claims using dummy IDs anyway; and (3) never sought repayment from Caremark.

On appeal, the Third Circuit addressed the applicability of the government knowledge inference doctrine. Initially it held that the doctrine, which had been developed in other Circuits, should be followed in the Third Circuit as well. The Third Circuit stated that the doctrine is used to distinguish between the submission of false claims, and the knowing submission of false claims. In order to achieve that purpose, the Third Circuit applied a two-part test to determine whether the government knowledge inference doctrine was appropriate. The test requires that: "(1) the government agency knew about the alleged false statement(s); and (2) the defendant knew the government knew." Applying the test to the issue before it, the Third Circuit determined that the government knowledge inference did not apply on the record before it. Although there was sufficient evidence to suggest that CMS knew Caremark had submitted PDE records with dummy Prescriber IDs, there was insufficient evidence to suggest that Caremark knew that CMS was aware of the issue. "Our review of the record shows that there is no evidence of the kind of cooperation and collaborative problem-solving that exists in the easy case where the government knowledge inference is invoked."

The Court, however, went on to address whether materiality is a required element of the False Claims Act. While this case was on appeal, the Supreme Court decided Universal Health Services Inc. v. Escobar, which made materiality an element of a FCA violation. Spay argued that the holding applied only to the post-2009 version of the FCA, and that Caremark's conduct took place prior to the enactment of the 2009 amendments under consideration in Universal Health. The Third Circuit concluded that the pre-2009 version of the FCA contained a materiality requirement and applied it to the present case. Ultimately, the Court concluded that the submission of dummy Prescriber IDs was not material to the government's decision to pay the claims substantiated by the PDE records. According to the Third Circuit, the evidence suggested that CMS knew about the use of dummy IDs, but paid the PBMs anyway. "CMS was concerned with making sure that the medications were dispensed to Medicare recipients and that pharmacies were paid for those prescriptions. Had the payments stopped, the prescriptions would not have been dispensed, and the pharmaceutical needs of Medicare recipients would not have been addressed." The Court held that the dummy IDs were thus immaterial to the government's decision to pay, as they were merely "minor or insubstantial" misstatements used to prevent legitimate claims from being rejected by the CMS electronic processing system. Therefore, although the government knowledge inference doctrine did not apply to the facts of this case, summary judgment was proper.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153548p.pdf

Panel: Smith, Chief Judge, McKee, and Restrepo, Circuit Judges

Argument Date: November 10, 2016

Date of Issued Opinion: November 16, 2017

Docket Number: No. 15-3548

Decided: Affirmed.

Case Alert Author: Stephen P. Dodd

Counsel: Ian P. Samson, Esquire, Marc S. Raspanti, Esquire, Counsel for Appellant; Enu Mainigi, Esquire, Joy P. Clairmont, Esquire, Jeffrey F. Keller, Esquire, Gordon Schnell, Esquire, Claire M. Sylvia, Esquire, Counsel for Appellee.

Author of Opinion:
Circuit Judge McKee

Circuit: Third Circuit

Case Alert Circuit Supervisor:
Prof. Mark Rahdert

    Posted By: Susan DeJarnatt @ 11/17/2017 05:39 PM     3rd Circuit     Comments (0)  

October 17, 2017
  Secretary United States Department of Labor v. American Future Systems, Inc. d/b/a Progressive Business Publications, a
Headline: Employers are required to compensate employees for all rest breaks of twenty minutes or less.

Area of Law: Labor and Employment Law

Issue(s) Presented: Is an employer, who permits employees to take breaks during working hours for any reason, required under the Fair Labor Standards Act to compensate employees for any breaks of twenty minutes or less.

Brief Summary: The Fair Labor Standards Act requires employers to compensate their employees for any break periods of twenty minutes or less. American Future Systems d/b/a Progressive Business Publications (Progressive), and its President, Edward Satell, instituted a "flex time" policy in which employees were entitled to log off of their computers throughout the work day at will and for any reason. However, employees were only compensated for the time spent logged in. Progressive did not consider its employees' "flex time" as a "break," and argued that it was therefore not a violation of the FLSA to deny compensation. The Third Circuit held that Progressive's "flex time" did constitute breaks, and that it was required to compensate employees for any breaks of twenty minutes of less. Furthermore, the Third Circuit awarded liquidated damages for the compensation that Progressive had failed to pay its employees.

Extended Summary: Progressive distributes business publications, which it sells through sales representatives. Its sales representatives are paid an hourly wage and they are evaluated on their performance while logged in to the system. They receive extra compensation and bonuses based on sales rates per hour. They are also expected to maintain a certain sales rate per hour while logged in or can be disciplined or even sent home for the day. In 2009, Progressive transitioned from a break policy in which employees received two fifteen-minute breaks per day to a "flex time" system. Under the new system, employees were allowed to take "flex time" at will for any reason simply by logging off the system. This "flex time" included using the bathroom or taking a coffee break. There was no limit set on the duration; however, once the employee was logged off for more than ninety seconds, he was considered on "flex time." Furthermore, employees were only compensated for time that they were logged in to the system; they were not compensated for "flex time."

Under the new system, employees were also required to estimate their expected working hours over a two-week period. Employees could choose to work anytime Monday-Friday between the hours of 8:30-5:30. Employees could not work more than forty hours per week, and they were required to meet their estimated goals. Under that system, the average employee was only compensated for just over five hours per day at the federal minimum wage of $7.25/hour.

The Secretary of the United States Department of Labor brought this lawsuit on behalf of Progressive's employees for violation of the Fair Labor Standards Act, which requires employers to compensate employees for all breaks of twenty minutes or less. The district court granted partial summary judgment to the Secretary on its claim that Progressive's employees were denied federal minimum wages through the failure to compensate break times of twenty minutes or less. The district court also granted liquidated damages in an equal amount for the compensation Progressive withheld from its employees. In so doing, the district court applied the Department of Labor, Wage and Hour Division's ("WHD") interpretation of the FLSA. Under that interpretation, breaks of five to twenty minutes are viewed as "common in the industry," "promote the efficiency of the employee," and are "customarily paid." As such, breaks of twenty minutes or less must be compensated and count as working hours.

On appeal, Progressive claimed that its "flex time" hours were not breaks. It argued that employees are not working unless they are logged into the system. Its employees are free to log out at any time for any duration; when employees log back in, they are back at work. The Third Circuit held that this view of "work" conflicts with the purpose of the FLSA. The FLSA requires employers to compensate employees for "hours worked," but does not define "work." The flex time provided for by Progressive, however, is clearly a "break" under the FLSA. The Court explained that, under Progressive's system, employees are forced to choose between being compensated for working hours and satisfying basic needs, such as using the bathroom, which would require more than ninety seconds.

Next, Progressive argued that the WHD's interpretation was given too much deference by the district court. However, the Third Circuit agreed with the district court's reliance on the WHD for several reasons. First, the WHD's interpretation was ratified by Congress in 1940. Second, the Department of Labor has consistently relied on the WHD's interpretation for over 46 years. Third, the Third Circuit found the interpretation to reasonable based on the language of the FLSA.

Finally, Progressive argued that the district court's reliance on 29 C.F.R. § 785.18 - which states that employees must be compensated for breaks of twenty minutes or less - as a bright-line rule was wrong. Progressive argued that 29 C.F.R. § 785.16 is more applicable. Under § 785.16, periods during which employees are "completely relieved of duties" and for personal reasons are not considered working hours. The Third Circuit disagreed. It noted that § 785.16 is a general section and § 785.18 is more narrowly defined to specifically address breaks of twenty minutes or less. Furthermore, such breaks are viewed by the WHD as time that improves the effectiveness of workers. Therefore, the short breaks are as much for the benefit of employers as they are personal in nature.

Progressive then claimed that allowing employees to take paid breaks under its flex-time system would lead to employees taking an unlimited number of nineteen-minute breaks throughout the day. The Third Circuit reasoned that proper recourse for such action by an employee was discipline or termination, not withholding of wages. Finally, the Third Circuit also affirmed the district court's award of liquidated damages equal to the compensation withheld.
The Third Circuit, thus, affirmed the judgment of the district court.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/162685p.pdf

Panel: McKee, Rendell, Fuentes, Circuit Judges

Argument Date: February 9, 2017

Date of Issued Opinion: October 13, 2017

Docket Number: No. 16-2685

Decided: Affirmed

Case Alert Author: Michael R. DeAngelo

Counsel: Alfred W. Putnam, Jr., Esq, Dorothy A. Hickok, Esq., Sarah E. Bouchard, Esq., and Lincoln O. Bisbee, Esq. for Appellant; M. Patricia Smith, Esq., Jennifer S. Brand, Esq., Paul L. Frieden, Esq., and Rachel Goldberg, Esq. for Appellee; Jonathan S. Krause, Esq. for Amicus-Appellant; Margaret W. Williamson, Esq. for Amicus-Appellee

Author of Opinion: McKee, Circuit Judge

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/17/2017 12:34 PM     3rd Circuit     Comments (0)  

October 10, 2017
  Paul Richard McGann v. Cinemark USA, Inc. - Third Circuit
Headline: A movie theater's failure to provide tactile interpretation to a deaf and blind patron constitutes a denial of the "full and equal enjoyment of the goods and services" of a "place of public accommodation" under the ADA.

Area of Law: Americans with Disabilities Act ("ADA")

Issue(s) Presented: Does a movie theater's failure to provide a deaf and blind patron with a tactile interpreter so he can experience a film in one of its theaters constitute a Title III of the ADA "special prohibition" regarding auxiliary aids and services and thus violates Title III's "general rule" that no individual shall be denied "full and equal enjoyment of the goods and services" of "a place of public accommodation?"

Brief Summary: Paul McGann, who is disabled within the meaning of the ADA, requested from Cinemark USA, Inc. an American Sign Language ("ASL") tactile interpreter so that he could experience a movie in his local Cinemark theater. Cinemark denied his request and McGann filed suit, claiming Cinemark violated Title III of the ADA, which requires public accommodations, such as movie theaters, to furnish auxiliary aids and services, which include qualified interpreters.
The ADA defines "auxiliary aid or service" to include a qualified interpreter. Furthermore, the Department of Justice ("DOJ") technical assistance materials, which provide implementation guidance on the ADA, specifically include tactile interpreters in the definition of auxiliary aids. Therefore, the Third Circuit found that an ASL tactile interpreter was a qualified interpreter under Title III of the ADA.
Next, the Third Circuit found that the entertainment service Cinemark provides includes furnishing auxiliary aids and services so that patrons with disabilities can have the economic and social experience of viewing a movie in a theater. According to the Third Circuit, a legislative purpose of the ADA is to allow individuals with disabilities to experience "mainstream American life," such as seeing a movie in a theater. Therefore, in denying McGann's request for an ASL tactile interpreter, Cinemark excluded or denied him from Cinemark's services.
Lastly, the Third Circuit determined that Cinemark's first defense failed, finding that a tactile interpreter would not "fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered" since the video, audio or physical experience of the movie would not be altered by the interpreter. The Third Circuit remanded the case to the district court for a factual determination of Cinemark's "undue burden defense" and vacated the district court's judgment in favor of Cinemark.

Extended Summary: Paul McGann, who is blind and deaf, requested from Cinemark USA, Inc. an ASL tactile interpreter so that he could experience a movie in his local Cinemark theater. Cinemark denied his request and McGann filed suit, claiming Cinemark violated Title III of the ADA. Title III of the ADA requires public accommodations, including movie theaters, to furnish auxiliary aids and services, which include qualified interpreters.
First, the Third Circuit established that there was no dispute that McGann is disabled within the meaning of the ADA and that Cinemark is a public accommodation under Title III of the ADA. Second, the Third Circuit considered whether McGann's requested ASL tactile interpreter was an "auxiliary aid or service." The ADA defines "auxiliary aid or service" to include a qualified interpreter. The Third Circuit noted an ASL tactile interpreter is a "qualified interpreter." Additionally, the Department of Justice ("DOJ") technical assistance materials, which are included in the DOJ implementing regulations for communicating with individuals who have vision, hearing, or speech disabilities, specifically mention tactile interpreters as auxiliary aids. Therefore, the Third Circuit found that an ASL tactile interpreter falls within the definition of an auxiliary aid or service under Title III.
Next, the Third Circuit considered whether Cinemark's failure to provide tactile interpretation of the movie excluded McGann from or denied him Cinemark's services. The Third Circuit reasoned that entertainment venues, such as movie theaters, provide an entertainment service to the public. That entertainment service includes selecting a movie of interest, purchasing a ticket to the movie, navigating to the correct auditorium, and providing auxiliary aids or services. The Third Circuit looked to Congress' intent in enacting the ADA, which was to address the "compelling need to integrate individuals with disabilities into the economic and social mainstream of American life." According to the Third Circuit, presenting movies in a theater and having the ability and opportunity to experience a movie "is a component of the social mainstream of American life." The Third Circuit reasoned that providing McGann with a tactile interpreter for a movie supports Congress' legislative intent. Thus, the Third Circuit concluded that a denial of McGann's request for a tactile interpreter excluded him or denied him from Cinemark's services, which is a violation of Title III of the ADA.
Having established that Title III's auxiliary aids and service requirement applies to McGann's request for a tactile interpreter, the Third Circuit analyzed Cinemark's defenses. Title III does not require a public accommodation to furnish a requested auxiliary aid or service if doing so would "fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered" or "would result in an undue burden." The Third Circuit found that because tactile interpretation of a movie does not require any changes to the physical environment or video or audio content of the movie, it does not significantly alter the essential nature of the services. Lastly, the Third Circuit evaluated Cinemark's undue burden defense, which under the DOJ regulations instructions of Title III include "significant difficulty or expense." The Third Circuit remanded the determination of this defense to the district court due to its fact-intensive nature.
The Third Circuit, thus, vacated the district court's entry of judgment for Cinemark and remanded the case for consideration of Cinemark's undue burden defense.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/162160p.pdf

Panel: Smith, Chief Judge, McKee and Restrepo, Circuit Judges

Argument Date: November 10, 2016

Date of Issued Opinion: October 6, 2017

Docket Number: No. 16-2160

Decided: Vacated and remanded

Case Alert Author: Katherine A. Osevala

Counsel: Carol A. Horowitz and Jeffrey M. Skakalski, counsel for Appellant; M. Brett Burns, Bridget J. Daley and Brian H. Simmons, counsel for Appellee; Vanita Gupta, Tovah R. Cadleron and Bonnie I. Robin-Vergeer, counsel for Amicus Curiae United States of America

Author of Opinion: Circuit Judge Restrepo

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/10/2017 03:12 PM     3rd Circuit     Comments (0)  

October 4, 2017
  In Re Asbestos Products Liability Litigation - Third Circuit
Headline: Third Circuit Holds That Manufacturer Can be Held Liable for Asbestos-related Injuries When the Injury Was a Reasonably Foreseeable Result of the Manufacturer's Conduct

Area of Law: Torts

Issue(s) Presented: When should a manufacturer of a product that does not contain asbestos be held liable for an asbestos-related injury caused by parts added on to the manufacturer's product?

Brief Summary: Roberta G. Devries and Shirley McAfee, widows of former United States Navy service members, filed separate complaints against several manufacturers that produced various metal products for naval ships. Devries and McAfee sued under negligence and strict liability theories. They alleged that their deceased husbands contracted cancer from exposure to asbestos-containing insulation added to the metal products. The manufacturers invoked the bare-metal defense, arguing that they should not be held liable because their products were made of pure metal and therefore cannot contain asbestos. Further, they should not be held responsible for asbestos-containing components added to their products post-sale. The district court applied a bright-line version of the bare-metal defense, finding that a bare-material manufacturer can never be held liable for injuries caused by later-added asbestos-containing materials, and granted the manufacturers' motion for summary judgment on both theories. On appeal, the Third Circuit found that maritime law principles favored a fact-specific standard, rather than a bright-line rule, and held that a manufacturer of a bare-metal product could be found liable if the injuries were a reasonably foreseeable result of the manufacturer's conduct. The Court remanded the matter for further proceedings consistent with the opinion.

Extended Summary: This case concerns the validity and extent of a manufacturer's bare-metal defense. Robert G. Devries' husband served in the United States Navy and worked aboard the U.S.S. Turner from 1957-1960. Shirley McAfee's husband, who also served in the Navy, served on two ships and worked in the Philadelphia Navy Shipyard. Both men died from cancer, allegedly caused by exposure to asbestos-containing insulation and components that were added to the ships' engines, pumps, boilers, blowers, generators, switchboards, steam traps, and other devices. Plaintiffs both filed complaints under negligence and strict liability theories. Since the alleged negligent acts occurred aboard naval ships, the case was governed by maritime law and was tried in the district court. The manufacturers moved for summary judgment and invoked the bare-metal defense, arguing that they could not be held liable because their products only consisted of metal and could not contain asbestos. The district court granted summary judgment in favor of the manufacturers.

Plaintiffs appealed because the district court did not address their negligence claims. The Third Circuit remanded and instructed the district court to determine the negligence issue based on either a bright-line rule or a fact-specific standard. The bright-line rule provides that a manufacturer of a bare-metal product can never be held liable for a plaintiff's injuries related to asbestos. The fact-specific standard allows a bare-metal manufacturer to be liable if the plaintiff's injuries were a reasonably foreseeable result of the manufacturer's conduct. The district court applied the bright-line rule and granted the manufacturers' motion for summary judgment on both the strict liability and negligence claims. Devries and McAfee appealed for a second time and the Third Circuit consolidated their appeals.

In order to determine whether the bare-metal defense was valid, the Third Circuit had to determine whether to use the bright-line rule or the fact-specific standard. Neither the Third Circuit nor the Supreme Court had addressed this issue, but other jurisdictions were split between the rule and the standard. The Court ultimately examined whether the rule or standard more appropriately aligned with the four maritime law principles: (1) deep concern with protection of sailors; (2) tradition of simplicity and practicality; (3) interest in protecting maritime commerce; and (4) preference for uniform rules to govern conduct and liability. The Third Circuit found that maritime law's deep concern with protection of sailors aligned with the standard approach because it allows for a greater number of injured sailors to be compensated. Next, the Court found that the second principle of simplicity and practicality could fit under either the bright-line rule or the fact-specific standard. It found that simplicity could relate to predictability, which would favor the bright-line rule, but it could also favor the fact-specific standard because it favors familiarity, which could be related to foreseeability. The Court disregarded the third and fourth principles because they did not favor one approach over the other. Looking at the principles in aggregate, the Court adopted the fact-specific standard.

Using the fact-specific standard, the Court held that a manufacturer could be found liable if decedents' injuries were a reasonably foreseeable result of the manufacturers' failure to provide a reasonable and adequate warning. Under prior case law, the Court reasoned that a bare-metal manufacturer may be subject to liability if it reasonably could have known, at the time it placed its product into the stream of commerce, that (1) asbestos is hazardous and (2) its product will be used with an asbestos-containing part, because (a) the product was originally equipped with asbestos-containing part that could reasonably be expected to be replaced over the product's lifetime, (b) the manufacturer specifically directed that the product be used with an asbestos-containing part, or (c) the product required an asbestos-containing part to function properly. However, the Court noted that this list is non-exhaustive and the bare-metal defense is a fact-specific inquiry that must be decided on a case-by-case basis. The Third Circuit remanded the negligence claims for further proceedings.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/162602p.pdf

Panel: Vanaskie, Shwartz, and Restrepo, Circuit Judges

Argument Date: March 27, 2017

Date of Issued Opinion: October 3, 2017

Docket Number: Nos. 16-2602 & 16-2669

Decided: Partially affirmed and remanded.

Case Alert Author: Emily Anderson

Counsel: Richard P. Myers, Esq. for Appellants Roberta G. Devries and Shirley McAfee; and John S. Howarth, Esq. for Appellee Buffalo Pumps, Inc.; and Shay Dvoretzsy, Esq. for Appellee CBS Corp.; and Lee J. Janiczek, Esq., Christopher, J. Keale, Esq. for Appellee Foster Wheeler LLC; and Timothy E. Kapshandy, Esq. and Rebecca K. Wood, Esq. for General Electric Co.; and Joseph I. Fontak for IMO Industries, Inc.; and Laurie J. Hepler, Esq. for Appellee Warren Pumps; and Carol A. VanderWoude, Esq. for Appellee Ingersoll Rand Co.

Author of Opinion: Judge Vanaskie

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/04/2017 12:53 PM     3rd Circuit     Comments (0)  

September 27, 2017
  Paul Satterfield v. District Attorney Philadelphia - Third Circuit
Headline: Third Circuit Articulates New Analysis for Rule 60(b)(6) Motions Premised on a Change in Decision Law, and Finds That a Showing of Actual Innocence Weighs Heavily in Favor of Habeas Corpus Petitioners' Ability to Litigate Their Constitutional Claims Despite Certain Procedural Bars

Area of Law: Federal Rules of Civil Procedure and Habeas Corpus

Issues Presented: Whether a change in decisional law, either alone or in combination with other equitable factors, was sufficient basis for invoking relief from final judgment under Rule 60(b)(6), to allow an appellant to raise an otherwise time-barred valid claim that trial counsel was ineffective?

Brief Summary: Despite repeatedly asserting his innocence, Paul Satterfield was convicted of first degree murder in 1985 and sentenced to life in prison. After years of direct and collateral litigation, Satterfield appeared to emerge victorious when the District Court, acting on his federal habeas petition, found that his ineffective assistance of counsel claim was meritorious. But the Third Circuit reversed the order granting habeas relief, after finding that Satterfield's petition was barred by Antiterrorism and Effective Death Penalty Act's ("AEDPA") statute of limitations. On remand, the District Court dismissed Satterfield's petition. In 2014, Satterfield filed a motion with the District Court under Federal Rule of Civil Procedure 60(b)(6) seeking relief from the judgment dismissing his habeas petition. Satterfield argued that the Supreme Court's holding in McQuiggin v. Perkins (2013) was a change in decisional law that served as an extraordinary circumstance upon which Rule 60(b)(6) relief may issue. McQuiggin held that "actual innocence, if proved, serves as a gateway through which a petitioner may pass" to overcome an untimely petition under AEDPA. However, the District Court denied Satterfield's Rule 60(b)(6) motion after determining that the decision in McQuiggin was not an extraordinary circumstance. On appeal, the Third Circuit considered whether McQuiggin, either alone or in combination with other equitable factors, was sufficient to invoke relief from final judgment under Rule 60(b)(6) to allow an appellant to raise an otherwise time-barred valid claim that trial counsel was ineffective.

The Third Circuit vacated the District Court's order, citing precedent which held that changes in decisional law may - when paired with certain circumstances - justify Rule 60(b)(6) motion relief. The Third Circuit explained that a district court addressing a Rule 60(b)(6) motion premised on a change in decisional law must examine the full panoply of equitable circumstances in the particular case before rendering a decision. The Third Circuit found that the District Court in Satterfield's case failed to undertake this required equitable analysis; thus, the court remanded the case for proper consideration.

The Third Circuit concluded by further instructing the District Court that on remand the nature of the change in decisional law must be weighed appropriately in the analysis of pertinent equitable factors. It emphasized that McQuiggin implicated the foundational principle of avoiding the conviction of an innocent person and attempted to prevent such a mistake through "the fundamental miscarriage of justice exception." Accordingly, the Third Circuit stated that if Satterfield could make the required credible showing of actual innocence to avail himself of "the fundamental miscarriage of justice exception," equitable analysis would weigh heavily in favor of deeming McQuiggin's change in law an exceptional circumstance justifying Rule 60(b)(6) relief. The Third Circuit then clarified that the nature of the change of law cannot be divorced from that analysis: Satterfield's ability to show actual innocence should not be case determinative. The District Court should weigh all of the equitable factors as guided by precedent.

Extended Summary: Despite repeatedly asserting his innocence, Paul Satterfield was convicted of first degree murder in 1985 and sentenced to life in prison. After years of direct and collateral litigation, Satterfield appeared to emerge victorious when the District Court, acting on his federal habeas petition, found that his ineffective assistance of counsel claim was meritorious. But in an earlier appeal the Third Circuit reversed the order granting habeas relief, after finding that Satterfield's petition was barred by Antiterrorism and Effective Death Penalty Act's ("AEDPA") statute of limitations. On remand, the District Court dismissed Satterfield's petition. In 2014, almost 30 years after his conviction, Satterfield filed a motion with the District Court under Federal Rule of Civil Procedure 60(b)(6) seeking relief from the judgment dismissing his habeas petition. Satterfield argued that the Supreme Court's holding in McQuiggin v. Perkins (2013) was a change in decisional law that served as an extraordinary circumstance upon which Rule 60(b)(6) relief may issue. McQuiggin held that "actual innocence, if proved, serves as a gateway through which a petitioner may pass" to overcome an untimely petition under AEDPA. However, the District Court denied Satterfield's Rule 60(b)(6) motion after determining that McQuiggin was not an extraordinary circumstance. On appeal, the Third Circuit examined whether McQuiggin, either alone or in combination with other equitable factors, was sufficient to invoke relief from final judgment under Rule 60(b)(6) to allow an appellant to raise an otherwise time-barred valid claim that trial counsel was ineffective.

The Third Circuit began its analysis by stating that Rule 60(b) provides litigants with a mechanism by which they may obtain relief from a final judgment "under a limited set of circumstances including fraud, mistake, and newly discovered evidence." Next, it explained that despite the open-ended nature of the provision, a district court may grant relief under Rule 60(b)(6) only in "extraordinary circumstances where, without such relief, an extreme and unexpected hardship would occur." The Third Circuit then considered Satterfield's assertion that a change in relevant decisional law occurring after his petition had been denied was an extraordinary circumstance upon which his Rule 60(b)(6) relief may issue. First, the Third Circuit acknowledged that Satterfield properly characterized McQuiggin as effecting a change in decisional law, since prior to McQuiggin, the Court had never affirmatively held that a showing of actual innocence could serve as an equitable exception to AEDPA's statute of limitations. Second, the Third Circuit determined whether the change in law effected by McQuiggin could properly serve as the basis of a Rule 60(b)(6) motion. The Third Circuit clarified that although change in decisional law alone has "rarely" constituted "extraordinary circumstances" for purposes of a Rule 60(b) motion, the Court has historically refrained from imposing any per se or bright-line rule that a particular change in law is never an extraordinary circumstance. Instead, the Third Circuit stated it has adhered to a "case-dependent analysis" rooted in equity, that manifests as a "flexible, multifactor approach to Rule 60(b)(6) motions," by taking into account all the particulars of a movant's case, even where the proffered ground for relief is a post-judgment change in the law. Accordingly, the Third Circuit held that whenever a petitioner bases a Rule 60(b)(6) motion on a change in decisional law, the court should evaluate the nature of the change along with all of the equitable circumstances and clearly articulate the reasoning underlying its ultimate determination. "Whenever a petitioner bases a Rule 60(b)(6) motion on a change in decisional law, the court should evaluate the nature of the change along with all of the equitable circumstances and clearly articulate the reasoning underlying its ultimate determination." The Third Circuit found that the District Court in Satterfield's case failed to articulate this requisite equitable analysis, and thus it remanded the case for proper consideration.

The Third Circuit concluded by further instructing the District Court that on remand, the nature of the change in decisional law must be weighed appropriately in the analysis of pertinent equitable factors. The Court emphasized that the values encompassed by the fundamental-miscarriage-of-justice exception and which drove the Supreme Court's decision in McQuiggin could not be divorced from other aspects of the Rule 60(b)(6) inquiry. More specifically, it explained that Third Circuit precedent requires a weighing of all the equitable factors at play in a particular case, and the nature of the change in law itself is highly relevant to that analysis. According to the Third Circuit, McQuiggin illustrated that where a petitioner makes an adequate showing of actual innocence, the interest in avoiding the wrongful conviction of an innocent person weighs heavily in favor of permitting the petitioner to pursue his constitutional claims in spite of the statute-of-limitations bar. The Third Circuit further explained that because society's "interest in avoiding the wrongful conviction of an innocent person" is so deeply embedded within our justice system, if a petitioner can make a showing of actual innocence, McQuiggin's change in law is almost certainly an exceptional circumstance. Accordingly, the Third Circuit determined that a proper demonstration of actual innocence by Satterfield could permit Rule 60(b)(6) relief unless the totality of equitable circumstances ultimately weigh heavily in the other direction. The Court then noted several other equitable factors that might come into play, including Satterfield's meritorious ineffective- assistance-of-counsel claim. However, the Court also warned that a credible showing of actual innocence is a "burdensome task" that can be met only by showing that in light of new evidence no reasonable juror could have found the defendant guilty beyond a reasonable doubt.

Ultimately, the Third Circuit vacated the District Court's order with respect to the denial of Satterfield's request for Rule 60(b)(6) relief, and remanded the case for reconsideration of the whether the change of law wrought by McQuiggin, combined with the other circumstances of the case, merited relief under Rule 60(b)(6).

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152190p.pdf

Panel: Ambro, Vanaskie, and Restrepo, Circuit Judges

Argument Date: March 27, 2017

Date of Issued Opinion: September 26, 2017

Docket Number: No. 15-2190

Decided: Vacated and remanded

Case Alert Author: Brooke Hutchins

Counsel: Aren K. Adjoian, Esq. [ARGUED), Arianna J. Freeman, Esq., Counsel for Appellant; Susan E. Affronti, Esq., Simran Dhillon, Esq. [ARGUED], Counsel for Appellees

Author of Opinion: Circuit Judge Vanaskie

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mark Rahdert

    Posted By: Susan DeJarnatt @ 09/27/2017 01:00 PM     3rd Circuit     Comments (0)  

September 25, 2017
  Souryavong v. Lackawanna County - Third Circuit
Headline: Employees Did Not Provide Sufficient Evidence to Prove a Willful Violation of the Fair Labor Standards Act ("FLSA") or Abuse of Discretion in Calculating Attorney's Fees.

Area of Law: Labor Law

Issue(s) Presented: (1) Whether Souryavong and Rolon provided sufficient evidence to prove that Lackawanna County's non-payment of overtime was a willful violation of the FLSA; and (2) whether the District Court abused its discretion by improperly calculating attorney's fees?

Brief Summary: In June 2013, Michael Souryavong and Nelson Rolon filed a complaint alleging non-payment of overtime. They worked two part-time jobs for Lackawanna County accumulating over 40 hours per pay period that went unnoticed by the County. At trial, Souryavong and Rolon presented limited evidence to prove the County's awareness of its FLSA violations. The District Court, therefore, granted the County's motion that argued the lack evidence for the jury to consider if the County willfully violated the FLSA. This is important because a jury finding of a willful violation of the FLSA would have permitted a larger award of damages.

Souryavong, Rolon, and Velez were awarded some damages for the violations by the County that included the award of attorney's fees. The District Court in its opinion significantly reduced the calculated attorney's fees by reducing the estimated hours and hourly rate of work for attorney Pollick. The attorney's fees were further diminished when the court considered the awarded relief.

Extended Summary: Souryavong and Rolon worked two separate part-time jobs for Lackawanna County. The County tracked and paid these employees for the individual jobs. In 2011, the County became aware of its failure to consider the hours in aggregate and thus of its failure to pay employees overtime.

At the trial, Souryavong and Rolon presented limited evidence including: the documentation of non-payment, the testimony of the County's general awareness of FLSA standards, and the email first addressing the issue. Willful violations of FLSA, however, require a more specific awareness by an employer concerning the legality of its actions. The evidence indicated only a general awareness of overtime issues and not specifically a violation of the FLSA. Further, Souryavong and Rolon only provided evidence of overtime violations before the County was aware of its non-payment of overtime. For these reasons the District Court correctly concluded that plaintiffs had failed to prove a willful FLSA violation.

Souryavong and Rolon still obtained a favorable result at trial for the County's actual FLSA violation and were awarded attorney's fees, also contested on appeal. Pollick, attorney for Souryavong and Rolon, argued that the District Court abused its discretion by lowering the estimated hours worked, the hourly rate, and the consideration of the awarded damages. The Supreme Court has held that courts should calculate attorney's fees according a "lodestar" method that considers several objective factors. The Court also held that after calculating the lodestar amount, courts may take into account other factors not included in the lodestar approach to determine a reasonable fee. Perdue v. Kenny A., 559 U.S. 542 (2010). The Circuit Court concluded that the District Court properly followed the lodestar method, and that other factors considered in making the award, including evidence of attorney compensation in the same region for matters of similar stature, were properly supported by the record.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153895p.pdf .

Panel: Ambro, Vanaskie, and Restrepo. Circuit Judges

Argument Date: March 28. 2017

Date of Issued Opinion: September 20, 2017

Docket Numbers: Nos. 15-3895 & 16-2214

Decided: Affirmed.

Case Alert Author: Nina F. del Valle

Counsel: Cynthia L. Pollick, Counsel for Appellants; and Harry T. Coleman, Counsel for Appellee

Author of Opinion: Circuit Judge Vanaskie

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mark Rahdert

    Posted By: Susan DeJarnatt @ 09/25/2017 11:50 AM     3rd Circuit     Comments (0)  

  Kenneth Mann v. Palmerton Area School District - Third Circuit
Headline: High school football coach entitled to qualified immunity because the right to be free from deliberate exposure to a traumatic brain injury after exhibiting signs of a concussion in the context of a violent contact sport was not clearly established in 2011

Area of Law: Constitutional right to bodily integrity, qualified immunity

Issue(s) Presented: Was the constitutional right to be free from deliberate exposure to a traumatic brain injury after exhibiting signs of a concussion in the context of a violent contact sport clearly established in 2011 so that a high school football coach was precluded from claiming qualified immunity? Was the school system that employed the coach liable for failure to implement effective policies and procedures for dealing with traumatic brain injury?

Brief Summary: Sheldon Mann, a high school football player for Palmerton Area School District, suffered a traumatic brain injury after sustaining two violent hits during a football practice in November 2011. Sheldon's parents alleged Palmerton Area School District and its high school head football coach, Chris Walkowiak, violated Sheldon's constitutional right to bodily integrity under a state created danger theory of liability. Specifically, they asserted that Sheldon's constitutional right to bodily integrity was violated by Walkowiak's instruction for Sheldon to continue practicing after exhibiting symptoms of a concussion and Palmerton Area's failure to implement effective policies and procedures for injured student athletes.

The Third Circuit determined that Walkowiak, a state actor sued in his individual capacity, was entitled to qualified immunity. Although the Third Circuit held that a jury could have found Walkowiak violated Sheldon's constitutional rights, which satisfies the first prong of the qualified immunity inquiry, the Third Circuit failed to find that the second prong was satisfied - that the right was clearly established at the time of the injury. The Third Circuit concluded that no appellate case decided prior to November 2011 held that a coach violates a student's constitutional rights to bodily integrity by requiring a student to continue practicing after experiencing a violent hit and showing signs of a concussion. A failure to satisfy the second prong entitled Walkowiak to qualified immunity.

The Third Circuit also held that the Manns failed to prove their claim against Palmerton Area School district. The Third Circuit determined that since there was no evidence of recurring football head injuries or a deliberate exposure of injured players to continued risk, there was no basis for concluding that a policy or custom of Palmerton Area or its failure to provide more intense concussion training to its coaches caused a violation of Sheldon's constitutional rights. Therefore, the Third Circuit affirmed the District Court's decision to grant summary judgment in favor of Walkowiak and Palmerton Area.

Extended Summary: Sheldon Mann, a high school football player for Palmerton Area School District, suffered a traumatic brain injury after sustaining two violent hits during a football practice in November 2011. Sheldon's parents brought a lawsuit against Palmerton Area School District and its high school head football coach, Chris Walkowiak, asserting that Walkowiak had violated Sheldon's constitutional right to bodily integrity under a state created danger theory of liability. They argued that Walkowiak's exercise of authority in telling Sheldon to continue participating in football practice after exhibiting signs of a concussion after enduring a violent hit violated Sheldon's constitutional right to bodily integrity. The Manns also asserted Sheldon's constitutional rights were violated as a result of Palmerton Area's failure to assure that injured student-athletes were medically cleared to resume participation in the sport, failure to enforce and enact proper concussion policies, and failure to train the coaches on a safety protocol for head injuries.

First, the Third Circuit analyzed whether Walkowiak was entitled to qualified immunity under 4s U.S.C. §1983. A qualified immunity defense relieves state actors sued in their individual capacity from liability when it is proved that their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known. Qualified immunity requires a determination of (1) whether the facts alleged by the plaintiff make out a violation of a constitutional right, and (2) whether that right was clearly established at the time of the injury. The Third Circuit concluded that the first prong of the qualified immunity inquiry was satisfied as the Manns had presented sufficient evidence that an injured student-athlete participating in a contact sport has a constitutional right to be protected from further harm, and that a state actor violates this right when the injured student-athlete is required to be exposed to a risk of harm by continuing to practice. The Third Circuit determined that a jury could have found that Walkowiak violated this right when he required Sheldon to continue practicing after sustaining one violent hit and exhibiting behaviors consistent with a concussion.

Next, the Third Circuit analyzed the second prong of the qualified immunity inquiry, whether a constitutional right was clearly established at the time of the injury in November 2011. The Third Circuit concluded that this right was not clearly established, noting that no appellate case decided prior to November 2011 held that a coach violates a student's constitutional rights to bodily integrity by requiring a student to continue practicing after experiencing a violent hit and showing signs of a concussion. For this reason the Third Circuit affirmed the District Court's qualified immunity ruling.

Lastly, the Third Circuit held that the Manns failed to prove their claim against Palmerton Area. Under §1983, local governments may be held liable for their own illegal acts when a plaintiff can demonstrate that the municipality itself, through the implementation of a municipal policy or custom, causes a constitutional violation. The Third Circuit found there was no evidence of a pattern of recurring head injuries in the Palmerton Area football program or that Walkowiak or the coaching staff deliberately exposed injured players to the continuing risk of harm that playing football poses. Therefore, there was no basis for concluding that a policy or custom of Palmerton Area or its failure to provide more intense concussion training to its coaches caused a violation of Sheldon's constitutional rights. The Third Circuit affirmed the District Court's decision to grant summary judgment in favor of Walkowiak and Palmerton Area.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/162821p1.pdf

Panel: McKee, Vanaskie and Rendell, Circuit Judges

Argument Date: April 27, 2017

Date of Issued Opinion: September 22, 2017

Docket Number: No. 16-2821

Decided: Affirmed

Case Alert Author: Katherine A. Osevala

Counsel: Howard J. Bashman, Larry E. Bendesky, Adam J. Pantano, and Robert W. Zimmerman Counsel for Appellant; Thomas A. Specht and Robin B. Snyder, Counsel for Appellee.

Author of Opinion: Circuit Judge Vanaskie

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mark Rahdert

    Posted By: Susan DeJarnatt @ 09/25/2017 11:46 AM     3rd Circuit     Comments (0)  

September 21, 2017
  Estate of Jeffrey H. Ware v. Hospital of the University of Pennsylvania - Third Circuit
Headline: The occurrence of nuclear material at a research university falls within the limits of the Price-Anderson Act.

Area of Law: Civil Procedure; statutory interpretation

Issue(s) Presented: Does the Price Anderson Act apply to a claim that alleges that an individual was harmed by radiation used in a research lab? Did the District Court appropriately exercise supplemental jurisdiction in retaining state-law claims?

Brief Summary:

Barbara Boyer filed a claim on behalf of her deceased husband, Jeffrey Ware, alleging that his death was the result of inadequate safety precautions taken to protect him in the lab where he worked at the University of Pennsylvania. The case was removed to federal court on the basis that the claims were covered under the Price-Anderson Act. The District Court agreed with this assessment and ultimately granted summary judgment in favor of the University of Pennsylvania. On appeal, Boyer argued that her claims are not covered under the Price-Anderson Act and that the District Court inappropriately denied her motion to withdraw while maintaining jurisdiction over her remaining state-law claims. The Third Circuit determined that Boyer's claims fell under the Price-Anderson Act because she alleged "public liability" resulting from a "nuclear incident" within the meaning of those terms in the Act. The Court noted that this Act extends to accidents beyond nuclear power plants or weapons facilities because the Act itself mentions research universities. The Third Circuit further affirmed the District Court's decision to deny Boyer's motion to withdraw and to retain jurisdiction over her additional claims. The District Court had discretionary supplemental jurisdiction over any state-law claims that were related to the federal claims and arose out of the same controversy.

Extended Summary:

Barbara Boyer filed this complaint on behalf of her deceased husband, Jeffrey Ware. Ware worked at the University of Pennsylvania ("UPenn") as a neuroscientist, where he studied biological organisms and the effects of radiation. In 2010, Ware was diagnosed with gliosarcoma, which is a form of brain cancer. Ware received chemotherapy and radiation treatment, but died a year later. As a result, Boyer brought this claim, alleging that Ware's cancer resulted from radiation exposure that UPenn failed to protect against. The defendants removed Boyer's complaint to federal court under the Price-Anderson Act, which provides federal jurisdiction for claims of "public liability" arising from a "nuclear incident." The District Court agreed with this removal and granted summary judgment in favor of UPenn. Boyer appealed, challenging the decision that Price-Anderson Act was applicable to her claims and argued that the Court did not have jurisdiction over her remaining state-law claims.

After reviewing the history of the Price-Anderson Act, the Third Circuit determined that the Act provides federal jurisdiction over any public liability action for any occurrence that has caused physical harm as a result of radioactive properties of nuclear material. The Court reasoned that "a public liability action" would be considered, for the most part, any legal liability resulting from a nuclear incident. The Court found that the definition of nuclear incident was intended to be broad and as a result, the jurisdiction grant of the Price-Anderson Act is also broad. Similarly, the Third Circuit disputed Boyer's argument that the grant only applied to nuclear power plants or weapons facilities by noting that the Price-Anderson Act refers to research universities in some of its provisions.

The Third Circuit further noted that the Price-Anderson Act does not only cover defendants that have indemnity agreements with the NRC. When the Act was amended in 1988, the purpose was to expand the scope of federal jurisdiction. The Court reasoned that limiting the applicability only to defendants with indemnity agreements would be contrary to Congressional intent. In reference to Boyer's argument that the Act only applies to defendants with a license to possess nuclear materials, the Court noted that UPenn has such a license, which was issued by the Pennsylvania Department of Environmental Protection Bureau of Radiation Protection. The Third Circuit reasoned that a license does not need to be issued by the NRC directly because the NRC has authority to enter into agreements with states that allow them to issue licenses.

In response to Boyer's argument that the Act only applies to unintentional releases of nuclear energy, the Court concluded that Boyer's claim alleges negligence, not deliberate exposure, so this exception would not be relevant to this case. The Court also disagreed with Boyer's theory that Congress' failure to adopt language pertaining to nuclear pharmacies or hospital medicine departments means that the Act is not applicable to harm from radiation used for medical care. The Court concluded that this language was not relevant to the facts at hand.

The Court determined that the District Court's denial of Boyer's motion to withdraw was appropriate because Boyer waited too long to file a notice of dismissal. When Boyer filed her notice, UPenn had already filed its answer. Due to the late timing, the District Court had discretion whether or not to allow the withdrawal. The District Court appropriately decided that the defendant would suffer prejudice if the claims were withdrawn because they had already utilized resources to produce expert reports and submit documents. In addition, the District Court had authority to exercise supplemental jurisdiction over the remaining state-law claims. The District Court was correct in determining that the state claims were sufficiently related to the federal claim that they were part of the same case.

The Third Circuit affirmed the District Court's decisions.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163801p.pdf

Panel: Ambro, Restrepo, and Cohen, Circuit Judges.

Argument Date: June 28, 2017

Date of Issued Opinion: September 18, 2017

Docket Number: No. 16-3801

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: Glenn Ellis, Aaron Freiwald, and Mathew Bravette, Counsel for Appellant; Donald Jose, Theresa Sachs, Daniel Sherry, and Donna Modestine, Counsel for Appellees.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mark C. Rahdert

    Posted By: Susan DeJarnatt @ 09/21/2017 10:02 AM     3rd Circuit     Comments (0)  

August 24, 2017
  Roger Vanderklok v. USA - Third Circuit
Headline: No implied cause of action for damages under the First Amendment against a TSA employee for retaliatory prosecution because the role of the TSA in securing public safety far outweighs the benefit of judicially implied damages liability.

Area of Law: First Amendment

Issues Presented: Whether a First Amendment claim for damages against a TSA employee for retaliatory prosecution exists in the context of airport security screenings.

Brief Summary:
The court ruled that there is no First Amendment damages remedy available against airport security screeners who allegedly retaliate against a traveler. The courts have never implied a remedy in a case involving military or national security because Congress is better positioned to evaluate the impact of a new species of litigation against those who act on the public's behalf in the national security context. The expansion of judicially implied causes of action to new contexts is strictly limited. Here, even if no alternative process was available, the role of the TSA in securing public safety was so significant that it precluded the Third Circuit from implying a cause for the plaintiff.

Extended Summary:
Roger Vanderklok packed a heart-monitor and his watch into a PVC pipe, capped it, then placed it inside his carry-on bag and went to the Philadelphia International Airport to board a flight for Miami. Shortly after his bag was x-rayed, Vanderklok had a disagreement with a TSA screener that resulted in his arrest for disorderly conduct, threatening placement of a bomb, and making terroristic threats - thwarting his plans of running a half marathon in Miami.

Shortly after being acquitted of all charges, Vanderklok filed suit for unconstitutional infringement of his First Amendment rights - one of nine claims - against the United States of America, the TSA, the TSA screener, the City of Philadelphia, Philadelphia Police officers and detectives, and an agent of the Department of Homeland Security. The district court dismissed all claims against each defending party, except the TSA screener - Charles Kieser. The district court rejected the argument that he was entitled to qualified immunity against the First Amendment retaliatory prosecution claim, and denied his motion for summary judgment. Keiser then filed the interlocutory appeal.

For the qualified immunity dispute, the court framed a dipositive threshold issue: whether there is a First Amendment right to be free from retaliatory prosecution by a TSA employee. The judiciary created a private cause of action against federal officers for deprivation of constitutional rights - a Bivens claim - but it is exceedingly rare and narrowly applied. The Supreme Court has never implied such an action under the First Amendment, and the Third Circuit has never invoked Bivens on claims of freedom from government retaliation against speech in a dispute with airport security screeners.

According to the Supreme Court, the allowance of this claim is very fact specific and should not be extended beyond the specific clauses of the specific amendments for which a cause of action has already been implied. Airport security and TSA screeners are a new context and category of defendant for a Bivens claim, which strongly weighed against recognizing Vanderklok's claim. However, this factor was not dipositive of the court's inquiry.

Special factors counseling hesitation before authorizing a new kind of litigation were ultimately determinative of the court's refusal to recognize the existence of the Vanderklok's claim. First, under the democratic process, Congress should decide whether to provide for a damages remedy - not the courts. The TSA was created in response to the September 11th attacks for the purpose of securing airports, so Vanderklok's claim implicated the government's response to 9/11. National security is the prerogative of Congress and the President, and judicially imposed damages liability may cause an official to second-guess difficult but necessary decisions concerning national-security policy, or increase the probability that a TSA agent would hesitate in making split-second decisions.

Second, the court surmised that Congress's failure to create damages liability in this context likely was not inadvertent. When it created the TSA, Congress restricted the scope of tort liability for the government and its employees, and created an administrative mechanism to adjudicate TSA complaints - TRIP. The Third Circuit believed it should hesitate to create new remedies when the ones available are already limited by congressional design.

Third, the court found Vanderklok's retaliatory prosecution claim poorly suited to address wrongs by line TSA employees because they are not trained on issues of probable cause, reasonable suspicion, and other constitutional doctrines that govern law enforcement officers. If TSA employees encounter situations requiring action beyond their limited responsibilities, they are instructed to contact local law enforcement. The district court ruled Keiser was not an enforcement officer of the TSA and there was no challenge to whether he acted within the scope of his employment. Since a retaliatory prosecution claim hinges on whether the allegedly offending government employee had probable cause to take some enforcement action, there were practical concerns counseling hesitation from the court.

According to the opinion, when it comes to creating judicial remedies, there must be a balancing of priorities - and the proper balance is one for Congress, not the judiciary, to undertake. In the specific context of airport security screeners, special factors precluded the court from implying a Bivens cause of action for First Amendment retaliation.

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/163422p.pdf

Panel: Judges Smith, Jordan, and Roth

Argument Date: March 23, 2017

Date of Issued Opinion: August 22, 2017

Docket Number: No. 16-3422

Decided: Reversed and remanded

Case Alert Author: Kevin P. McGilloway

Counsel: John C. Connell, Jordan L. Fischer, Jeffrey M. Scott, counsel for Appellants
Nicholas A. Cummins, Charity C. Hyde, counsel for Defendants City of Philadelphia, Kenneth Flaville, Raymond Pinkney, and Michael Wojciechowski
Colin M. Cherico, Anne B. Taylor, counsel for Defendants United States of America, Transportation Security Administration, John S. Pistole, and Jen Johnson
Robyn L. Goldenberg, Thomas B. Malone, counsel for Appellee
Benjamin C. Mizer, Paul J. Fishman, Daniel J. Aguilar, Sharon Swingle, Mary Hampton Mason, Andrea Jae Friedman, counsel for Amicus Appellant

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/24/2017 03:44 PM     3rd Circuit     Comments (0)  

August 19, 2017
  Real Alternatives Inc v. Secretary, Department of Health and Human Services--Third Circuit
Headline: The RFRA only provides relief from substantial government burdens on religious exercise, and passive eligibility for reimbursement of optional contraceptive services is not a substantial burden.

Area of Law: Constitutional

Issues Presented: (1) Whether the Contraceptive Mandate must exempt a secular anti-abortion group with no religious affiliation, and (2) whether an employee's religious beliefs are substantially burdened by the law's requirement that his or her employer's insurance plan cover contraceptives.

Brief Summary:
A single-isssue non-profit company is not similarly situated with a religion because they are different in structure, aim, purpose, and function. Such organizations do not qualify for religious exemptions, which are reserved for houses of worship based on the longstanding government principle of noninterference.

The substantial burden test, not strict scrutiny, is applied to RFRA claims brought by an individual. Such claimants must show that a penalty or benefit be more than incidental in order to amount to a substantial injury, and here the burden is not direct. Employee actions under the ACA are mediated by an insurance company, and any link between the decision to sign up for insurance on the one hand and the provision of contraceptives to a particular individual on the other is far too attenuated to rank as substantial. The fact that the Government may require insurers to offer coverage for certain services that some might find objectionable on religious grounds cannot form the basis of requiring the Government to adjust its programs on behalf of all employees.

Extended Summary:
The Contraceptive Mandate is a specific part of a larger provision in the Affordable Care Act that requires employer-provided health insurance plans to cover an array of preventative services at no cost to participating employees. The service covered by the mandate is FDA-approved contraceptives, and it includes a limited exemption for houses of worship and their integrated auxiliaries.

Appellant, Real Alternatives, is a non-profit, non-religious, anti-abortion organization. While the company does not hold itself out as a religious entity, it considers contraceptives morally wrong and categorically opposes their use; it only hires employees who share the company's stance on contraceptives and abortion.

Appellant alleged that the mandate violates Equal Protection Clause of the 5th Amendment by exempting religious employers but not secular entities that oppose the mandate. The organization contended that it is identically situated to houses of worship because all of its employees by definition oppose contraceptive coverage. This position posits that if churches receive a religious exemption, then so too must non-religious entities receive religious exemptions.

The Third Circuit rejected this argument because Appellant is not similarly situated to a religious employer, but rather mirrors a single-issue interest group instead of a comprehensive belief system. Real Alternatives is an employer with a single mission statement and it cannot guide believers comprehensively through life in a way similar to religion. Based on the company's limited structure and singular purpose, the court found Appellant to be a completely different type of entity than a religion.

After deciding that Appellant was not similarly situated to a religion, the court warned against the far-reaching consequences of permitting such an organization to qualify for the exemption. Framing the exemption so broadly as to encompass any employer who disagrees with any aspect of an underlying law lies in direct contradiction of the judiciary's refusal to broaden religious exemptions in similar contexts. Further, it would conflict with the body of legislative protections for religious freedom that intentionally exclude mere moral philosophy. Finally, it would ignore the historic governmental recognition of a particular sphere of autonomy for houses of worship.

The Court stated that finding all single-issue non-profit organizations to be similarly situated with houses of worship based on their adherence to a shared position on one issue would expand religious exemptions - a legitimate purpose of the highest order - beyond what is constitutionally required. If the mandate was a violation of Real Alternatives' equal protection rights, any law implicating religion would be rendered moot because the exemption would be too easy to invoke. Drawing upon all the foregoing reasons, the Third Circuit ruled Appellant's Equal Protection claim failed as a matter of law.

The employees of Real Alternatives brought a claim under the Religious Freedom and Restoration Act because their religious beliefs prohibit them from using, supporting, or otherwise advocating the use of abortifacients, and from participating in a health insurance plan that covers them. The insurance plan at issue makes employees eligible to be reimbursed for various optional services. The mandate increases the number of choices an employee has when he or she purchases the plan, but it is still up to the employee to decide what to do with those options.

The Court's review of the RFRA claim presented a question of first impression and served as the basis of its precedential holding. The Court framed the issue to be: whether employees who oppose contraceptives on religious grounds but work for secular employers experience a substantial burden on their religious exercise when the Government regulates group health care plans and providers by requiring them to offer coverage for services the employees find incompatible with their religious beliefs.

As a threshold matter to this issue, the Court held that the RFRA only provides relief from substantial government burdens on religious exercise, and that such substantiality may be determined as a matter of law. A substantial burden on the exercise of religion exists only where the Government demands that an individual engage in conduct that seriously violates his or her religious beliefs. The Court very specifically articulated the contours of this rule; it did not want to improperly conflate the determination that a religious belief is sincerely held with the determination that a law or policy substantially burden religious exercise. The Court's review only evaluated the burden itself, not the reasonableness of the religious belief.

Examining the act performed and not the effect of that act, the Court decided as a matter of law that the burden placed on Real Alternatives employees was not substantial. The act complained of was filling out a form that triggers eligibility for reimbursement of services the employee chooses to use. This action was not changed by the mandate nor does it amount to a substantial burden under the RFRA. The possibility that others might avail themselves of objectionable services is no more burdensome than filling out the form. The Court reasoned that checking off a box to gain eligibility for reimbursement does not indicate support or advocacy for any particular service when the actual selection and use is left entirely to the discretion of the employee.

The Court held that there is a material difference between employers arranging or providing an insurance plan that includes contraception coverage and becoming eligible to apply for reimbursement for a service of one's choosing. Passive eligibility for reimbursement of optional services requires no real participation, and that payment for the ability to have coverage does not give an employee an active role in the underlying plan. Thus, the connection between the conduct and the religious belief was too attenuated to create a substantial burden.

The Third Circuit also found the Appellants' position unworkable. The employee's actions under the ACA are mediated by the insurance company and individuals cannot use the RFRA to compel the Government to structure its relations with a third party in a certain way. Medical treatments that some may view as objectionable are as varied as they are numerous, and finding that coverage for one set of objectionable services constitutes a substantial burden would imply that coverage for all such services impose a substantial burden - rendering the health care system totally unworkable.

For Real Alternatives' APA claims, it alleged that the mandate infringes on Constitutional and federal laws - namely, the Affordable Care Act ("ACA"), the Weldon Amendment, and the Church Amendment. Appellant argued that the mandate violates the ACA by requiring coverage of abortion services, but the court found this argument unsubstantiated and largely based on semantics; it found the Weldon Amendment claim failed for the same reasons. The Church Amendment prohibits an individual from being required by the government to assist in any part of a health service program if his assistance would be contrary to his religious beliefs. This count failed for lack of standing, because the employees at issue purchase their health insurance from a company in the health insurance market, not from the Department of Health and Human Services.

Judge Jordan filed a lengthy dissent on the RFRA claim.


Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/161275p.pdf

Panel: Judges Jordan, Greenaway, Jr., and Rendell

Argument Date: November 3, 2016

Date of Issued Opinion: August 4, 2017

Docket Number: No. 16-1275

Decided: Affirmed

Case Alert Author: Kevin P. McGilloway

Counsel: Matthew S. Bowman, David A. Cortman, Kevin H. Theriot, Elissa M. Graves, Randy Wenger, counsel for Appellants; Benjamin C. Mizer Peter J. Smith Mark B. Stern Alisa B. Klein Patrick G. Nemeroff Megan Barbero Joshua M. Salzman (Argued), counsel for Appellees; Richard B. Katskee, Natacha Y. Lam, Seth M. Marnin David L. Barkey, counsel for Amici Curiae Americans United for Separation of Church and State; Anti-Defamation League; Central Conference of American Rabbis; Hadassah, The Women's Zionist Organization of America, Inc.; National Council of Jewish Women; People for the American Way Foundation; Union for Reform Judaism; Women of Reform Judaism.

Author of the Opinion: Judge Rendell

Circuit: Third

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/19/2017 01:51 PM     3rd Circuit     Comments (0)  

August 18, 2017
  Alissa Moon v. Breathless, Inc.-Third Circuit
Headline: Independent contractor's statutory claim for wages trumps arbitration clause because the clause did not clearly and unambiguously signal that she was surrendering her right to pursue statutory claims in court.

Area of Law: Employment, Fair Labor, Arbitration Clauses

Issues Presented: Does the scope of the arbitration clause in a signed employment contract include plaintiff's statutory claims where it does not specify that statutory claims are included?

Brief Summary:
For controversies over arbitration clauses, courts must determine the extent of the clause and then resolve only issues that fall outside of that scope. Here, the clause did not specifically state the types of claims covered and made no mention of any statutory claims, but did make limiting references to contractual disputes. Therefore, the agreement did not clearly and unambiguously signal to plaintiff that she was surrendering her right to pursue statutory claims in court. Because plaintiff relied solely on her statutory - rather than her contractual - rights to recovery, the court allowed her to proceed on her FLSA claims without first seeking arbitration.

Extended Summary:
Appellant, Alissa Moon, signed an Independent Dancer Rental Agreement to rent performance space from Appellee, Breathless Men's Club. The relevant employment provision stated that Moon was an independent contractor and not an employee. The relevant provisions of the arbitration clause stated that disputes arising under the agreement would be resolved by binding arbitration and that - in arbitration - neither party would have the right to litigate in court nor have a trial by jury.

Moon sued the Club for wages and benefits as an employee under the Fair Labor Standards Act, the New Jersey Wage Payment Law, and the New Jersey Wage and Hour Law. The district court granted summary judgment to the Club, holding that Moon's claims fell within the scope of the agreement's arbitration provision.

On appeal, the Third Circuit conducted two inquiries into the scope of the clause: whether the arbitrability of the issue itself was subject to arbitration, and whether the specific claims at issue were within the scope of the clause. Federal courts apply state contract law for matters of contract interpretation, so the Court applied New Jersey contract law to determine the scope of the clause in controversy. The Third Circuit ruled the arbitrability of the issue and Moon's statutory claims both fell outside the scope of the clause.

To answer the first question, the Court found the language insufficient to include arbitrability. Under New Jersey law, there is a presumption that courts must decide whether an issue is arbitratable unless there is clear and unmistakable evidence that the parties agreed otherwise. In the contract at issue, the court found no mention of arbitrability nor the venue for deciding it. Furthermore, the Club conceded to the lower court that courts decide issues of arbitrability. Therefore, the Club did not overcome its presumptive burden and the Court held that it had the power to review the scope of the clause.

To resolve the second question, the Court found the contract's terminology made the arbitration clause applicable only to contract claims, not statutory claims. To encompass statutory rights, an arbitration clause must identify the substantive area it covers, reference the type of claims waived, and explain the difference between arbitration and litigation. The clause at issue only referenced disputes arising under the agreement - not statutory rights. Further, it did not specifically reference claims related to employment or status as an independent contractor. As such, the explanation of arbitration was immaterial because the clause did not appropriately make clear that it applied to statutory claims.

The Club argued that Moon's claim as an employee arose under the agreement because it referred to her as an independent contractor. The court held that, despite the employment provision, Moon's claim for lawful wages and benefits still arose under the FLSA and state statutes, not the agreement itself. Further, the independent contractor label does not preclude a worker from the protection of the Act if the work done follows the usual path of an employee, nor does it change the applicable standards for arbitration clauses.

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/163356p.pdf

Panel: Judges Fisher, Hardiman, Greenaway, Jr.

Argument Date: January 18, 2017

Date of Issued Opinion: August 17, 2017

Docket Number: 16-3356

Decided: reversed and remanded

Case Alert Author: Kevin P. McGilloway

Counsel: Jeremy E. Abay, John K. Weston, counsel for Appellant
Marc J. Gross, Justin P. Kobenschlag, counsel for Appellee

Author of Opinion: Judge Greenaway

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/18/2017 01:30 PM     3rd Circuit     Comments (0)  

  Daryle McNelis v. Pennsylvania Power & Light Co. - Third Circuit
Headline: NRC regulations create essential functions required of a qualified individual under the ADA

Area of Law: Employment; Americans with Disabilities Act

Issue(s) Presented: Do NRC regulations create essential functions under the ADA? Should a court question a physician's fitness determination for an employee?

Brief Summary:

As an armed nuclear security officer for Pennsylvania Power & Light Company (PPL), Daryle McNelis had unrestricted access and was authorized to carry a weapon. Federal regulations for nuclear facilities require them to evaluate security officers' fitness for duty, including a high assurance that officers are trustworthy and do not pose any risk to public safety. In 2012, McNelis started to experience mental health problems, as well as alcohol problems. His erratic behavior was reported to a supervisor, who placed McNelis' unrestricted access on hold. A third party psychiatrist evaluated McNelis and concluded that he was not fit for duty. As a result, McNelis was terminated from his position. McNelis brought a suit against PPL claiming that his termination violated the ADA. The Third Circuit affirmed summary judgment for PPL, concluding that McNelis was not a qualified individual under the ADA because he was unable to perform the essential functions created by the regulations.

Extended Summary:

In 2009, Daryle McNelis began working for the Philadelphia Power & Light Company (PPL) as an armed security officer. In this position, McNelis had unrestricted access to the PPL plant. By 2012, McNelis started to exhibit mental health problems, such as paranoia, as well as a drinking problem. As part of the Nuclear Regulatory Commission's regulations, one of McNelis' co-workers reported concerns about McNelis' behavior. As a result, PPL temporarily withdrew McNelis' unrestricted access. McNelis was evaluated by a psychologist, who determined that McNelis was not fit for duty. As a result, PPL terminated McNelis' employment. McNelis filed a suit, claiming that his termination violated the Americans with Disabilities Act. The District Court found that his termination was based on the fact that he lacked a mandated job requirement under the NRC.

The Third Circuit affirmed the District Court's grant of summary judgment, finding that McNelis would not be considered a qualified individual under the ADA. In order for someone to satisfy the qualified individual prong, he/she must satisfy the prerequisites for the position and must be able to perform the essential functions of the position. The Court determined that McNelis was unable to perform the essential functions of his position because he did not have unrestricted security access and he was deemed unfit for duty. Both of these things are required in order to work as an armed security guard in a nuclear power plant. The Court determined that the NRC regulations created essential functions of the job under the ADA.

The Court further noted that the NRC has created an employee screening system for certain traits or behaviors that may endanger the public. In doing so, the NRC cannot exempt individuals with disabilities from this screening process, as their priority is to ensure the protection of the public. The ADA applies differently to positions that implicate the public welfare.

In response to one of McNelis' contentions, the Third Circuit concluded that McNelis was given the full opportunity to dispute the evaluation done by Dr. Thompson. The NRC regulations provide for certain review procedures, which allowed McNelis the opportunity to dispute the perceptions of Dr. Thompson and PPL. McNelis was not entitled to more review than the NRC regulations provided, as PPL appropriately followed the procedures that are outlined in the NRC regulations. In addition, the Court determined that even though PPL generally allows employees a chance to comply with treatment recommendations, they are not obligated to do so as a matter of law.

The Third Circuit disagreed with McNelis' assertion that PPL was not entitled to rely on Dr. Thompson's evaluation. Referencing the Supreme Court, the Third Circuit noted that a court should not doubt a physician's evaluation that an employee failed to meet the appropriate regulatory standards for his/her position. In addition, the NRC regulations prohibit PPL from second-guessing the fitness determination after it was made.

The Third Circuit affirmed the judgment of the District Court.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163883p.pdf

Panel: Hardiman, Roth, and Fisher, Circuit Judges

Argument Date: May 26, 2017

Date of Issued Opinion: August 15, 2017

Docket Number: No. 16-3883

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: Ralph Lamar and Marc Weinstein, Counsel for Appellant; Darren Creasy, Counsel for Appellee

Author of Opinion: Circuit Judge Hardiman

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/18/2017 01:04 PM     3rd Circuit     Comments (0)  

August 10, 2017
  USA v. Joseph Ferriero - Third Circuit
Headline: Integrity-undermining intent is not required under the New Jersey bribery statute; New Jersey bribery statute is constitutional

Area of Law: RICO; Wire Fraud

Issue(s) Presented: Does the New Jersey bribery statute require integrity-undermining intent? Is the New Jersey bribery statute unconstitutionally vague? Does the Supreme Court decision in McDonnell impact the outcome of this case?

Brief Summary:

Joseph Ferriero was the chairman of the Bergen County Democratic Organization. He was involved in nominating Democrats in local elections and helped raise money for the Democratic Party. He also helped to connect vendors with elected Democrats. Ferriero made a deal with John Carrino, a vendor, to recommend his firm, C3, to local officials. In return, Ferriero would receive commissions on the contracts that hired the firm. Ultimately, Ferriero was convicted for violations of the Travel Act, RICO, and the federal wire fraud statute. The Third Circuit affirmed these convictions, finding the Travel Act and RICO did not require proof of integrity-undermining intent for an individual to be convicted. The Court further ruled that party officials were intended to be included under the Travel Act and Rico, that the New Jersey bribery statute was constitutional, and that the definition of "official act" determined in McDonnell v. United States did not impact the outcome of this case.

Extended Summary:

Joseph Ferriero was the chairman of the Bergen County Democratic Organization. As party chair, Ferriero was responsible for raising money for the Democratic Party, helping elect candidates, and connecting vendors with elected Democrats. Ferriero entered into a contract with John Carrino, who owned C3, a corporation that provided notification systems for local governments. Ferriero and Carrino agreed that Ferriero would recommend C3 to local officials and in return, Ferriero would receive commissions when Carrino's firm was hired. None of the local officials were aware of the agreement between Ferriero and Carrino. At least four towns hired C3 and Ferriero received at least $11,875 in commissions. Cliffside Park was one of the towns that Ferriero approached about hiring Carrino's firm. However, the mayor was concerned about Ferriero's role and sent an email inquiring into the owners of the corporation. Carrino responded to the email with no mention of Ferriero and Cliffside Park ultimately retained Carrino's services. Ferriero was indicted for violations of RICO, the Travel Act, and wire fraud statutes. Ferriero moved for acquittal, which the court denied. He was sentenced to prison and ordered to forfeit any profits that he made.

The Third Circuit affirmed Ferriero's conviction under the Travel Act and RICO, finding that the government did not need to demonstrate that Ferriero had the intent to undermine the integrity of a public action. The Court noted that the current New Jersey bribery statute should be applied to public officials or voters and "prohibits bribing those persons to secure a particular decision, opinion, recommendation, or vote." Ferriero's argument that the previous statutory language of integrity-undermining intent should be read into the current statute is not supported by any previous court decisions.

The Third Circuit affirmed that the District Court appropriately instructed the jury regarding the nexus element of the RICO charge. In order for the nexus element to be satisfied, there must be a strong connection between the defendant, his/her involvement in the enterprise's affairs, and the pattern of racketeering. The District Court correctly interpreted this statute and instructed the jury that Ferriero's participation in the enterprise's affairs by means of, by consequence of, by reason of, by agency of, or by instrumentality of a pattern of racketeering activity is sufficient to satisfy the nexus element.

The Court affirmed that a rational juror could conclude that the bribery scheme was a means by which Ferriero participated in the conduct of business. A rational juror could have determined that the BCDO's affairs extended further than the official duties. The bribery scheme did not have to occur in the official capacity because Ferriero's participation in the conduct of the party's affairs was sufficient. The Court further noted that there was sufficient evidence to demonstrate that Ferriero participated in the conduct of BCDO's affairs by means of a pattern of bribery.

The Third Circuit concluded that there was sufficient evidence for a rational juror to determine that the representation made in Carrino's email was materially false and fraudulent. Ferriero argued that the failure to specify his involvement in the contract was an omission that should not be considered a false representation because he did not owe a duty to disclose. The Court noted that most cases that use that standard have involved a situation where the defendant did not make an actual representation and instead, remained silent. Carrino's email involves an actual representation that was made to Cliffside Park and therefore, a jury is capable of determining whether the representation was false or fraudulent. The Court determined that there was sufficient evidence for a rational juror to make this determination.

The Third Circuit disagreed with Ferriero's argument that Congress did not intend for party officials to be punishable for bribery under RICO or the Travel Act. The Court found that the definition of bribery found in the Travel Act and RICO should be read broadly to include all relationships that involve a special trust, which should be protected from the corrupt influence of bribery. Party officials fall into this category of occupying a position of special trust and fall within the individuals who are punishable under RICO and the Travel Act.

The Court also concluded that New Jersey's bribery statute is not unconstitutionally vague or overbroad. The statute offers specificity in describing the acceptance of a benefit that would be considered bribery. Further, the statute gives public officials and party officials a reasonable opportunity to understand what conduct is prohibited. In addition, the Court determined that there are no applications of the bribery law that can be deemed unconstitutional. This statute does not punish First Amendment activity because it only punishes corrupt agreements that are not protected under the First Amendment. The Court concluded that there was no sufficient basis to deem the bribery statute as unconstitutional.

Finally, the Third Circuit concluded that the Supreme Court decision in McDonnell v. United States did not have an effect on the outcome of this case. In McDonnell, the Supreme Court held that setting up a meeting or talking to another official were not sufficient to be considered "official acts" under the federal bribery statute. The Supreme Court rejected a broad interpretation of this statute that would encompass almost all activities of a public official. The Third Circuit determined that statute interpretation used in McDonnell should not be applied to the New Jersey bribery statute in this case because the New Jersey statute already uses a narrow and specific interpretation.

The Third Circuit affirmed the judgments of conviction against Ferriero.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/154064p.pdf

Panel: Hardiman and Scirica, Circuit Judges; Rosenthal, District Judge

Argument Date: November 1, 2016

Date of Issued Opinion: August 4, 2017

Docket Number: No. 15-4064

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: Peter Goldberger, Counsel for Appellant; Mark Coyne and Bruce Keller, Counsel for Appellee

Author of Opinion: Circuit Judge Scirica

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/10/2017 11:43 AM     3rd Circuit     Comments (0)  

August 7, 2017
  Charles Blackledge v. Olga Blackledge - Third Circuit
Headline: The Third Circuit held that shared parental intent of a settled purpose is sufficient to constitute a habitual residence; split custody should be considered as one factor in determining habitual residence

Area of Law: Custody; Hague Convention on Child Abduction

Issue(s) Presented: Is a retention date determined by the original date of consent? Is a "settled purpose" enough to demonstrate habitual residence? Does split custody give rise to alternating habitual residences?

Brief Summary:

Petitioner filed a petition under the Hague Convention, seeking the return of his son, J.B., to Germany. J.B. and Respondent had been residing in Pittsburgh for a year at the time the petition was filed. The District Court denied the petition, finding that retention was not wrongful under the Hague Convention. The Third Circuit ultimately affirmed, while clarifying some minor errors in the District Court's reasoning. The Court found that the District Court determined an incorrect retention date by focusing on the original consent given by the Petitioner. When Petitioner filed the petition under the Hague Convention, he sufficiently withdrew his consent. The Third Circuit further found error in the District Court's determination that there was no evidence of an agreement between Respondent and Petitioner. However, the Court concluded that even though there was an agreement, the shared parental intent factor still demonstrated that the United States was the appropriate habitual residence. After clarifying these errors, the Third Circuit affirmed, finding that denial of Petitioner's petition was appropriate.

Extended Summary:

Petitioner filed a petition alleging that his wife, the Respondent, was acting in violation of the Hague Convention on the Civil Aspects of International Child Abduction by retaining their son in the United States. Petitioner, Respondent, and their son, J.B., lived in various countries during his childhood. In Spring 2011, Petitioner moved to Germany to work as a patent agent. During this same time, Respondent and J.B. moved to Pittsburgh, where they lived for two years. In August 2013, Respondent and J.B. returned to Germany, where J.B. attended school and Respondent was working on a Ph.D. program. In August 2015, Petitioner and Respondent were having difficulties in their marriage and Respondent and J.B. returned to Pittsburgh, with Petitioner's agreement, to finish her Ph.D. While in Pittsburgh, J.B. attended second grade, where he succeeded academically and he was very involved in extracurricular activities as well. In February 2016, Petitioner and Respondent corresponded through email about the living status of J.B. These emails discussed an agreement that J.B. was to return to Germany for the following school year. However, Respondent insisted that their son should not be changing schools each year. During this ongoing dispute, Respondent filed for divorce and received an interim custody order. With no resolution as to whether J.B. would return to Germany, Petitioner filed a petition under the Hague Convention, seeking J.B.'s return.

The District Court held a bench trial and used the email correspondence, testimony from Petitioner and Respondent, as well as testimony from J.B.'s school, to determine the appropriate retention date to be August 2016. Based on this, the District Court found that J.B.'s habitual residence was in Pittsburgh and therefore, retention was not wrongful under the Hague Convention. The District Court denied the petition.

The Third Circuit determined that the August retention date adopted by the District Court was inappropriate. The Court found that the District Court erred by focusing on the Petitioner's original consent and not focusing on the subsequent communications between Petitioner and Respondent. The Third Circuit concluded that the appropriate retention date was July 6, when Petitioner filed his Hague Convention petition and fully withdrew his prior consent.

The Third Circuit held that the District Court erred in determining that there was no credible evidence that the parties had an agreement that J.B. remain in Pittsburgh for a specific duration. The Court found that there was specific evidence on record that showcased an agreement of this nature. Habitual residence is determined by the parents' shared intent as to a settled purpose for the child's move to Pittsburgh and the child's acclimatization to the claimed residence. The Third Circuit concluded that both factors still favored the United States as J.B.'s habitual residence. Petitioner and Respondent intended J.B.'s stay in Pittsburgh to have a settled purpose. He resumed a normal and routine life in Pittsburgh. The Court determined that parties' agreement for J.B. to return to Germany did not diminish the parties' intention for J.B. to live a settled life in Pittsburgh. J.B. was also acclimatized to his life in Pittsburgh. For these reasons, the Third Circuit found that the District Court was ultimately correct in deciding that the United States was J.B.'s habitual residence at the time.

The Third Circuit further addressed the idea of "shuttle custody," where a child splits time between his parents' countries of residence. The Court determined that an agreement to alternate custody in different countries does not necessarily equate to alternating habitual residences. Instead, the Court held that this type of agreement should be considered as a factor in determining whether the parents intended the child's move to have a degree of settled purpose. The Court found that the totality of the circumstances, including the retention date, degree of settled purpose, and shared parental intent, supported the finding that J.B.'s habitual residence was the United States.

Petitioner argued that, due to the District Court's error on the retention date, certain evidence regarding J.B.'s acclimatization should be inadmissible. In response, the Third Circuit determined that this error was harmless and the record regarding acclimation was sufficient based on the correct retention date. The District Court's determination that J.B. had acclimated to the United States was still appropriate.

The Third Circuit affirmed the District Court's decision to deny the petition.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163667p.pdf

Panel: Ambro, Krause, and Nygaard, Circuit Judges

Argument Date: May 19, 2017

Date of Issued Opinion: August 3, 2017

Docket Number: No. 16-3667

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: James Martin and Michael Yingling, Counsel for Appellant; Barbara Ernsberger, Counsel for Appellee.

Author of Opinion: Circuit Judge Krause

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/07/2017 09:43 AM     3rd Circuit     Comments (0)  

August 3, 2017
  Vance Haskell v. Superintendent Greene SCI-Third Circuit
Headline: The actual prejudice standard of Brecht does not apply to claims on habeas, where the state has knowingly presented or knowingly failed to correct perjured testimony. A reasonable likelihood that the perjured testimony affected the judgment of the jury is all that is required.

Area of Law: Criminal Procedure

Issues Presented: Is the defendant entitled to relief once he has shown a reasonable likelihood the false testimony could have affected the judgment of the jury, or must he also show the perjured testimony caused him actual prejudice?

Brief Summary:
Pennsylvania knowingly used perjured eyewitness testimony to convict a man of murder. The defendant filed a habeas petition in federal court for due process violations. The Third Circuit found a reasonable likelihood that the false testimony could have affected the judgment of the jury, and granted him relief. The court further held that it is unnecessary for a defendant to show that such an error had a substantial and injurious effect on the verdict because, when the state has corrupted the truth-seeking function of the trial by knowingly presenting or failing to correct perjured testimony, the threat to a defendant's constitutional rights is at its apex and the state's interest are their lowest.

Extended Summary:
Haskell was convicted of first-degree murder and several other crimes in connection with the 1994 shooting death of a man in Erie, Pennsylvania. To secure his conviction, the state's prosecutor relied heavily on testimony from four eyewitnesses. Of the four witnesses, only one - Antoinette Blue - gave consistent testimony, the other three either recanted their account or had previously denied being able to identify the shooter.

At trial, Blue claimed she expected nothing in return from the Commonwealth in exchange for her testimony, but both she and the prosecutor knew the state's help with Blue's own pending criminal matter was the quid pro quo for her testimony. The prosecutor failed to correct her statement, and even used her "untainted" participation for leverage in his closing argument.

Haskell filed a habeas petition challenging his conviction as tainted by perjured testimony in violation of his 14th amendment due process rights, to which the district court denied relief. It held that Blue's testimony was indeed false and that the prosecutor knew or should have known the same, but that Haskell failed to show that the perjured testimony had a substantial and injurious effect or influence on the jury's verdict - the Brecht standard.

For federal cases on direct review of perjured testimony in a state prosecution, the materiality test applies a reasonable likelihood standard. Under this standard, Haskell must establish that: (1) Blue committed perjury, (2) the Commonwealth knew or should have known that the testimony was false, (3) the false testimony was not corrected, and (4) there is a reasonable likelihood that the perjured testimony could have affected the judgment of the jury. Uncontested facts established the first three elements, and the Third Circuit reasoned that Blue's central role in the state's case coupled with knowledge of the benefit she received posed a reasonable likelihood of affecting the jury's judgment.

This standard puts the burden on the prosecution to show, beyond a reasonable doubt, that the perjured testimony was a harmless error. Thus, the materiality and harmless error - Brecht - standards merge; whenever the applicable materiality test is derived from the reasonable likelihood standard, the test for materiality supplies the test for harmlessness.

But the issue on appeal, as framed by the Third Circuit, is whether the Brecht standard also applies to such a case under collateral review - here, a habeas petition. According to the Brecht standard, when constitutional trial errors are raised in habeas proceedings - as opposed to on direct review - the defendant must prove actual prejudice. This standard puts the burden on the defendant to show that the perjured testimony had a substantial and injurious effect or influence on the jury's verdict. The majority of circuit courts have ruled that Brecht does indeed apply.

The Third Circuit ruled against the majority, stating that Brecht does not apply when the state has knowingly presented or failed to correct perjured testimony. The court began its reasoning by citing exceptions to Brecht, such as when a state violates the Brady rule by suppressing evidence, and then pointed out that the presentation of perjured testimony is one of three errors that implicate Brady. Directly addressing the argument of opposing circuits, the court said the materiality standard for false testimony should be lower because fabrication of the truth is an even greater error than suppression of the truth; it is the duty and responsibility of the state to elicit the truth and correct what is false.

The Third Circuit also found that the facts of this case did not reach the three main concerns of Supreme Court's Brecht rule, rather they fell closer to the Court's rule that a conviction obtained by the knowing use of perjured testimony is fundamentally unfair. The Third Circuit reasoned that when the state knowingly presents perjured testimony, it deprives the defendant of his constitutional right to due process and obtains a conviction through deceit. Perjured testimony cases involve a corruption of the truth-seeking function of the trial process by the state itself, and concerns of finality do not trump those of justice. Further, there is little chance that excluding perjured testimony claims from Brecht analysis will degrade the prominence of the trial itself, because the trial is where the perjury occurs.

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/153427p.pdf

Panel: Judges Ambro, Vanaskie, and Restrepo

Argument Date: March 27, 2017

Date of Issued Opinion: August 1, 2017

Docket Number: No. 15-3427

Decided: reversed and remanded

Case Alert Author: Kevin P. McGilloway

Counsel: Lisa B. Freeland, Elisa A. Long, counsel for Defendant
Mark W. Richmond, counsel for Prosecution

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/03/2017 12:51 PM     3rd Circuit     Comments (0)  

July 26, 2017
  Steven Trzaska v. L'Oreal USA, Inc. - Third Circuit
Headline: An implicit threat by an employer that would result in the disregard of obligatory ethical standards of one's profession violates a clear mandate of public policy within the meaning of New Jersey's Conscientious Employee Protection Act

Area of Law: Employment Law

Issue(s) Presented: Can the rules of professional conduct governing attorneys serve as a basis to bring a CEPA claim alleging that employer fired employee who refused to violate such rules?

Brief Summary:

Steven Trzaska was working as a patent attorney for L'Oréal USA, Inc. The patent team had to meet a certain annual quota or face losing their jobs. After Trzaska approached his superiors with concerns that he was being expected to violate ethical standards in order to meet this quota, he was fired. Trzaska sued L'Oréal for wrongful retaliatory discharge. The Third Circuit reversed the dismissal of the claim, determining that the rules of professional conduct were mandates of public policy and that Trzaska had sufficiently pleaded facts showing that his employer implicitly directed him to disregard those ethical obligations, supporting a CEPA claim.



Extended Summary:

Steven Trzaska was the head of the patent team for L'Oréal USA. His team was in charge of determining a product's patentability and submitting patent applications to the United States Patent and Trademark Office (USPTO). As an attorney, Trzaska was required to follow the Rules of Professional Conduct established by the Supreme Court of Pennsylvania, as well as the rules provided by the USPTO. These ethical standards prevented attorneys from filing bad-faith patent applications. The patent team was given an annual quota of 40 patent applications. If they were unable to meet this quota, management said that their careers could be negatively impacted. Trzaska was concerned that he would be expected to file frivolous patents in order to meet the quota, so he brought these concerns to his superiors. After making it known that he would not violate the rules of professional conduct, Trzaska was offered two severance packages to leave the company. When he did not accept, L'Oréal fired him. In response, Trzaska filed a claim for wrongful retaliatory discharge in violation of the New Jersey Conscientious Employee Protection Act (CEPA) against L'Oréal USA and L'Oréal, S.A.

The Third Circuit reversed the District Court's decision to dismiss, finding that Trzaska had sufficient grounds to bring a CEPA claim. The CEPA protects employees from retaliatory actions when an employee refuses to participate in an activity or policy that he/she believes is in violation of a law or rule pursuant to law. The Court concluded that Trzaska's allegation that L'Oréal was instructing or threatening its patent attorneys to disregard the rules of professional conduct is a violation of the public policy mandate under CEPA. The Third Circuit determined that CEPA protection was triggered because a patent itself is relevant to public policy and violation of the rules of professional conduct can harm the public's interest. For these reasons, termination for failure to disregard the ethical obligations of one's profession creates an adequate CEPA claim.

The Third Circuit also reversed the District Court's holding that even if there was sufficient basis to bring a claim, Trzaska failed to adequately plead that claim. The Court concluded that Trzaska had met the standard of review, whether a complaint provides enough facts to raise a reasonable expectation that a cause of action can be determined through discovery. Trzaska's complaint alleged the company policies, as well as the threatened termination of employees. These allegations supported Trzaska's reasonable belief that he would be fired if he did not disregard his ethical obligations sufficient to proceed to discovery.

The Third Circuit denied L'Oréal, S.A.'s motion to dismiss the appeal due to the failure file a notice of appeal. The Court held that there was a connection between the appeal against L'Oréal USA and L'Oréal, S.A. and there was an inferred intent to appeal both orders The Third Circuit determined that there was clear intent that Trzaska wanted to appeal against both orders. In addition, L'Oréal, S.A. was still given the full opportunity to brief the issues.

Circuit Judge Chagares dissented in part, noting that he would have found that Trzaska did not sufficiently plead a CEPA claim because a heightened standard should be applied to Trzaska as an attorney and he failed to plead that L'Oréal demanded that he violate his professional obligations.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153810p.pdf

Panel: Ambro, Chagares, and Fuentes, Circuit Judges

Argument Date: November 16, 2017

Date of Issued Opinion: July 25, 2017

Docket Number: No. 15-3810

Decided: Reversed and Remanded

Case Alert Author: Kristina Flatley

Counsel: Daniel Bencivenga and Harold Goodman, Counsel for Appellant; George Barbatsuly, Laura Scully, Christopher Carton, and Eric Savage, Counsel for Appellees.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/26/2017 03:07 PM     3rd Circuit     Comments (0)  

  Steven Trzaska v. L'Oreal USA, Inc. - Third Circuit
Headline: An implicit threat by an employer that would result in the disregard of obligatory ethical standards of one's profession violates a clear mandate of public policy within the meaning of New Jersey's Conscientious Employee Protection Act

Area of Law: Employment Law

Issue(s) Presented: Can the rules of professional conduct governing attorneys serve as a basis to bring a CEPA claim alleging that employer fired employee who refused to violate such rules?

Brief Summary:

Steven Trzaska was working as a patent attorney for L'Oréal USA, Inc. The patent team had to meet a certain annual quota or face losing their jobs. After Trzaska approached his superiors with concerns that he was being expected to violate ethical standards in order to meet this quota, he was fired. Trzaska sued L'Oréal for wrongful retaliatory discharge. The Third Circuit reversed the dismissal of the claim, determining that the rules of professional conduct were mandates of public policy and that Trzaska had sufficiently pleaded facts showing that his employer implicitly directed him to disregard those ethical obligations, supporting a CEPA claim.



Extended Summary:

Steven Trzaska was the head of the patent team for L'Oréal USA. His team was in charge of determining a product's patentability and submitting patent applications to the United States Patent and Trademark Office (USPTO). As an attorney, Trzaska was required to follow the Rules of Professional Conduct established by the Supreme Court of Pennsylvania, as well as the rules provided by the USPTO. These ethical standards prevented attorneys from filing bad-faith patent applications. The patent team was given an annual quota of 40 patent applications. If they were unable to meet this quota, management said that their careers could be negatively impacted. Trzaska was concerned that he would be expected to file frivolous patents in order to meet the quota, so he brought these concerns to his superiors. After making it known that he would not violate the rules of professional conduct, Trzaska was offered two severance packages to leave the company. When he did not accept, L'Oréal fired him. In response, Trzaska filed a claim for wrongful retaliatory discharge in violation of the New Jersey Conscientious Employee Protection Act (CEPA) against L'Oréal USA and L'Oréal, S.A.

The Third Circuit reversed the District Court's decision to dismiss, finding that Trzaska had sufficient grounds to bring a CEPA claim. The CEPA protects employees from retaliatory actions when an employee refuses to participate in an activity or policy that he/she believes is in violation of a law or rule pursuant to law. The Court concluded that Trzaska's allegation that L'Oréal was instructing or threatening its patent attorneys to disregard the rules of professional conduct is a violation of the public policy mandate under CEPA. The Third Circuit determined that CEPA protection was triggered because a patent itself is relevant to public policy and violation of the rules of professional conduct can harm the public's interest. For these reasons, termination for failure to disregard the ethical obligations of one's profession creates an adequate CEPA claim.

The Third Circuit also reversed the District Court's holding that even if there was sufficient basis to bring a claim, Trzaska failed to adequately plead that claim. The Court concluded that Trzaska had met the standard of review, whether a complaint provides enough facts to raise a reasonable expectation that a cause of action can be determined through discovery. Trzaska's complaint alleged the company policies, as well as the threatened termination of employees. These allegations supported Trzaska's reasonable belief that he would be fired if he did not disregard his ethical obligations sufficient to proceed to discovery.

The Third Circuit denied L'Oréal, S.A.'s motion to dismiss the appeal due to the failure file a notice of appeal. The Court held that there was a connection between the appeal against L'Oréal USA and L'Oréal, S.A. and there was an inferred intent to appeal both orders The Third Circuit determined that there was clear intent that Trzaska wanted to appeal against both orders. In addition, L'Oréal, S.A. was still given the full opportunity to brief the issues.

Circuit Judge Chagares dissented in part, noting that he would have found that Trzaska did not sufficiently plead a CEPA claim because a heightened standard should be applied to Trzaska as an attorney and he failed to plead that L'Oréal demanded that he violate his professional obligations.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153810p.pdf

Panel: Ambro, Chagares, and Fuentes, Circuit Judges

Argument Date: November 16, 2017

Date of Issued Opinion: July 25, 2017

Docket Number: No. 15-3810

Decided: Reversed and Remanded

Case Alert Author: Kristina Flatley

Counsel: Daniel Bencivenga and Harold Goodman, Counsel for Appellant; George Barbatsuly, Laura Scully, Christopher Carton, and Eric Savage, Counsel for Appellees.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/26/2017 03:07 PM     3rd Circuit     Comments (0)  

July 21, 2017
  Semcrude L.P. v. J. Aron & Co. - Third Circuit
Headline: Downstream Buyers are Considered Buyers-for-Value and Purchased Oil From Bankruptcy Debtor/Midstream Purchaser Free of Security Interests Claimed by Oil Producers

Area of Law: Fraud; Bankruptcy

Issue(s) Presented: Did J. Aron and BP satisfy the three requirements of the buyer-for-value defense? Was jurisdiction of the District Court and Bankruptcy Court appropriate under Title 11? Is constructive knowledge sufficient to overcome the knowledge elements of the buyer-for-value defense?

Brief Summary:

In the aftermath of the bankruptcy of SemGroup, a midstream purchaser, the oil producers filed a suit against J. Aron and BP oil, the downstream purchasers, to obtain full payment for the oil. The District Court granted summary judgment in favor of J. Aron and BP on recommendation of the Bankruptcy Court. The Third Circuit affirmed, finding that the Producers had not perfected their claimed security interests, and that J. Aron and BP were buyers-for-value, which allowed them to purchase the oil free of any secured interest. In addition, the Third Circuit found no sufficient evidence for the fraud claim brought against J. Aron and BP.

Extended Summary:

SemGroup operated as a "midstream" company because SemGroup purchased oil from producers and sold that oil to downstream purchasers. As a result, the oil producers and downstream purchasers were both effected when SemGroup filed for bankruptcy. Based on previous agreements, the downstream purchasers were protected from SemGroup's insolvency and were paid in full after the bankruptcy. However, the producers made no protection agreement and were only paid in part. As a result, the producers filed claims against J. Aron and BP, the downstream purchasers, to recover unpaid debts. The Bankruptcy Court recommended summary judgment in favor of J. Aron and BP, finding that there was no evidence of fraud and that both companies were free of any security interest as buyers for value. The District Court adopted the Bankruptcy Court's recommendation for summary judgment.

The Third Circuit affirmed that the Bankruptcy Court and the District Court had jurisdiction under 28 U.S.C. § 157(c)(1) and 28 U.S.C. § 1334(b) because the proceedings were related to cases under title 11. Both Courts appropriately exercised related-to jurisdiction because the proceedings had a potential effect on the bankruptcy estate.

The Court affirmed that Delaware and Oklahoma law govern perfection and that J. Aron and BP qualified as buyers for value because the Producers' security interests were not perfected. The Producers claimed that their security interest in the oil continued after the oil was resold to J. Aron and BP. Under U.C.C. § 9-317(b), if a security interest were not perfected, J. Aron and BP would take the oil free of that security interest, unless they actually knew of the security interest. The Producers also argued that Texas or Kansas law should govern perfection. Under U.C.C. Article 9, the local law of the jurisdiction where a debtor is located should govern perfection. The Bankruptcy and District Courts appropriately applied Delaware's choice-of-law rules because Delaware is the forum state. Under Delaware law, a financing statement must be filed in order to have perfected security interests. The Producers failed to make this filing, and thus their interests are unperfected.

The Third Circuit determined that J. Aron and BP satisfied the second requirement of the buyer-for-value defense because they purchased oil on credit per industry custom. Under U.C.C. § 1-204, J. Arons and BP's purchases on credit were sufficient to satisfy the value requirement.

The Third Circuit also affirmed the District Court in finding that no reasonable fact finder would determine that J. Aron or BP had knowledge of the Producer's security interest. Under U.C.C. § 1-202(b), actual knowledge is required to negate the third element of the buyer-for-value defense. The Court affirmed that constructive knowledge is not sufficient to defeat this defense. J. Aron and BP satisfied the three elements required to demonstrate the buyer-for-value defense. For this reason, summary judgment was appropriate. The Court declined to determine whether they were also buyers in the ordinary course.

The Third Circuit affirmed the District Court's grant of summary judgment against the Producers' fraud claim. The Court determined that the Producers had the opportunity to fully oppose summary judgment during the discovery process. The Producers were unable to demonstrate direct evidence in the record to suggest that J. Aron or BP participated in fraud or that they even knew most of the producers. The business arrangement between SemGroup, J. Aron and BP , which involved options trading in addition to the purchase of oil, was not sufficient to demonstrate that J. Aron and BP knew that they were taking oil that had not been paid for.

Finally, the Court determined that the District Court's grant of summary judgment against the Oklahoma Producers was appropriate because the Oklahoma Production Revenue Standards Act (PRSA) did not create an implied trust or impose any duties on J. Aron. The Oklahoma Producers argued that, under the PRSA, an implied trust would be created against J. Aron and therefore, it would be responsible for full payment of the oil. The Court determined that the PRSA was not intended to be applied to downstream purchasers, like J. Aron, and that the language in the statute does not suggest the creation of an implied trust that travels down the stream of commerce. The Third Circuit further concluded that the 2010 Lien Act does not apply to this case because it was passed after SemGroup declared bankruptcy.

The Third Circuit affirmed the rulings of both the Bankruptcy and District Courts.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153094p.pdf

Panel: Ambro, Jordan, and Fisher, Circuit Judges

Argument Date: April 4, 2017

Date of Issued Opinion: July 19, 2017

Docket Number: Nos. 15-3094, 15-3095, 15-3096, 15-3097, 15-3121, 15-3123, 15-3124

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: Blake Bailey, Paul Moak, Basil Umari, Peter Goodman, Sarah Jorgensen, Michael Carney, Hugh Ray, Lewis LeClair, Adam Landis, and Matthew McGuire, Counsel for Anstine & Musgrove Inc.; Don Beskrone, Stacy Newman, Boaz Morag, Rishi Zutshi, and Thomas Moloney, Counsel for J. Aron & Co.; James Carr, Melissa Byroade, David Zalman, Monica Hanna, Kevin Capuzzi, and Jennifer Hoover, Counsel for BP Oil Supply Co.; Ian Bifferato, Thomas Driscoll, III, Kevin Collins, Mark Collins, John Knight, Michael Romanczuk, Zachary Shapiro, L. Katherine Good, Maris Kandestin, Garvin McDaniel, R. Stephen McNeill, Travis McRoberts, Benjamin Stewart, Mark Stromberg, and W. Robert Wilson, Counsel for Semcrude LP; Charles Brown, III, Counsel for Star Production Inc.; Hartley Martyn and Duane Werb, Counsel for IC Co. Inc.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/21/2017 02:01 PM     3rd Circuit     Comments (0)  

July 20, 2017
  Parks, LLC v. Tyson Foods, Inc-Third Circuit
Headline: False advertising claims may not be used to subvert the evidentiary burden of a false association claim

Area of Law: Trademarks

Issues Presented: Is there a substantive distinction between false advertising and false association claims? Does geographic origin refer solely to place of origin, or does it include any broader conception of the term origin?

Brief Summary:
The Third Circuit affirmed the lower court's dismissal of PARKS' false advertising and false association claims against Tyson. The court dismissed the false advertising claim because - principally - it was a false association claim in disguise, the former of which has a lesser evidentiary burden. For the false association claim, the court held that no reasonable jury could find secondary meaning in the "PARKS" mark because there is almost no direct-to-consumer advertising, PARKS had a miniscule market share, and there is virtually no record of actual confusion.

Extended Summary:
Parks Sausage Company ("PARKS") was founded in 1950 and is the first African-American owned company to be publicly traded on the NYSE. The company enjoyed wide success and recognition until the early 1990's, when it went bankrupt and sold to new owners, who then entered into a licensing agreements with distributors. PARKS registered its trademark in 1970 and let it lapse around 2000.

Tyson owns and manufactures "BALL PARK" branded hot dogs, which account for 23% of all franks sold in the United States.* Tyson claims that 90% of adults in the U.S. recognize the Ball Park brand, so it designed a premium product - "PARK'S FINEST" - to capitalize on the brand recognition.

The claims on appeal were false association and false advertising, which PARKS brought under the Lanham Act. To establish a false advertising claim, the statement must misrepresent the nature, characteristics, qualities, or geographic origin of a product. To establish a false association claim, the owner of an unregistered trademark has the burden of proving the existence of a protectable mark - here, a second meaning in the form of a mental association in buyers' minds between the alleged mark and a single source of the product.

PARKS made three arguments in support of its false advertising claim, the name PARK'S FINEST is misleading because: it falsely implies Tyson's product is one of PARKS' products; it implies that the product is a sausage when it is really a frankfurter, an item consumers may regard as inferior; and it mispresents product origin.

The court dismissed all three for being inseparable from false association claims. It reasoned PARK'S FINEST is only misleading if a consumer makes the connection between PARK'S FINEST and PARKS, and has in mind a pre-existing association between PARKS and high-quality products. The court noted that the distinction between a frankfurter and a sausage is not legally significant - here, the PARK'S FINEST packaging displays a factually accurate unambiguous statement that the product is a frankfurter, and a frankfurter is a kind of sausage. Additionally, the court specifically held that "geographic origin" refers solely to place of origin and not to the creator, manufacturer, or any broader conception of the term origin. The name PARK'S FINEST says nothing about the product's geographic origin, so the false advertising claim failed on all three allegations.

On the false association claim, PARKS argued its mark is inherently distinctive and - in the alternative - that its mark had secondary meaning. The court affirmed the claim's dismissal because trademarks based on the surname of a founder - Parks - are not inherently distinctive, and the mark cannot have secondary meaning if not interpreted by the public as both an identification of the product and a representation of its origin. The record showed no recent extensive advertising such as would create the necessary mental association between the mark and the product - Tyson submitted extensive focus group/survey data showing the name PARK'S FINEST was selected without any reference to PARKS and none of the sales numbers from PARKS are large enough to indicate a secondary meaning.

PARKS attempted to establish secondary meaning by showing customer confusion, but the court found insufficient evidence. The customer surveys submitted by PARKS were fundamentally flawed and did not evaluate the presence of secondary meaning. Also, there was no showing of actual confusion amongst consumers because there were only a handful of such complaints among the millions of franks sold by PARK'S FINEST.

* "Though it may distress the cognoscenti, we use the terms 'frankfurters,' 'franks,' and 'hot dogs,' as synonyms. Not so with the term 'sausage,' which we use to denote something akin to but arguably different from hot dogs."

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/162768p.pdf

Panel: Circuit Judges Smith, Jordan, and Roth

Argument Date: March 22, 2017

Date of Issued Opinion: July 6, 2017

Docket Number: No. 16-2768

Decided: Affirmed

Case Alert Author: Kevin P. McGilloway

Counsel:
Roberta Jacobs-Meadway, Jeffrey P. Lewis, Theodore H. Jobes, Ronald J. Shaffer, James C. McConnon, Alex R. Sluzas, counsel Appellant

Daniel T. Brier, Mark H. Churchill, John J. Dabney, Mary D. Hallerman, counsel for Appellees

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/20/2017 10:27 AM     3rd Circuit     Comments (0)  

July 17, 2017
  Atron Castleberry v. STI Group - Third Circuit
Headline: "Pervasive or Severe" is the Appropriate Legal Standard for a Harassment Claim; An Isolated Incident Can Give Rise to a Harassment or Retaliation Claim.

Area of Law: Employment Discrimination

Issue(s) Presented: Was "pervasive and regular" the appropriate standard to apply to a racial harassment claim? Is an isolated incident of discrimination sufficient to be considered "severe"? Can one incident be sufficient to bring a retaliation claim? Can a claim of disparate impact discrimination be brought under § 1981?

Brief Summary:
Castleberry and Brown filed claims under § 1981 for racially-based harassment, discrimination, and retaliation in their workplace. The Third Circuit reversed the dismissal of the harassment claim, finding that the District Court applied the wrong legal standard and that the Plaintiffs satisfied the correct "severe or pervasive" standard. The Third Circuit reversed the District Court's dismissal of the disparate treatment claim because appropriate burden-shifting framework was not implemented. Defendants did not meet their burden of proof to overcome Plaintiffs' allegations. The Court reversed the dismissal of the retaliation claim, finding that an isolated incident is sufficient to bring claim under § 1981. The Third Circuit did not remand for Plaintiffs' amended disparate impact claim because the claim cannot be brought under § 1981.

Extended Summary:

Atron Castleberry and John Brown were hired by STI Group to work as general laborers for Chesapeake Energy Corporation. During their employment, Appellants claim multiple instances where they were harassed or discriminated against based on their race. They claim that they were not permitted to work on the pipelines, even though they had sufficient work experience. They also reported the use of offensive language and racial comments made towards them. After reporting an incident to a superior, Castleberry and Brown were terminated, rehired, and then terminated again. The reasoning that STI Group gave for their termination was "lack of work." Castleberry and Brown filed a suit against STI and Chesapeake claiming racially-based harassment, discrimination, and retaliation under 42 U.S.C § 1981.

The Third Circuit reversed the District Court's decision to dismiss the harassment claim because the District Court used the "pervasive and regular" standard when assessing the harassment claim. In order to prevail on a harassment claim, a plaintiff must demonstrate that the discrimination was severe or pervasive. Due to conflicting precedent, the District Court applied the incorrect standard when assessing the Plaintiffs' harassment claim. The Third Circuit clarified that "severe or pervasive" is the correct standard and that one incident can be sufficient to state a claim. The racially charged slurs, as well as threats of termination, were enough to bring a harassment claim.

The Court reversed the District Court's decision to dismiss the Plaintiff's claim under disparate treatment discrimination. Plaintiffs brought allegations of undesirable work assignments due to their race, as well as termination because of their race. The Third Circuit ruled that these allegations were sufficient to satisfy the elements of a discrimination claim. The District Court erred in dismissing before Defendants had satisfied their burden of demonstrating nondiscriminatory reasons for the incidents that occurred.

The Third Circuit also reversed the District Court's dismissal of the retaliation claim because the District Court was relying on the incorrect reasoning that an isolated discriminatory remark would not satisfy the "pervasive and regular" standard. Under the correct "severe or pervasive" standard, an isolated incident is sufficient to bring a claim and can amount to unlawful activity. Due to this incorrect application, the Third Circuit found that Plaintiffs could bring a retaliation claim under the premise that one discriminatory remark could amount to unlawful activity.

While the District Court did not address the Plaintiffs' claim of disparate impact discrimination, the Third Circuit found that remand was unnecessary because a claim of disparate impact cannot be brought under § 1981. The Court determined that § 1981 was enacted to provide recourse for purposeful and intentional discrimination claims and does not support claims brought under a theory of disparate impact.

The Third Circuit reversed and remanded the District Court's decision in regards to Plaintiffs' harassment, disparate treatment discrimination, and retaliation claims.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163131p.pdf

Panel: Ambro, Vanaskie, and Restrepo, Circuit Judges

Argument Date: March 28, 2017

Date of Issued Opinion: July 14, 2017

Docket Number: No. 16-3131

Decided: Reversed and Remanded

Case Alert Author: Kristina Flatley

Counsel: David Horowitz and Richard Swartz, Counsel for Appellant; Terri Patak, Daniel Brier, and Donna Walsh, Counsel for Appellees.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/17/2017 04:33 PM     3rd Circuit     Comments (0)  

July 14, 2017
  Noreen Susinno v. Work Out World Inc.- Third Circuit
Headline: Plaintiff has standing for claim under the Telephone Consumer Protection Act based on single pre-recorded call to her cell phone

Area of Law: Consumer protection, TCPA

Issues Presented: Does the TCPA prohibit a solicitor from leaving a single voicemail of a pre-recorded promotional offer on a consumer's cellphone? If so, is mere receipt of the call a sufficiently concrete injury for Article III standing?

Brief Summary:
Work Out World (WOW) left one prerecorded promotional voicemail on Susinno's cell phone, which Susinno claimed was a violation of the Telephone Consumer Protection Act (TCPA). The Third Circuit reversed dismissal of her claim, holding that the TCPA prohibition extends to single phone calls and that the call caused Susinno a concrete injury. The Third Circuit held that, where a plaintiff's intangible injury has been made legally cognizable through the democratic process, and the injury closely relates to a cause of action traditionally recognized in the English and American courts, standing to sue exists. The injury here was squarely covered by the TCPA and is closely related to traditional torts like invasion of privacy, intrusion upon seclusion, and nuisance.

Extended Summary:

The Third Circuit reversed the District Court's dismissal for lack of subject matter jurisdiction of a claim under the TCPA. Plaintiff Susinno had alleged a claim under the TCPA based on WOW's single pre-recorded call to her cell phone. The Court rejected WOW's argument that the TCPA does not prohibit a single pre-recorded call to a cell phone if the owner is not charged for the call, and that congress's primary concern in prohibiting prerecorded calls is the cost to the consumer. The Court noted that the TCPA grants the FCC power to exempt from prohibition certain prerecorded calls that do not charge the recipient. It also found such calls may implicate the privacy rights Congress intended to protect with the statute - regardless of charges - and held the statute applies equally to residential cell phones as it does house phones.

The Court further held that Susinno's alleged injuries were sufficiently concrete to establish constitutional standing under Spokeo. It held that, when one sues under a statute alleging the very injury the statute is intended to prevent, and the injury has a close relationship to a harm traditionally providing a basis for a lawsuit, a concrete injury has been pleaded. Congress squarely identified single-prerecorded calls as an injury under the TCPA. Susinno met the second part of the test because her claim closely relates to a common law cause for intrusion upon seclusion - which has long been heard in American courts - and Congress sought to protect the same interests implicated by this traditional common law claim in enacting the TCPA. Therefore, Susinno alleged a sufficiently concrete intangible injury.

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/163277p.pdf

Panel: Circuit Judges Hardiman and Krause, and District Judge Stengel (sitting by designation)

Argument Date: March 8, 2017

Date of Issued Opinion: July 10, 2017

Docket Number: No. 16- 3277

Decided: Reversed and remanded for further proceedings.

Case Alert Author: Kevin P. McGilloway

Counsel:
Keith J. Keogh, Timothy J. Sostrin, Yitzchak Zelman, Ari Marcus, counsel for Appellant

Joshua S. Bauchner, Michael H. Ansell, counsel for Appellees

Andrew J. Pincus, counsel for amicus Chamber of Commerce in support of Appellees

Brian Melendez, counsel for amicus ACA International in support of Appellees

Author of Opinion: Judge Hardiman

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/14/2017 04:37 PM     3rd Circuit     Comments (0)  

July 11, 2017
  USA v. Binyamin Stimler - Third Circuit
Headline: No Reasonable Expectation of Privacy in CSLI, religious freedom did not preclude rabbis' prosecution for kidnapping

Area of Law: Criminal Law

Issue(s) Presented: Is there a reasonable expectation of privacy in cell site location information?? Was the government's kidnapping prosecution substantially burdensome to the religious beliefs of the defendants? Was an FBI sting sufficiently outrageous to violate due process?

Brief Summary:
Three rabbis appeal their convictions for conspiracy to kidnap recalcitrant husbands to force them to agree to divorce. They claimed error in denying a motion to suppress evidence, a Fourth Amendment violation, violation of the Religious Freedome Restoration Act, jury instruction errors, and a due process violation. The Third Circuit affirmed, holding that the third-party doctrine does not apply to cell site location information (CSLI) and there is no reasonable expectation of privacy in CSLI. The Court also affirmed that the government has a compelling interest in preventing kidnapping and the prosecution did not substantially burden the defendants' religious beliefs. The Third Circuit also found that evidence of the defendants' religious practices was not relevant to the affirmative defense of consent and could, therefore, be excluded. The Court rejected the argument that the FBI's sting operation which led to the arrests was so outrageous that it violated due process. Finally, the Court affirmed the finding that the co-conspirator statements were admissible because they were made in furtherance of the conspiracy.

Extended Summary:

Binyamin Stimler, Jay Goldstein, and Mendel Epstein were convicted of conspiracy to commit kidnapping. All three men were Orthodox Jewish rabbis. They were involved with a kidnapping ring, where the rabbis would kidnap and torture Jewish husbands to coerce them to sign divorce contracts. After being arrested during an FBI sting, all three men were convicted following a jury trial.

The Third Circuit affirmed the District Court's decision to deny Goldstein's motion to suppress cell site location information (CSLI) evidence. Under the Stored Communications Act (SCA), the government can require a provider to disclose records when a court order is obtained, if there are reasonable grounds for requiring this information. This standard was satisfied because the government was able to demonstrate that it had sufficient reason to believe that the CSLI would be able to assist in the investigation. The Court relied In re Application, which held that the third-party doctrine does not apply to CSLI and that individuals do not have a reasonable expectation of privacy in CSLI. The Court determined that subsequent cases from other circuits were not sufficient to undermine the holding in In re Application and that Supreme Court precedent was distinguished so that denial of the motion to suppress was appropriate.

The Court next found that defendants were unable to demonstrate that the government substantially burdened their religious beliefs. Under the Religious Freedom Restoration Act (RFRA), government conduct cannot substantially burden an individual's exercise of religion, unless that burden is the "least restrictive means of furthering a compelling government interest." The defendants had the original burden of proving that the government substantially burdened their religious beliefs and they were unable to show that they lacked acceptable alternative means to assist the women in getting divorces. In addition, the government has a compelling interest in preventing serious crimes, such as kidnapping.

The Court held that the District Court did not abuse its discretion in excluding evidence about Orthodox Jewish marital law. The Court affirmed that evidence of religious practices was not relevant to raising the affirmative defense of consent because there was no specific consent given to the particular kidnappings and therefore, the religious evidence was not relevant. The Court was also concerned that religious evidence might have prejudiced the jury.

The Third Circuit found no error regarding the District Court's jury instructions. The Court concluded that the District Court's instruction regarding the conspiracy charge was sufficient because the instructions, as a whole, made it clear that the charge contained a jurisdictional element. The Court found no error regarding the kidnapping instruction because many jury instructions have been upheld that do not include a temporal element. A reasonable jury would have found that the defendants' actions involved "an appreciable period of time." The Court also found no error in the jury instruction that referred to the specific motive that was charged in the indictment.

The Court affirmed the District Court's decision to admit statements made by alleged co-conspirators. The Court determined that the statements were not testimonial because the individuals would not have believed their statements would be used to aid in a criminal prosecution. The Confrontation Clause was not violated by the admission of these statements. The admissibility of the statements was appropriate under the Federal Rules of Evidence because the individuals were members of the kidnapping team and co-conspirators. Their statements were made in furtherance of the conspiracy and thus properly admitted.

The Court concluded that the due process claim, that the sting operation was outrageous, was barred because the argument was not made in District Court. However, the Court determined that, even if the argument was allowed, no due process violation occurred. The government's operation could not be considered "so outrageous" to be considered as a due process violation.

Judge Restrepo concurred in the judgment but would have held that the government's actions, regarding the CSLI, were a warrantless search that violates the Fourth Amendment. In all other aspects of the opinion, Judge Restrepo concurred.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/154053p.pdf

Panel: Chagares, Restrepo, and Roth, Circuit Judges

Argument Date: January 25, 2017

Date of Issued Opinion: July 7, 2017

Docket Number: No. 15-4053, 4094, 4095

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: Nathan Lewin and Gedalia Stern, Counsel for Appellant Stimler; Aidan O'Connor, Counsel for Appellant Goldstein; Laura Gasiorowski and Robert Stahl, Counsel for Appellant Epstein; Mark Coyne, Norman Gross, and Glenn Moramarco, Counsel for Appellee.

Author of Opinion: Circuit Judge Roth

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/11/2017 03:58 PM     3rd Circuit     Comments (0)  

  Daryoush Taha v. County of Bucks - Third Circuit
Headline: Third Circuit Determines that Compensatory Damages are not Required to Impose Punitive Damages under CHRIA; Punitive Damages can be Imposed on Government Agencies.

Area of Law: Class Certification, punitive damages

Issue(s) Presented: Can a court impose punitive damages without any compensatory damages under CHRIA? Does Plaintiff need to demonstrate actual harm to have standing under Article III? Can punitive damages be imposed on a government agency?

Brief Summary:
The Third Circuit affirmed the District Court's certification of a class in a suit challenging Bucks County's creation of an internet search tool that included personal information on every individual held in the Bucks County Correctional Facility since 1938. The Court ruled that intangible harm is sufficient to create standing under Article III. Taha sufficiently demonstrated "aggrieved" standing under Pennsylvania's Criminal History Record Information Act (CHRIA) by showcasing harm that was unique to him. The Court further affirmed that compensatory damages are not required for punitive damages to be imposed. Under Pennsylvania law, punitive damages can be imposed as long as the plaintiff can demonstrate a cause of action. The Court affirmed the District Court's finding that punitive damages could be imposed on a government agency because CHRIA provides a waiver of sovereign immunity.

Extended Summary:

Daryoush Taha is the class representative for a punitive class claim brought against Bucks County and Bucks County Correctional Facility for the creation of an "Inmate Lookup Tool." This tool allows individuals to search for people who have been held or incarcerated at Bucks County Facility. Taha was incarcerated in 1998, but his record was ultimately expunged. In 2011, Taha learned of the inmate search tool, which had his mug shot and information on his arrest. Taha filed for certification of a class composed of individuals whose criminal history could be located on the search tool. The District Court granted class certification and partial summary judgment.

The Third Circuit was unwilling to review the Defendants' defense that certification violated one-way intervention under Rule 23 because they failed to raise the defense in District Court. The Third Circuit determined that the defendants had multiple opportunities to raise this defense below and they failed to do so.

The Third Circuit also found that Taha had standing under Article III and under CHRIA. The Court determined that Taha had standing under Article III because intangible harm can be sufficient to meet the necessary requirements. The Court determined that Taha sufficiently demonstrated that he suffered actual harm from the posting of his photograph, including embarrassment, sadness, and weight loss. Under CHRIA, the Court found that Taha demonstrated "aggrieved" standing because he has a substantial, direct, and immediate interest in the outcome of the litigation. Taha sufficiently showcased that the harm he experienced was unique to him and that causation exists between the defendants' actions and the harm that occurred.

The Third Circuit affirmed the District Court's finding that punitive damages could be imposed, even though Taha did not suffer compensatory damages. The Court affirmed this decision with the understanding that, under CHRIA, a court may impose punitive damages without compensatory damages, as long as the plaintiff has demonstrated a cause of action.

The Court affirmed that punitive damages could be imposed upon a government agency. The District Court ruled that CHRIA provides a waiver of sovereign immunity, so punitive damages could be imposed. CHRIA authorizes punitive damages and is applicable to government agencies.

The Third Circuit affirms the District Court holding that the remaining factual issue of willfulness can be determined based on common evidence. The predominance factor requires that common questions relevant to all class members predominate over any questions specific to each individual. The question of the defendants' intent in creating the website can be answered without taking into account the individual effects on class members.

The Third Circuit affirmed the District Court's decision.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163077p.pdf

Panel: Greenaway, Jr., Shwartz, and Greenberg, Circuit Judges

Argument Date: March 15, 2017

Date of Issued Opinion: July 6, 2017

Docket Number: No. 16-3077

Decided: Affirmed

Case Alert Author: Kristina Flatley

Counsel: Frank Chernak and Burt Rublin, Counsel for Appellants; Alan Denenberg, Robert LaRoca, and Jonathan Shub, Counsel for Appellee; Crystal Clark, Counsel for Amicus Curiae County Commissioners Association of Pennsylvania; Janet Ginzberg, Counsel for Amicus Curiae Community Legal Services.

Author of Opinion: Circuit Judge Greenberg

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/11/2017 03:05 PM     3rd Circuit     Comments (0)  

July 10, 2017
  Richard Fields v. City of Philadelphia - Third Circuit
Headline: Third Circuit Determines that Recording Police Officers in Their Official Duties is a First Amendment Right; Police Officers are Granted Qualified Immunity

Area of Law: First Amendment

Issue(s) Presented: Is there a First Amendment right to record police activity in public? If so, was this right sufficiently established to overcome qualified immunity?

Brief Summary:

The Third Circuit held that the First Amendment protects an individual's right to record police officers performing their official duties in public areas. It rejected the lower court's decision limiting constitutional protection based on the intent of the recorder, holding that recording is protected regardless of the recorder's intent to share the recording. However, the Third Circuit held that the officers were entitled to qualified immunity because, at the time of both incidents, the constitutional right that they violated was not clearly established. The Court did not make a ruling on municipal liability because the District Court did not have the opportunity to make a first judgment.

Extended Summary:

Amanda Geraci was attending a protest when she began to record a police officer arresting a protestor. When the police noticed, an officer pushed her against the wall so that she would be unable to film the arrest. She was not arrested. Similarly, Richard Fields was recording the police while they broke up a party. When he refused to stop filming, he was arrested and his phone was confiscated. While being detained, the officer searched through the videos on his phone. He was released with a citation, which was eventually dropped. Both filed claims under 42 U.S.C. § 1983, against the City of Philadelphia and individual police officers. The Plaintiffs alleged that their First Amendment right to record was violated by these officers. The District Court granted summary judgment in favor of the officers and determined that the Plaintiffs' activities were not protected by the First Amendment because the act of recording was not expressive conduct.

The Third Circuit reversed, holding that expressive intent does not need to be present at the moment the recording takes place. Instead, an individual might not appreciate the content of the recording until afterwards. The First Amendment should provide the opportunity to use a recording in an expressive manner. The Court notes the importance of information about police activity and how recordings help to provide accurate information. For these reasons, the Court held that the First Amendment protects the recording of police officers performing their official duties in public, consistent with reasonable time, place, and manner restrictions. A recording that interferes with police activity might not be protected under the First Amendment. However, the Plaintiffs involved in this case did not interfere with the police activity.

However, the Court also found that the police officers are entitled to qualified immunity because this First Amendment right was not clearly established when the violation took place. The right to record police officers in their official duties was not a right that had been established in previous opinions. Plaintiffs argued that the Police Department's policies should be enough to clearly establish the First Amendment right. The Court determined that these policies were not sufficient to make officers understand the constitutional right to record.

The Court remanded the issue of municipal liability to allow the District Court the first opportunity to make this determination.

Circuit Judge Nygaard concurred in part and dissented in part, agreeing with the holding that recording police officers in their official duties is a First Amendment right. However, he would hold that this right was clearly established and therefore, qualified immunity is inappropriate.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/161650p.pdf

Panel: Ambro, Restrepo, and Nygaard, Circuit Judges

Argument Date: May 9, 2017

Date of Issued Opinion: July 7, 2017

Docket Number: Nos. 16-1650 and 16-1651

Decided: Reversed and Remanded

Case Alert Author: Kristina Flatley

Counsel: Jonathan Feinberg, John Grogan, Peter Leckman, Seth Kreimer, Mary Roper, and Molly Tack-Hopper, Counsel for Appellants; Craig Gottlieb, Counsel for Appellees; Dorothy Hickok, Alfred Putnam, Mark Taticchi, and Ilya Shapiro, Counsel for Amicus Appellant Cato Institute; Eli Segal, Counsel for Amicus Appellant Society for Photographic Education; Sharon McGowan, April Anderson, and Tovah Calderon, Counsel for Amicus Appellant United States of America; Bruce Brown and Gregg Leslie, Counsel for Amicus Appellant Reporters Committee for Freedom of the Press and 31 Media Organizations; Sophia Cope and Adam Schwartz, Counsel for Amicus Appellant Electronic Frontier Foundation; Robert LaRocca, Counsel for Amicus Appellant First Amendment Law Professors; Patrick Geckle, John Burton, and David Milton, Counsel for Amicus Appellant National Police Accountability Project; Jason Gosselin, John Whitehead, Douglas McKusick, and Christopher Moriarty, Counsel for Amicus Appellant Rutherford Institute.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/10/2017 09:51 AM     3rd Circuit     Comments (0)  

July 7, 2017
  Colleen Reilly, et al. v. City of Harrisburg, et al. - Third Circuit
Headlines: Third Circuit Holds that while Considering a Request for Equitable Relief, the Movant Must Meet the Threshold for the Two Most Critical Factors, Not All Four Factors.

Third Circuit Holds that in a First Amendment Case, the Government Bears the Burden of Proof on the Ultimate Question of a Statute's Constitutionality.

Area of Law: Constitutional Law, Equitable Relief

Issue(s) Presented: In deciding a request for equitable relief, should a court require all four factors to be met for the request to be appropriate, or only the first two most critical factors?

In a First Amendment case, does the burden of proof shift to the Government to prove ultimate questions of a statute's constitutionality, or must the plaintiff prove its likelihood to succeed on the merits?

Brief Summary: Plaintiffs brought a constitutional challenge to a Harrisburg city ordinance they allege impermissibly restricts their right to protest near abortion clinics. Plaintiffs also sought a preliminary injunction to enjoin the ordinance's enforcement. The District Court denied their request for an injunction because it claimed Plaintiffs did not meet their burden of demonstrating that they were likely to succeed on the merits. Plaintiffs requested that the Third Circuit review the merits of their case and the denial of the injunction. Because Plaintiffs' claims were still before the District Court, the Third Circuit stated that the District Court should evaluate the constitutional claims. Regarding the request for injunctive relief, the Third Circuit held that the District Court misallocated the burden of demonstrating narrow tailoring. It also clarified the analysis for granting a preliminary injunction. The Third Circuit ultimately vacated the decision and remanded for further consideration.

Extended Summary: Plaintiffs Colleen Reilly and Becky Biter brought a constitutional challenge to a Harrisburg city ordinance they allege impermissibly restricts their right to protest in the vicinity of abortion clinics. Plaintiffs also sought a preliminary injunction to enjoin the ordinance's enforcement. The District Court denied their request for an injunction because it claimed Plaintiffs did not meet their burden of demonstrating that they were likely to succeed on the merits. Plaintiffs requested that the Third Circuit review the merits of their case and the denial of the injunction.

The ordinance prohibited persons to knowingly congregate, patrol, picket or demonstrate in a zone extending twenty (20) feet from a health care facility. The ordinance's purpose was to promote the health and welfare of the city's residents and visitors to the health care facilities, as well as the health and welfare of those who wished to voice their constitutionally protected speech outside of the facilities. The ordinance applied to all persons equally, except for police, employees and other exempted persons, regardless of the intent of their conduct or content of their speech. Plaintiffs claim to provide sidewalk counseling to those entering abortion clinics by use of leaflets, prayer and conversation, in attempts to dissuade patients from getting abortions. Plaintiffs allege that the ordinance creates unconstitutional buffer zones that render their ability to engage effectively in counseling impossible. They allege that the ordinance violates their First Amendment rights to speak freely, exercise their religion, and assemble. They also allege the ordinance violates their Fourteenth Amendment due process and equal protection rights. In additional to challenging the constitutionality of the ordinance, Plaintiffs requested a preliminary injunction to enjoin the enforcement of the ordinance. The District Court ruled that Plaintiffs did not meet their burden of demonstrating that they were likely to succeed on the merits and denied their request for relief.

Regarding the request for injunctive relief, the Third Circuit held that the District Court did not provide a full analysis of whether to grant the request, and misallocated the burden of demonstrating narrow tailoring. It therefore vacated the decision and remanded for further consideration. The Third Circuit ultimately held that a movant for preliminary equitable relief must meet the threshold for the first two most critical factors. First, it must demonstrate that it can win on the merits. Second, it must demonstrate that it is more likely than not to suffer irreparable harm in the absence of preliminary relief. Once these gateway factors are met, the court can then consider the remaining two factors and determine, in its sound discretion, if all four factors taken together balance in favor of granting the requested preliminary relief.

The Third Circuit also reasoned that while plaintiffs normally bear the burden of demonstrating a sufficient likelihood of prevailing on the merits, in First Amendment cases, the Government bears the burden of proof on the ultimate questions of a statute's constitutionality. Plaintiffs must be deemed likely to prevail unless the Government has shown that Plaintiffs' proposed alternatives are less effective than the statute. The burdens at the preliminary injunction stage track the burdens at trial, which rest with the Government for First Amendment purposes. Therefore, the Third Circuit vacated and remanded the decision for further proceedings.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163722p.pdf

Panel: Ambro, Jordan, and Roth, Circuit Judges

Argued: March 21, 2017

Date of Issued Opinion: May 25, 2017

Docket Number: No. 16-3722

Decided: Vacated and remanded.

Case Alert Author: Rachel N. Costello

Counsel: Mary E. McAlister, Esq., Mathew D. Staver, Esq., & Horatio G. Mihet, Esq., Counsel for Appellants; Joshua M. Autry, Esq. & Frank J. Lavery, Jr., Esq. Counsel for Appellees.

Author of Opinion: Ambro, Circuit Judge.

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 07/07/2017 12:33 PM     3rd Circuit     Comments (0)  

July 6, 2017
  John Daubert v. NRA Group, LLC, d/b/a National Recovery Agency - Third Circuit
Headline: Specific evidence is required to show express consent to receive collection calls on cell phone; bona fide error defense to FDCPA claims not applicable to mistake of law

Area of Law: Telephone consumer protection, debt-collection.

Issues Presented:
Does the mere possibility a called-party provided his cell phone number to his creditor - raise a genuine issue of fact as to whether he expressly consented to collection calls?
Is good-faith reliance upon persuasive legal authority sufficient for the bona fide error defense to excuse an FDCPA?

Brief Summary:

Daubert sued NRA for FDCPA violations because there was a barcode used to identify him printed on a collection letter's envelope, and for TCPA violations because he never consented to automated phone calls. NRA asserted an affirmative defense, the bona fide error defense, to the FDCPA claim and argued that Daubert's prior express consent as a defense to the TCPA claim.

The Third Circuit affirmed the grant of summary judgment to Daubert on the TCPA claim, because no direct evidence of Daubert's prior consent existed on the record and NRA failed to show a genuine issue of material fact. Further, the court affirmed the lower court's decision to exclude an affidavit about automated dialing submitted by NRA because it flatly contradicted prior testimony and lacked support from the record.

The Third Circuit reversed the district court's ruling on the FDCPA violations, and remanded with instructions that judgment be entered for Daubert. NRA admitted to the violations when it invoked the bona fide error defense, but it cited the authority of two district courts to excuse its mistake of law. The Third Circuit ruled that the bona fide error defense does not apply to mistakes of law.

Extended Summary:

NRA attempted to collect a $25 debt from Daubert, which he originally owed to a hospital, by sending him a collection letter and calling him sixty-nine times in ten months. The collection letter was sent with a unique identifier barcode, which was plainly visible through the window of the envelope. The sixty-nine phone calls were made using some form of automated phone calling software.

Barcodes fall into a grey area for liability under FDCPA, with precedent on both sides of the question. NRA believed barcodes printed on envelopes were not a violation, a belief supported by two Eastern District court opinions finding no FDCPA violation for printing barcodes to identify the debtor on the envelopes of collection letters. The Third Circuit reversed the grant of judgment as a matter of law to NRA, holding that reliance on precedent shows that NRA made a mistake of law, not fact. The Supreme Court has held that the defense does not apply to mistakes of law.

The sixty-nine phone calls were the basis for TCPA violations. This statute was enacted to shield consumers from unwanted phone calls and other forms of harassment through telecommunications. Collectors may not contact people using automated dialing systems unless the called-party has given prior express consent. Daubert claimed he never consented, the district court found the calls constituted violations, and the Third Circuit affirmed.

The Court rejected NRA's argument that Daubert consented when he gave his phone number to the hospital. Daubert established an absence of direct support for NRA's claim, meeting his burden of proof as the moving party. NRA failed to meet its burden as the non-moving party because it did not do more than "show that there is some metaphysical doubt." There was nothing in the evidence, depositions, interrogatories, and admissions on file that NRA used - beyond its own pleadings and affidavits - to show a genuine dispute of material fact existed relating to the TCPA claim.

The Court also held that the District Court was within its discretion in refusing to admit an affidavit NRA submitted to show the phone calls were not automated. The original testimony regarding the automated system came from a deposition, in which NRA selected an employee to speak on its behalf. The employee testified that some level of automation existed in the phone system, but months later NRA submitted an affidavit saying there was no automation in the process.

The sham-affidavit doctrine provides for the court's discretion in such situations, which the lower court properly exercised under the circumstances. NRA never cited specific evidence nor gave a satisfactory explanation as to the duress or incompetency that compromised the deposition. The court is supposed to consider the totality of the circumstances when using its discretion to admit or reject a sham-affidavit, and this scenario there was nothing on the record that supported the validity of the affidavit over the deposition.

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/163613p.pdf

Panel: Circuit Judges Hardiman, Roth, and Fisher

Argument Date: May 23, 2017

Date of Issued Opinion: July 3, 2017

Docket Number: Nos. 16-3613 and 16-3629

Decided: Affirmed in part, reversed in part

Case Alert Author: Kevin P. McGilloway

Counsel
Richard J. Perr, Counsel for Cross-Appellant

Brett M. Freeman, Carlo Sabatini, Counsel for Appellant

Author of Opinion: Judge Fisher

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/06/2017 02:15 PM     3rd Circuit     Comments (0)  

July 5, 2017
  Joseph De Ritis v. Thomas McGarrigle - Third Circuit
Headline: Third Circuit Finds Employee Speech Unprotected by the First Amendment; Qualified Immunity is Granted to Supervisor.

Area of Law: Qualified immunity; First Amendment rights

Issue(s) Presented: Are comments made by attorney to colleagues in and out of the courtroom protected under the First Amendment? If so, does a supervisor who terminated the employee from his position receive qualified immunity?

Brief Summary:

Joseph De Ritis was an Assistant Public Defender, working in the office of Public Defender, Douglas C. Roger. After Roger transferred De Ritis to a different unit, De Ritis started to spread a rumor that he was being punished for taking too many cases to trial. On multiple occasions, he expressed these thoughts with colleagues and judges, both in and out of the courtroom. When Roger caught wind of this rumor, he fired De Ritis for his conduct.

The Third Circuit reversed the District Court's denial of Roger's motion for summary judgment, holding that De Ritis's comments in court were employee speech not protected by the First Amendment; and Roger was entitled to qualified immunity for any violation of the First Amendment based on De Ritis's comments to two municipal officials out of court.

Extended Summary:

Joseph DeRitis sued his former boss, Public Defender Douglas C. Roger, claiming that Roger terminated him in violation of his right to free speech. De Ritis had worked as an Assistant Public Defender under Roger for seven years, moving up to a trial unit. In June 2012, De Ritis was informed that he would need to be transferred back to the juvenile court unit due to staffing issues. De Ritis asked colleagues about the real reason for his transfer, and got the impression that he was transferred because he was bringing too many cases to trial and that this was against the office ideal of moving cases by getting guilty pleas. There was no real evidence to support these accusations, just hearsay.

De Ritis repeated this rumor to his colleagues, judges, and other attorneys over many months. Eventually De Ritis approached Michael Maddren, Country Solicitor and Thomas McGarrigle, chairman of the County Council. DeRitis wanted them to investigate his claims, but neither pursued the matter much further. By May 2013, Roger became aware, through Judge Klein, of the allegations that were being made against him. When confronted by Roger, De Ritis acknowledged all of the individuals to whom he spread these rumors. In response, Roger fired De Ritis. The District Court denied Roger's motion for summary judgment in which he claimed qualified immunity as a public official.

The Third Circuit reversed. It held that De Ritis's comments to colleagues and judges in court were employee speech and not protected by the First Amendment under the applicable three prong test. First, DeRitis's actions were not protected because the speech was within the regular scope of his duties as an employee. Thus he was not protected as he would have been if "he spoke as a citizen, not an employee, if his speech involved a matter of public concern, and if Roger lacked an adequate justification for treating him differently than the general public."

Under the second-prong, the Court analyzed whether De Ritis's out of court speech related to a matter that was valuable and generally relevant to the public. The Court noted that speech that focused on the individual employee's problems, even if there was a potential for public concern, would be viewed as a "personal grievance." De Ritis's out of court statements to other attorneys were not a matter of public concern because these statements were only directly related to De Ritis's own grievance. However, the Court found that the statements made to Maddren and McGarrigle were addressed towards public concern requiring analysis under the third prong. De Ritis expressed some concern for potential violation of the constitutional rights of his clients.

In analyzing the third-prong, the Court balanced De Ritis's interests with the interest of Roger as a state official and found that De Ritis's comments tended to be geared more towards his own individual concern than any public concern. He sought action for himself but failed to follow-up on protecting any rights of his clients. The Court determined that statements made by De Ritis could have seriously hindered the work environment and thus his interests were outweighed by Roger's strong interest in protecting the work environment and promoting positive work performance. At minimum, Roger was entitled to qualified immunity as any right De Ritis had under the First Amendment was not clearly established.

The Third Circuit reversed the District Court's denial of qualified immunity and remanded for further proceedings.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/161433p.pdf

Panel: Vanaskie, Krause, and Nygaard, Circuit Judges.

Argument Date: January 17, 2017

Date of Issued Opinion: June 29, 2017

Docket Number: No. 16-1433

Decided: Reversed and remanded

Case Alert Author: Kristina Flatley

Counsel: Joseph De Ritis, Counsel for Appellee; Mark A. Raith, Counsel for Appellant

Author of Opinion: Circuit Judge Krause

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/05/2017 12:19 PM     3rd Circuit     Comments (0)  

May 2, 2017
  Luis Antonio Dutton-Myrie v. the Attorney General of the United States of America - Third Circuit
Headline: Third Circuit Requires Review of Willful Blindness in CAT Analysis Regarding Acquiescence to Torture

Area of Law: Convention Against Torture, Acquiescence

Issues Presented: What standard should the Board of Immigration Appeals use in assessing acquiescence to torture under the Convention Against Torture?

Brief Summary:

Dutton-Myrie appealed a decision from the Board of Immigration Appeals ("BIA") which dismissed his claim that the Panamanian government was willfully blind to torturous acts against him. The Third Circuit found that the BIA did not thoroughly review the circumstantial evidence or the potential for willful blindness de novo in its ruling. The Third Circuit remanded with instructions to consider circumstantial evidence that may establish willful blindness.

Extended Summary:

Luis Antonio Dutton-Myrie petitioned for review of a ruling by the Board of Immigration Appeals ("BIA") dismissing his appeal of the decision by an Immigration Judge ("IJ") that he is ineligible for deferral of removal under the United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT). Dutton-Myrie contends that the BIA erred in affirming the IJ's conclusion that the government of Panama would not be willfully blind to torturous acts against him and incorrectly stated what constitutes acquiescence to torture by Panamanian officials. In addition, Dutton-Myrie contends that the IJ is biased against him and violated his due process rights. The Third Circuit found that the Board did not apply the correct legal standard under the Convention Against Torture ("CAT") and remanded.

Dutton-Myrie is a citizen of Panama who came to the US on a visitor's visa in 1991 and overstayed that visa. In 2005, the Government apprehended and deported him to Panama. A few days after his return to Panama, a group of men stabbed him in the neck so he fled the country and re-entered the US. In 2007, the Government apprehended him again and charged him with illegal re-entry. In 2012, the US Department of Homeland Security reinstated the final order of removal but an asylum officer found he expressed a reasonable fear of returning to Panama and referred him to an IJ. Dutton-Myrie filed an application for deferral of removal under the CAT based on his claim that members of the Mara Salvatrucha ("MS-13") gang would likely torture him if he returned. Dutton-Myrie's close relatives started a gang in Panama and many of his male family members have been targeted and killed by MS-13.

The IJ found Dutton-Myrie to be credible but determined that he failed to establish that Panamanian officials would consent or acquiescence to the harm he feared and denied his CAT claim. Dutton-Myrie went before the same IJ four times, and appealed four times. The BIA vacated and remanded the first three times but affirmed the fourth decision. The Third Circuit first turned to the Convention Against Torture and noted the burden of proof is on the petitioner to produce evidence that it is more likely than not that he or she would be tortured. To establish acquiescence, an applicant must demonstrate that a public official was aware of the torture and breached the legal responsibility to intervene and prevent it, which can also be shown if the government willfully blinded itself to such activities.

The Third Circuit reviewed Dutton-Myrie's claim that the BIA erred in reviewing for clear error the IJ's conclusion that the Panamanian government would not acquiesce to torture. The IJ must conduct a two-part analysis. First, the IJ makes a factual finding as to how the public officials will act in response to the harm the petitioner fears. Next, the IJ assesses whether the likely response from public officials qualifies as acquiescence. The BIA should review the first part for clear error, but must review the second part de novo. The BIA found no clear error in the IJ's finding that the government of Panama would not be acquiescent to any torture but it should have also determined de novo whether the evidentiary findings were sufficient to establish acquiescence. The BIA should have considered willful blindness before concluding the government conduct would not qualify as acquiescence.

The BIA must consider circumstantial evidence of willful blindness. The BIA needs to consider relevant evidence to determine if harm Dutton-Myrie fears will be met with a "blind eye" by authorities. The regulations do not require actual knowledge of specific torturous acts. The Third Circuit remanded with instructions to consider circumstantial evidence that may establish willful blindness. The Third Circuit did not comment on the due process claim but noted the case "may be ripe for reassignment [to a different IJ]if further fact-finding is necessary."

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/161599p.pdf

Panel: Ambro, Chagares, and Fuentes, Circuit Judges

Argument Date: November 16, 2016

Date of Issued Opinion: April 28, 2017

Docket Number: No. 16-1599

Decided: Remanded

Case Alert Author: Jessica Wood

Counsel:

Nathanael P. Kibler (argued), Counsel for Petitioner

Benjamin C. Mizer, Bernard A. Joseph, Jason Wisecup, Erica B. Miles, Counsel for Respondent

Author of Opinion: Ambro, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 05/02/2017 04:06 PM     3rd Circuit     Comments (0)  

April 12, 2017
  Revock v. Cowpet Bay West Condominium Association - Third Circuit
Headline: Third Circuit Holds that Fair Housing Act Claims Survive the Death of a Party, and Reverses District Court's Grant of Summary of Judgment

Area of Law: Fair Housing Act, Statutory Interpretation

Issue(s) Presented: (1) Whether a Fair Housing Act claim survives the death of a party; (2) Whether the district court properly dismissed Walters' Fair Housing Act claims entirely due to her death; (3) Whether the district court properly denied Kromenhoek's Fair Housing Act claims on the merits.

Brief Summary: Appellants Barbara Walters and Judith Kromenhoek filed civil rights actions under the Fair Housing Act. Walters and Kromenhoek sought accommodations for their disabilities in the form of emotional support animals, which were not permitted under the rules of their condominium association. They alleged violations of their right to a reasonable accommodation of their disabilities and interference with the exercise of their fair housing rights. Among other issues, these cases raised the question of whether a Fair Housing Act claim survives the death of a party. The Third Circuit held that the district court improperly answered this question by applying a limited gap-filler statute and, in turn, territorial law. It then concluded that the survival of claims under the Fair Housing Act is not governed by the gap-filler statute, but rather by federal common law, under which a Fair Housing Act claim survives the death of a party. Accordingly, it reversed the district court's grant of summary judgment against Walters' executrix. On the merits of the summary judgment motions, the Third Circuit reversed in part and vacated in part, and remanded to the district court with instructions to consider whether to permit substitution for two deceased appellees.

Extended Summary: Appellants Barbara Walters and Judith Kromenhoek suffered from disabilities, for which each was prescribed an emotional support animal. Each woman obtained a dog. This violated the "no dogs" rule of their condominium association, Cowpet Bay West. Cowpet's rule had no exceptions and Cowpet had no policy regarding assistive animals like emotional support animals. Walters and Kromenhoek each attempted to request an accommodation for an emotional support animal by filing paperwork with Cowpet's office manager. The paperwork included a doctor's letter prescribing an emotional support animal, and a dog certification. Each certification stated that the dog was "prescribed and deemed necessary to assist . . . the confirmed disabled handler" and that "property managers and landlords are required to make reasonable accommodation" under the Fair Housing Act. Certain residents at Cowpet became upset that Walters kept a dog in violation of the rule, and these views were expressed on one of the residents' online blog posts. Both Walters and Kromenhoek maintained their right to keep a dog in spite of the rule. Despite both women having submitted accommodation requests and medical verifications to Cowpet, the association and its representatives denied having reviewed the paperwork, and subsequently imposed a fine upon both Walters and Kromenhoek for violating the rule. Several months later, Cowpet's board changed presidents, and Walters and Kromenhoek again submitted accommodation requests, which were granted.

Despite being granted an accommodation, both women subsequently filed civil rights lawsuits under the Fair Housing Act, raising two federal claims: (1) that Cowpet denied their reasonable requests for accommodation in violation of the Act; and (2) that Cowpet and certain Cowpet residents interfered with the exercise of their fair housing rights in violation of the Act. While the case was pending in the district court, Walters committed suicide. The court granted the substitution of Liana Walters Revock as Walters' personal representative. Defendants moved for summary judgment. The district court dismissed Walters' Fair Housing Act claims entirely due to her death, and denied Kromenhoek's Fair Housing Act claims on the merits. Both appealed to the Third Circuit.

The Third Circuit first addressed the question of whether a Fair Housing Act claim survives the death of a party, which was an issue of first impression. The court began by explaining that the Fair Housing Act is construed broadly in light of its purpose of providing fair housing and eradicating discriminatory practices, including discrimination on the basis of disability. Because the Act is silent as to survival, the district court applied a "gap-filler statute," which in turn led it to apply territorial law. The district court applied a Virgin Islands statute under which it held that Walters' Fair Housing Act claims did not survive her death. The Third Circuit reversed the judgment of the district court on this issue, holding that the gap-filler statute does not apply to the issue of whether a Fair Housing Act claim survives the death of the party because the plain text of the statute did not apply to the Fair Housing Act. So, absent statutory guidance, the Third Circuit applied federal common law. The weight of authority as to the common law rule of survival indicates that remedial claims survive, but penal claims do not. The court explained that a Fair Housing Act claim is remedial because the Act was intended by Congress to have "broad remedial intent." Thus, under the common law rule, Fair Housing Act claims survive the death of a party, which means that Walters' claim survived her death.

Next, the court examined the merits of the first Fair Housing Act claim, considering whether Cowpet refused to provide a reasonable accommodation for Walters' and Kromenhoek's disabilities in violation of the Act. Because the court found that there were genuine issues of material fact as to this claim, it reversed the district court's grant of summary judgment for Cowpet. Specifically, Cowpet disputed the statutory requirement that there be a "refusal" to provide the reasonable accommodation. Whether there has been a refusal to provide a reasonable accommodation under the Fair Housing Act depends on the circumstances, and a refusal may be "actual or constructive." An undue delay in granting a reasonable accommodation may amount to a refusal. Moreover, a refusal occurs when the disabled resident is first denied a reasonable accommodation, irrespective of the remedies granted in subsequent proceedings. The Third Circuit noted, however, that the same action might sometimes amount to a "refusal" and, at other times, mere enforcement of a housing rule. In this case, whether Cowpet's actions constituted a refusal depends upon whether Cowpet was given an opportunity to accommodate. On this issue, the parties disputed material issues of fact that precluded summary judgment.

Then, the court considered the issue of whether the Defendants interfered with Walters' and Kromenhoek's exercise of their fair housing rights in violation of the Fair Housing Act. The district court granted summary judgment for the Defendants, and the Third Circuit reversed in part and vacated in part. The Act makes it "unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed . . . any right granted or protected by" the provisions of the Act. Because the term "interference" is not defined in the Act, the court looked at its ordinary meaning, and found that interference under the Act may consist of harassment, provided that it is sufficiently severe or pervasive as to create a hostile environment. There were genuine issues of material fact that existed as to this claim, requiring the Third Circuit to reverse the district court's grants of summary judgment. The court also vacated the district court's grant of summary judgment for the former president of Cowpet's board, who had since passed away, and directed the district court on remand to determine whether to substitute a party for him.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/144776p.pdf

Panel: Fuentes, Vanaskie, and Restrepo, Circuit Judges

Argument Date: May 19, 2016

Date of Issued Opinion: March 31, 2017

Docket Number: Nos. 14-4776 & 14-4777

Decided: Reversed in part, vacated in part, remanded in part

Case Alert Author: Samuel M. Ventresca

Counsel: Karin A. Bentz, Gregory A. Thorp, Counsel for Appellants; W. Todd Boyd, James K. Parker, Jr., Yvette R. Lavelle, Joseph G. Riopelle, Carl R. Williams, John H. Benham, III, Boyd L. Sprehn, Kyle R. Waldner, Ryan C. Meade, Counsel for Appellees; Vanita Gupta, Mark L. Gross, April J. Anderson, Counsel for Amicus Appellant United States of America.

Author of Opinion: Circuit Judge Restrepo

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 04/12/2017 02:50 PM     3rd Circuit     Comments (0)  

  Mirabella v. Villard - Third Circuit
Headline: No Free Speech Protection from Montgomery Township Officials' Retaliatory Email After Plaintiff Had Threatened Litigation Against Township

Area of Law: First Amendment

Issue(s) Presented: Is the right to be free from a retaliatory restriction on communication with one's government protected under the First Amendment when the plaintiff has threatened or engaged in litigation against the government? 

Brief Summary: A Montgomery Township couple received a tersely worded email in response to their informing the Township that they would be suing their neighbors and the Township for alleged environmental destruction of local public wetlands. The Third Circuit found that the local official's direction to "[p]lease never contact me" violated the couple's First Amendment rights to freedom from retaliation against exercise of free speech and to petition the government. The Township was spared by the doctrine of qualified immunity, which shields government officials from liability unless they violate clearly established rights. The Third Circuit did not find any cases clearly establishing the right to be free from a retaliatory restriction on communication with one's government when the plaintiff has threatened litigation against the government.

Extended Summary: The Mirabellas, both attorneys, complained to Montgomery Township that their neighbors allegedly extended their backyards into public Montgomery Township-owned wetlands that abut their properties by attempting to fence in the open space, placing playground equipment there, and landscaping it. Though the Township required the neighbors to remove the fence and playground equipment and stop landscaping, it ultimately allowed the neighbors to mow the open space. Viewing the Township's response as environmentally destructive, the Mirabellas emailed the Township Board of Supervisors that they intended to sue their neighbors for encroachment and destruction of the open space. In their email, the Mirabellas also claimed that the Township would be an indispensable party in the litigation, which the Board of Supervisors members Joseph Walsh and Jeffrey McDonnell took as a threat to sue the Township. The Township responded via email that it would be seeking sanctions, and Mr. Mirabella defended the lawsuit as non-frivolous. Later that night at 11:26pm, Walsh sent the following from his iPhone and copied numerous Township officials:

Dear Mr[.] Mirabella and his wife attorney. Please direct all further communications to the Township attorney. Please never contact me, the Board of Supervisors or the Township employees directly. Do not call me at work, email me at work or speak to me in public or private. The dye is caste [sic].

In response, the Mirabellas filed a lawsuit against the Township alleging violations of their First Amendment rights, specifically that the Township retaliated against them for exercising free speech rights and that the Township violated their right to petition the government. The defendants filed motions to dismiss in which they argued qualified immunity. The Third Circuit found that the Mirabellas pled both First Amendment claims based on Walsh's email but they could proceed no further. Under qualified immunity, the right to be free from a retaliatory restriction on communication with one's government, when the plaintiff has threatened or engaged in litigation against the government, was not clearly established.

On the retaliation claim, the Third Circuit found Walsh's email more than just an instruction to contact the Township attorney regarding the litigation because it barred the Mirabellas from communicating directly with their local government for any reason. The Third Circuit then examined whether freedom from a retaliatory restriction on communication with one's government, when the plaintiff has threatened or engaged in litigation against the government, is a clearly established right that would overcome the qualified immunity defense. Finding no support in other cases for such a right, the Third Circuit held the Township was entitled to qualified immunity.

The Mirabellas also alleged a First Amendment violation of their right to petition the government for redress of grievances based on the Walsh email. The Third Circuit found that the Mirabellas showed a burden on their free speech interests in petitioning their government that was substantially greater than the Township's litigation interests. Again, the Third Circuit found that a restriction on communication with one's government, when the plaintiff has threatened or engaged in litigation against the government, was not a clearly established right. A reasonable person in Walsh's position would not have known the email violated the Mirabellas' First Amendment rights. Accordingly, the Township was entitled to qualified immunity.


The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153171p.pdf

Panel: Fuentes, Shwartz, and Restrepo, Circuit Judges 

Argument Date: July 12, 2016

Date of Issued Opinion: April 4, 2016

Docket Number: No. 15-3171

Decided: Reversed, in part

Case Alert Author: Rebecca Daily

Counsel: John Mirabella, Esquire, Counsel for Appellees; Harry G. Mahoney and Peter R. Kulp, Counsel for Appellants. 

Author of Opinion: Circuit Judge Restrepo

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 04/12/2017 02:47 PM     3rd Circuit     Comments (0)  

March 27, 2017
  Carvalho-Grevious v. Delaware State University - Third Circuit
Headline: In Title VII Retaliation Claim, Plaintiff Need Only to Proffer Evidence Sufficient to Raise Inference that Engagement in Protected Activity was Likely Reason, Not But-For Reason

Areas of Law: Employment Discrimination

Brief Summary: In this Title VII retaliation suit, the Third Circuit addressed the question of whether a plaintiff asserting a Title VII relation claim must establish but-for causation as part of her prima facie case. The Third Circuit holds that, at the prima facie stage, a plaintiff need only to proffer evidence sufficient to raise the inference that her engagement in a protected activity was the likely reason for the adverse employment action, not the but-for reason.

Extended Summary: In this Title VII retaliation claim, Carvalho-Grevious appealed from an order of summary judgment granted in favor of her former employer, Delaware State University (DSU). The employee, a professor, alleged that by retaliating against her for complaining about discriminatory employment practices based on race and gender, DSU violated Title VII of the Civil Rights Act. On May 3, 2011, the employee was informed that she would be dismissed as chairperson after previously filing multiple complaints of discriminatory conduct by her employer. Furthermore, on June 21, 2011 DSU revoked her renewable contract and issued her a terminal contract. Finally, on June 22, 2012, when the terminal contract expired, DSU elected not to renew the contract. Accordingly, the employee filed suit in District Court. At this time, DSU filed a motion for summary judgment, which was granted by the District Court on the basis that when a plaintiff asserts a Title VII retaliation claim, she must prove that the employer's unlawful retaliation was the but-for cause of the adverse employment action. On appeal, the Third Circuit was tasked with answering the question of whether the standard on which the District Court based its grant of summary judgment was the proper standard.

More specifically, the question before the court was: what must a plaintiff provide as part of her prima facie case of retaliation to survive a motion for summary judgment in the wake of the Supreme Court's decision in Nassar, which held that Title VII retaliation claims must be proven according to traditional principles of but-for causation? In Nassar, the Supreme Court held that, in a retaliation claim, a plaintiff's ultimate burden is to prove that retaliatory animus was the but-for cause of the adverse employment action. However, as decided by the Third Circuit in this case, that burden differs at the prima face stage of the case. Consistent with overwhelming precedent, a plaintiff alleging retaliation has a lesser causal burden at the prima facie stage. Accordingly, the proper standard at the prima facie stage is that the plaintiff must produce evidence sufficient to raise the inference that her protected activity was the likely reason for the adverse employment action. Thus, Nassar does not alter the plaintiff's burden at the prima facie stage; proving but-for causation as part of her ultimate burden of persuasion comes later, and not at the motion-to-dismiss stage.

The full opinion is available at http://www2.ca3.uscourts.gov/opinarch/153521p.pdf

Panel: Ambro, Smith, Fisher, Circuit Judges (Judge Smith became Chief Judge on Oct. 1, 2016)

Argument Date: September 27, 2016

Date of Issued Opinion: March 21, 2017

Docket Number: 15-3521

Decided: March 21, 2017

Case Alert Author: David A. Rosenfeld

Counsel: Christine E. Burke, Ari R. Karpf, Counsel for Appellant; Gerard M. Clodomir, James D. Taylor Jr., Counsel for Appellees

Author of Opinion: Circuit Judge Fisher

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 03/27/2017 01:40 PM     3rd Circuit     Comments (0)  

February 27, 2017
  United States of America v. Dominique Jackson - Third Circuit
Headline: Third Circuit Affirms Conviction Based on "Listening Post" Theory in Wiretap Statute

Area of Law: Pennsylvania Wiretap Statute, Evidence

Issues Presented: Did the District Court erroneously deny pretrial motions to suppress evidence derived from intercepted calls?

Brief Summary:

Defendant Dominique Jackson appealed his conviction for conspiracy to possess with the intent to distribute cocaine. He claimed that the district court erred by denying his pretrial motions to suppress evidence from calls because he claimed the calls were unlawfully intercepted. Defendant argued that the evidence from the wiretaps should have been suppressed because the state court did not have jurisdiction to wiretap cells phones when they were outside of Pennsylvania. The Third Circuit adopted the "listening post" theory, which permits interception of out-of-state calls if the interception itself is located within the jurisdiction of the court authorizing the interception. The Third Circuit reviewed Pennsylvania's wiretap statute and Title III, the federal wiretap statute, and confirmed that Pennsylvania's statute was modeled to be substantially similar to Title III in terms of jurisdiction. Therefore, the state court had authority to grant the wiretap on the evidence from the calls outside of Pennsylvania and the evidence was admissible.

Extended Summary:

Defendant appealed his conviction for conspiracy to possess with the intent to distribute cocaine. Defendant claimed the district court erroneously denied his pretrial motions to suppress evidence from cell phone calls. A Pennsylvania state court had authorized the wiretaps and information from those wiretaps was used in affidavits of probable cause. Intercepted calls were placed and received outside of the state and Defendant contended that the state court lacked subject matter jurisdiction to permit wiretaps outside of Pennsylvania. The jury convicted Defendant of one count of conspiracy to distribute and possess with intent to distribute five or more kilograms of cocaine.

Defendant contended that the evidence from the wiretaps should have been suppressed because the state court did not have jurisdiction over the cellphones when they were outside of Pennsylvania. Defendant maintained that a state's jurisdiction is limited to its borders, and several conversations involving Defendant occurred while the cellphones were located outside of Pennsylvania. The government responded that Defendant lacked standing because, except for six calls which he was a party and had standing to challenge, he was not a party to the intercepted calls. The government also claimed the evidence was admissible under the "listening post" theory, which permits interception of out-of-state calls if the interception itself is located within the jurisdiction of the court authorizing the interception.

The Third Circuit joined other courts of appeals in adopting the "listening post" theory under Title III. The Court reasoned that the Pennsylvania wiretap statute was amended to clarify the definition of "intercept" based on the "listening post" theory. For interception to be lawful, therefore, only the interception had to have been in Pennsylvania. There was no dispute that the interceptions were made in Pennsylvania. The Court, thus, upheld the district court's denial of the motion to suppress.

Defendant also claimed on appeal that the district court erred in not precluding the government's agent, "Countryman," from interpreting the meaning of certain intercepted calls. The government claimed that the phone conversations were unclear and needed interpretation. It also claimed that the testimony involved Countryman's personal observations as a lay witness. The Third Circuit found that Countryman's testimony was not based on his direct knowledge of events. Therefore, he was in no better position than the jury to interpret the calls, and his testimony was overly broad and improper. Although the district court erred in not precluding that evidence, the Third Circuit found that the error was not plain for purposes of granting appellate relief.

Defendant also claimed that the government wrongfully attempted to use two of his co-conspirators' guilty pleas as evidence of Defendant's guilt. The Third Circuit held the government's use of the co-conspirators' guilty pleas was permissible because they went to the heart of whether the co-conspirators were credible, whether the government had selectively prosecuted Defendant, and whether the co-conspirators had firsthand knowledge of the crime for which Defendant was charged. The evidence of the pleas was not offered as substantive evidence of Defendant's guilt. The district court also provided appropriate limiting instructions. Therefore, the district court did not err in allowing the testimony.

Finally, Defendant argued that the district court erred by allowing admission of a co-conspirator's Fifth Amendment privilege not to testify. The Third Circuit held that the prosecutor's mention of the witness's invocation of the Fifth Amendment in front of the jury was inopportune, but was not so serious as to constitute plain error for purposes of appeal.

The Third Circuit, thus, found that Defendant failed to show plain error on appeal and his conviction and sentence were affirmed.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/143712p.pdf

Panel: Fisher, Krause, and Greenberg, Circuit Judges

Argument Date: Argued December 7, 2016

Date of Issued Opinion: February 24, 2017

Docket Number: No. 14-3712

Decided: Affirmed

Case Alert Author: Jessica Wood

Counsel:

David S. Hickton, United States Attorney, Donovan J. Cocas (argued), Assistant U.S. Attorney, Rebecca R. Haywood, Assistant U.S. Attorney, Michael Ivory, Assistant U.S. Attorney, Counsel for Appellee

F. Clinton Broden (argued), Counsel for Appellant

Author of Opinion: Greenberg, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 02/27/2017 06:54 PM     3rd Circuit     Comments (0)  

February 14, 2017
  Craig Williams and Shaun T. Walker v. Sec. Pa. Dept. of Corrections - Third Circuit
Headline: Third Circuit provides fair and clear warning that "those no longer subject to the death penalty have a due process right to be free from indefinite conditions of solitary confinement"; qualified immunity will not bar future claims

Area of Law: Due Process, Qualified immunity

Issues Presented: Whether there is a constitutionally protected liberty interest that prohibits the State from continuing to house inmates in solitary confinement on death row after they have been granted resentencing hearings, without meaningful review of the continuing placement?

Brief Summary:
Plaintiffs sued various Department of Corrections officials, alleging the officials violated their Fourteenth Amendment rights to due process by continuing to subject them to the deprivations of solitary confinement on death row without meaningful review of their placements for years after their death sentences had been vacated. Plaintiffs' appeals from summary judgment rulings for the defendants were consolidated.

On appeal, the Third Circuit established that there is a constitutionally protected liberty interest that prohibits the State from continuing to house inmates in solitary confinement on death row after they have been granted resentencing hearings, without meaningful review of the continuing placement. The Due Process Clause of the Fourteenth Amendment limits the State's ability to subject an inmate to the deprivations of death row once the death sentence, initially relied upon to justify such extreme restrictions, is no longer operative. However, because this principle was not clearly established, the defendants were entitled to qualified immunity.

Extended Summary: Craig Williams and Shawn T. Walker ("Plaintiffs") are inmates in the custody of the Pennsylvania Dept of Corrections ("DOC"). Each was sentenced to death and housed on the death row of his respective institution. Eventually, their death sentences were vacated, but several years elapsed before they were resentenced to life without parole and placed in the general population. In the interim, Plaintiffs were kept on death row in solitary confinement, without regular placement reviews to determine if the deprivations of those placements were necessary.

Each Plaintiff brought suit, seeking damages from various DOC officials ("Defendants"). Their suits alleged the officials violated their Fourteenth Amendment rights to due process by continuing to subject them to the deprivations of solitary confinement on death row without meaningful review of their placements after their death sentences had been vacated. Defendants argued that DOC policy required Plaintiffs' continued confinement on death row until they were resentenced to life imprisonment. According to Defendants, this policy only permitted removal from death row when a death sentence had actually been modified. They claimed that the grants of resentencing merely put Plaintiffs' sentences on hold because reimposition of the death penalty was possible. In any event, Defendants asserted they were protected from Plaintiffs' suits by qualified immunity.

Defendants' motions for summary judgment were granted for both cases. Plaintiffs' appeals from those rulings were consolidated. The Third Circuit established there is a constitutionally protected liberty interest under the Due Process Clause of the Fourteenth Amendment that prohibits indefinite conditions of solitary confinement but that defendants were entitled to qualified immunity because the right had not yet been clearly established. The Court conducted a two-part inquiry. First, it determined whether a right of the Plaintiffs had been violated; and second, it determined whether that right was clearly established when violated such that it would have been clear to a reasonable person that his conduct was unlawful.

With regards to the first inquiry, the Court held that "virtual isolation for almost eight years" in solitary confinement created a protected liberty interest under the Fourteenth Amendment. The Court explained a liberty interest may arise from the Constitution or "from an expectation or interest created by state laws." To rise to the level of a liberty interest, the right alleged must confer "freedom from restraint which . . . imposes atypical and significant hardship on the inmate in relation to the ordinary incidents of prison life."

Plaintiffs sufficiently alleged atypical hardship for several reasons. Plaintiffs' isolation on death row lasted six and eight years after the initial justification for subjecting them to such extreme deprivation, their death sentences, ceased to exist. Moreover, their isolation contrasted sharply with other common forms of solitary confinement because it was indefinite. Plaintiffs' continued confinement on death row after their death sentences were vacated continued for years with no ascertainable date for their release into the general population. The Court noted researchers have found that even a few days in solitary confinement can cause cognitive disturbances. Thus, the conditions Plaintiffs had to endure while awaiting re-sentencing constituted an "atypical . . . hardship on the inmate in relation to the ordinary incidents of prison life."

The Third Circuit also found Plaintiffs sufficiently alleged significant hardship. It explained in detail that the conditions Plaintiffs experienced on death row "differ[ed] significantly from 'routine' prison conditions in Pennsylvania state institutions." For example, Plaintiffs were confined to their respective cells for twenty-two to twenty-four hours a day and ate all meals accompanied only by the emptiness within the walls of their cells, among other hardships. Additionally, the Court again noted research has shown that such conditions can trigger devastating psychological consequences, and that these hardships are stark departures from conditions in the general prison population.

In opposition to the Court's reasoning, Defendants argued that Plaintiffs' continued confinement on death row could not be atypical since the appropriate standard in this case is not the general prison population. Instead, Defendants claimed the metric that should have been applied was either the conditions imposed on inmates eligible for the death penalty, or what Plaintiffs' convictions have "authorized the State to impose." However, the Court found Defendants' argument failed for several reasons. First, the Court explained that the "similar sentence" standard Defendants proposed was inconsistent with Third Circuit precedent. The Court had previously judged the conditions of solitary confinement "in relation to the ordinary incidents of prison life" or relative to "'routine' prison conditions." Second, the metric Defendants proposed was unworkable in the context of this case. The Court explained it could not resolve Plaintiffs' claims by reference to "inmates serving similar sentences" because, during the period at issue, Plaintiffs were not serving any sentence whatsoever. Their sentences had been vacated and resentencing had been ordered. Defendants' other metric - what the State is authorized to impose - was also based on a similarly mistaken premise.

Finally, the Court pointed out that the cases Defendants relied on in arguing against Plaintiffs' liberty interest were readily distinguishable from the cases at hand. While those cases held that inmates confined under a death sentence did not have a liberty interest that precludes confinement on death row without regular review, those inmates were all confined pursuant to death sentences that had not been vacated. Accordingly, confinement on death row was not a significant or atypical hardship for them. Rather, it was expressly within the "expected perimeters of the sentence imposed." The Court found that their liberty interests were thus unparalleled to those of inmates with active death sentences that arguably require continued placement on death row.

For these reasons, the Court held that Plaintiffs had a due process liberty interest in avoiding the extreme sensory deprivation and isolation endemic in confinement on death row after their death sentences had been vacated.

The Third Circuit next held that, although the precedent that existed when Defendants continued Plaintiffs' confinement on death row should have suggested caution, it was not sufficient to inform Defendants that their conduct violated clearly established law. Instead, Defendants were merely following a prison policy that required appellants to remain on death row until they were resentenced. The Court concluded that Defendants read the policy as creating a rule that required "prisoners like Williams and Walker, whose death sentences have been vacated but who are still exposed to the death penalty, [to] remain [on death row] until resentenced to something other than death." Thus, Defendants' continued confinement of Plaintiffs on death row resulted from a reasonable interpretation of the policy. According to the Court, Defendants' actions were neither "plainly incompetent" nor a "knowing[] violat[ion of] the law." Defendants should have qualified immunity from suit.

In conclusion, the Third Circuit affirmed the district courts' grants of summary judgment based on qualified immunity in favor of all Defendants and against both Plaintiffs. The Court also stressed that despite their ruling against Plaintiffs, its holding-- that Plaintiffs had a protected liberty interest-- provided "fair and clear warning" that qualified immunity will not bar such claims in the future.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/141469p.pdf

Panel: McKee, Fuentes, and Roth, Circuit Judges

Argument Date: April 18, 2016

Date of Issued Opinion: February 9, 2017

Docket Number: No. 14-1469

Decided: Affirmed

Case Alert Author: Brooke A. Hutchins

Counsel: James J. Bilsborrow, Esq., Counsel for Appellants; John G. Knorr III, Kemal A. Mericli, Esq., Randall J. Henzes, Esq., and Claudia M. Tesoro, Esq., Counsel for Appellees

Author of Opinion: Circuit Judge McKee

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 02/14/2017 01:51 PM     3rd Circuit     Comments (0)  

February 1, 2017
  Fredrick Capps v. Mondelez Global LLC - Third Circuit
Headline: FMLA retaliation claim fails because employer had an honest belief that employee was misusing the FMLA

Area of Law: Employment Law

Issue(s) Presented: Did the employer's honest belief that an employee was misusing the FMLA justify summary judgment to the employer on a retaliation claim?

Brief Summary:

Frederick Capps appealed the District Court's summary judgment in favor of his former employer, Mondelez Global, LLC. Capps argued that Mondelez: (1) interfered with his rights under the Family and Medical Leave Act ("FMLA"); (2) acted in retaliation to Capps' proper use of FMLA leave; and (3) violated the Americans with Disabilities Act. The Third Circuit affirmed, holding the employer's honest belief that Capps was misusing FMLA leave defeated his FMLA retaliation claim.

Extended Summary:

Nabisco, who was Mondelez's predecessor, hired Capps in November 1989. At all relevant times to this action, Capp held the position of mixer, which required him to operate a mixing machine that makes dough. Mondelez's policy entitles an employee to FMLA leave for " a serious health condition of the employee that makes the employee unable to perform one or more of the essential functions of his/her position." The employee may use intermittent FMLA leave when it is a medical necessity and the employee must provide notice of the leave as soon as practicable. An employee who wishes to take FMLA leave due to his own serious health condition must provide the company with a certification from his health care provider. Mondelez also maintained a policy entitled "Dishonest Acts on the Part of Employees." This policy is considered a major rule and violation of such rules are considered inexcusable offenses that will result in immediate suspension pending investigation, which could lead to termination.

Capps suffers from Avascular Necrosis (AVN), and, as a result, developed arthritis in both hips, which necessitated bilateral hip replacement in 2003. Capps has experienced severe pain in the pelvic region, which sometimes lasted for days or weeks at a time. Therefore, he requested intermittent time off from work when flare-ups occurred. Capps was certified for intermitted FMLA leave following his hip replacements, and was continuously recertified every six months for his condition until his employment was terminated in 2014. In February 2013, Capps took FMLA leave on several days. On one of those days, he was arrested for drunk driving.

Upon returning to work he performed the same work and received the same salary and benefits as before taking FMLA leave. He did not report his arrest to anyone at Mondelez, nor was he required to do so. In August 2013, Capps pled guilty to a DUI. In early 2014, a Human Resources (HR) manager at Mondelez became aware of Capps' DUI conviction through a newspaper article. The HR manager and other HR employees investigated Capp's attendance record to determine if Capps had any absences during the time frame of Capp's arrest and conviction. They noticed that Capp's arrest date and court dates appeared to coincide with days on which Capps had taken FMLA leave. HR confronted Capps with this information on February 2014. Mondelez then received a letter from Capp's physician confirming that on the aforementioned dates Capps had taken FMLA leave due to his "hip pathology." Capps also submitted to Mondelez a copy of a letter dated May 31, 2013, addressed to Capps from his attorney in the DUI matter, confirming some of the dates related to his DUI action.

Capps was terminated in February 2014. The letter confirmed that Capp's termination was based on his violation of the Dishonest Acts Policy. Capps completed a Grievance form on March 2014 claiming he was unlawfully terminated. Mondelez offered Capps reinstatement without back pay on April 2014, which Capps rejected. Capps initiated this lawsuit. He alleged claims of interference and retaliation in violation of the FMLA, violations of the ADA, and violations of the Pennsylvania Human Relations Act (PHRA). Mondelez filed a motion for summary judgment, which the District Court granted. Capps appealed to the Third Circuit for review.

The Third Circuit analyzed Capps' claims of FMLA interference and retaliation. Capps claimed that Mondelez discriminated against him in violation of the FMLA by terminating his employment in retaliation for taking FMLA leave. The Court stated that FMLA retaliation claims require proof of the employer's retaliatory intent. The Court concluded that Capps could not establish a prima facie case of FMLA retaliation, and that Mondelez met its burden of demonstrating a legitimate, nondiscriminatory justification for Capps' discharge. Where an employer provides evidence that the reason for the adverse employment action taken by the employer was an honest belief that the employee was misusing FMLA leave that is a legitimate, nondiscriminatory justification for the discharge.

Capps' FMLA interference claim also failed. The Court stated that an interference claim requires an employee to show that he was not only entitled to FMLA benefits but also that he was denied those benefits. Capps argued that his termination amounted to a deprivation of benefits and therefore interference under the FMLA. The Court held that Capps was unable to show that FMLA benefits were actually withheld as he was unable to point to evidence in the record indicating that he was denied a benefit to which he was entitled under the FMLA.

Capps also argued that requests for intermittent leave may be protected by the ADA and that a request for FMLA leave does not bar an ADA retaliation claim. The Court recognized that a request for FMLA leave may qualify, under certain circumstances, as a request for a reasonable accommodation under the ADA. However, the court concluded that the record in this action did not support the view that Mondelez discriminated against Capps under the ADA or refused to accommodate any such request. The Court stated that there was a lack of evidence to show that Mondelez did not make a good faith effort in accommodating Capps's request for intermittent leave. The Third Circuit affirmed the District Court's order granting summary judgment in favor of Mondelez.


The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153839p.pdf

Panel: Fuentes, Shwartz, Restrepo, Circuit Judges

Argument Date: July 12, 2016

Date of Issued Opinion: January 30, 2017

Docket Number: No. 15-3839

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Christine E. Burke, Ari R. Karpf, Counsel for Appellant; Leslie M. Greenspan, Joe H. Tucker, Jr., Counsel for Appellee; Jeremy D. Horowitz, Counsel for Amicus Appellee.

Author of Opinion: Circuit Judge Restrepo

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 02/01/2017 03:12 PM     3rd Circuit     Comments (0)  

  Khadidja Issa v. School District of Lancaster - Third Circuit
Headline: Third Circuit Affirms District Court's Preliminary Injunction to Allow English Language Learners to Transfer to Schools of Their Choice

Area of Law: Education Law

Issue(s) Presented: Did the District Court err in granting a preliminary injunction to compel the School District of Lancaster to allow under-credited English Language Learners to transfer to a program designed to teach English language skills?

Brief Summary:

Refugees who attended school in the School District of Lancaster asked the District Court for a preliminary injunction compelling the District to allow them to transfer from Phoenix Academy to McCaskey High School's International School. McCaskey offers a program designed principally to teach language skills to English Language Learners. The District Court granted the request and found violations of Pennsylvania law and of a provision of the Equal Educational Opportunities Act of 1974. The Third Circuit affirmed the District Court's decision based on the EEOA violations but not on the state law violations.

Extended Summary:

The appellees in this action are refugees aged 18 to 21. They arrived in the United States in 2014 and international refugee agencies settled them in Lancaster, Pennsylvania. None are native English speakers. They are also considered students with limited or interrupted formal education (SLIFE). SLIFE are English language learners who are two or more years behind their appropriate grade level, possess limited or no literacy in any language, have limited or interrupted formal educational backgrounds, and have endured stressful experiences causing acculturation challenges. Khadidja Issa fled Sudan when she was five years old to escape insecurity under President Omar al-Bashir. She lived in refugee camps in Chad until she was 17, where she received her only prior schooling. Her native language is Fur and she is also fluent in Arabic. In 2015, Issa immigrated to the United States and resettled in Lancaster. When she first arrived, she couldn't speak, read, write or understand any English. She is eligible to attend public school in Pennsylvania through 2019, the year she turns 21. The other plaintiffs in the action shared similar stories, all being refugees with limited understanding of English and over-aged for their grade level.

The School District of Lancaster administers two institutions relevant to this action: McCaskey High School, which the District operates directly, and Phoenix Academy, operated by a private, for-profit company under contract with the District. McCaskey High School consists of two smaller schools, one which a traditional public high school and the other is known as an International School. The International School is a program designed primarily to teach language skills to students who speak little or no English. Students generally attend the International School for one year, during which they receive intensive English as a second language (ESL) support through a teaching method called "sheltered instruction." Under that method, English Language Learners (ELLs), are grouped together in content courses such as science and math, with other ELLs at comparable English-proficiency levels. ELLs are hence "sheltered" in those classes from other ELLs at higher proficiency levels and from native English Speakers. The International School also introduces ELLs to American cultural values and beliefs. Phoenix Academy is an alternative education program intended to serve at risk students over-age for their grade, and in danger of not graduating high school before they age out of public-school eligibility at 21. Phoenix's principal missions are to ensure that students accumulate enough credits to graduate and to change students' negative behaviors - not to further their academic proficiencies.

In order to change student's "anti-social" behaviors, Phoenix enforces stringent security measures not in effect at McCaskey. These include daily pat down searches, a strict dress code and a ban on students bringing in personal belongings such as backpacks, food, and even homework. At Phoenix, students take an accelerated curriculum which allows them to earn a high school diploma in half the time of a traditional high school. The result is that students at McCaskey, receive twenty-four more hours of instruction per class than do students at Phoenix. In regards to ESL support, Phoenix offers ELLs one 80-minute ESL course per day. ELLs take all of their content courses with Phoenix's general population under the accelerated model. In addition the School District does not assess in any measurable way whether Phoenix's program helps ELLs overcome their language barriers.

Under the District's enrollment policies new-to-the-District students over age 17 and under-credited are not offered a choice of whether to enroll at Phoenix or McCaskey. The School District unilaterally assigns them to Phoenix and doesn't allow them to transfer to McCaskey. This mandatory enrollment rule applies regardless of a student's English proficiency or educational background and even if the student has several years of public school eligibility left under Pennsylvania law. For Issa and the other plaintiffs, a common complaint is that they didn't understand the vast majority of content taught in their non-ESL classes. In addition, Phoenix's accelerated curriculum moved too quickly for them to grasp. Despite these difficulties, they accrued credits and advanced to higher-grade levels.

In 2016, the plaintiffs sued the School District in the District Court for the Eastern District of Pennsylvania, requesting a preliminary injunction allowing them and similarly situated ELLs to enroll in and attend McCaskey. The District Court granted the preliminary injunction and found likely violations of the EEOA and state law. The School District appealed, asking the Third Circuit to stay the injunction's enforcement. The Court began its analysis by interpreting the text of §1703(f) of the EEOA. The Court held that an individual alleging a violation of § 1703(f) must satisfy four elements: (1) the defendant must be an educational agency, (2) the plaintiff must face language barriers impeding her equal participation in the defendant's instructional programs, (3) the defendant must have failed to take appropriate action to overcome those barriers, and (4) the plaintiff must have been denied equal educational opportunity on account of her race, color, sex, or national origin.
The Court held that there is no dispute that the plaintiff's satisfied elements one and two of the statute. In regards to the third element that defendant must have failed to take appropriate action, the court looked to the Supreme Court's decision in Castaneda for guidance as to what entails "appropriate action." Castaneda provides a three-part test to resolve whether the School District took "appropriate action" to overcome the plaintiffs' language barriers under § 1703(f). The Court found that the Lancaster School District floundered on Castaneda's first and third prongs. The District failed to satisfy the first prong of the test as it failed to pursue a program informed by an educational theory recognized as sound by some experts in the field. Experts consistently testified that Phoenix's accelerated, non-sheltered program is unsound for SLIFE. As to the third prong, the Court held that the District failed to produce results indicating that language barriers were being overcome, as the School District does not keep data on the efficacy of Phoenix's ESL program. The Court concluded that plaintiffs had satisfied element three of the statute.

The Court also held that the plaintiffs met the fourth and final element of §1703(f). Section 1703(f) requires that the denial of the equal educational opportunity - in § 1703(f)'s case, the language barrier that is not being overcome - must stem from race, color, sex, or national origin, rather than from, for example, a cognitive disability covered by a different remedial scheme, like the Individuals with Disabilities Education Act. However it does not require a showing of discrimination. The Court concluded that the record fully supported that the plaintiff's language barriers stemmed from their national origins. Having satisfied the four elements of §1703(f), the Court affirmed the District Court's preliminary injunction for violations of the EEOA, finding the lower court had properly found the plaintiffs showed irreparable harm sufficient to justify the injunction. The Court remanded for consideration of cognizability of the state court claims.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/163528p.pdf

Panel: Fisher, Krause, Melloy, Circuit Judges

Argument Date: December 5, 2016

Date of Issued Opinion: January 30, 2017

Docket Number: No. 16-3528

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Sharon M. O'Donnell, Thomas A. Specht, Counsel for Appellant; Hedya Aryani, Seth Kreimer, Maura I. McInerney, Kristina Moon, Kathleen A. Mullen, Thomas B. Schmidt, III, Eric J. Rothschild, Molly M. Tack-Hooper, Witold J. Walczak, Counsel for Appellees; Tovah R. Calderon, Erin H. Flynn, Counsel for Amicus Appellee.

Author of Opinion: Circuit Judge Fisher

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 02/01/2017 01:49 PM     3rd Circuit     Comments (0)  

January 27, 2017
  In re: Horizon Healthcare Services Inc. Data Breach Litigation - Third Circuit
Headline: Third Circuit Holds that Consumers Who Have Their Personal Data Stolen Can Sue for a Violation of the Fair Credit Reporting Act Even if They Cannot Show the Data Has Been Improperly Used

Area of Law: Civil Procedure

Issues Presented: Whether Plaintiffs' alleged injury of improper disclosure of personal information is sufficient to satisfy Article III standing (injury in fact), without additional injury.

Brief Summary: On the weekend of November 1 - 3, 2013, two unencrypted laptops were stolen from the headquarters of Horizon Healthcare Services, Inc. The stolen laptops contained personal identifying information and personal health information for 839,000 of Horizon's customers. After being notified of the theft, Plaintiffs (Horizon customers whose personal information was contained on the stolen laptops) filed this class action in district court against Horizon, for violation of the Fair Credit Reporting Act's (FCRA) consumer privacy requirements. The District Court ultimately dismissed Plaintiff's claim, concluding that Plaintiffs' lacked Article III standing since they had not shown that the stolen information had been used to their detriment. On appeal, the Third Circuit relied on precedent to support the proposition that the unlawful disclosure of legally protected information was a recognizable injury in itself, even if the information was never used improperly. The Court then analyzed Congress' intent regarding FCRA violations to address defendant's claim that a recent Supreme Court case, Spokeo, Inc. v. Robins, required a different result The Court concluded that "Congress believed that the violation of FCRA causes a concrete harm to consumers." Thus, the Third Circuit held that both "precedent and congressional action lead [to the conclusion] that the improper disclosure of one's personal data in violation of FCRA is a cognizable injury for Article III standing purposes." Therefore, the Court vacated the District Court's order of dismissal and remanded the matter for further proceedings consistent with the opinion. Judge Shwartz concurred in the judgment.

Extended Summary: This case concerns a class action against a health insurer, Horizon Healthcare Services, Inc., by Horizon customers. The dispute originated on the weekend of November 1 - 3, 2013, when two unencrypted laptops, containing personal information for more than 839,000 Horizon members, were stolen from Horizon's headquarters. Horizon was made aware of the theft the following day, and alerted "potentially affected members" through a press release and letters a month later. As a result of the theft of personal information (including names, dates of birth, social security numbers, and addresses), Plaintiffs filed this action on June 27, 2014, and alleged that Horizon had committed violations of the Fair Credit Reporting Act (FCRA) as well as various state laws.

FCRA was enacted "to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." FCRA imposes requirements on any "consumer reporting agency" in order to protect consumer privacy. FCRA further ensures that "any such agency that either willfully or negligently 'fails to comply with any requirement imposed under [FCRA] with respect to any consumer is liable to that consumer."

Plaintiffs alleged that Horizon failed to adequately comply with FCRA requirements. Plaintiffs specifically alleged that Horizon furnished their information in an "unauthorized fashion allowing it to fall into the hands of thieves," and failed to maintain "reasonable procedures" to keep their personal information confidential. Horizon moved to dismiss for, among other things, failing to establish standing under Federal Rule of Civil Procedure 12(b)(1. The District Court granted Horizon's FRCP 12(b)(1) motion, concluding that Plaintiff's lacked Article III standing because they had not shown that the stolen information had been used to their detriment.

The Third Circuit characterized the FRCP 12(b)(1) challenge as a "facial" attack, and thus applied the same standard of review as when the Court reviews a motion to dismiss under FRCP 12(b)(6). Thus, the Court noted that they accepted "the Plaintiff's well-pleased factual allegations as true and [drew] all reasonable inferences from those allegations in the Plaintiff's favor."

The Third Circuit began its analysis by noting the three elements of Article III standing, including injury in fact, a causal connection between the injury and the conduct complained of, and that the injury will be redressed by a favorable decision. Here, the Court noted that the sole element at issue was the first element described, injury in fact. Plaintiffs claimed that "the violation of their statutory right to have their personal information secured against unauthorized disclosure constitutes, in and of itself, an injury in fact." In rejecting this argument, the district court had stated that a showing of standing must include a specific harm that goes beyond "mere violations of statutory and common law rights."

After noting that injury-in-fact determinations are "very generous," the Court proceeded to analyze the Plaintiffs' claim in light of recent Court decisions. The Court relied on a pair of recent Third Circuit decisions, both which allowed "individuals to sue to remedy violations of their statutory rights, even without additional injury. First, the Court discussed In re Google Inc. Cookie Placement Consumer Privacy Litigation, which held that "the actual or threatened injury required by Article III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing." Similarly, the Court next relied on In re Nickelodeon Consumer Privacy Ligation, holding that "'the unlawful disclosure of legally protected information' constituted 'a clear de facto injury." However, the Court then turned its attention to a recent Supreme Court decision, Spokeo, Inc. v. Robins (2016), which Horizon had relied on, arguing it necessitated the opposite outcome. However, the Third Circuit disagreed, and instead noted that Spokeo stood for the proposition that "Congress has the power to define injuries" and thus this analysis must include a determination of "whether Congress has expressed an intent to make an injury redressable." The Third Circuit further noted that it would not interpret the Spokeo decision to "erect new barriers that might prevent Congress from identifying new causes of action though they may be based on intangible harm." Instead, the Third Circuit read Spokeo to "reiterate traditional notions of standing."

Finally, the Third Circuit addressed the issue of Congress' intent. The Court concluded that by creating a private right of action in order to enforce the requirements of the FCRA, Congress illustrated that it "believed that the violation of FCRA causes a concrete harm to consumers." Therefore, because Plaintiffs alleged the unauthorized disclosure of their personal information, they have alleged the "very injury that FCRA is intended to prevent." The Third Circuit thus held that Plaintiffs' allegations constitute a "de facto injury" sufficient to satisfy the requirements of Article III standing: "Our precedent and congressional action lead us to conclude that the improper disclosure of one's personal data in violation of FCRA is a cognizable injury for Article III standing purposes." Based on this holding, the Court vacated the District Court's order of dismissal and remanded the matter for further proceedings consistent with the opinion.

Judge Shawtz wrote separately concurring in the judgment, but based this conclusion on a different analysis. The concurrence framed the issue of injury as a loss of privacy, which occurred as soon as the laptops were stolen. Judge Shwartz stated, "Plaintiffs here have suffered an injury in fact based on the loss of privacy," which injury provided the necessary standing to bring this case.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/152309p.pdf

Panel: Jordan, Vanaskie, and Shwartz, Circuit Judges

Argument Date: July 12, 2016

Date of Issued Opinion: January 20, 2017

Docket Number: No. 15-2309

Decided: Vacated and remanded

Case Alert Author: Tessa M. Carson

Counsel: Ben Barnow, Erich P. Schork, Joseph J. DePalma, Jeffrey A. Shooman, Robert N. Kaplan, David A. Straite, Laurence D. King, Philip A. Tortoreti, Counsel for Appellants; Kenneth L. Chernof, David Jay, Philip R. Sellinger Greenberg Traurig Counsel for Appellee.

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Supervisor: Professor Mark Anderson

    Posted By: Susan DeJarnatt @ 01/27/2017 12:57 PM     3rd Circuit     Comments (0)  

November 22, 2016
  Fraternal Order of Police, Lodge 1 v. City of Camden - Third Circuit
Headline: "Directed patrols" that required police officers to engage with community members did not violate New Jersey Anti-Quota law, prohibiting quotas for arrests and citations; 1st Amendment did not protect officers' objections to the patrol policy; officers are entitled to trial on their retaliation claims under New Jersey state law.

Area of Law: Evidence, Qualified Immunity, NJ Anti-Quota Law, Conscientious Employee Protection Act, First Amendment, Family and Medical Leave Act

Issues Presented: Does a city's "directed patrols" policy implemented by its police department constitute an illegal quota system in violation of New Jersey's anti-quota law? When does a city's conduct amount to illegal retaliation in violation of New Jersey's Conscientious Employee Protection Act, the First Amendment, and the Family and Medical Leave Act?

Brief Summary: In April 2009, the Fraternal Order of Police filed a complaint against the City of Camden Police Department and the Attorney General of New Jersey ("Defendants"), claiming Camden had imposed an unlawful quota policy by requiring the officers to perform "directed patrols," which required them to engage with community members. The individual plaintiff Officers also accused Defendants of illegal retaliation in violation of NJ's Conscientious Employee Protection Act ("CEPA"), the First Amendment, and the Family and Medical Leave Act ("FMLA"). The Third Circuit concluded that NJ's anti-quota statute is inapplicable to the patrols policy and thus could not support Plaintiffs' allegations of a quota. It affirmed summary judgment on the First Amendment claims because the plaintiffs were speaking as employees, not citizens. But the Court reversed summary judgment on plaintiffs' retaliation claims under the New Jersey Conscientious Employee Protection Act, holding that plaintiffs' reasonable belief that the policy was illegal, the evidence of adverse actions taken against them, and evidence of a causal connection showed material facts in dispute. Plaintiffs were entitled to rely on hearsay evidence to oppose summary judgment because the evidence was capable of being admissible at trial.

Extended Summary: This case arises from a dispute between the Fraternal Order of Police, Lodge 1 as well as certain police officers ("Plaintiffs") on one side, and the City of Camden, NJ and certain supervisory police personnel ("Defendants") on the other. In 2008, Camden implemented a policy known as "directed patrols" requiring police officers to engage with city residents even though the residents are not suspected of any wrongdoing. The announced purpose of the program was to obtain information about the community while making the police presence more visible. In April 2009, Fraternal Order of Police, Lodge 1 filed a complaint against the Camden Police Department and the NJ Attorney General, claiming that the directed controls policy constituted an illegal quota system in violation of NJ's anti-quota law. The individual plaintiff Officers further alleged that Defendants violated NJ's Conscientious Employee Protection Act ("CEPA"), the First Amendment and the Family Medical Leave Act ("FMLA") by retaliating against them because they expressed their disagreement with the policy. The district court granted summary judgment to Defendants on all of Plaintiffs' claims.

On appeal, Plaintiffs contended that the district court erred in dismissing their claims under (1) New Jersey's anti-quota law; (2) CEPA; (3) the First Amendment; and (4) FMLA. In addition, they asserted that the district court erred when it ignored hearsay evidence and concluded that Defendants were entitled to judgment as a matter of law. The Third Circuit discussed each claim of error in turn.

First, the Third Circuit discussed the district court's concern over statements by the individual plaintiffs about statements other officers purportedly made concerning the alleged retaliation and the nature of the patrols constituted hearsay. According to the Third Circuit, this evidence was hearsay, but the court erred in refusing to consider it at the summary judgment stage. The Third Circuit explained "the rule in this circuit is that hearsay statements can be considered on a motion for summary judgment if they are capable of being admissible at trial." Thus, in ruling on Defendants' motion for summary judgment, the district court should have limited its inquiry to determining if the out-of- court statements Plaintiffs were relying on were admissible at trial, "and they clearly were." Accordingly, The Third Circuit reversed the district court's exclusion of hearsay in determining if the record allowed Plaintiffs to survive a motion for summary judgment.

Second, the Third Circuit discussed Plaintiffs assertion that Camden's patrols policy violates NJ's anti-quota statute even though the statute's text only addresses arrests and citations. The Third Circuit found that the district court correctly relied on the limited scope of the statute's text - which does apply only to arrests and citations, and not to the civilian "encounters" that are at the center of this dispute. Accordingly, the Third Circuit affirmed the court's grant of summary judgment in favor of Camden on Plaintiffs' claims under the anti-quota law.

Third, the Third Circuit discussed CEPA, which protects employees against retaliation by employers for whistleblowing activities. The Court made clear that NJ courts have created a four-pronged test for adjudicating CEPA claims that largely replicates the three- part burden-shifting test that is used to decide federal retaliation claims. To establish a CEPA violation, a plaintiff must prove that: (1) she reasonably believed her employer was violating a law or rule; (2) she performed a protected whistleblowing activity; (3) an adverse employment action was taken against her; and (4) there is a causal connection between the whistleblowing activity and the adverse action. According to the Third Circuit, Plaintiffs satisfied each prong, and summary judgment was therefore inappropriate. Accordingly, the Third Circuit reversed the district court's dismissal of the plaintiff-officers' retaliatory transfer claims under CEPA.

Fourth, the Third Circuit addressed plaintiff-officers claim that Defendants violated their First Amendment rights by retaliating against them for objecting to the patrols policy. According to the Third Circuit, a public employee's statement is protected by the First Amendment when "(1) in making it, the employee spoke as a citizen, (2) the statement involved a matter of public concern, and (3) the government employer did not have 'an adequate justification for treating the employee differently from any other member of the general public' as a result of the statement he made." While the Third Circuit noted that the plaintiff-officers provided compelling arguments to support their claim that their speech involved a matter of public concern, it agreed with the district court that their First Amendment claims could not proceed. The Court explained, the First Amendment "provides robust protection to statements pertaining to matters of public concern," but it does not "empower public employees to constitutionalize the employee grievance when they are acting in their official capacities."' Accordingly, the Third Circuit affirmed the dismissal of the plaintiff-officers' First Amendment claims.

Fifth, the Third Circuit discussed the FMLA, which affords eligible employees leave to tend to a serious health condition, and to care for a family member with a serious health condition. A claim that these rights have been breached is referred to as "interference." Officer Holland alleged that Camden interfered with his protected FMLA leave, while Camden contended that any "interference" was in part an internal miscommunication. The Third Circuit found that without more, Camden's conduct was not actionable under FMLA. Accordingly, because FMLA "provides no relief unless the employee has been prejudiced by the violation," the district court was correct in granting summary judgment against Officer Holland.

Finally, the Third Circuit discussed qualified immunity, since in addition to suing the City of Camden, Plaintiffs also sued several officers in their individual capacities. Those officers objected to the suits on the ground that they are protected by qualified immunity. In assessing the qualified immunity claims, the Third Circuit conducted its two-part inquiry by first, determining whether the facts demonstrate the violation of a right; and second, deciding if the right at issue was clearly established at the time of the alleged misconduct. Ultimately, the Third Circuit agreed with the district court that qualified immunity depends, in part, on whether a legal violation occurred, and since Plaintiffs did not show a violation of federal law, it did not need to reach the issue of qualified immunity.

Overall, the Third Circuit reversed the district court's order granting summary judgment to Defendants on Plaintiffs' CEPA claims, and remanded for proceedings consistent with this opinion. In addition, the Third Circuit affirmed the district court's dismissal of Plaintiffs' New Jersey Anti-Quota law, First Amendment claims, and Officer Holland's FMLA claim.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151963p.pdf

Panel: McKee, Ambro, and Scirica Circuit Judges

Argument Date: January 12, 2016

Date of Issued Opinion: November 17, 2016

Docket Number: No. 15-1963

Decided: Reversed and remanded

Case Alert Author: Brooke Hutchins

Counsel: Gregg L. Zeff, Esq., Counsel for Appellants; John C. Eastlack, Jr., Esq., Daniel E. Rybeck, Esq., Counsel for Appellees

Author of Opinion: Circuit Judge McKee

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 11/22/2016 03:00 PM     3rd Circuit     Comments (0)  

November 21, 2016
  Delaware Trust Co. v. Energy Future Intermediate Holding Co. - Third Circuit
Headline: Third Circuit holds that the redemption premium in a loan indenture is not cancelled by acceleration due to the borrower's voluntary bankruptcy filing, undertaken in order to refinance the indenture at a lower rate.

Area of Law: Bankruptcy

Issues Presented: What happens when one provision of an indenture for money loaned provides that the debt is accelerated if the debtor files for bankruptcy and while in bankruptcy it opts to redeem that debt, while another indenture provision provides for a redemption premium?

Brief Summary: The Energy Future Intermediate Holding Company LLC and EFIH Finance Inc. (collectively, "EFIH") redeemed Notes after their maturity had accelerated due to EFIH's voluntary bankruptcy filing. It did not pay the redemption premium called for in the Notes. The Third Circuit reversed the courts below which had held that the acceleration due to the bankruptcy cancelled the obligation to pay the redemption premium. The Third Circuit made clear that its "primary objective . . . is to give effect to the intent of the parties as revealed by the language of their agreement." Accordingly, it found that the language of the First Lien Indenture required EFIH to pay a make-whole if it redeemed the First Lien Notes at its option before December 1, 2015, and the Second Lien Indenture required the same for redemptions of Second Lien Notes before May 15, 2016 or March 1, 2017. EFIH redeemed the First Lien Notes at its option on June 19, 2014 and redeemed a portion of the Second Lien Notes on March 10, 2015. Thus, the Third Circuit held that EFIH must pay the make-whole per the indenture language.

Extended Summary: First and Second Lien Trustees brought appeals on behalf of their respective Noteholders, which the Third Circuit consolidated. They argued that the Bankruptcy Court and District Court for the District of Delaware erred by holding that Indentures did not require payment of the make-whole when the Energy Future Intermediate Holding Company LLC and EFIH Finance Inc. (collectively, "EFIH") redeemed the Notes after their maturity had accelerated due to EFIH's voluntary filing for bankruptcy. The issue presented to the Third Circuit was what happens when one provision of an indenture for money loaned provides that the debt is accelerated if the debtor files for bankruptcy and while in bankruptcy it opts to redeem that debt, and another indenture provision provides for a redemption premium.

Section 3.07, titled "Optional Redemption," stated when the make-whole is due: "At any time prior to December 1, 2015, the Issuer may redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium [i.e., the make-whole] . . . and accrued and unpaid interest." Section 6.02 provided that on the filing of a bankruptcy petition by EFIH "all outstanding Notes shall be due and payable immediately without further action or notice."

The Third Circuit began by discussing the First Lien Indenture. It stated that any duty to pay the make-whole came from § 3.07. Next, the Court next explored whether there was a redemption, if the redemption was optional, and if it occurred before December 1, 2015. Since § 3.07 did not define "redemption," the Court looked to New York and federal courts, which deemed "redemption" to include both pre- and post- maturity repayments of debt. Accordingly, the Court held that EFIH's June 19, 2014 refinancing was a "redemption" within the meaning of § 3.07. The Court then explained that EFIH's contention that any redemption was mandatory rather than optional did not match the facts. Instead, events leading up to the post-petition financing on June 19, 2014 demonstrated that the redemption was at EFIH's option under § 3.07. Finally, the Court explained that since these occurred before December 1, 2015, § 3.07 required that EFIH pay the Noteholders the yield-protection payment.

Second, the Third Circuit found that any conflict between §§ 3.07 and 6.02 was illusory: "We know no reason why we should choose between §§ 3.07 and 6.02 when both plainly apply." According to the Court, § 3.07 governs the optional redemption embedded in the refinancing and requires payment of the make-whole, while § 6.02 is silent. Thus, "it surpasses strange to hold that silence in § 6.02 supersedes § 3.07's simple script."

Third, the Third Circuit discussed the Second Lien Indenture's additional language, not present in the First Lien Indenture. According to the Court, these additions made explicit the link between acceleration under §6.02 and the make-whole for an optional redemption per § 3.07. Unlike the First Lien Indenture, where these concepts are without cross- reference and separate, in the Second Lien Indenture they are tied together: "Sections 3.07 and 6.02 are not merely compatible but complementary." Even still, the Court made clear that the result is the same no matter the Indenture - there were optional redemptions before a date certain, thereby triggering make-whole premiums.

When EFIH filed its bankruptcy petition, Second Lien Indenture § 6.02 caused "all principal of and premium, if any, interest . . . [,] and any other monetary obligations on the outstanding [Second Lien] Notes [to] be[come] due and payable immediately." The words "premium, if any," are most naturally read to reference §3.07's "Applicable Premium" - that is, the make-whole. By including the words "premium, if any," in its acceleration provision, the Second Lien Indenture left no doubt that §§3.07 and 6.02 work together. Thus, both remained applicable following bankruptcy, and, pursuant to the agreement struck with the Second Lien Noteholders, they were entitled to the make-whole.

Fourth, the Third Circuit discussed the effect of acceleration on make-whole provisions. The Court adopted the New York Court of Appeals' holding that contract terms like § 3.07 that are applicable before acceleration remain so afterward. Put differently, § 3.07 applies no less following acceleration of the Notes' maturity than it would to a pre-acceleration redemption. The Third Circuit explained that if parties want a "prepayment" premium to survive acceleration and maturity, they must clearly state it. Accordingly, the Court found nothing in § 6.02 negates the premium § 3.07 requires if an optional redemption occurs before a stated date. Thus, acceleration here had no bearing on whether and when the make-whole is due.

The Court subsequently emphasized that it must give effect to the "words and phrases" the parties chose. It explained that by avoiding the word "prepayment" and using the term "redemption," here, the parties decided that the make-whole would apply without regard to the Notes' maturity. Still, however, the Court found that if EFIH wanted its duty to pay the make-whole on optional redemption to terminate on acceleration of its debt, it needed to make clear that § 6.02 trumps § 3.07. The burden to make that showing was with EFIH. "To place it on the Noteholders for EFIH's decision to redeem the Notes, [would be] a bridge too far."

The Third Circuit concluded by reiterating its primary objective, "to give effect to the intent of the parties as revealed by the language of their agreement." It restated that the language of the First Lien Indenture required EFIH to pay a make-whole if it redeemed the First Lien Notes at its option before December 1, 2015, and the Second Lien Indenture requires the same for redemptions of Second Lien Notes before May 15, 2016 or March 1, 2017. EFIH redeemed the First Lien Notes at its option on June 19, 2014 and redeemed a portion of the Second Lien Notes on March 10, 2015 - before the respective dates noted. Thus, in accordance with statements of New York law by its highest Court and the federal Circuit Court in New York, the Third Circuit held that EFIH must pay the make-whole. The Court reversed the District Court's judgment with instructions to remand to the Bankruptcy Court for further proceedings consistent with this opinion.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/161351p.pdf

Panel: Ambro, Smith, and Fisher, Circuit Judges

Argument Date: September 27, 2016

Date of Issued Opinion: November 17, 2016

Docket Number: Nos. 16-1351, 16-1926, 16-1927 & 16-1928

Decided: Reversed and remanded

Case Alert Author: Brooke Hutchins

Counsel: Philip D. Anker, Esq. [Argued], Danielle Spinelli, Esq., Joel Millar, David Gringer, Isley Gostin, James H. Millar, Esq., Todd C. Shiltz, Esq., Norman L. Pernick, Esq., Counsel for Appellant DE Trust Co; Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., Mark D. Collins, Esq., Andrew R. McGaan, Esq. [Argued], James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., Chad J. Husnick, Esq., Steven N. Serajeddini, Esq., Edward O. Sassower, Esq., Michael A. Petrino, Esq., Counsel for Appellees EFIH; Joshua K. Brody, Esq., Gregory A. Horowitz, Esq. [Argued], Thomas M. Mayer, Esq., Jeffrey S. Trachtman, Esq., Laura D. Jones, Esq., James E. O'Neill, III, Esq., Robert J. Feinstein, Esq., Stephanie Wickouski, Esq., Counsel for Appellant Computershare Trust Co.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 11/21/2016 01:35 PM     3rd Circuit     Comments (0)  

November 18, 2016
  Carlton Baptiste v. Attorney General United States of America - Third Circuit
Headline: 18 U.S.C. §16(b) is void as unconstitutionally vague under the Due Process Clause of the Fifth Amendment due to its failure to clearly define "crime of violence"

Area of Law: Due Process Clause of Fifth Amendment, Statutory Interpretation

Issue(s) Presented: Does the definition of a "crime of violence" provided in 18 U.S.C. §16(b) render the statute void for vagueness under the Due Process Clause of the Fifth Amendment?

Brief Summary: The Third Circuit reviewed petitioner Carlton Baptiste's order to be removed as an alien issued by the Board of Immigration Appeals due to a conviction defined as a "crime of violence" and at least two convictions for crimes involving moral turpitude, or an extreme indifference to the value of human life. Baptiste, a native of Trinidad and Tobago, was convicted in 2009 for an aggravated felony, which is defined as a "crime of violence" pursuant to 18 U.S.C. §16(b). According to federal statute, aliens who are convicted of aggravated felonies after admission to the United States are removable.
Mirroring a recent decision by the Supreme Court which held that the definition of "violent felony" was unconstitutionally vague, the Third Circuit similarly held in the case at bar that the definition of a "crime of violence" in 18 U.S.C. §16(b) was unconstitutionally vague under the Due Process Clause of the 5th Amendment. Using the categorical approach of first defining "crime of violence" and then comparing the definition to the conviction statute of an aggravated felony, the Third Circuit did not find the definitions of "ordinary case" or "substantial risk" required to establish a crime of violence under §16(b) to be clear and give "fair notice of the conduct it punishes." Therefore, the Third Circuit found §16(b) to be subject to arbitrary enforcement and rendered it void.
However, the Third Circuit affirmed that Baptiste was still subject to removal due to his multiple convictions involving crimes of moral turpitude.

Extended Summary: Carlton Baptiste, a native of Trinidad and Tobago, sought review of a decision by the Board of Immigration Appeals ordering his removal as an alien due to his convictions of an aggravated felony and at least two convictions involving moral turpitude. In 2009, Baptiste was convicted of second-degree aggravated assault pursuant to New Jersey law. The Department of Homeland Security began removal proceedings against Baptiste in 2013 due to the classification of his 2009 conviction as a "crime of violence" pursuant to 18 U.S.C. §16 and therefore, was convicted of an aggravated felony pursuant to 8 U.S.C. §1227(a)(2)(A)(ii).
According to federal law, an alien who is convicted of an aggravated felony after admission to the United States is removable. 18 U.S.C. §16 defines an aggravated felony as a "crime of violence" imposing a prison sentence of at least one year. The Third Circuit used the categorical approach to determine if Baptiste's 2009 conviction was indeed an aggravated felony. To employ the categorical approach, the Third Circuit first examined the definition of a "crime of violence" and then compared that definition to the statute of conviction to determine if "aggravated felony" as defined in the statute of conviction was categorically a crime of violence.
The Third Circuit noted that 18 U.S.C. §16(b) defines a "crime of violence" as a "felony and that, by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense." Further, the categorical approach required the Third Circuit to apply the definition of a crime of violence to the statute of conviction, which stated that an aggravated assault occurs if the perpetrator "attempts to cause serious bodily injury to another, or causes such injury purposely or knowingly or under circumstances manifesting extreme indifference to the value of human life recklessly causes such injury." Therefore, the Third Circuit inquired whether recklessly causing serious bodily injury to another was categorically a crime of violence under §16(b).
The Third Circuit adopted the "ordinary case inquiry" to determine if a crime presents a "substantial risk" of the use of force, thus categorizing it as a crime of violence under §16(b). To define the "ordinary case" of reckless second-degree assault, the Third Circuit evaluated the conduct that is usually or normally used in the commission of the crime. However, the Third Circuit concluded that a variety of conduct can usually or normally be employed to commit reckless second-degree assault, noting specifically conduct that (1) "constitutes an intentional use of force;" (2) "presents a substantial risk of the intentional use of force; and" (3) presents no risk of the intentional use of force."
The Third Circuit contended that only judicial experience and "common sense" led it to the definition of the "ordinary case" of reckless second-degree assault to be conduct that "presents a substantial risk of the intentional use of force" and thus, categorically a crime of violence under §16(b). Because this reasoning invited arbitrary evaluation of the "ordinary case" of the commission of the crime, the Third Circuit determined that the definition of "ordinary case" was vague. Also, the Third Circuit noted that §16(b) provided no example offenses of a crime of violence and thus, failed to provide any guidance to the courts. Because the "ordinary case" and "substantial risk" analysis required by §16(b) were unconstitutionally vague, as it did not provide "fair notice of the conduct it punishes" required by the Due Process Clause of the Fifth Amendment, the Third Circuit invalidated the statute. Therefore, the invalidation of §16(b) rendered Baptiste's 2009 conviction of an aggravated felony void, as it could not be categorically defined as a crime of violence.
Regardless, the Third Circuit found that Baptiste was still removable as he was convicted of at least two crimes, his 2009 conviction and a conviction in 1978 for assault and battery, involving moral turpitude. Ultimately, the Third Circuit remanded Baptiste's petition to the Board of Immigration Appeals to determine if he was eligible for relief from removal due to his 2009 conviction no longer being categorized as an aggravated felony.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/144476p.pdf

Panel: Greenaway, Jr., Scirica, and Rendell, Circuit Judges

Argument Date: April 5, 2016

Date of Issued Opinion: November 8, 2016

Docket Number: No. 14-4476

Decided: Granted in part, denied in part, remanded in part

Case Alert Author: Katherine A. Osevala

Counsel: Michael L. Foreman and Penelope A. Scudder, counsel for Petitioner; Jennifer J. Keeney, Jesse M. Bless, Anthony C. Payne and Colette J. Winston, counsel for Respondent.

Author of Opinion: Circuit Judge Greenaway, Jr.

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 11/18/2016 01:15 PM     3rd Circuit     Comments (0)  

October 26, 2016
  Zaloga v. Borough of Moosic - Third Circuit
Headline: Third Circuit rules that retaliation for free speech does not alone overcome qualified immunity doctrine.

Area of Law: Qualified Immunity, Constitutional Law

Issues Presented: Does qualified immunity extend to a government actor's retaliation against a plaintiff for use of free speech?

Brief Summary: The owner of a medical company that serviced Lackawanna County prison engaged in a political dispute with members of Moosic Borough's government. In retaliation, those parties attempted to end his contract with the prison, and he sued for violation of his First Amendment rights. The Third Circuit ruled that the nature of the constitutional principles at play did not create a right clear enough to overcome the reasonableness standard created by the qualified immunity doctrine.

Extended Summary: Plaintiff Dr. Edward Zaloga is the owner of Correctional Care, Inc., a company that services the medical needs of correctional facilities. While living in Moosic Borough in Lackawanna County, his company contracted with Lackawanna County prison. Plaintiff became involved in a dispute with a tire company whose facility was immediately adjacent to his home. He was dissatisfied with the Borough's handling of the situation and began political attacks against the president of the borough council and the mayor.

A month later Plaintiff was informed by the county solicitor that Lackawanna County would not continue its contract with his company upon its expiration. He was also told that he could bid for the contract against other similar companies, but learned from a prison board member that his political opponents were working to block his contract renewal by contacting members of the board and gaining their support. The contract was ultimately renewed in 2009 and again in 2015.

Plaintiff filed a complaint in 2010 for alleged violations of his First and Fourteenth Amendment rights. Defendants moved for summary judgment. That motion was granted in part and denied in part, with the court ruling that the jury should decide whether one defendant was entitled to qualified immunity from suit.

The Third Circuit began by explaining that qualified immunity only shields government agents from suit insofar as their conduct does not violate "clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). To determine qualified immunity, the court first examines whether the facts show a violation of the plaintiff's constitutional rights. Second, the court evaluates whether those rights were clearly established in the specific context of the case.

The Court held that because the district court's analysis was mistaken as to the second part of the analysis there was no need to analyze the first. The Court explained that qualified immunity is meant to protect government workers who make mistakes but not those who are plainly incompetent or who knowingly violating the law. Thus, the constitutional right must be clearly established. "[T]he contours of that right must be clear to a reasonable official" so that such officials can be expected not to violate that right. Reichle v. Howards, 132 S. Ct. 2088, 2094 (2012). It is not enough that there is a well-established right against retaliation by a state actor for free speech; this right must be understood by a reasonable state actor.

Turning to Third Circuit precedent, the Court concluded that retaliation for free speech must be of a particularly virulent character to violate a constitutional right. That actor must coerce or threaten a third party to act in order for that conduct to be actionable. McLaughlin v. Watson, 271 F.3d 566 (3d. Cir. 2001). The case at hand involved no such coercion or threats. Furthermore, it has never been established that a governmental official who takes no direct action beyond pressuring others to act can be held personally liable.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/152723p.pdf

Panel (if known): Smith, Jordan, Rendell

Argument Date: July 12, 2016

Date of Issued Opinion: October 24, 2016

Docket Number: 15-2723

Decided: Reversed and Remanded

Case Alert Author: John Farrell

Counsel: Joshua M. Autry, Esq. [Argued], Counsel for Appellants; Bruce L. Coyer, Esq., Joseph T. Healy, Esq. [Argued], Counsel for Appellees

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/26/2016 12:34 PM     3rd Circuit     Comments (0)  

October 24, 2016
  Greg Hargus v. Ferocious and Impetuous, LLC - Third Circuit
Headline: Tortious act of throwing an object from land at an individual on an anchored vessel does not threaten a disruptive effect on maritime commerce and does not invoke federal admiralty law

Area of Law: Federal Admiralty and Maritime Jurisdiction

Issue(s) Presented: Whether throwing a coffee cup from land at an individual's head, who is standing on an anchored vessel, threatens a disruptive effect on maritime commerce and, thus, invokes maritime jurisdiction?

Brief Summary: Plaintiff filed a personal injury suit in District Court when he was hit in the head by a coffee cup while standing on an anchored vessel. Defendant threw the coffee cup from land. The Third Circuit concluded that plaintiff's negligence claim did not invoke maritime jurisdiction because the act did not potentially disrupt maritime commerce.
As established by the United States Constitution and 28 U.S.C §1333(1), "federal district courts have original jurisdiction over any civil case of admiralty or maritime jurisdiction" for the purpose of protecting maritime commerce. These cases must satisfy conditions of both location and of connection with maritime activity in order to be asserted.
The Third Circuit held that the first prong of the admiralty jurisdiction connection test was not met. Analyzing the "potential disruptive effects" the tortious act could have had on maritime commerce, the Third Circuit concluded that throwing an object from land at a person on an anchored vessel did not disrupt the waterway, obstruct free passage of commercial ships, or damage nearby commercial ships. Therefore, the incident did not have a disruptive effect on maritime commerce and failed to satisfy the first prong of the connection test, rendering federal admiralty jurisdiction inappropriate.

Extended Summary: Plaintiff Greg Hargus filed a negligence claim in district court when he was hit in the head by a coffee cup while he was standing on an anchored vessel. The coffee cup was thrown by Defendant Kyle Coleman while he was on land. The Third Circuit found that this tortious incident did not invoke maritime jurisdiction because it did not "potentially disrupt maritime commerce."
As established by the United States Constitution and 28 U.S.C §1333(1), "federal district courts have original jurisdiction over any civil case of admiralty or maritime jurisdiction." The purpose of having maritime jurisdiction is to protect maritime commerce. "To invoke federal admiralty jurisdiction over a tort claim, the claim must satisfy conditions of both location and of connection with maritime commerce."
The Third Circuit focused on the connection aspect of the test. Connection is satisfied by fulfilling a two-part test, requiring the court to first establish that "the general features of the type of incident involved have a potentially disruptive impact on maritime commerce." Referencing other cases, the Third Circuit noted that a disagreement or "physical altercation" between individuals on or around navigable water did not disrupt navigation, because it did not impede the "free passage of commercial ships in navigable waterways." Also, because the injurious event occurred while the vessel was docked, the vessel's crew was not distracted, which could have posed a danger to colliding with other vessels.
The Third Circuit held that the activity did not pose a threat to potentially disrupting maritime commerce since it did not obstruct the free passage of commercial ships, create a risk of collision of vessels, or damage a nearby vessel. Therefore, the first prong of the connection test was not satisfied, barring the application of federal admiralty jurisdiction. The Third Circuit vacated the judgment and remanded with instructions for the District Court to dismiss the case.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153635p.pdf

Panel: Fuentes, Vanaskie, and Restrepo, Circuit Judges

Argument Date: May 19, 2016

Date of Issued Opinion: October 18, 2016

Docket Number: No. 15-3635

Decided: Vacated and remanded

Case Alert Author: Katherine A. Osevala

Counsel: Matthew J. Duensing, Counsel for Appellants.

Author of Opinion: Circuit Judge Vanaskie

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/24/2016 12:50 PM     3rd Circuit     Comments (0)  

  USA v. Kareem Bailey - Third Circuit
Headline: Admission of highly prejudicial video evidence of a murder in connection with drug conspiracy convictions ruled harmless error due to overwhelming amount of other evidence

Area of Law: Federal Rules of Evidence Rule 403, Harmless Error

Issue(s) Presented: Did the district court commit harmful error in admitting highly prejudicial video evidence of a murder, not committed by defendants, to prove defendants' participation in a drug-trafficking organization?

Brief Summary: The four defendants were convicted for conspiracy and involvement in a heroin trafficking organization in Atlantic City, New Jersey. Video and non-video evidence of a murder committed by an individual other than the four defendants were admitted at trial. This evidence was used to prove the firearm and drug trafficking conspiracy charges of the defendants. The Third Circuit applied Federal Rule of Evidence 403, balancing the probative versus prejudicial effect of the evidence and found the non-video evidence of the murder to be admissible. Invoking the Rule 403 balancing for the video evidence of the murder, the Third Circuit concluded the unfair prejudice substantially outweighed the probative value of the video. The Third Circuit concluded the government had sufficiently proven the murder and its connection to the drug conspiracy through wiretapped phone calls and testimony, and therefore, was using the video only to elicit emotion. However, the Third Circuit found the error to be harmless. The Third Circuit reasoned that due to abundant other evidence that established defendants' guilt, it was not highly probable that the admission of the video altered their convictions. The Third Circuit affirmed the defendants' convictions.

Extended Summary: The four defendants were convicted of a number of charges relating to their involvement and conspiracy to participate in a violent heroin trafficking organization in Atlantic City, New Jersey. Defendants made four main arguments on appeal regarding the District Court's admission of evidence during trial and its refusal to grant a mistrial, which the Third Circuit dismissed with hardly any discussion. The Third Circuit only found their argument regarding the erroneous admission of video evidence of a drug-trafficking related murder to be of merit. However, the Third Circuit ruled that due to the abundance of other evidence available to establish the defendants' guilt, the admission of the video evidence was harmless.
Defendants argued that the prejudicial effect of the admission of evidence of a drug-trafficking related murder substantially outweighed the probative value, thus violating Rule 403 of the Federal Rules of Evidence. Rule 403 allows courts to "exclude relevant evidence if its probative value is substantially outweighed by unfair prejudice." The court uses a balancing test to evaluate the need for evidence "against the risk of prejudice to the defendant."
Video and non-video evidence of the murder was admitted at trial. The non-video evidence included testimony and recorded conversations regarding the murder. Because both the murder and the conspiracy charges were related to drug trafficking, the Third Circuit concluded the non-video evidence of the murder was more highly probative than prejudicial.
However, the Third Circuit found the admission of the video evidence of the murder to be highly prejudicial, outweighing its probative value. The video depicted an individual shooting the victim directly in the head outside of a crowded restaurant. The Third Circuit stated that the only value the murder video served was to play on the emotions of the jury. Also, the Third Circuit noted that there was an abundance of other evidence that was used to prove the conspiracy and firearm charges against the defendants. Therefore, video evidence of a murder not committed by the defendants was unnecessary. The Third Circuit concluded the prejudicial value of the video evidence of the murder substantially outweighed its probative value and was erroneously admitted.
Regardless of this error, the Third Circuit found the admission to be a harmless error. "An evidentiary error is harmless if it is highly probable that the error did not contribute to the judgment." The Third Circuit ruled the admission of the video to be harmless error due to the amount of other evidence available to prove the defendants' involvement in the drug-trafficking conspiracy and the firearm charges. Therefore, it was not probable that the admission of the video evidence altered the outcome of defendants' case, making the erroneous admission harmless. Defendants' convictions were affirmed.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152128p.pdf

Panel: McKee, Chief Judge, Jordan, and Roth, Circuit Judges

Argument Date: April 28, 2016

Date of Issued Opinion: October 18, 2016

Docket Number: No. 15-2276

Decided: Affirmed

Case Alert Author: Katherine A. Osevala

Counsel: John M. Holliday, Gina A. Capuano, William R. Spade, Jr., and James R. Murphy, Counsel for Appellants; Mark E. Coyne and Norman Gross, Counsel for Appellees.

Author of Opinion: Chief Judge McKee

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/24/2016 12:43 PM     3rd Circuit     Comments (0)  

October 17, 2016
  Mack v. Warden Loretto FCI - Third Circuit
Headline: Third Circuit Finds That Inmate's Oral Grievance Of Anti-Muslim Harassment Is Constitutionally Protected Under First Amendment and Indirect Pressure May Constitute a Substantial Burden on Religious Expression under Religious Freedom and Restoration Act

Area of Law: First Amendment Retaliation, Religious Freedom and Restoration Act

Issue(s) Presented: (1) Whether an inmate's oral grievance to prison officials can constitute protected activity under the Constitution; (2) Whether RFRA prohibits individual conduct that substantially burdens religious exercise; and (3) Whether RFRA provides for monetary relief from an official sued in his individual capacity.

Brief Summary: Plaintiff, an inmate and practicing Muslim at a federal correctional institution in Pennsylvania, filed a pro se lawsuit against various correctional officers for First Amendment retaliation and for violations of the Religious Freedom and Restoration Act. Plaintiff argued that he was fired from his commissary work assignment after he complained about officers' anti-Muslim conduct. He also claimed that one officer's anti-Muslim comments and conduct created a hostile work environment such that he was afraid to pray at work. He complained orally and in writing after the harassment, after the termination, and after receiving an unsatisfactory explanation for the termination. The Third Circuit found that Plaintiff's oral complaint was constitutionally protected and certain Defendants were not entitled to qualified immunity. The Court also found that the RFRA was the appropriate vehicle for relief to challenge a government official's individual conduct that indirectly coerced Plaintiff to betray his religious exercise.

Extended Summary: Plaintiff worked for pay in the prison commissary. Plaintiff was a practicing Muslim and was provided certain religious accommodations at work. Defendants were assigned to supervise the commissary. One officer slapped Plaintiff hard on the back, tagging him with an "I love bacon" sticker. He also made offensives comments about Muslims and told Plaintiff, "he'd be looking for a new job soon." Another officer stood by and laughed. Plaintiff claimed that the officers' conduct created a tense working environment, and that as a result Plaintiff was afraid to pray at work.

Plaintiff spoke to the officers' supervisor to complain about the anti-Muslim conduct and statements. Plaintiff was fired one week later for "bringing other inmates' commissary slips in," which Plaintiff denied. He eventually filed an inmate request-to-staff form seeking explanation in writing for why he was terminated. He orally complained to the Warden and then filed a formal grievance with the Deputy Warden. This federal lawsuit followed after his grievance was rejected.

With regard to the First Amendment retaliation claim, the Third Circuit affirmed dismissal of claims against certain Defendants because they were not involved until after Plaintiff was terminated. The Court vacated the dismissal and remanded for further proceeding with regard to the remaining Defendants. The Court found that Plaintiff properly exhausted his administrative remedies, alerting prison officials to his principal allegation, as required by the Prison Litigation Reform Act. The Court also found that Plaintiff's oral complaint was constitutionally protected because it sufficiently and timely put prison officials on notice that he sought redress, was conveyed in a reasonable manner, and concerned conduct that the prison itself prohibited. The Court additionally noted that the facility encouraged inmates to communicate their concerns orally and informally before filing a grievance. Lastly, the Court found that Defendants were not entitled to qualified immunity because a reasonable official in the officers' position should have known that retaliating against Plaintiff for exercising his right to petition was unlawful, especially if the prison encouraged its inmates to communicate their concerns orally.

With regard to the Religious Freedom and Restoration Act ("RFRA") claim, the Third Circuit vacated dismissal and remanded for further proceedings. The Court held that RFRA is the appropriate vehicle for relief to challenge a government official's individual conduct, regardless of whether that conduct was undertaken pursuant to an official rule or policy. The Court also held that RFRA provides for monetary relief when officers act unlawfully because monetary damages would be consistent with the purpose of RFRA to provide "appropriate relief" when religious liberty is substantially burden by government officials. Lastly, the Court held that a burden could be substantial even if it does not involved direct coercion to betray one's religious beliefs. Allegations of indirect pressure substantially burdening religious exercise are sufficient to survive a motion to dismiss.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/142738p.pdf

Panel: McKee, Fuentes, and Roth, Circuit Judges

Argument Date: April 18, 2016

Date of Issued Opinion: October 11, 2016

Docket Number: 14-2738

Decided: Affirmed in part, vacated in part and remanded

Case Alert Author: Jasmine M.Williams

Counsel: Sean E. Andrussier, Esq. and Duke University Law Students, John Bailey, Anne Showalter, Russell Taylor, Attorneys for Appellant; Jennifer R. Andrade, Esq., Jane M. Dattilo, Esq., and Rebecca R. Haywood, Esq., Office of United States Attorney, Attorneys for Appellees

Author of Opinion: Circuit Judge Fuentes

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 10/17/2016 09:49 AM     3rd Circuit     Comments (0)  

October 10, 2016
  United States of America v. Michael Free - Third Circuit
Headline: Sentencing guidelines allow harm enhancement only for economic harm inflicted or intended by bankruptcy fraudster

Area of Law: Federal Sentencing

Issues Presented: How is "loss" calculated under the Federal Sentencing Guidelines when a defendant commits bankruptcy fraud, but all of his creditors receive payment in full?

Brief Summary: Michael Free filed for bankruptcy, despite having more than sufficient assets to pay his debts. Thereafter, Free hid assets worth hundreds of thousands of dollars from the Bankruptcy Court. Free's actions eventually led to criminal charges and convictions for four counts of bankruptcy fraud. The Third Circuit upheld his conviction even though the creditors were paid in full because of overwhelming evidence that Free concealed assets and lied repeatedly to the trustee and the court. The Third Circuit vacated his sentence because it was enhanced based on the estimated value of the assets Free concealed and the amount of debt he sought to discharge, rather than on any economic loss he inflicted or intended to inflict on his creditors. It remanded for resentencing and directed the lower court to consider sentencing under this standard but noted that Free's manifest disrespect for the judicial system could merit an upward departure from the Guidelines.

Extended Summary: In 2010, Michael Free filed for bankruptcy, despite having more than sufficient assets to pay his debts. Thereafter, Free hid assets, mostly rare WW II-era guns, worth hundreds of thousands of dollars from the Bankruptcy Court. Free's actions eventually led to criminal charges and convictions for multiple counts of bankruptcy fraud. The Court noted that "[t]he oddity of this entire situation is best summarized by the fact that, despite all of Free's prevarications, his creditors received 100 cents on the dollar from Free's bankruptcy estate."

The Federal Sentencing Guidelines increase a bankruptcy fraudster's recommended sentence based on the amount of loss he causes, or intends to cause, to his victims. At Free's sentencing hearing, the District Court therefore needed to make a determination as to the amount of loss caused or intended to be caused by Free's crimes. Instead, the District Court chose to treat the estimated value of the assets that Free concealed from the Bankruptcy Court and the amount of debt sought to be discharged as the relevant "loss" under the Guidelines. This resulted in a Guidelines range of 21 - 27 months' imprisonment. The District Court ultimately sentenced Free to 24 months' incarceration on each count, to run concurrently, and to a term of supervised release of three years.

The Third Circuit found the evidence of Free's guilt indisputable and rejected his argument that he did not commit fraud because his creditors received full payment. Free was properly convicted of four counts under 18 U.S.C. § 157. "One commits bankruptcy fraud under § 157 by (1) devising a scheme to defraud, and (2) filing a document in a bankruptcy proceeding or making [a] false or fraudulent statement in relation to the bankruptcy proceeding for the purpose of executing or concealing the fraudulent scheme," and there was ample evidence from which a reasonable jury could have concluded that Free did precisely that. Moreover, the Court clarified that no fraudulent losses need to occur for a debtor to violate § 157; "[f]iling itself is the forbidden act." Thus, the Court found the evidence that Free filed fraudulent documents with the Bankruptcy Court to be overwhelming. Finally, the Court stated counts V and VI involved violations of 18 U.S.C. §§ 152(1) and 152(2), noting that "[a] debtor violates § 152(1) by failing to "reveal the existence of his assets to the United States Trustee,"' and § 152(2) outlaws "knowingly and fraudulently mak[ing] a false oath" in relation to a bankruptcy case. The Court again found the evidence of Free's guilt to be irrefutable.

Second, the Third Circuit vacated the sentence, holding that the District Court erred in its calculation of "loss" under the Sentencing Guidelines. The Court concluded that treating the value of Free's concealed assets as "loss," was out-of-step with the structure of the Guidelines and inconsistent with its own precedent. Because the District Court did not clearly find whether Free intended to deprive his creditors of this, or of any amount, the enhancement was not warranted. Instead, the Third Circuit instructed the District Court to determine whether Free intended to cause a loss to his creditors, or what he sought to gain from committing the crime.

The Third Circuit acknowledged the District Court's view that it is "sensible to punish fraudsters who conceal assets of greater value more harshly than defendants who conceal assets of lesser value." In fact, the Court explained that in the vast majority of cases, the loss calculation will have precisely this effect because, "generally speaking, the reason defendants conceal assets in bankruptcy is to benefit themselves at the expense of their creditors." Nonetheless, the Third Circuit found that the District Court failed to make explicit factual findings as to whether Free had such an intent: "While we are sympathetic with the District Court's desire to punish Free in a manner commensurate with his disrespect for the judiciary, we nonetheless conclude that inflating Free's loss figure based on a theory of abstract harm to the judiciary is not an appropriate way to calibrate his sentence under the Guidelines."

In conclusion, the Third Circuit added that even if the District Court finds no such intended loss, Free may not receive a lower sentence on remand. The Court explained Free's repeated lying to the Bankruptcy Court and his manifest disrespect for the judicial system could merit an upward departure or variance from the Guidelines, urging the District Court to examine these issues to determine an appropriate sentence consistent with the statutory sentencing factors and the applicable Sentencing Guidelines. Accordingly, the Third Circuit vacated the District Court's judgment and remanded the case for resentencing.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152939p.pdf

Panel: Fuentes, Shwartz, and Restrepo, Circuit Judges

Argument Date: July 12, 2016

Date of Issued Opinion: October 6, 2016

Docket Number: No. 15-2939

Decided: Vacated and remanded

Case Alert Author: Brooke Hutchins

Counsel: Martin A. Dietz, Esquire, for Appellant; Rebecca R. Haywood, Esquire, for Appellee.

Author of Opinion: Circuit Judge Fuentes

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/10/2016 12:56 PM     3rd Circuit     Comments (0)  

  Bobbi-Jo Smiley; Amber Blow; Kelsey Turner v. E.I. DuPont de Nemours and Company; Adecco USA, Inc. - Third Circuit
Headline: Third Circuit Holds Regular Paid Lunch Does Not Offset Required Overtime Pay

Area of Law: Fair Labor Standards Act

Issues Presented: Can DuPont offset overtime pay for employees by using the paid lunch time DuPont voluntarily provides to employees?

Brief Summary:

Employees working at DuPont's manufacturing plant in Towanda, PA bring a putative collective action and class action against DuPont seeking overtime compensation for before and after their shifts. DuPont voluntary provided these employees a thirty minute paid break and argued that break could offset the work employees were doing before and after their shifts. The Third Circuit reviewed the FLSA and determined that the lunch break could not offset overtime work because the employees were receiving it at their regular pay and not at a premium rate. The Third Circuit reversed and remanded the District Court's grant of summary judgment in favor of DuPont.

Extended Summary:

Bobbi-Jo Smiley, Amber Blow, and Kelsey Turner filed a putative collective action and class action against DuPont seeking overtime compensation for time before and after their shifts. 160 workers opted in to the class action. Appellants worked twelve-hour shifts at DuPont's manufacturing plant in Towanda, PA. DuPont directly employed Smiley and Blow, while Adecco employed Turner as an hourly contract employee. Employees were required to be onsite before and after their shifts to "don and doff" uniforms and protective gear. They were also required to participate in "shift relief" which involved sharing of information and status updates. The time spent on these two activities ranged from thirty to sixty minutes a day.

Although the FLSA does not require compensation for meal breaks, DuPont chose to compensate employees for one thirty minute paid lunch break, in addition to two non-consecutive thirty minute breaks. The paid break time always exceeded the amount of time Plaintiffs spent pre and post shift. Plaintiffs sought to recover overtime compensation for time spent donning and doffing their uniforms and protective gear and performing shift relief. DuPont argued that it could offset the overtime compensation with the paid breaks which they voluntarily provided. The District Court agreed holding that the FLSA allowed DuPont to use paid non-work time to offset the required overtime and dismissed the lawsuit entirely.

The Third Circuit first reviewed the statutory language of the FLSA. First, the Court determined that the voluntary paid lunch that DuPont provided is considered regular pay because the employees are compensated at a regular rate and not a premium rate. The Court looked to the definition of "hours worked" and permissible offsetting under the FLSA and determined that nothing in the FLSA authorizes the type of offsetting where an employer seeks to credit compensation that is included in calculating an employee's regular rate of pay against its overtime liability. The FLSA only provides for an offset of an employer's overtime liability using other compensation not already included in the regular rate and paid at a premium rate.

The FLSA does not require employers to treat meal breaks as hours worked, but it does not prohibit them from doing so. In this case, DuPont voluntary provided paid breaks and compensated employees with regular pay which can not offset overtime pay under the FLSA. The Third Circuit reversed and remanded.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/144583p.pdf

Panel: Vanaskie, Krause and Rendell, Circuit Judges

Argument Date: July 14, 2016

Date of Issued Opinion: October 7, 2016

Docket Number: No. 14-4583

Decided: Reversed and Remanded

Case Alert Author: Jessica Wood

Counsel:

Thomas M. Marrone, Esq., Patricia V. Pierce, Esq., Counsel for Appellants Bobbi-Jo Smiley, Amber Blow, and Kelsey Turner

David S. Fryman, Esq., Amy L. Bashore, Esq., Counsel for Appellee E.I. du Pont de Nemours and Company

A. Patricia Diulus-Myers, Eric R. Magnus, Counsel for Appellee Adecco USA, Inc.

Rachel Goldberg, Esq., Counsel for Amicus Curiae, Secretary, United States Department of Labor

Author of Opinion: Rendell, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/10/2016 11:15 AM     3rd Circuit     Comments (0)  

October 7, 2016
  Elliott J. Schuchardt v. President of the United States - Third Circuit
Headline: Lawyer has standing to challenge National Security Administration program he claimed collected full user communication content from several large U.S. internet providers

Area of Law: National Security

Issue(s) Presented: Does an individual have standing to challenge surveillance authorized under Section 702 of the Foreign Intelligence Surveillance Act?

Brief Summary: Elliott Schuchardt is an attorney who uses email services provided by Google and Yahoo as well as other services on the world wide web. In 2013, confidential documents were leaked that showed the National Security Administration operated an electronic surveillance program called PRISM. The program purportedly collected directly from the servers the full content of user communications exchanged using services provided by several large U.S. companies. The Third Circuit reversed the District Court's ruling that Schuchardt lacked standing under Article III to challenge the surveillance. The Third Circuit found that Schuchardt's allegations stated a particularized injury and that the allegations plead in his second amended complaint were entitled to a presumption of truth.

Extended Summary: The former secretary of the National Security Administration (NSA), Eric Snowden, leaked classified documents to journalists writing for the Washington Post and the Guardian. The documents noted the existence of an electronic surveillance program operated under Section 702 of the Foreign Intelligence Surveillance Act called PRISM. The program collected from U.S. company servers, including but not limited to, Google, Yahoo, and Apple full user communications content. The Appellant, Elliott Schuchardt, filed a complaint in District Court alleging the Government violated his Fourth Amendment right to be free from unreasonable searches and seizures of property by storing his confidential communications.

The Government filed successive motions to dismiss and Schuchardt in response amended his complaint twice. In his second amendment, he alleged that because the Government was intercepting, monitoring, and storing the content of all or substantially all of the email sent by American citizens, his own online communications had been seized in the dragnet. However, the District Court granted the Government's motion to dismiss the second amended complaint. The Court reasoned that Schuchardt lacked standing under Article III and had identified no facts supporting an inference that his own communications had been targeted, seized, or stored. Schuchardt appealed.

The Third Circuit noted that the lower court's analysis focused solely on the plaintiff's second amended complaint, which is a facial and not a factual attack on jurisdiction. In a facial attack, all of the allegations and documents referenced in the complaint are reviewed in the light most favorable to the plaintiff. In its review of the lower court's order, the Third Circuit accepted all of Schuchardt's plausible allegations as true and drew all reasonable inferences in his favor.

A plaintiff seeking to invoke federal jurisdiction, must have suffered an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent. In addition, there must be a causal connection between the injury and the conduct complained of. Moreover, it must be likely that the injury will be redressed by a favorable decision. In this case, Schuchardt's standing turned on whether his allegations were sufficiently particularized and whether his well-pleaded allegations were entitled to a presumption of truth. A particularized injury is one that affects a plaintiff in a personal and individual way. The collection of all or substantially all of the email sent by American citizens by means of the large internet providers allegedly encompasses Schuchardt's personal communications and data influenced by his personal circumstances. This includes information such as bank account numbers and passwords for financial data, and in the case of Schuchardt privileged and confidential communications with clients of his law firm. The Third Circuit held that Schuchardt's allegations stated a particularized injury under Article III.

The presumption of truth attaches only to those allegations for which there is sufficient factual matter to render them plausible on their face. The Third Circuit has cautioned that the plausibility standard does not impose a heightened pleading requirement and plaintiffs need not plead specific facts. Schuchardt relied on media reports and other publicly-available information to state his claim that the Government was intercepting, monitoring, and storing the content of all or substantially all of the email sent by American citizens. The Government raised three arguments challenging the sufficiency of Schuchardt's allegations. In addressing each of the arguments in turn, the Third Circuit stated that the Government's reliance on two prior cases was misplaced as one involved only prospective injury, and the other involved the summary judgment standard, not dismissal. In addition, Schuchardt's pleaded factual matter supports the inference that PRISM collects all or substantially all of the email sent. Finally, the Government's arguments disagreeing with the factual premises of the plaintiff's claims cannot be considered in a facial jurisdictional challenge. Thus, the Third Circuit held that Schuchardt's second amended complaint sufficiently pleaded his standing to sue for a violation of his Fourth Amendment right.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153491p.pdf

Panel: Smith, Hardiman, and Nygaard, Circuit Judges

Argument Date: May 17, 2016

Date of Issued Opinion: October 05, 2016

Docket Number: No. 15-3491

Decided: Vacated and Remanded

Case Alert Author: Geminesse Dorsey

Counsel: Elliott J. Schuchardt, Esquire, Counsel for Appellant; Andrew G. Crocker, Esquire, Counsel for Amicus Appellant; Benjamin C. Mizer, Esquire, David J. Hickton, Esquire, H. Thomas Byron III, Esquire, and Henry C. Whitaker, Esquire, Counsel for Appellee.

Author of Opinion: Circuit Judge Hardiman

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/07/2016 12:22 PM     3rd Circuit     Comments (0)  

October 4, 2016
  Federal Trade Commission v. Penn State Hershey Medical Center - Third Circuit
Headline: FTC and Commonwealth of Pennsylvania granted a preliminary injunction to prevent merger of Penn State Hershey Medical Center and PinnacleHealth System

Area of Law: Antitrust Law, Mergers and Acquisitions

Issue(s) Presented: Should the Third Circuit grant a preliminary injunction precluding the merger of Penn State Hershey Medical Center and PinnacleHealth System because the proposed merger will have a "presumptively anticompetitive" effect on the Harrisburg area?

Brief Summary: Penn State Hershey Medical Center and PinnacleHealth System, both located in the Harrisburg, Pennsylvania area, proposed their plan to merge to the Federal Trade Commission (FTC) in May 2015. The FTC concluded that the proposed merger violated Section 7 of the Clayton Act. Joined by the Commonwealth of Pennsylvania, the FTC sought a preliminary injunction, alleging that the merger would "substantially lessen competition." The Third Circuit agreed.

The Third Circuit determined the effect on the Harrisburg area, which was discerned as the relevant geographic market the merger would affect, would be "presumptively anticompetitive." Due to this conclusion, the Third Circuit proceeded to weigh the equities of granting the preliminary injunction to decide if it would be done in the "public interest." Reasoning that the public's interest in enforcing antitrust laws outweighed the possible positive effects of the two hospitals merging, the Third Circuit granted the FTC's preliminary injunction.

Extended Summary: Penn State Hershey Medical Center and PinnacleHealth System (the "Hospitals"), both located in the Harrisburg area, signed a letter of intent for a proposed merger in June 2014. After approval from both of their boards in March 2015, the Hospitals revealed their plans to merge to the FTC in May 2015. After conducting an extensive investigation, the FTC alleged the merger violates Section 7 of the Clayton ACT in an administrative complaint filed on December 7, 2015. Two days later, joined by the Commonwealth of Pennsylvania, the FTC filed suit in the Middle District of Pennsylvania.
The FTC and Commonwealth (the "Government") sought a preliminary injunction alleging that the merge of the two hospitals would "substantially lessen competition in the market for general acute care services sold to commercial insurers in the Harrisburg, Pennsylvania market." The District Court denied the preliminary injunction, stating that the Government had not properly defined the relevant geographic market, which left the District Court no basis for determining if the merger would negatively impact competition.
The Third Circuit found that the District Court had applied the incorrect legal standard for determining the facts that establish a relevant geographic market. Determining a relevant geographic market is imperative in deciding whether a merger is likely to be anticompetitive and warrants injunctive relief under Section 13(b) of the FTC Act. While the District Court stated that it would use the hypothetical monopolist test, the appropriate test agreed by both parties, the Court incorrectly applied the test, instead using an economic test the FTC no longer accepts.
According to section 13(b) of the FTC Act, the FTC can seek a preliminary injunction in federal district court to prevent a merger if the FTC has reason to believe the corporation is violating or will violate Section 7 of the Clayton Act. The District Court may grant a preliminary injunction if there is a sufficient showing, once weighing the equities and considering the likelihood of the success of the FTC claim, granting this action will be in the public interest.
The Third Circuit first considered the likelihood of the success of the FTC's claim on its merits. Section 7 of the Clayton Act precludes mergers that may substantially "lessen competition" or "tend to create a monopoly." Section 7 claims are also assessed by a burden-shifting framework. Therefore, the Government needed to establish a prima facie case that the merger of the Hospitals had a high probability of being anticompetitive. The Government needed to establish this prima facie case by "(1) propos[ing] the proper relevant market and (2) show[ing] that the effect of the merger in that market is likely to be anticompetitive.
In assessing the first prong of the prima facie case, the Third Circuit found that the relevant product market was "general acute care ('GAC') services sold to commercial payors." GAC services require patients to stay overnight in the hospital for surgery or other medical procedures. Both parties agreed this was the appropriate relevant product market.
Next, the Third Circuit established that the relevant geographic market, the "area in which a potential buyer may rationally look for the goods or services he seeks," as the four-county "Harrisburg area," including Dauphin, Cumberland, Lebanon and Perry counties. In establishing the relevant geographic market, the Court had to consider the "commercial realities of the industry" and if those were "economically significant." The Third Circuit used the hypothetical monopolist test to determine the relevant geographic market, which questions "if a hypothetical monopolist could impose a small but significant non-transitory increase in price in the proposed market, the market is properly defined." If consumers would respond to an increase in prices by seeking the product outside the proposed market, then the market definition is too narrow.
The Third Circuit found that the District Court misapplied the hypothetical monopolist test, instead using a test that focused primarily on patient inflow statistics. The Third Circuit stated that patient flow data was not helpful in this case, because Hershey is a prominent hospital that attracts patients from outside of the Harrisburg area. Therefore, it is likely patients will still choose to go to Hershey due to its exceptional reputation for patient care without affecting the decisions of those patients who choose hospitals located closer to them. Explicitly, the Third Circuit stated that relying on patient flow data did not satisfy the hypothetical monopolist test. The District Court also failed to consider patient outflow which was very low for the GAC services.
Also, the Third Circuit stated the District Court did not consider the insurance companies' responses to a slight increase in pricing, which showed that the District Court failed to recognize the "commercial realities" of the geographic area. The Third Circuit clarified that in applying the hypothetical monopolist test, the view of the insurers is taken into account. Considerations such as a price increase forcing the insurers to take on hospitals outside the proposed geographic market proves that the market is too narrow.
Lastly regarding the relevant geographic market, the Third Circuit established that private contracts should not be considered for the hypothetical monopolist test, because it is a hypothetical test. The Third Circuit reasoned that if its analysis could be swayed by private contracts, any merger could try to expand its relevant geographic market by giving evidence of private agreements and escaping antitrust laws.
Having evaluated the District Court's legal error in applying the hypothetical monopolist test, the Third Circuit found that the Government had successfully defined the relevant geographic market. Noting the Government's extensive evidence regarding the bargaining power Hershey possesses due to its exceptional reputation and insurance company testimony that hospitals in York or Lancaster counties were not "suitable alternatives," the Third Circuit held the "four-county Harrisburg area" to be the relevant geographic market.
For the second prong of the prima facie case, the Third Circuit evaluated whether the Government proved the merger was likely to have a negative impact on competition in the area. Using a market concentration measurement index, the Third Circuit determined that the Government presented an excessively concentrated market which translated into demonstrating that the merger would be "presumptively anticompetitive."
While the Hospitals did have an opportunity to rebut the Government's prima facie case, The Third Circuit found that the Hospitals failed to prove that the merger would not inhibit competition or that any anticompetitive effects brought about by the merger would be "offset by extraordinary efficiencies resulting from the merger." To rebut a prima facie case of this nature, the Hospitals had to prove either of these options. The Hospitals presented two efficiencies defenses, but both failed, as the Third Circuit found that the Hospitals only presented speculative and ambiguous evidence, not clear evidence that the merger will create efficiencies which will offset the effect it will have on competition. Also, the Hospitals alleged that repositioning, "the response by competitors to offer close substitutes offered by the merging firms," would deter prices from significantly rising. However, the Third Circuit disputed this argument, reasoning that Hershey had too much power and attracted too many patients for repositioning to be successful.
Lastly before granting the preliminary injunction, the Third Circuit weighed the equities to decide whether granting the motion "would be in the public interest." This caused the Third Circuit to question if the harm suffered by the Hospitals in delaying the merger outweighed the harm the public might experience if the injunction were denied. Because Section 13(b) of the FTC Act does not specify which equities to weigh, the Third Circuit balanced the public's interest in enforcing antitrust laws with the private equities of the Hospitals seeking to merge. Reasoning that allowing the Hospitals to merge and then finding that it violates Section 7 of the Clayton would be more detrimental and costly than delaying the merge and granting the injunction, the Third Circuit concluded granting the preliminary injunction was appropriate. The Third Circuit clarified that it was weighing the equities of the injunction, as required by Section 13(b) of the FTC Act, not the merger, and found that the injunction would not deprive the public of any benefits. While recognizing the possibility for advantages to the public could result because of the merger, the Third Circuit reasoned that those advantages will still exist even though the merger is delayed by this preliminary injunction.
In conclusion, the Third Circuit concluded that a preliminary injunction precluding the merger of the Hospitals would be in the public interest after determining the Government's likelihood of success in proving the anticompetitive effects of the merger and weighing the equities.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/162365p.pdf

Panel: Fisher, Greenaway, Jr., and Krause, Circuit Judges

Argument Date: July 26, 2016

Date of Issued Opinion: September 27, 2016

Docket Number: No. 16-2365

Decided: Reversed and remanded

Case Alert Author: Katherine A. Osevala

Counsel: David C. Shonka, Sr., Joel R. Marcus, Deborah L. Feinstein, Michele Arington, William H. Efron, Ryan F. Harsch, Jared P. Nagley, Jonathan W. Platt, Geralyn J. Trujillo, Counsel for the Appellant FTC; Bruce L. Castor, Jr., Bruce Beemer, James A. Donahue, III, Tracy W. Wertz, Jennifer Thomson, Aaron L. Schwartz, Counsel for Appellant Commonwealth of Pennsylvania; Charles I. Artz, Counsel for Amicus Association of Independent Doctors; Richard P. Rouco, Counsel for Amicus Economics Professors; Lawrence G. Wasden, Brett DeLange, Robert W. Ferguson, Darwin P. Roberts, Jonathan A. Mark, Kamala D. Harris, George Jepsen, Lisa Madigan, Thomas J. Miller, Janet T. Mills, Maura Healey, Lori Swanson, Jim Hood, Tim Fox, Ellen F. Rosenblum, Counsel for Amici States; William D. Coglianese, Louis K. Fisher, Julie E. McEvoy, Christopher N. Thatch, Adrian Wager-Zito, Alisha M. Crovetto, Jon G. Heintz, James P. DeAngelo, and Kimberly A. Selemba, Counsel for Appellees.

Author of Opinion: Circuit Judge Fisher

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/04/2016 12:48 PM     3rd Circuit     Comments (0)  

September 27, 2016
  Maurice Marie Didon v. Alicia Dominguez Castillo - Third Circuit
Headline: The Hague Convention does not Allow for Concurrent Residence in Multiple Countries

Area of Law: International Law, Custody Law

Issues Presented: May a child have two countries of habitual residence at the same time under the Hague Convention?

Brief Summary: The children in this custody dispute lived on the island of Saint Martin which comprises two countries, French Saint Martin and Dutch Sint Maarten. The children lived on the Dutch side and went to school on the French side. The father filed for custody in the French court, and, when the mother took them to the United States, he sought their return under the Hague Convention on the Civil Aspects of International Child Abduction. The Hague Convention only allows enforcement of orders from countries where children are habitually residing. The Third Circuit rejected the lower court ruling that the children were residents of both countries. It found that, based on the text of the Hague Convention a child could only habitually reside in a single country. Because residence is decided by where the child has lived, and Sint Maarten has not recognized the Convention, it did not apply.

Extended Summary: This case concerns two children, A.D. and J.D., from Saint Martin. This island is split into French Saint Martin, where the children went to school, and Dutch Sint Maarten, where the children lived. French Saint Martin recognizes the Hague Convention on the Civil Aspects of International Child Abduction but Sint Maarten does not. The Convention allows a parent to petition for the return of a child removed from his or her "habitual residence," in violation of a custody order.

A.D. was the son of both parties and J.D. the daughter of the respondent Dominguez Castillo, referred to by the Court as Dominguez. The parties sought and obtained in French court a change to J.D.'s birth certificate naming Didon as the father but completed no other adoption procedures. The family lived in Dutch Sint Maarten but Didon worked and the children went to school in French Saint Martin. In July 2014 Didon filed for full custody in French civil court, resulting in no notice to Dominguez. Before these procedures were complete, she took the children to New York with no clear intention to return. The French court granted Didon full custody and a private investigator he hired found them in Hazleton, Pennsylvania.

In August, 2015 Didon filed a Hague Convention Petition in the Middle District of Pennsylvania to return his children and enforce the French custody order. The District Court approved the petition as to A.D. but denied it as to J.D. The court found that due to the family's contacts it was resident in both parts of the island and added that: "The parties' testimony reveals that the border [between Dutch Sint Maarten and French Saint Martin] is so permeable as to be evanescent, and is regularly and readily traversed by residents and travelers alike. . . . [F]or most purposes of its residents' daily life, the island is essentially undivided." The District court distinguished cases denying multiple habitual residences previously as deciding the issue of whether the child had abandoned a previous residence. It granted Didon custody of A.D. due to the biological relationship. However, the adoption of J.D. did not satisfy French law such that it could grant him custody.

The Third Circuit reversed, holding that a child can have only a single country of habitual residence, and because the children lived in Sint Maarten, it was their habitual residence. Because Sint Maarten did not recognize the Convention, Didon could not rely on the Convention to enforce his French custody order. The Court cautioned that determining an individual's place of residence is a mixed question of law and fact. The purpose of the Hague Convention is to prevent forum shopping during custody cases; it seeks to restore the status quo by returning children to their homes. The Court set forth distinct questions to be evaluated in such a custody battle: (1) where the removal or retention took place; (2) where the child was habitually resident immediately prior to the removal or retention; (3) whether the removal or retention violated the petitioning parent's custody rights under the law of the country of habitual residence; (4) whether the petitioning parent was actually exercising those custody rights at the time of the removal or retention, or would have but for the removal or retention.

The Court found the second question dispositive. The Court examined the text of the Hague Convention and found that it unambiguously contemplated only a single place of residence in referring only to a single "State" of habitual residence at multiple points. Moreover case law from multiple circuits has reiterated this point. While there was a case from the Ninth Circuit which the District Court used to justify its reasoning which found it could be possible to find multiple residences where a child split their time, the case was unclear if it was referring to alternating or concurrent habitual residence. The Third Circuit went on to explain that even if the case was referring to concurrent habitual residence it would not override the text of the convention.

The Court then found that Dutch Sint Maarten was the children's place of habitual residence based on the concept that residence cannot be established where a child has not lived. This interpretation honors the choice of law rule provided by the drafters of the Convention. A child must have lived in a country for that country to be her place of habitual residence under the Hague Convention. Thus the French custody order could not be enforced through the Convention as the habitual residence was Sint Maarten which did not recognize the Convention.



To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/153350p.pdf

Panel (if known): McKee, Fisher, Greenaway, Circuit Judges

Argument Date: June 22, 2016

Date of Issued Opinion: September 26, 2016

Docket Number: 15-3350 and 15-3579

Decided: Vacated

Case Alert Author: John Farrell

Counsel: Anthony J. Vetrano, Esq., Counsel for Didon; Michelle Pokrifka, Esq., Counsel for Dominguez

Author of Opinion: Judge Greenaway

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 09/27/2016 03:36 PM     3rd Circuit     Comments (0)  

September 23, 2016
  Johnson v. City of Philadelphia - Third Circuit
Headline: Third Circuit Finds that Police Officer's Use of Deadly Force to Protect against Potentially Fatal Attack was Justified Even if Initial Contact with Mentally Disturbed Individual Did Not Follow Department Protocol

Area of Law: Fourth Amendment, Excessive Force

Issue(s) Presented: Whether police officer's use of force was objectively reasonable in the circumstances?

Brief Summary: The plaintiff, as administrator of Kenyado Newsuan's estate, sued Officer Thomas Dempsey and the Philadelphia Police Department for using excessive force while attempting to arrest Mr. Newsuan, which force ended in Newsuan's death. Newsuan was high on PCP and standing naked in the street when Dempsey first confronted him. Philadelphia Police Department policy called for employing a more cautious and less confrontational approach than that pursued by Dempsey when dealing with severely mentally disturbed individuals. The plaintiff argued that, if Dempsey had followed department policy, Newsuan would never have attacked Dempsey and attempted to grab his gun, and therefore would never have been shot by Dempsey in self-defense. While agreeing that Dempsey should have behaved differently, the Third Circuit found that Newsuan's sudden and violent attack interrupted the chain of causation and was a superseding cause of Newsuan's death, thereby relieving Dempsey of any responsibility for Newsuan's demise.

Extended Summary: Philadelphia Police Officer Thomas Dempsey arrived at the 5800 block of North Mascher Street in response to several reports that a naked man was standing in the street yelling and flailing his arms. There he encountered Kenyado Newsuan, who was indeed naked, yelling and flailing his arms. He was also high on PCP, which fact Dempsey probably knew. The Philadelphia Police Department instructs officers who encounter a severely mentally disturbed individual to, among other things, request adequate backup, maintain a zone of safety, attempt to deescalate the situation through communication, and avoid taking immediate aggressive actions. Officer Dempsey did not follow these directives. Instead he exited his patrol car with taser in hand and ordered Newsuan to come to where Dempsey was standing. After initially ignoring Dempsey's order, Newsuan eventually approached Dempsey. When he got too close, Dempsey tasered him. Subsequently, there was a violent confrontation between the two, with Newsuan hitting Dempsey, choking him, and banging him against the squad car. Ultimately, Newsuan tried to get Dempsey's gun from his holster. At that point, Dempsey shot and killed Newsuan.

Plaintiff, as administrator of Newsuan's estate, sued Officer Dempsey and the City of Philadelphia for using unconstitutionally excessive force. The District Court granted summary judgment in favor of the defendants, holding that there was no genuine material dispute that Officer Dempsey reasonably used deadly force to defend himself from Newsuan's attack. Plaintiff appealed.

The Third Circuit analyzed the case from the perspective of a reasonable officer in light of the totality of circumstances. It found that Dempsey was justified in using deadly force to defend himself once Newsuan began reaching for his gun. The plaintiff argued that even if the use of lethal force was justified after Newsuan's attack, the seizure as a whole was unreasonable because Dempsey did not comply with the Police Department directive regarding encounters with severely mentally disabled persons. Had Dempsey followed police department policy, the violent confrontation would have never occurred and Dempsey would never have been required to use deadly force to protect his own life. The Court, however, found that the plaintiff's argument failed on the fundamental tort principle of proximate cause, specifically the principle that a superseding cause breaks the chain of proximate causation. The Court concluded as a matter of law that Newsuan's violent, precipitate, and illegal attack on Officer Dempsey severed any causal connection between Dempsey's initial actions and his subsequent use of deadly force. Newsuan's assault coupled with his attempt to gain control of Dempsey's gun was the direct cause of his death.

The Court emphasized a note of caution regarding the straightforward analysis of the proximate cause issue. It noted that the opinion should not be misread to broadly immunize police officers from Fourth Amendment liability whenever a mentally disturbed person threatens an officer's physical safety. This case presented exceptional circumstances, namely the sudden and unexpected attack, that forced the officer into a position to defend himself. In other situations, particularly when plaintiffs can show that mentally ill individuals are likely to react in certain ways to certain provocations, it may be that the chain of causation will not be broken.

The Court affirmed the lower court's granting of summary judgment to the defendants.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152346p.pdf

Panel: Fuentes, Krause, and Roth

Argument Date: February 11, 2016

Date of Issued Opinion: September 20, 2016

Docket Number: 15-2346

Decided: Affirmed

Case Alert Author: Jasmine M.Williams

Counsel: Armando A. Pandola, Jr., Esq. and Alan E. Denenberg, Esq. of Abramson & Denenberg, P.C., Attorneys for Appellants; Craig R. Gottlieb, Esq., of the City of Philadelphia Law Department, Attorneys for Appellees

Author of Opinion: Circuit Judge Fuentes

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 09/23/2016 01:37 PM     3rd Circuit     Comments (0)  

September 22, 2016
  Watson v. Rozum - Third Circuit
Headline: Court Finds Prisoner's Retaliation Claim Can Survive if Evidence of Prisoner Misconduct is not Clear and Overt

Area of Law: Retaliation - Deprivation of Rights

Issue(s) Presented: Under what circumstances can a prisoner's claim for retaliation survive attempts to show that the prisoner would have been disciplined even if he had not complained about his treatment?

Brief Summary: Prisoner Joseph Watson filed a claim against prison officials for illegal retaliation. He claimed that prison officials wrote him up for misconduct for having contraband in his cell (a radio with a taped-on antenna) only because he filed a grievance claiming a guard had broken off the antenna to his radio (which had only been loose before) during a routine cell search. The prison moved for summary judgment on his claim under the "other decision" doctrine, which holds that prison officials cannot be charge with retaliation if they can demonstrate that the prisoner would have been punished for his actions even if he had not engaged in protected activity, in this case even if he had not filed a grievance about the radio. While the District Court granted the prison's motion, the Third Circuit reversed, finding that summary judgment was only appropriate if the rules violation by the prisoner was "clear and overt." That was not true here. The Court noted that the prisoner had kept the same radio in his cell for over a year without any problems, that other inmates had broken radios and had not had misconduct charges brought against them, and that the decision to file a misconduct charge against Watson appears to have been made only after Watson said he was going to file a grievance.

Extended Summary: Joseph Watson is an inmate at the state prison in Somerset, Pennsylvania. Watson filed a claim against prison officials for retaliating against him for exercising his First Amendment rights. Watson's claim arose from the alleged mishandling and confiscation of his radio during a routine cell search. Watson alleged that while inspecting his radio, Officer Kline pulled the antenna so hard that it broke off of the radio. Officer Kline claimed the antenna was already broken, but secured with tape. Watson claimed it was merely loose. After Kline failed to take responsibility for breaking the antenna, Watson requested a grievance form from Captain Simosko, who refused to provide one. Later that day, Watson was summoned to a meeting with Officer Coutts about the broken radio, at which meeting Officer Coutts supposedly admonished Watson for giving Kline and Simosko a "hard time" by asking for a grievance form and by requesting that the radio be fixed. Coutts allegedly told Watson that he should have simply dropped the matter, and because he didn't, Coutts would be filing a misconduct charge against Watson. Watson was eventually able to file his grievance after he secured the proper form from another prisoner, but before he could do that, he was officially charged with a Class I misconduct for having a broken radio in his cell. (Broken radios are considered contraband under prison regulations.) The misconduct form was issued about 6 hours after the initial search of Watson's cell.

Watson filed his retaliation lawsuit against several individuals, including Officers Coutts. The District Court granted summary judgment on this claim, ruling that the officials would have issued the misconduct against Watson even if he hadn't filed a grievance (the "same decision" defense), because the radio was contraband, and keeping contraband in one's cell is a punishable offense. The same decision defense requires the prison officials to establish that "they would have made the same decision absent the protected conduct for reasons reasonably related to a legitimate penological interest."

The Court of Appeals found that summary judgment in favor of Officer Coutts was not appropriate, because the record supported conflicting inferences regarding Coutts' motive in issuing Watson's misconduct. Although an inference of improver motive can be rebutted if the evidence of a violation of prison regulations is "clear and overt," in this case the Court found this not to be true. The Court noted evidence in the record that Watson's radio had been broken for at least a year, as well as evidence that there were other inmates who had broken radios that had not been confiscated and for which they had not been issued misconduct citations. The evidence also showed that Officer Kline did not issue a misconduct citation to Watson at the time he confiscated the radio, but rather that the misconduct was issued only after Watson announced he was going to file a grievance.

Accordingly, the Third Circuit found that granting summary judgment for the claim against Officer Coutts was not appropriate. The decision of the lower court was affirmed in all respects except with respect to the summary judgment for Officer Coutts, which judgment was reversed and remanded for further proceedings.

Judge Ambro filed a concurring opinion in which he expressed a concern about what to do in future situations where, unlike in the instant case, prison officials can prove that punishment would normally be imposed for the conduct at issue but there is still a strong indication that the punishment was actually imposed in retaliation for exercising protected activities. He suggested a hypothetical in which a prison official admits that the prisoner would never have been charged with misconduct had he not filed a complaint against prison officials.

Judge Hardiman filed a dissenting opinion.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/133510p.pdf

Panel: McKee, Ambro, and Hardiman

Argument Date: October 8, 2015

Date of Issued Opinion: August 23, 2016

Docket Number: 13-3510

Decided: Affirmed in part, Reversed in part

Case Alert Author: Jasmine M.Williams

Counsel: Kathleen G. Kane Attorney General of Pennsylvania Kemal A. Mericli, Counsel for Appellees; Benjamin R. Barnett, Ellen L. Mossman, Counsel for Appellant

Author of Opinion: Chief Judge McKee

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 09/22/2016 10:47 AM     3rd Circuit     Comments (0)  

  Reed Dempsey v. Bucknell University - Third Circuit
Headline: Third Circuit Finds Bucknell Police Not Liable for Damages as a Result of Bringing Assault Charges against Bucknell University Student

Area of Law: False Arrest, Malicious Prosecution

Issues Presented: Did recklessly omitted facts from a charging affidavit lead to the issuance of a faulty warrant against a Bucknell University student?

Brief Summary:

The Third Circuit affirmed the District Court's grant of summary judgment for the malicious prosecution claim of Bucknell student Reed Dempsey, because the court determined that, even taking into account certain facts recklessly omitted from the charging affidavit, a reasonable jury could still not find a lack of probable cause for the original charges filed against Dempsey. Dempsey had been accused of assaulting a fellow Bucknell University student, Kelly Stefanowicz, in their residence hall. After a couple of months, the charges against Dempsey were dropped by the District Attorney. A year later Dempsey filed a civil rights suit against Bucknell University and Bucknell University Public Safety (BUPS) Officers (the Bucknell Defendants") alleging a violation of his Fourth Amendment right to be free from unlawful search and seizure. To analyze Dempsey's claim, the Third Circuit first identified those material facts describing the alleged assault that were omitted from the sworn affidavit Bucknell police used to obtain the original arrest warrants against Dempsey. The Court then reconstructed the affidavit with the omitted facts included, and ultimately decided that no reasonable jury could conclude that this revised affidavit lacked probable cause for issuing an arrest warrant. The summary judgment dismissal of Dempsey's claims by the trial court was affirmed.

Extended Summary:

On September 7, 2010, Reed Dempsey was charged with assaulting fellow Bucknell University student Kelly Stefanowicz in their residence hall. Two days later, additional charges of indecent assault and false imprisonment were brought against Dempsey. In the course of investigating the alleged crime, BUPS Officers interviewed Stefanowicz, Dempsey, and ten other undergraduate students and also obtained a written statement from Stefanowicz. They also reviewd text messages from Dempsey to Stefanowicz that were sent after the events in question and which demonstrated remorse for his actions. Not surprisingly, not all of the witnesses agreed on all the details of the alleged crimes. It was on the basis of this evidence that BUPS Officers charged Dempsey with wrongdoing.

Less than two months later, the District Attorney of Union County, Peter Johnson, withdrew all charges against Dempsey, explaining that "the nature of the alleged crime and the surrounding circumstances make it difficult to prove what happened beyond a reasonable doubt." A year after that, Dempsey brought suit against the Bucknell Defendants claiming false arrest, malicious prosecution, and false imprisonment, among other claims. The District Court dismissed some of the claims and, after discovery, granted summary judgment as to the rest. Dempsey appealed and argued that the District Court incorrectly concluded that information omitted from the charging affidavit by Officer Julie Holtzapple was not material to the probable cause determination. Dempsey contended that Officer Holtzapple's affidavit reflected a false version of events and that an accurate affidavit would not have established probable cause to charge him with any crime.

In analyzing Dempsey's appeal, the Third Circuit noted that a plaintiff alleging malicious prosecution must show two things - first, that the charging officer's affidavit recklessly made false statements or omissions, and second, that those false statements or omissions were necessary to the finding of probable cause for violation of the law. The Court also made clear that once a determination is made that false information was included or that important information was omitted in an affidavit of probable cause, the court must then create a reconstructed affidavit which includes essential omitted facts and which corrects material falsehoods. In this case, because the District Court did not perform the necessary reconstruction, the Third Circuit undertook the task on its own.

After a close examination of the record, the Court agreed with Dempsey that a number of material facts had been omitted from the affidavit. But even after adding those facts to the affidavit - including the contradictory eyewitness testimony and the disagreement over how much time Dempsey and Stefanowicz had spent in his room alone together - the Court concluded that no reasonable jury could have found that probable cause for the charges did not still exist, especially given the extent of Stefanowicz's injuries, the strength of her allegations, and Dempsey's subsequent text messages expressing remorse. Accordingly the Third Circuit affirmed the District Court's grant of summary judgment in favor of the Bucknell Defendants.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/151328p.pdf

Panel: Vanaskie, Shwartz and Krause, Circuit Judges

Argument Date: January 26, 2016

Date of Issued Opinion: August 22, 2016

Docket Number: No. 15-1328

Decided: Affirmed

Case Alert Author: Jessica Wood

Counsel: Dennis E. Boyle, Esq., Kenneth E. Raleigh, Esq., Counsel for Appellants

Amy C. Foerster, Esq., James A. Keller, Esq., Cory S. Winter, Esq., Counsel for Appellee

Author of Opinion: Krause, Circuit Judge

Circuit: Third

Case Alert Supervisor: Professor Mark Anderson

    Posted By: Susan DeJarnatt @ 09/22/2016 08:53 AM     3rd Circuit     Comments (0)  

September 12, 2016
  Leonard v. Stemtech International Inc. - Third Circuit
Headline: District court did not abuse its discretion allowing a $1.6 million jury award for the infringed use of copyrighted stem cell photographs

Area of Law: Copyright Infringement

Issue(s) Presented: Did the district court abuse its discretion in concluding the jury's findings as to vicarious and contributory infringement were supported by substantial evidence and awarding a $1.6 million award for copyright infringement?

Brief Summary: Andrew Leonard, a stem cell photographer, licensed one of his photographs to Stemtech International Inc., a nutritional supplement provider, to be used in one of Stemtech's publications. Stemtech then used Leonard's images without a license in other materials, including its distributors' websites, marketing materials, and informational PDFs. Leonard sought damages for direct, vicarious, and contributory infringement and was awarded a $1.6 million jury award on these counts.
The Third Circuit held that the district court did not abuse its discretion in finding the jury's verdict on direct, vicarious, and contributory infringement was supported by substantial evidence. Leonard first established direct infringement, which is required to prove contributory and vicarious infringement, by showing the use of his copyrighted images in Stemtech's distributors' materials. He also demonstrated that Stemtech required its distributors to use the copyrighted images in order to add legitimacy to its products and attract customers. This evidence was sufficient to prove vicarious and contributory liability.
Due to expert testimony supporting the rarity of stem cell photographs and using the Copyright Act's fair market value approach for calculating actual damages, the Third Circuit did not find the jury's $1.6 million award to be excessive or the district court to have abused its discretion in upholding the verdict. The Third Circuit vacated the district court's denial of prejudgment interest, as the district court erroneously refused to grant it to Leonard because it believed the jury award to be sufficient compensation for the use of the infringed photographs.

Extended Summary: Leonard, a stem cell photographer, licensed one of his photographs to Stemtech International Inc., a nutritional supplement provider, to be used in two places in Stemtech's Healthspan magazine. Stemtech then used Leonard's images without a license ninety-two additional times in other materials, including its distributors' websites, marketing materials, and informational PDFs. Stemtech creates and requires its distributors to use certain marketing and advertising materials, only allows the use of self-replicated websites, and owns the domains to some of its distributor's websites. Leonard discovered the unauthorized use of his copyrighted images by conducting an internet search for his photographs. After a fruitless effort to contact Stemtech and receive compensation for the use of his photographs, Leonard sought damages for direct, vicarious, and contributory infringement. He was awarded a $1.6 million jury verdict.

The Third Circuit held that the district court did not abuse its discretion in finding the jury's verdict on vicarious and contributory infringement conclusions were supported by substantial evidence. Leonard established direct infringement on behalf of Stemtech's distributors, which is required to prove vicarious and contributory infringement, by showing he owned the copyright to the photographs and did not authorize the use of his images in those materials by Stemtech or Stemtech's distributors.

Leonard then established contributory infringement, which requires a plaintiff to prove that a third party directly infringed on the copyright, that the defendant knew the third party was directly infringing, and that the defendant contributed to the infringement. The Third Circuit reasoned that Stemtech created the materials containing the copyrighted images and required its distributors to use them, proving that it knew of the third party's infringed use. Also, Stemtech knew the images were copyrighted, as it had previously licensed one image from Leonard. Therefore, sufficient evidence to prove contributory infringement was established.

Sufficient evidence to prove vicarious infringement was also established by Leonard. Vicarious infringement requires that the infringer had the right and ability to supervise or control infringing activity and had a direct financial interest in the activity. The Third Circuit looked to other case law to analogize Stemtech's control over its distributors, comparing Stemtech's required use of its created materials by its distributors to that of the products a chain store is required to sell by its controlling corporation. Since Stemtech had contracts with its distributors and required them to use certain advertising materials, it had control over their infringing activities. The Third Circuit found Stemtech officials' testimony that the use of the photographs in their materials added legitimacy to their products and attracted customers constituted a direct financial interest in the infringed use of the photographs. Therefore, vicarious infringement was established.

Second, the Third Circuit did not find the jury's $1.6 million award excessive. The award was calculated using the fair market value approach for actual damages that is authorized by the Copyright Act. Leonard presented an expert to testify to the fair market value of his images, who then multiplied that amount due to the "scarcity and rarity" of stem cell photographs. In applying this approach for the use of 92 images, the Third Circuit did not find the award excessive. The Third Circuit also noted that the expert produced an estimate of the fair market value for the use of the images to be between $1.4 and $3 million. The jury awarded an amount at the lower end of this proposed spectrum. Therefore, the Third Circuit concluded that the award did not shock the judicial conscience.

The Third Circuit vacated the district court's finding that Leonard was not entitled to prejudgment interest since he was justly compensated by the damages he received on his infringement claims. Prejudgment interest in copyright cases is awarded to prevent unjust enrichment and compensate for the time and value of income that is lost by the use of the images.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153198p.pdf

Panel: Fuentes, Shwartz, and Restrepo, Circuit Judges

Argument Date: July 12, 2016

Date of Issued Opinion: August 24, 2016

Docket Number: No. 15-3198

Decided: Affirmed in part, vacated in part

Case Alert Author: Katherine A. Osevala

Counsel: Kathleen M. Kushi Carter, Christine R. Arnold, and Thomas P. Leff, Counsel for Appellants; Jan I. Berlage, James S. Green, Sr., and Jared Green, Counsel for Appellee.

Author of Opinion: Circuit Judge Shwartz

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/12/2016 09:30 AM     3rd Circuit     Comments (0)  

  John Harnish v. Widener University School of Law - Third Circuit
Headline: Third Circuit finds law students did not sufficiently comprise a class in misrepresentation suit against their law school.

Area of Law: Consumer Fraud

Issue(s) Presented: Did the district court err in denying class certification to the plaintiff law students?

Brief Summary: Plaintiff law students sued Widener University School of Law for alleged misrepresentation of employment statistics for recent graduates. The students alleged that this misrepresentation caused a price inflation in tuition, resulting in the students paying more in tuition than the degree was actually worth at the time. Students sought certification as a class, including all Widener University School of Law students from 2005-2011, alleging that all these students were victims of the inflated tuition.

The district court denied certification to the class, finding that the evidence did not support predominately class-wide questions but rather called for individual analysis. Students appealed this decision, arguing that the district court: (1) improperly viewed the limited evidence against a burdensome standard; (2) improperly considered the different employment outcomes of the students, ignoring the theory that the damages were unrelated to actual outcomes; and (3) improperly found that the evidence did not support a class-wide theory for relief. The Third Circuit affirmed the decision of the district court, finding that the court properly viewed the evidence against the required standard and that the students failed to present evidence to support a cognizable theory that would show that the students suffered the same injury similarly as a whole.

Extended Summary:[/B Plaintiff law students brought suit against Widener University School of Law, alleging fraud and misrepresentation. The students alleged that between 2005 and 2011, Widener misrepresented their graduate employment statistics in print, online publications, and oral presentations targeting potential students. The students alleged that Widener published statistics depicting graduate employment rates of 90-97%, when in reality only 50-70% of graduates held full-time legal positions. The students argued that Widener improperly reflected part-time and non-legal employment in their published statistics and credited unreliable student employment reports, while ignoring reports of unemployment. The students alleged that this misrepresentation allowed the school to charge higher tuition than it would have received if it had published the correct information. The students argued that this tuition price inflation violated the New Jersey Consumer Fraud Act (NJCFA) and the Delaware Consumer Fraud Act (DCFA). The students sought to sue the school as class, including all students who attended Widener during the 2005-2011 period and were subjected to the higher tuition rates.

The district court denied certification, finding that the evidence did not support the students' suit against Widener because they could not show that they were all similarly affected by the inaccurate information, citing to the different employment outcomes and the students enrolling at different times. The students filed an appeal, alleging that the district court (1) improperly viewed the limited evidence against a burdensome standard; (2) improperly considered the different employment outcomes of the students, ignoring the theory that the damages were unrelated to actual outcomes; and (3) improperly found that the evidence did not support a class-wide theory for relief.

The Third Circuit affirmed the decision of the district court, finding that based on the evidence presented, the common questions in this case were not predominate over the individual questions. On the students' first claim, the Court found that the district court properly reviewed the evidence in this case under a rigorous standard. In determining whether the students were similarly impacted by this inaccurate information, the court must examine the evidence to evaluate whether the group can present the same evidence or whether each student would have to present his or her own evidence on an individual basis in order to prove each issue. Under the NJCFA and DCFA, the issues the students would have to prove included an unlawful practice resulting in an ascertainable loss and a causal relationship between the two. The Court noted that the district court had to carefully consider how each issue would be presented and was required to take more than a threshold look on a plausible theory. The Court found that this inquiry may overlap with the merits of the case, and ultimately agreed with the district court's finding that the students would not be able to show ascertainable loss or causation class-wide because of the differences in experiences of all the students over the six-year period. For example, some of the students were enrolled after Widener made changes to their reporting practices and others had varying tuition obligations.

The Third Circuit also rejected the argument that the district court improperly considered the different employment outcomes of the students in accessing the theory for damages. The students argued that the different employment outcomes were irrelevant under their theory of damages, which focused solely on the difference between what they paid in tuition and what the education was actually worth. The Third Circuit agreed with the students, finding that the actual value of the education was based on the probability of full-time employment rather than the actual outcome. The Court noted, however, that this mischaracterization of the damages theory was harmless as the evidence still did not support a class-wide theory for relief.

On the final claim, the Third Circuit found that students failed to raise a cognizable theory of relief. The students argued that Widener charged more for tuition than the accurate information would have allowed (price inflation), therefore empowering Widener to charge more across the whole market regardless of the students' actual reliance on the inaccurate information. The Third Circuit rejected this as both New Jersey and Delaware have stated that the ascertainable loss and causation elements are not met by the price inflation theory outside of a federal securities fraud context. Therefore, state law removes the theory as a common question entirely and leaves only individual questions in how diverse members of the class reacted to the alleged fraud.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151692p.pdf

Panel: Chagares, Krause, and Barry, Circuit Judges 

Argument Date: June 6, 2016

Date of Issued Opinion: August 16, 2016

Docket Number: No. 15-3888

Decided: Affirmed

Case Alert Author: James Shygelski

Counsel: Danielle F. Moriber, Esq., Rachel E. Simon, Esq., David S. Stone, Esq., (Argued), Counsel for Appellants; Suna Lee, I, Esq., Thomas F. Quinn, Esq., (Argued), Dennis J. Drasco, Esq., Counsel for Appellees

Author of Opinion: Circuit Judge Chagares

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/12/2016 09:27 AM     3rd Circuit     Comments (0)  

  Michele Black v. Montgomery County - Third Circuit
Headline: Third Circuit Holds Pre-trial Restrictions Constitute a "Seizure" for Fourth Amendment Purposes, and a Stand-Alone Fabrication of Evidence Claim Under the Due Process Clause of the Fourteenth Amendment Can Proceed Even if There Is No Conviction

Area of Law: Civil Rights

Issues Presented: Whether a person released pre-trial, but ordered to appear in court at the state's command, is "seized," as is required for a Fourth Amendment malicious prosecution claim? Whether a conviction is a prerequisite to a stand-alone due process claim under the Fourteenth Amendment against a state actor for fabrication of evidence?

Brief Summary: Michele Black was interrogated and accused by police of committing arson, despite a Fire Chief's report that the fire was electrical and the fact that electricians were at the scene repairing wiring at the time the fire started. Shortly thereafter, Black flew from her home in California to Pennsylvania for her arraignment because Pennsylvania authorities issued an arrest warrant and directed her return. Black was required to post unsecured bail of $50,000. She was told the bond would be forfeited if she did not attend all court proceedings, compelling her to travel across the United States to attend a dozen pre-trial hearings in a year. At trial, Black was found not guilty after a jury deliberated for less than forty minutes.

Black filed a lawsuit under 42 U.S.C. § 1983 and state law, alleging that various law enforcement officers and fire department officials violated her constitutional rights in connection with criminal proceedings that ended in her acquittal. The district court dismissed the case, finding that Black was not "seized" as required for a Fourth Amendment malicious prosecution claim, and that a Fourteenth Amendment due process claim for fabricated evidence required that Black be convicted at trial. On appeal, the Third Circuit first held that Black was seized for purposes of her Fourth Amendment malicious prosecution claim even though she was never incarcerated. Second, that a conviction is not a prerequisite to a stand-alone fabricated evidence claim against state actors under the Fourteenth Amendment. Thus, the Third Circuit reversed the district court's judgment and remanded the matter for further proceedings consistent with the opinion.

Extended Summary: On November 21, 2012, a fire started at Michele Black's childhood home in Lower Merion Township while electricians were upgrading the home's wiring. The electricians extinguished the fire before they called the fire department. After arriving at the home, the Fire Chief reported the fire was electrical. However, despite the Fire Chief's report and fire damage on the electrical outlet where the fire began, a Deputy Fire Marshal concluded the fire was started intentionally. Subsequently, Black was interrogated and accused by police of committing arson. Less than one month later, Black flew from her home in California to Pennsylvania for her arraignment because an arrest warrant had been issued and she had been directed to return. Black was required to post unsecured bail of $50,000. A condition of her bail was that Black was required to appear at all court proceedings otherwise a bench warrant would be issued for her arrest. This compelled Black to travel across the United States to attend twelve pre-trial hearings in just a year. On April 23, 2014, Black's trial began. On April 24, 2014, Black was found not guilty after a jury deliberated for less than forty minutes.

Black filed a lawsuit under 42 U.S.C. § 1983, alleging, inter alia, malicious prosecution in violation of the Fourth Amendment and violation of her Fourteenth Amendment due process rights due to the alleged fabrication, suppression and destruction of evidence by various law enforcement officers and fire department officials. The district court dismissed the case, finding that Black was not "seized" as required for a Fourth Amendment malicious prosecution claim, and that a Fourteenth Amendment due process claim for fabricated evidence required that Black be convicted at trial. On appeal, the Third Circuit reversed the district court's judgment and remanded the matter for further proceedings consistent with the opinion.

First, the Third Circuit held that Black was "seized," thus supporting her Fourth Amendment malicious prosecution claim, even though she was never incarcerated. The Court adopted the Supreme Court's concept of "continuing seizure" discussed in a concurrence, and after citing relevant case law, concluded that an individual under pretrial restrictions and ordered to appear in court is "seized" for Fourth Amendment purposes. The Court, thus, found that Black's circumstances demonstrated she experienced "constitutionally significant restrictions on [her] freedom of movement by the defendants for the purpose of obtaining h[er] presence at a judicial proceeding" and she was "seized within the meaning of the Fourth Amendment." Accordingly, the Court vacated and remanded the district court's dismissal of Black's malicious prosecution claim.

Second, the Third Circuit held that a conviction is not a prerequisite to a stand-alone fabricated evidence claim against state actors under the due process clause of the Fourteenth Amendment. The Court explained that such a claim only requires a reasonable likelihood that, absent fabricated evidence, the plaintiff would not have been criminally charged. The Court explained "reasonable likelihood" requires that a plaintiff draw a "meaningful connection" between her particular due process injury and the use of fabricated evidence against her. The Court reasoned that a plaintiff must demonstrate the fabricated evidence "was so significant that it could have affected the outcome of the criminal case." Finally, there must be "persuasive evidence supporting a conclusion that the proponents of the evidence" are aware that the evidence is incorrect or that is being offered in bad faith. Under this framework, the Court found that Black's "acquittal does not preclude her claim that the defendants intentionally fabricated evidence in violation of the due process clause of the Fourteenth Amendment." Accordingly, the Court vacated and remanded the district court's dismissal of the fabrication of evidence claim.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153399p.pdf

Panel: Chagares, Krause, and Scirica, Circuit Judges

Argument Date: June 8, 2016

Date of Issued Opinion: August 30, 2016

Docket Number: No. 15-3399

Decided: Vacated and remanded

Case Alert Author: Brooke A. Hutchins

Counsel: Michael C. Schwartz, Counsel for Appellant; Carol A. Vanderwoude, Counsel for Appellees Township of Lower Merion, Detective Gregory Henry, Bryan A. Garner, Chief Fire Off. Charles McGarvey and Deputy Fire Marshal Frank Hand; Philip W. Newcomer, Counsel for Appellees Montgomery County and Detective John T. Fallon; and Claudia M. Tesoro, Counsel for Appellee State Trooper Robert Pomponio

Author of Opinion: Circuit Judge Chagares

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/12/2016 09:24 AM     3rd Circuit     Comments (0)  

  Terry Brown a/k/a Antonio Lambert v. Superintendent Greene SCI - Third Circuit
Headline: Third Circuit Holds Defendant's Sixth Amendment Rights Violated When Co-Defendant Declined to Testify During Trial and Prosecutor Revealed Redacted Identity of Defendant in Co-Defendant's Incriminating Confession.

Area of Law: Civil Rights

Issue(s) Presented: Was a defendant's Sixth Amendment rights violated when the confession of a co-defendant, who had asserted his Fifth Amendment rights and declined to testify, was redacted to protect the identity of the defendant, and the prosecutor subsequently revealed the defendant's identity during his closing argument?

Brief Summary: Defendant Lambert and his co-defendant, Garcia, were tried jointly in Pennsylvania state court for the murder of Mary Edmond. In his confession, Garcia stated that Lambert was involved in the shooting and he was just a bystander who remained in the car during the robbery and shooting. Lambert was charged with, and convicted of, first-degree murder among other charges. During trial, Garcia asserted his Fifth Amendment right against self-incrimination and declined to testify. Lambert argued that the combination of Garcia's confession implicating Lambert and Garcia's refusal to testify violated his Sixth Amendment Confrontation Clause right. The trial court agreed and ordered the statement to be redacted of any mention of Lambert's name and replaced with phrases like "the other guy." The jury was instructed that it may only use the confession against Garcia, not Lambert. During closing arguments, however, the prosecutor revealed that "the other guy" who accompanied Garcia to his house after the shooting was Lambert, implicating Lambert as the shooter in Garcia's confession. Lambert objected and moved for a mistrial, but his request was denied and he was convicted on all counts. Lambert's appeal was unsuccessful, as was his habeas petition to the district court. The Third Circuit Court of Appeals granted a certificate of appealability. The Third Circuit found that the prosecutor's reveal of Lambert's identity violated the Supreme Court standard that reading a confession to a jury, and instructing them to use the confession against one defendant but not another, violated the Confrontation Clause and that limiting instructions could not cure that violation. The Court further held that because of the significance of Garcia's confession, and the absence of any other evidence identifying Lambert as the shooter, the error had a "substantial and injurious effect" on the outcome of the case and relief was warranted. The Third Circuit Court of Appeals remanded the case to the district court, with instructions to either release or retry Defendant.

Extended Summary:

Defendant Lambert and his co-defendant, Garcia, were tried jointly in Pennsylvania state court for the murder of Mary Edmond. On February 23, 2001, Lambert, Garcia and their friend, Cheatham, were driving around North Philadelphia, smoking marijuana and obtaining Xanax pills, when the trio pulled over at a gas station and robbed, shot, and killed Mary Edmond. In his confession, Garcia claimed that Cheatham and Lambert were involved in the shooting and he was just a bystander who remained in the car.

During the criminal trial, Lambert's motion to sever was denied and he and Garcia were tried jointly. The Commonwealth planned to use Garcia's confession during the trial. Garcia asserted his Fifth Amendment rights against self-incrimination and declined to testify at trial. Lambert argued that the combination of the confession implicating Lambert, and Garcia's refusal to testify, violated his Sixth Amendment Confrontation Clause rights. The trial court agreed, and ordered the statement to be redacted of any mention of Lambert or Cheatham's names, replacing them with phrases like "the other guy," "one of the guys," and "the guy with the gun." The jury was told at the time the confession was introduced, and again before deliberation, that it may only use the confession against Garcia and not against Lambert. During the Commonwealth's closing arguments, the prosecutor revealed that "the other guy" who accompanied Garcia to his house after the shooting was Lambert, implicating Lambert as the shooter. Lambert objected, but the judge overruled the objection and allowed the prosecutor to proceed with closing arguments. Lambert then moved for a mistrial, but his request was denied and he was convicted on all counts. Lambert's direct appeals were unsuccessful. His habeas petition in the district court was then denied, but the Third Circuit Court of Appeals granted a certificate of appealability.

The Third Circuit reasoned that United States Supreme Court precedent holds that cognitive dissonance results from asking jurors to consider a confession only against one defendant and not another. In some of these cases, an extreme risk exists that a jury cannot follow these instructions, the consequences of which are vital to the defendant. In these cases, after the jury is exposed to an incriminating confession, no limiting instructions are sufficient to cure the harm that results to the defendant. Here, the Third Circuit found that the prosecutor's reveal of Lambert's identity violated Supreme Court standards that reading a confession to a jury, and instructing them to use the confession against one defendant but not another, violated the Confrontation Clause and limiting instructions could not cure the violation.

Following clearly established Supreme Court law, the Third Circuit held that the prosecutor's reveal of Lambert's identity violated his Sixth Amendment rights under the Confrontation Clause. Further, the Court concluded that this error was not harmless to Lambert, and that the Pennsylvania Supreme Court misapplied this clearly established precedent by not requiring a mistrial. The Third Circuit Court of Appeals remanded the case to the district court, with instructions to either release or retry the Defendant.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/142655p.pdf

Panel: Ambro, Krause, and Nygaard, Circuit Judges

Argument Date: June 16, 2016

Date of Issued Opinion: August 22, 2016

Docket Number: No. 14-2655

Decided: Remanded.

Case Alert Author: Rachel N. Costello

Counsel: Leigh M. Skipper, Esquire, Brett G. Sweitzer, Esquire, Arianna J. Freeman, Esquire, Counsel for Appellant; and Susan E. Affronti, Esquire, Ronald Eisenberg, Esquire, George D. Mosee, Jr., Esquire, R. Seth Williams, Esquire, Counsel for Appellees.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/12/2016 09:21 AM     3rd Circuit     Comments (0)  

  James A. Dennis v. Secretary, Pennsylvania Department of Corrections - Third Circuit En Banc
Headline: Third Circuit Affirms District Court's Grant of Habeas Corpus to James Dennis

Area of Law: Habeas Corpus

Issue(s) Presented: Did the prosecutor's failure to disclose evidence that corroborated the defendant's alibi and undercut the eyewitness identification deprive defendant of a fair trial?

Brief Summary:

James Dennis was convicted for the murder of Chedell Williams. He spent almost twenty-four years unsuccessfully challenging his conviction. The Pennsylvania Supreme Court repeatedly affirmed Dennis's first-degree murder conviction and sentence and denied his applications for post-conviction relief. Thereafter, the United States District Court for the Eastern District of Pennsylvania granted Dennis habeas corpus relief. The District Court concluded that the Pennsylvania Supreme Court had unreasonably applied Brady v. Maryland to three material pieces of evidence. The evidence suppressed by the Commonwealth included a receipt corroborating Dennis's alibi, an inconsistent statement by the Commonwealth's key eyewitness, and documents indicating that another individual committed the murder. The Third Circuit concluded that the withholding of this evidence denied Dennis a fair trial in state court and affirmed the District Court's grant of habeas relief.

Extended Summary:

On October 22, 1991, Chedell Williams and Zahra Howard were climbing the steps of the Fern Rock SEPTA Station in North Philadelphia. Two men approached the girls and demanded their earrings. The girls fled down the steps with Williams then running into an intersection. The men followed Williams; they tore her gold earrings from her earlobes and one then shot her in the neck. After shooting the victim, the men ran up the street to a waiting car and fled the scene. The investigation into Williams' murder focused on determining the identity of the shooter. The police pursued rumors that "Jimmy" Dennis had committed the crime, though they were unable to identify the source of the rumors. Resting on tips by Dennis' neighbors, the police proceeded with Dennis as the primary suspect.

Dennis was arrested on November 22, 1991. His signed statement indicated that he stayed at his father's house until about 1:30 p.m. on the day of the murder. His father then drove him to the bus stop and watched him get on the "K" bus toward Abbottsford Homes to attend singing practice that evening. Dennis rode the "K" bus for approximately thirty minutes and during the trip Dennis saw Latanya Cason, a woman he knew from Abbottsford Homes. Dennis asserted that when he and Cason disembarked the bus, he waved to her. After getting off the bus, Dennis walked to Abbotsford Homes, where he spent the rest of the day with his friends. Dennis' father, James Murray, corroborated Dennis's story. He stated that they spent the morning together, and that he drove Dennis to the bus stop shortly before 2:00 p.m. to catch the K bus to Abbottsford Homes. Murray testified that he knew for a fact that Dennis was on the K bus at the time of William's murder because he drove Dennis to the stop and watched from his car as Dennis boarded the bus.

The Commonwealth obtained eyewitness reports and identifications, few of which aligned with Dennis's appearance. The witnesses, including Howard, described the shooter at tall and stocky. Dennis, on the other hand, is 5'5" tall and weighed between 125 and 132 pounds at the time of trial. Before trial, three eyewitnesses identified Dennis in a photo array, at an in-person lineup, and at a preliminary hearing. However, during the pre-trial stage two of the witnesses were not absolutely sure that Dennis was the shooter. The Commonwealth's case rested primarily on the eyewitness testimony. It had no physical evidence, as the handgun and the earrings were never recovered. All three testified that the shooter was wearing red and black clothing.

Latanya Cason, testified she saw Dennis between 4:00 and 4:30 p.m. Her estimate that she saw him in that time period was strictly a guess, but there was no question that she saw him that day. Before seeing Dennis, Cason had picked up her public assistance check, signing a document to confirm pick up. She then filled her daughter's prescription, got some fish, and went home via the K bus. Nothing was introduced at trial to show the precise time of day she retrieved her check.

Three members of Dennis's singing group, who had known him for ten years or more, testified on Dennis's behalf about rehearsal on the day of the murder. Their testimony aligned with Dennis's account. One testified that Dennis was dressed in dark sweats and a dark hooded shirt at rehearsal that night - he was not wearing any red. Each testified that they had not seen a handgun in Dennis's possession. Dennis himself testified that when he left his father's house, he was wearing a dark blue jeans set; he changed into black sweats before rehearsal.

The prosecution failed to disclose to Dennis's counsel three pieces of exculpatory and impeachment evidence: (1) a receipt revealing the time that Cason had picked up her welfare benefits, several hours before the time she had testified to at trial, thus corroborating Dennis's alibi (the "Cason receipt"); (2) a police activity sheet memorializing that Howard had given a previous statement inconsistent with her testimony at trial, which provided both invaluable material to discredit the Commonwealth's key eyewitness and evidence that someone else committed the murder (the "Howard police activity sheet"); and (3) documents regarding a tip from an inmate detailing his conversation with a man other than Dennis who identified himself as the victim's killer (the "Frazier documents").

The jury found Dennis guilty of first-degree murder and sentenced him to death. In 1998, the Pennsylvania Supreme Court affirmed Dennis's conviction and death sentence on direct appeal by a vote of four to three. Dennis then filed a timely pro se petition pursuant to the PCRA. The Howard police activity sheet and the Frazier documents were disclosed during the PCRA discovery. The PCRA court denied Dennis's claims that the prosecution violated Brady by failing to disclose the Howard statement and the Frazier documents. The Pennsylvania Supreme Court agreed with the PCRA court, finding that the Commonwealth's failure to disclose the Frazier documents did not violate Brady because the prosecution was not required to disclose "every fruitless lead" and that "inadmissible evidence cannot be the basis for a Brady violation."

Dennis then filed a habeas corpus petition in the United States District Court for the Eastern District of Pennsylvania for review of his conviction and death sentence. The District Court granted Dennis habeas relief based on Dennis's Brady claims as to the Commonwealth's failure to disclose the Cason receipt, the Frazier documents, and the police activity sheet containing Howard's inconsistent statement. The Third Circuit concluded that the Pennsylvania Supreme Court's decisions regarding Dennis's Brady claims rested on unreasonable conclusions of fact and unreasonable applications of clearly established law, or were contrary to United States Supreme Court precedent. The Court affirmed the District Court and granted habeas relief on Dennis's Brady claims based on the Cason receipt, the Howard police activity sheet, the Frazier documents, and their cumulative prejudice.

The Court determined that the Pennsylvania Supreme Court erred by failing to recognize the impeachment value of the Cason receipt, which would have provided documentary evidence that Cason testified falsely at trial. The United States Supreme Court has made plain that impeachment evidence may be considered favorable under Brady even if the jury might not afford it significant weight. The Third Circuit also stated that the Pennsylvania Supreme Court erroneously concluded that the receipt was not exculpatory because it did not affect Dennis's alibi. The conclusion failed to recognize how Cason's corrected testimony corroborated testimony provided by Dennis and other witnesses, namely, his father.

Regarding the Howard Police Activity Sheet, the Court stated that the Pennsylvania Supreme Court denied Dennis's Brady claim regarding the Howard statement on materiality grounds. The Third Circuit concluded that although the court articulated the proper standard for materiality, whether a "reasonable probability" of a different outcome has been established, it applied it in a manner inconsistent with Supreme Court precedent. Defense counsel could have used Howard's inconsistent statement as an effective means of impeachment during trial. Impeachment evidence unquestionably falls under Brady's purview and cannot be suppressed by the prosecution. The Third Circuit rejected the Commonwealth's argument that evidence is not necessarily material under Brady simply because it may open up avenues for impeachment - the focus of the inquiry is on the "reasonable probability of a different result." Such a probability existed as the type of impeachment evidence provided by the activity sheet would have undercut the credibility of a key prosecution witness in a manner not duplicated by other challenges the defense was able to level at trial. Consequently, the impeachment material provided by the suppressed activity sheet is material under Brady, and it was unreasonable for the Pennsylvania Supreme Court to hold otherwise.

Finally, the Third Circuit held that the Pennsylvania Supreme Court's justification that the Frazier documents were a "fruitless lead" was unreasonable. There is no requirement that leads be fruitful to trigger disclosure under Brady, and it cannot be that if the Commonwealth fails to pursue a lead, or deems it fruitless, that it is absolved of its responsibility to turn over to defense counsel Brady material. The Third Circuit also held that the lead was not fruitless; it was simply not rigorously pursued.

Judge Jordan concurred as to the Cason receipt. Judges Fisher, Smith, Chagares, and Hardiman dissented.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/139003p1.pdf

Panel: McKee, Chief Judge; Ambro, Fuentes, Smith, Fisher, Chagares, Jordan, Hardiman, Greenaway, Jr., Vanaskie, Shwartz, Krause and Rendell, Circuit Judges

Argument Date: October 14, 2015

Date of Issued Opinion: August 23, 2016

Docket Number: No. 13-9003

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Ronald Eisenberg, Susan E. Affronti, Ryan Dunlavey, Counsel for Appellants; Amy L. Rohe, Stuart B. Lev, Counsel for Appellee; Catherine M.A. Carroll, Counsel for Amicus Appellees.

Author of Opinion: Circuit Judge Rendell

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 09/12/2016 09:17 AM     3rd Circuit     Comments (0)  

September 9, 2016
  Rosa Elida Castro v. US Department of Homeland Security - Third Circuit
Headline: Third Circuit Affirms Dismissal of Habeas Corpus Petition For Lack Of Subject Matter Jurisdiction

Area of Law: Immigration

Issue(s) Presented: Does the district court have subject matter jurisdiction to adjudicate alien-petitioners' claims that an asylum officer and immigration judge violated their Fifth Amendment procedural due process rights under 8 U.S.C. § 1252 and 8 U.S.C §1225?

Brief Summary:

Twenty-eight families entered the United States illegally and were apprehended by authorities. Because they had no immigration papers and did not claim to have been previously admitted to the United States, they were ordered to be expeditiously removed. Upon apprehension, they expressed a fear of persecution if they were to be returned to their home countries. In accordance with the law, an asylum officer interviewed each individual and determined no credible threat existed. They were granted a de novo review of this determination by an immigration judge who concurred with the findings.

Petitioners submitted petitions for habeas corpus relief, claiming that the officers and immigration judge violated their Fifth Amendment procedural due process rights. The Third Circuit affirmed the district court's findings that the court lacked subject matter jurisdiction, concluding that statutes unambiguously foreclose judicial review of all claims. Further, the Court determined that the Suspension Clause did not require that judicial review be available to address any of Petitioners' claims and therefore §1252(e) does not violate the suspension clause.


Extended Summary:

This case concerns 28 families who were natives and citizens of El Salvador, Honduras, and Guatemala who entered the United States seeking refuge. These individuals claimed to have been in fear of becoming victims of violence from gangs or domestic partners. United States Customs and Border Protection agents apprehended them within one to six hours of entering the country. Under the controlling statute, 8 U.S.C § 1252, and because these individuals had no immigration papers and none claimed to have been previously admitted to the country, they fell within the class of aliens to whom expedited removal applies. Upon apprehension, each individual expressed a fear of persecution if returned to their native country. In accordance with the law, each was referred to an asylum officer to determine if a credible fear existed, which was not found. The officers' supervisors reviewed and approved this determination.

Petitioners then requested and were granted de novo review of this determination by an immigration judge who concurred with the asylum officers' conclusions. The petitioners were referred back to the Department of Homeland Security for removal. Each family then submitted a separate habeas petition, claiming that the asylum officer and the immigration judge violated their Fifth Amendment procedural due process rights as well as a variety of other statutes.

Petitioners argued that the district court should construe §1252 to allow review of their claims in order to avoid "the serious constitutional concerns that would arise" otherwise. This argument was rejected by the district court, which concluded that the statute unambiguously foreclosed judicial review of all claims. Further, the Court determined that the Suspension Clause did not require that judicial review be available to address any of Petitioners' claims and therefore §1252(e) does not violate the Suspension Clause. The Court dismissed with prejudice the consolidated petitions for lack of subject matter jurisdiction. Petitioners then filed an appeal with this Court, challenging the district court's holding that it lacked subject matter jurisdiction as well as the conclusion that §1252(e) does not violate the Suspension Clause.

Petitioners argued that the district court has jurisdiction to entertain "whether [they have been] ordered removed" under §1252(e)(2)(B). The Court rejected this argument, pointing to §1252(a)(2)(A)(iii), which states that "No court shall have jurisdiction to review . . . the application of §1225(b)(1) to individual aliens, including the [credible fear] determination made under [§1252(b)(1)(B)]." The Court concluded that the district court lacked jurisdiction under §1252 to review Petitioners' claims and then evaluated the constitutionality of the statute under the Suspension Clause.

Petitioners argued that under the Supreme Court's Suspension Clause jurisprudence, courts must, at a minimum, be able to review the legal conclusions underlying the Executive branch's credible fear determinations, including the Executive's interpretation and application of a statute to undisputed facts. They argued that because §1252(e)(2) does not provide for at least this level of review, it constitutes an inadequate substitute for habeas relief in violation of the Suspension Clause. Finally, they argued that regardless of the extent of their constitutional or statutory due process rights, habeas relief stands as a constitutional check against illegal detention by the Executive that is separate and apart from the protections afforded by the Due Process Clause. The Government argued that the plenary power doctrine forecloses Petitioners' Suspension Clause challenge. Further, the Government argued that because Petitioners have no underlying procedural due process rights to vindicate, the scope of habeas review is irrelevant.

The Court agreed with the Government that §1252 is a constitutional and permissible suspension of the writ. The Court first pointed to the Supreme Court's holding that a statute modifying the scope of habeas review is constitutional under the Suspension Clause so long as the modified scope of review is neither inadequate nor ineffective to test the legality of a person's detention. The Court relied on a two-step inquiry where courts must first determine whether a given habeas petitioner is prohibited from invoking the Suspension Clause due to some attribute of the petitioner or to the circumstances surrounding his arrest or detention. Once it is confirmed that the petitioner is not so prohibited, the court must then turn to the question of whether the substitute for habeas is adequate and effective to test the legality of the petitioner's detention.

The Court determined that the Petitioners could not satisfy the first part of the inquiry. The Supreme Court has concluded that an alien seeking initial admission the the United States requests a privilege and has no constitutional rights regarding his application. Because the Petitioners were apprehended within hours of entering the United States, the Court concluded it was appropriate to treat them as "aliens seeking initial admission to the United States." Because the issues that the Petitioners seek to challenge all stem from the Executive branch's decision to remove them from the country, they cannot invoke the Constitution, including the Suspension Clause, in an effort to force judicial review beyond what Congress has already granted them. The Court therefore concluded that Congress may deny habeas review in federal court of claims relating to an alien's application for admission to the country, at least as to aliens who have been denied initial entry or who were apprehended very near the border and immediately after surreptitious entry into the country.

The Court acknowledged that its decision to treat Petitioners as "aliens seeking initial admission the the United States" appears to conflict with precedent suggesting that an alien's physical presence in the country alone allows for some constitutional protections. The Court reasoned that past cases involving arriving aliens rejected the aliens' efforts to invoke additional protections based merely on their presence in the territorial jurisdiction of the United States. Further, the Supreme Court has suggested that entrants like Petitioners do not qualify for constitutional protections based merely on physical presence alone. The Court affirmed the district court's order dismissing Petitioners' habeas petitions for lack of subject matter jurisdiction.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/161339p.pdf .

Panel: Smith, Hardiman, and Shwartz, Circuit Judges 

Argument Date: May 19, 2016

Date of Issued Opinion: August 29, 2016

Docket Number: 16-1339

Decided: Affirmed.

Case Alert Author: Megan Knoll

Counsel: Lee Gelernt, Jennifer Newell, Mary Catherine Roper, and Witold Walczak, Counsel for Appellants; Joseph Darrow, Erez Reuveni, Counsel for Appellees.

Author of Opinion: Circuit Judge Smith

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/09/2016 01:24 PM     3rd Circuit     Comments (0)  

  Rosa Elida Castro v. US Department of Homeland Security - Third Circuit
Headline: Third Circuit Affirms Dismissal of Habeas Corpus Petition For Lack Of Subject Matter Jurisdiction

Area of Law: Immigration

Issue(s) Presented: Does the district court have subject matter jurisdiction to adjudicate alien-petitioners' claims that an asylum officer and immigration judge violated their Fifth Amendment procedural due process rights under 8 U.S.C. § 1252 and 8 U.S.C §1225?

Brief Summary:

Twenty-eight families entered the United States illegally and were apprehended by authorities. Because they had no immigration papers and did not claim to have been previously admitted to the United States, they were ordered to be expeditiously removed. Upon apprehension, they expressed a fear of persecution if they were to be returned to their home countries. In accordance with the law, an asylum officer interviewed each individual and determined no credible threat existed. They were granted a de novo review of this determination by an immigration judge who concurred with the findings.

Petitioners submitted petitions for habeas corpus relief, claiming that the officers and immigration judge violated their Fifth Amendment procedural due process rights. The Third Circuit affirmed the district court's findings that the court lacked subject matter jurisdiction, concluding that statutes unambiguously foreclose judicial review of all claims. Further, the Court determined that the Suspension Clause did not require that judicial review be available to address any of Petitioners' claims and therefore §1252(e) does not violate the suspension clause.


Extended Summary:

This case concerns 28 families who were natives and citizens of El Salvador, Honduras, and Guatemala who entered the United States seeking refuge. These individuals claimed to have been in fear of becoming victims of violence from gangs or domestic partners. United States Customs and Border Protection agents apprehended them within one to six hours of entering the country. Under the controlling statute, 8 U.S.C § 1252, and because these individuals had no immigration papers and none claimed to have been previously admitted to the country, they fell within the class of aliens to whom expedited removal applies. Upon apprehension, each individual expressed a fear of persecution if returned to their native country. In accordance with the law, each was referred to an asylum officer to determine if a credible fear existed, which was not found. The officers' supervisors reviewed and approved this determination.

Petitioners then requested and were granted de novo review of this determination by an immigration judge who concurred with the asylum officers' conclusions. The petitioners were referred back to the Department of Homeland Security for removal. Each family then submitted a separate habeas petition, claiming that the asylum officer and the immigration judge violated their Fifth Amendment procedural due process rights as well as a variety of other statutes.

Petitioners argued that the district court should construe §1252 to allow review of their claims in order to avoid "the serious constitutional concerns that would arise" otherwise. This argument was rejected by the district court, which concluded that the statute unambiguously foreclosed judicial review of all claims. Further, the Court determined that the Suspension Clause did not require that judicial review be available to address any of Petitioners' claims and therefore §1252(e) does not violate the Suspension Clause. The Court dismissed with prejudice the consolidated petitions for lack of subject matter jurisdiction. Petitioners then filed an appeal with this Court, challenging the district court's holding that it lacked subject matter jurisdiction as well as the conclusion that §1252(e) does not violate the Suspension Clause.

Petitioners argued that the district court has jurisdiction to entertain "whether [they have been] ordered removed" under §1252(e)(2)(B). The Court rejected this argument, pointing to §1252(a)(2)(A)(iii), which states that "No court shall have jurisdiction to review . . . the application of §1225(b)(1) to individual aliens, including the [credible fear] determination made under [§1252(b)(1)(B)]." The Court concluded that the district court lacked jurisdiction under §1252 to review Petitioners' claims and then evaluated the constitutionality of the statute under the Suspension Clause.

Petitioners argued that under the Supreme Court's Suspension Clause jurisprudence, courts must, at a minimum, be able to review the legal conclusions underlying the Executive branch's credible fear determinations, including the Executive's interpretation and application of a statute to undisputed facts. They argued that because §1252(e)(2) does not provide for at least this level of review, it constitutes an inadequate substitute for habeas relief in violation of the Suspension Clause. Finally, they argued that regardless of the extent of their constitutional or statutory due process rights, habeas relief stands as a constitutional check against illegal detention by the Executive that is separate and apart from the protections afforded by the Due Process Clause. The Government argued that the plenary power doctrine forecloses Petitioners' Suspension Clause challenge. Further, the Government argued that because Petitioners have no underlying procedural due process rights to vindicate, the scope of habeas review is irrelevant.

The Court agreed with the Government that §1252 is a constitutional and permissible suspension of the writ. The Court first pointed to the Supreme Court's holding that a statute modifying the scope of habeas review is constitutional under the Suspension Clause so long as the modified scope of review is neither inadequate nor ineffective to test the legality of a person's detention. The Court relied on a two-step inquiry where courts must first determine whether a given habeas petitioner is prohibited from invoking the Suspension Clause due to some attribute of the petitioner or to the circumstances surrounding his arrest or detention. Once it is confirmed that the petitioner is not so prohibited, the court must then turn to the question of whether the substitute for habeas is adequate and effective to test the legality of the petitioner's detention.

The Court determined that the Petitioners could not satisfy the first part of the inquiry. The Supreme Court has concluded that an alien seeking initial admission the the United States requests a privilege and has no constitutional rights regarding his application. Because the Petitioners were apprehended within hours of entering the United States, the Court concluded it was appropriate to treat them as "aliens seeking initial admission to the United States." Because the issues that the Petitioners seek to challenge all stem from the Executive branch's decision to remove them from the country, they cannot invoke the Constitution, including the Suspension Clause, in an effort to force judicial review beyond what Congress has already granted them. The Court therefore concluded that Congress may deny habeas review in federal court of claims relating to an alien's application for admission to the country, at least as to aliens who have been denied initial entry or who were apprehended very near the border and immediately after surreptitious entry into the country.

The Court acknowledged that its decision to treat Petitioners as "aliens seeking initial admission the the United States" appears to conflict with precedent suggesting that an alien's physical presence in the country alone allows for some constitutional protections. The Court reasoned that past cases involving arriving aliens rejected the aliens' efforts to invoke additional protections based merely on their presence in the territorial jurisdiction of the United States. Further, the Supreme Court has suggested that entrants like Petitioners do not qualify for constitutional protections based merely on physical presence alone. The Court affirmed the district court's order dismissing Petitioners' habeas petitions for lack of subject matter jurisdiction.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/161339p.pdf .

Panel: Smith, Hardiman, and Shwartz, Circuit Judges 

Argument Date: May 19, 2016

Date of Issued Opinion: August 29, 2016

Docket Number: 16-1339

Decided: Affirmed.

Case Alert Author: Megan Knoll

Counsel: Lee Gelernt, Jennifer Newell, Mary Catherine Roper, and Witold Walczak, Counsel for Appellants; Joseph Darrow, Erez Reuveni, Counsel for Appellees.

Author of Opinion: Circuit Judge Smith

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/09/2016 01:24 PM     3rd Circuit     Comments (0)  

  Daniel Binderup v. Attorney General United States of America - Third Circuit
Headline: Third Circuit Panel Restores Second Amendment Rights to Challengers

Area of Law: Constitutional Law, Criminal Law

Issue(s) Presented: Whether 18 U.S.C. § 922(g)(1) applies to convictions for which it is possible to receive an imprisonment sentence of one year or less and, if it does, whether 18 U.S.C. § 922(g)(1), as applied to challengers, violates their Second Amendment rights.

Brief Summary: This decision failed to accumulate a majority of circuit judges for most of the analysis. However, a unanimous Court held that 18 U.S.C. § 922(g)(1) applies to convictions eligible for a sentence of imprisonment for more than one year even if the conviction is also eligible for a shorter sentence. A majority of the Court also held that, as applied to the two challengers in this case, 18 U.S.C. § 922(g)(1) unconstitutionally infringed on their Second Amendment rights.

Extended Summary: Sitting en banc, the Third Circuit Court of Appeals heard two challenges to a major federal firearms statute in a consolidated oral argument. The federal statute in question was the Gun Control Act, 18 U.S.C. § 922(g)(1). This statute generally prohibits the possession of firearms by those convicted, in any court, of a "crime punishable by imprisonment for a term exceeding one year."

The first challenger was Daniel Binderup, who had been in a consensual sexual relationship with a 17-year-old female when he was 41 years old. Although the teen was a minor, she was over Pennsylvania's legal age of consent. Binderup pled guilty to corruption of a minor in connection with this relationship - a misdemeanor offense punishable by up to five years in prison. His actual sentence was probation for three years and a fine, plus court costs and restitution. Binderup had no further criminal history.

Julio Suarez was the second challenger. Police noticed a handgun and two "speed loaders" in Suarez's vehicle after stopping him on suspicion of driving while intoxicated. Suarez did not have a permit for the gun and ultimately pled guilty to unlawfully carrying a handgun without a license - a misdemeanor offense punishable by imprisonment for "not less than 30 days and not [more than] three years or a fine of not less than $250 and not [more than] $2,500 or both." His actual punishment was a suspended sentence of 180 days' imprisonment and a fine, followed by probation for one year.

Binderup and Suarez (the "Challengers") wanted to obtain guns but § 922(g)(1) barred them from possessing firearms because their situations did not fall within any of the statutory exceptions. A unanimous Court quickly rejected the Challengers' first argument that § 922(g)(1) did not apply to their convictions. The Challengers argued that, because their convictions were eligible for sentences less than two years' imprisonment, the convictions fell within an exception to § 922(g)(1) exempting state misdemeanors "punishable by a term of imprisonment of two years or less." The Third Circuit interpreted "punishable by" to mean that the crime in question could not be punished by a sentence of more than two years.

The second argument was an "as-applied" challenge to the constitutionality of the statute, that is, the law's "application to a particular person under particular circumstances deprived that person of a constitutional right." The Court utilized a framework for as-applied challenges to gun laws. First, the "challenger must prove...that a presumptively lawful regulation burdens his Second Amendment rights." To do this, he must "(1) identify the traditional justifications for excluding from Second Amendment protections the class of which he appears to be a member, and then (2) present facts about himself and his background that distinguish his circumstances from those of persons in the historically barred class." The challenger holds the burden of rebutting the presumptive lawfulness of the exclusion with a strong showing. If the challenger succeeds, "the burden shifts to the Government to demonstrate that the regulation satisfies some form of heightened scrutiny."

Using this framework, the Court began with the presumption that § 922(g)(1) was valid. Prior Supreme Court precedent affirmed that "prohibitions on the possession of firearms by felons" are presumptively valid. For its part, § 922(g)(1) described convictions that, though classified as misdemeanors in a state court, met the traditional definition of a felony. Both Challengers' crimes fell within that traditional definition, even though their ultimate sentences did not.

The Court ultimately concluded that the Challengers' convictions "were not serious enough to strip them of their Second Amendment rights." In particular, the classification a state legislature gives to an offense "is a powerful expression of its belief that the offense is not serious enough to be disqualifying," though the maximum possible punishment remains probative on the issue. That the Challengers received lenient sentences as measured against the guidelines further supported their arguments.

Finally, the Court determined that the law did not survive heightened scrutiny as applied to the Challengers. While the law was intended to further a governmental interest of promoting public safety, applying either intermediate or strict scrutiny, the Government did not meet its burden to prove the appropriateness of the means to further this interest.

Judge Fuentes, joined by six other judges, wrote the concurring and dissenting opinion dissenting in the judgment. Its view was that § 922(g)(1) could never be successfully attacked in an as-applied challenge because felons and felon-equivalents affected by the law lack Second Amendment rights and, therefore, their rights could not be burdened. The concurring and dissenting opinion also argued that the approach adopted by the plurality opinion was unworkable and "place[d] an extraordinary administrative burden on district courts."

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/144549p.pdf.

Panel: McKee, Chief Judge and Ambro, Fuentes, Smith, Fisher, Chagares, Jordan, Hardiman, Greenaway, Jr., Vanaskie, Shwartz, Krause, Restrepo, Nygaard, and Roth, Circuit Judges

Argument Date: June 1, 2016

Date of Issued Opinion: September 7, 2016

Docket Number: Nos. 14-4549, 14-4550, 15-1975, 15-1976

Decided: Affirmed

Case Alert Author: Sarah Kalman

Counsel: Benjamin C. Mizer, Esquire, Principal Deputy Assistant Attorney General, Zane D. Memeger, Esquire, United States Attorney, Mark B. Stern, Esquire, Michael S. Raab, Esquire,
Patrick Nemeroff, Esquire, and Abby C. Wright, Esquire, Counsel for Appellants/Cross-Appellees; Alan Gura, Esquire and Douglas Gould, Esquire, Counsel for Appellees/Cross-Appellants; Stefan B. Tahmassebi, Esquire, Amicus Curiae Counsel on behalf of the NRA.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/09/2016 01:20 PM     3rd Circuit     Comments (0)  

  L.R. v. School District of Philadelphia - Third Circuit
Headline: Kindergarten student deprived of her Fourteenth Amendment substantive due process rights under a state-created danger theory when her teacher allowed her to leave school premises with a stranger who sexually assaulted her later that day

Area of Law: Fourteenth Amendment, Qualified Immunity

Issue(s) Presented: Is a teacher entitled to qualified immunity or does the state-created danger exception to the Fourteenth Amendment apply when he allows a minor student, against school policy, to leave school premises with a stranger, resulting in the student's sexual assault?

Brief Summary: In January 2013, Defendant Reginald Littlejohn, a teacher at W.C. Bryant Elementary School in Philadelphia, allowed his kindergarten student, "Jane," to leave school premises with Christina Regusters. Regusters did not present identification or evidence that Jane was permitted to leave with her, which is required by school district policy. After leaving the classroom and school premises, Regusters sexually assaulted Jane, who suffered significant physical and emotional injuries.
L.R., Jane's parent and guardian, alleged Jane's Fourteenth Amendment substantive due process rights were violated under a state-created danger theory when Littlejohn allowed her to leave school with a stranger. In his capacity as a teacher, Littlejohn asserted a defense of qualified immunity, which protects public officials from unlimited liability when serving as state actors. However, a qualified immunity defense will not prevail when state actors violate constitutional rights that they should have been or were aware existed at the time. Qualified immunity claims consist of two-prongs: "(1) whether the plaintiff sufficiently alleged the violation of the constitutional right, and (2) whether the right was 'clearly established' at the time of the official's conduct." The Third Circuit found that Littlejohn was not entitled to qualified immunity as to L.R.'s fourteenth amendment substantive due process claim.

Extended Summary: In January 2013, Defendant Reginald Littlejohn, a teacher at W.C. Bryant Elementary School in Philadelphia, allowed his kindergarten student, "Jane," to leave school premises with Christina Regusters. Regusters did not present identification or evidence that Jane was permitted to leave with her, which is required by school district policy. After leaving the classroom and school premises, Regusters sexually assaulted Jane, who suffered significant physical and emotional injuries.
Jane's parent and guardian, L.R., filed a civil rights lawsuit under 42 U.S.C. §1983 against Littlejohn, alleging Jane's Fourteenth Amendment substantive due process rights were violated under a state-created danger theory. L.R. alleges that Littlejohn caused the danger that "resulted in Jane's physical and emotional harm" by allowing Jane to leave school with an unidentified adult. Littlejohn moved to dismiss, claiming qualified immunity in his capacity as a teacher. Qualified immunity protects state actors from unlimited liability when acting in their official capacity. However, a qualified immunity defense can be refuted when state actors violate constitutional rights that they should have been or were aware existed at the time. The Third Circuit evaluated L.R.'s allegations and Littlejohn's qualified immunity defense using the two-pronged test for qualified immunity: "(1) whether the plaintiff sufficiently alleged the violation of a constitutional right, and (2) whether the right was 'clearly established' at the time of the official's conduct."
In evaluating the first prong, the Third Circuit used a prior Supreme Court decision to clarify that the Due Process Clause of the Fourteenth Amendment does not require the State to protect private individuals from private actors, but instead protects private individuals from State-created or enhanced dangers.
The Third Circuit analyzed the four elements of the state-created danger exception, as alleged by L.R., finding that a substantive due process violation was sufficiently asserted. Focusing on the fourth state-created danger element initially, "affirmative use of authority creating or increasing danger," the Third Circuit found that Littlejohn did not maintain the status quo of a safe kindergarten classroom for Jane by allowing her to leave with Regusters. The Third Circuit stated that permitting Jane to leave with Regusters without proper identification or verification constituted an affirmative misuse of his state authority in his capacity as a kindergarten teacher and the "gatekeeper" of the safety of his students in his classroom.
Second, the Third Circuit found that L.R. proved that "the harm ultimately caused was a foreseeable and fairly direct result of the state's actions." The Third Circuit reasoned that the possible harm that could result from allowing a kindergartener to leave school premises with a stranger was "obvious" and that experience and common sense made this risk foreseeable. Also, the Third Circuit stated that the harm was a "fairly direct result" of Littlejohn's decision to allow Jane to leave with Regusters.
Next, the Third Circuit concluded that L.R. satisfied the second prong of state-created danger in proving that Littlejohn's release of Jane to a complete stranger shocked the conscience. The Third Circuit found that Littlejohn was deliberately indifferent as he consciously disregarded "a substantial risk of serious harm" by allowing Jane to leave with Regusters. According to the Third Circuit, Littlejohn's behavior shocked the conscience since he was aware of the obvious risk of allowing a kindergartener to leave school with a stranger due to his knowledge of the school policies and his own attempt to abide by them by asking Regusters for her identification.
Lastly, the Third Circuit established that Jane was a "foreseeable victim," because a teacher-student relationship existed between Littlejohn, the state actor, and Jane, the "foreseeable victim of the state actor's conduct." Having satisfied this final element, the Third Circuit concluded that L.R. had successfully alleged Jane's substantive due process rights had been violated, thus satisfying the first prong of the qualified immunity test.
The Third Circuit also concluded that the second prong of the qualified immunity test was satisfied. The Third Circuit stated that Jane, especially since she was a vulnerable five-year old child, had a right to be protected in the safe environment of her classroom and not to be removed into an environment that clearly produced harm. Looking to Supreme Court precedent and other recent judicial decisions, the Third Circuit held that at the time Littlejohn authorized Jane to leave the classroom, this right was clearly established.
In sum, L.R. sufficiently proved a state-created danger exception. By allowing her to leave school with a stranger, Littlejohn clearly deprived Jane of her substantive due process rights, which he knew to exist at the time, precluding his qualified immunity defense.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/144640p.pdf.

Panel: Fuentes, Krause, and Roth, Circuit Judges

Argument Date: February 11, 2016

Date of Issued Opinion: September 6, 2016

Docket Number: No. 14-4640

Decided: Affirmed

Counsel: Kerri E. Chewning and Jeffrey M. Scott, Counsel for Appellants; Charles L. Becker, Dominic C. Guerrini, Thomas R. Kline, Tracie L. Palmer, and David C. Williams, Counsel for Appellee.

Author of Opinion: Circuit Judge Fuentes

Circuit: Third Circuit

Case Alert Author: Katherine A. Osevala

Case Alert Circuit Supervisor: Prof. Mary E. Lev

    Posted By: Susan DeJarnatt @ 09/09/2016 01:17 PM     3rd Circuit     Comments (0)  

  North Jersey Media Group, Inc. v. U.S. - Third Circuit
Headline: Third Circuit Protects Unindicted "Bridgegate" Co-Conspirator's Identity from Media Requests

Area of Law: Criminal Law, Constitutional Law, Rights of Public Access

Issue(s) Presented: Whether a prosecutor's letter naming an unindicted co-conspirator is more like a bill of particulars, subject to a right of public access, or a discovery disclosure in a criminal case protected from public view.

Brief Summary: The Third Circuit vacated the District Court's order requiring the government to disclose a prosecutor's letter naming an unidentified, unindicted co-conspirator in the Bridgegate case. It held that the letter was not subject to disclosure as a matter historically open to the press and was not akin to a judicial record

Extended Summary: Federal prosecutors brought charges against certain New Jersey government officials involved in a widely reported incident involving allegedly orchestrated lane closures on the George Washington Bridge as an act of political revenge. This scandal is frequently referred to as "Bridgegate."

At the center of the dispute was a prosecutor's letter naming this unidentified, unindicted co-conspirator in the infamous Bridgegate scandal. The unidentified "John Doe" intervened for an appeal after a consortium of media groups obtained a district court order requiring the government to disclose the letter. The central question was whether this letter was an integral part of the criminal discovery process that is protected from public view, or a bill of particulars ("a formal written statement by the prosecutor providing details of the charges against the defendant"), which is publicly accessible. Ultimately, the Court ruled that the letter was not subject to public disclosure.

The Media asserted a right of access to the letter under the First Amendment and common law. To determine the right of access under the First Amendment, the Court used a two-pronged evaluation. First, the "experience prong" evaluates if the place and process was historically open to the press. Second, the "logic prong" evaluates "whether public access plays a significant positive role in the functioning of the particular process in question."

The letter in question was not treated by the parties to the litigation as having the same legal effect of a bill of particulars, nor did it serve the same purpose. Because the Court agreed with John Doe and the government that the letter in question was not akin to a bill of particulars, the first prong of the test was not satisfied. The Court noted in dicta that the second prong would have also weighed in Doe's favor.

As for any common law right of access to the letter, the pertinent question was "whether [the document at issue] was considered to be a 'judicial record.'" Here, the letter was not formally filed with the court. Sending the letter directly to the trial judge also did not bring the letter within the scope of the common law right because the document lacks "adjudicatory significance." As the government describes it, "[t]he court was merely the passive repository of the letter and needed to do nothing with it." Therefore, the letter was not a judicial record subject to the common law right of access.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/162431p.pdf.

Panel: Ambro, Jordan, and Scirica, Circuit Judges

Argument Date: June 6, 2016

Date of Issued Opinion: September 8, 2016

Docket Number: No. 16-2431

Decided: Vacated


Counsel: Jenny R. Kramer, Esq., for Intervenor-Appellant, John Doe; Bruce S. Rosen, Esq., for Media Consortium Appellees; Lee M. Cortes, Jr., Esq., Mark E. Coyne, Esq., David W. Feder, Esq., Paul J. Fishman, Esq., J. Fortier Imbert, Esq., and Vikas Khanna, Esq., for Appellee United States of America; Michael A. Baldassare, Esq., Dillon H. Malar, Esq., Jennifer Mara, Esq., for Defendant William E. Baroni, Jr.; Michael D. Critchley, Esq., for Defendant Bridget Anne Kelly; David R. Kromm, Esq., for Defendant Port Authority of New York and New Jersey.

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Author: Sarah Kalman

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/09/2016 01:13 PM     3rd Circuit     Comments (0)  

September 2, 2016
  National Collegiate Athletic Association v. Governor of the State of New Jersey - Third Circuit
Headline: New Jersey Law Repealing Sports Gambling Prohibitions in Casinos and Racetracks Violates the Professional and Amateur Sports Protection Act of 1992

Area of Law: Constitutional Law, Gaming

Issue(s) Presented: Whether SB 2460, enacted by the New Jersey Legislature to partially repeal certain prohibitions on sports gambling, violates PASPA? Whether PASPA unconstitutionally commandeers the states?

Brief Summary: In 1992 Congress passed the Professional and Amateur Sports Protection Act of 1992 ("PASPA") to prohibit state authorized sports gambling. Congress included in the law an exception for New Jersey, but only if the State enacted a sports gambling scheme within one year of PASPA's enactment. New Jersey failed to do so. In 2014, the New Jersey Legislature passed SB 2460, repealing any existing prohibitions on sports gambling in casinos and racetracks. The NCAA and various professional sports leagues filed suit to enjoin New Jersey from enacting the law. New Jersey argued that SB 2460 did not violate PASPA because it was a repeal of existing prohibitions of sports gambling, not an authorization of such. The State further argued that PASPA was unconstitutionally commandeering the states by forcing states into a binary choice between a complete repeal of existing laws or a complete ban on sports gambling. The Third Circuit rejected New Jersey's arguments, concluding that despite New Jersey's use of "repeal" the law selectively authorizes sports gambling in casinos and racetracks across the state. Additionally, PASPA does not unconstitutionally commandeer the states because it does not create a coerced binary choice between a total repeal or total ban. The fact that New Jersey's partial repeal was ruled to violate PASPA does not exclude the chance that other partial repeals may be deemed satisfactory under the federal law.

Extended Summary: In 1992 Congress passed the Professional and Amateur Sports Protection Act of 1992 ("PASPA") to prohibit state authorized sports gambling. Congress included in the law an exception for New Jersey, but only if the State enacted a sports gambling scheme within one year of PASPA's enactment. New Jersey failed to do so. In 2011, after a statewide referendum, the New Jersey Legislature amended the state constitution to permit sports gambling. In 2012, after voters approved the constitutional amendment, the New Jersey Legislature enacted the Sports Wagering Act, which provided for state authorized and regulated sports wagering in casinos and racetracks. In response, the NCAA, NFL, NBA, NHL, and MLB ("the Leagues") sued to enjoin the 2012 law. Before the Third Circuit, New Jersey challenged PASPA as unconstitutional under the anti-commandeering doctrine because it prohibited the repeal of New Jersey's sports gambling prohibitions. The Court rejected this argument, reasoning that PASPA did not require that the states keep any law in place, but it only prohibited affirmative authorization of gambling schemes by states.

Undeterred, the New Jersey Legislature passed SB 2460 in 2014. The law did not affirmatively authorize sports wagering, but repealed any existing prohibitions on the practice insofar as they apply to casinos, gambling houses, or horse racetracks in the state. SB 2460 also limited sports gambling to those over the age of 21 and prohibited placing bets on New Jersey collegiate teams or collegiate competitions taking place in the state. The Leagues again filed suit, this time to enjoin SB 2460. New Jersey argued that SB 2460 does not violate PASPA and is consistent with the ruling in Christie I because the law is a repeal and not an affirmative authorization. The Leagues argued in opposition that SB2460 is actually an authorization of sports gambling cleverly disguised as a repeal. The Third Circuit agreed.

In reviewing the relevant arguments and laws, the Third Circuit provided three distinct reasons that SB 2460 violated PASPA. First, SB 2460 effectively authorized sports gambling at casinos and racetracks, while other laws prohibit such a practice at other establishments. New Jersey has numerous laws in place that prohibit sports gambling throughout the state including at casinos and racetracks. Since sports gambling is undoubtedly illegal throughout the State, the enactment of SB 2460 allows an activity that would otherwise be prohibited and, thus, is an authorization in violation of PASPA.

Second, the Third Circuit reasoned that SB 2460 violated PASPA by selectively dictating where sports gambling may occur, who can place those bets, and which contests are permissible to bet on. Under SB 2460, New Jersey removed sports gambling prohibitions from casinos, gambling houses, and horse racetracks provided the bettors are over the age of 21 and no wagers are placed on New Jersey collegiate teams or collegiate competitions to take place in New Jersey. Using the Black's Law Dictionary definition of authorize, "to empower; to give a right or authority to act," the Third Circuit concluded that SB 2460 empowers casinos, racetracks and persons to conduct practices that other businesses and people cannot. This constitutes permission or authorization in violation of PASPA. New Jersey argued that SB 2460 is simply a repeal not an authorization, which the Third Circuit rejected by reasoning that merely because the state law is couched as a repeal does not stop the Court from examining what the law actually does - selectively authorize sports gambling at casinos and racetracks for certain persons.

Third, the exception in PASPA for New Jersey, which the State did not take advantage of, indicates that Congress perceived sports gambling in New Jersey to violate PASPA. The Third Circuit emphasized that statutory provisions will not be read as surplusage. Thus, if Congress did not believe sports gambling in New Jersey would violate PASPA then it would not have needed to include the New Jersey exception in the federal law.

Finally, the Third Circuit addressed New Jersey's contention that PASPA unconstitutionally commandeers the states. New Jersey claimed that Christie I held that PASPA is constitutional because it allows States to choose not to prohibit sports wagering, even if authorizing it is prohibited. The Third Circuit explained that despite its determination that SB 2460's selective repeal of certain prohibitions amounts to authorization under PASPA, it does not mean that states cannot create their own partial repeals that are acceptable under PASPA. The Court did not state where the line should be drawn for when partial repeals amount to authorization, but simply concluded that SB 2460 crossed it. Thus, since PASPA does not force a coercive binary choice or an affirmative adoption of federal law, it does not unconstitutionally commandeer the states.

A copy of the court's decision can be found here: http://www2.ca3.uscourts.gov/opinarch/144546p1.pdf


Panel: Ambro, Fuentes, Smith, Fisher, Jordan, Hardiman, Greenaway Jr., Vanaskie, Krause, Restrepo, Rendell, and Barry, Circuit Judges

Argument Date: February 17, 2016

Date of Issued Opinion: August 9, 2016

Docket Number:14-4546, 14-4568, 14-4569

Decided: Affirmed.

Case Alert Author: David A. Rosenfeld

Counsel: John J. Hoffman, Esq., Jeffrey S. Jacobson, Esq., Stuart M. Feinblatt, Esq., Peter M. Slocum, Esq., Matthew M. Hoffman, Esq., Ashley E. Johnson, Esq., Theodore B. Olson, Esq., Matthew D. McGill, Esq., Counsel for Appellants Governor of the State of New Jersey; Elliott M. Berman, Esq., Ronald J. Riccio, Esq., Edward A. Harnett, Esq., Counsel for Appellant New Jersey Thoroughbred Horsemen's Association; Michael R. Griffenger, Esq., Counsel for Appellants Stephen M. Sweeney and Vincent Prieto; Paul D. Clement, Esq., Erin Murphy, Esq., Jeffrey A. Mishkin, Esq., Anthony J. Dreyer, Esq., William J. O'Shaunghnessy, Esq., Richard Hernandez, Esq., Counsel for Appellees NCAA, NBA, NFL, NHL, and MLB.

Author of Opinion: Circuit Judge Rendell

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/02/2016 12:18 PM     3rd Circuit     Comments (0)  

  NAACP v. City of Phila - Third Circuit
Headline: Third Circuit Holds City of Philadelphia's Policy, Which Blocked NAACP's Non-Commercial Ad at Airport, Is Unreasonable under First Amendment

Area of Law: First Amendment

Issue(s) Presented: Is a city's policy, preventing private advertisers from displaying non-commercial content at an airport owned by the city, a permissible use of governmental power under the First Amendment? 

Brief Summary:
In January 2011, the NAACP submitted an ad for display at city-owned Philadelphia airport that read: "Welcome to America, home to 5% of the world's people & 25% of the world's prisoners." The City, in line with a policy of banning non-commercial ads at the Airport, rejected the submission. The NAACP filed a lawsuit and claimed the policy violated the First Amendment.
Though the City cited revenue maximization and controversy avoidance as purposes behind the ban, the Third Circuit found that neither of these purposes could render the ban on non-commercial speech in a limited public forum constitutionally reasonable. Particularly fatal to the City's case was the deposition testimony of an airport deputy director, who testified that the ban could in fact cause the airport to lose money and that it did not have anything to do with maintaining neutrality. Thus, the Third Circuit found the ban on non-commercial ads at the Airport unreasonable under the First Amendment.

Extended Summary:
In January 2011, the NAACP submitted an ad for display at the Philadelphia International Airport (PHL), which read: "Welcome to America, home to 5% of the world's people & 25% of the world's prisoners. Let's build a better America together. NAACP.org/smartandsafe." The City of Philadelphia, which owns PHL, rejected the submission based on an informal practice of only accepting ads that promoted commercial transactions. In October 2011, the NAACP filed a lawsuit and claimed the City's rejection of its ad violated the First Amendment. In March 2012, while the lawsuit was pending, the City adopted a written policy, which provides that ads that do not "propose a commercial transaction" cannot be approved.
The City argued that its ban on non-commercial content maximized revenue and avoided controversy. The City cited commercial advertisers not wanting their content next to divisive messages about social issues, and exposing travelers to content they may find offensive, as reasons behind the ban.
Though the City pointed to revenue maximization as one of the reasons behind the written policy, an airport director testified that he believed that the NAACP's ad would not cost PHL revenue and that the written policy had nothing to do with revenue. He even suggested that the policy could cost the city money if it forced PHL to turn away advertisers. As to the City's controversy-avoidance rationale, he testified he had no reason to believe the policy related to maintaining neutral positions for the City on issues of non-commercial speech. He further testified that the policy did not involve the City avoiding picking favorites or imposing on captive audiences. He conceded the policy "may" have something to do with avoiding offending travelers. The director testified that PHL management strives to create in the airport a soothing and pleasing environment for often-stressed travelers.
Because the City's policy affected fundamental First Amendment rights, the Third Circuit shifted the burden of proof onto the City. To satisfy the burden, the City had to show its ban on non-commercial content in the limited public forum of PHL advertising was reasonable either through evidence in the record or by commonsense inferences.
The Third Circuit found the City could not meet its burden. Emphasizing that the record clearly contrasted with inferences the City wished the Court to draw, the Court stated that it could not even make a commonsense inference in favor of the City on revenue maximization. As to controversy avoidance, the Court again found the record lacking in supporting evidence. The Third Circuit further pointed to the Supreme Court's caution against inferring controversy avoidance as a legitimate purpose for restricting First Amendment rights when such a purpose can be used to conceal bias against certain viewpoints. The Court ultimately concluded that the City's ban on non-commercial ads at PHL was unreasonable under the First Amendment.


The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151002p.pdf .

Panel: McKee, Chief Judge, Ambro, and Hardiman, Circuit Judges 

Argument Date: October 8, 2015

Date of Issued Opinion: August 23, 2016

Docket Number: No. 15-1002

Decided: Affirmed

Case Alert Author: Rebecca Daily

Counsel: Shelley R. Smith, Elise M. Bruhl, Craig R. Gottlieb, Counsel for Appellant; Laura Kessler, Fred T. Magaziner, Catherine V. Wigglesworth, Mary Catherine Roper, Seth F. Kreimer, Counsel for Appellee. 

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/02/2016 12:14 PM     3rd Circuit     Comments (0)  

September 1, 2016
  Sara Rosenberg v. DVI Receivables XVII, LLC - Third Circuit
Headline: Third Circuit Finds State Law Claim for Damages Not Preempted by Federal Bankruptcy Law

Area of Law: Bankruptcy, Federal Preemption

Issues Presented: Does the federal Bankruptcy Code preempt the state law claim of non-debtors, which was based on the wrongful filing of an involuntary bankruptcy petition?

Brief Summary: Following a successful suit for damages based on a claim of bad faith involuntary bankruptcy proceedings, plaintiffs filed suit for damages against the parties who had initiated the involuntary bankruptcy proceedings for tortious interference with contracts and business relationships. Defendants sought dismissal of that suit on the ground that it was preempted by federal bankruptcy law on which the involuntary petitions had originally been filed. The Court found that the state law claims were not preempted by the involuntary bankruptcy provisions of the Bankruptcy Code.

Extended Summary:
Maury Rosenberg established several medical imaging companies that were initially financed by DVI Financial Services, Inc. who later transferred them to DVI Funding LLC. DVI Financial entered bankruptcy in 2004, resulting in US Bank's acquisition of the servicing contracts. DVI Funding and DVI Receivables filed involuntary bankruptcy petitions over money Rosenberg's companies owed to DVI. The district court dismissed these actions because DVI Funding and DVI Receivables were not the creditors to those debts.

Mr. Rosenberg then filed an adversary action under 1 U.S.C §303(i) against those two entities as well as U.S. Bank and its subsidiary Lyon Financial. Following a trial, the court awarded attorney's fees, damages, and costs to plaintiff for the bad faith filing of the involuntary bankruptcy filings.

In 2013 Sara Rosenberg together with several other entities owned by her husband filed suit to recover damages that resulted from the involuntary bankruptcy filings ("the Rosenberg affiliates"). The Rosenberg affiliates were not named in the involuntary bankruptcy proceedings, but claimed tortious interference with contracts and business relationships resulted from the bankruptcy filings because of their relationship to the named parties. Defendants moved to dismiss on the grounds that state law tortious interference claims were preempted by the involuntary provisions of the Bankruptcy Code.

The relevant section of the Code, 11 U.S.C. §303(i), provides that if an involuntary bankruptcy petition is dismissed, debtors may recover attorney's fees, costs, and damages from the creditors. The Rosenberg affiliates, not technically debtors, were unable to recover under the Code so then filed the state law claim.

In holding that the district court erred by finding the state law claims preempted by the involuntary bankruptcy provisions of the Bankruptcy Code, the Third Circuit began by explaining that there are three types of federal preemption: express, conflict, and field preemption. This case falls into the latter category, in which federal law preempts state law only if congressional intent to supersede state laws is clear and manifest and the federal regulation leaves no room for state regulation. The Court further explained that there is a strong preference to avoid preemption if possible. In order to find preemption, § 303 must indicate a clear intent to preempt state law.

The Court noted that the law refers only to debtors and does not lay out remedies available to non-debtors. Thus, the court held that field preemption was not applicable. The Court was not convinced by Defendants' argument that the Bankruptcy Code was intended to exclude a remedy for non-debtors when it created one for debtors. Rather, the Court interpreted the Code as a means of deterring abuse by holders of debt and that it would be inconsistent with the purposes of the law to deny a remedy to others, including non-debtors aggrieved by an abusive involuntary petition.

The Court emphasized that field preemption requires a clear and manifest intent, which was not present in the Code. The Court also distinguished a contradictory opinion from the Ninth Circuit, which it found inconsistent with its own previous decisions and the presumption against preemption.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/152622p.pdf

Panel (if known): Ambro, Jordan, Scirica

Argument Date: March 1, 2016

Date of Issued Opinion: August 29, 2016

Docket Number: 2-14-cv-05608

Decided: Reversed and Remanded

Case Alert Author: John Farrell

Counsel: Lewis J. Pepperman, Esq. (Argued), Tucker H. Byrd, Esq., Scottie N. McPherson, Esq., Counsel for Appellants; Craig A. Hirneisen, Esq., Stacey A. Scrivani, Esq., Peter H. Levitt, Esq. (Argued), Jack C. McElroy, Esq., Counsel for Appellees

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/01/2016 09:59 AM     3rd Circuit     Comments (0)  

August 24, 2016
  Andrea Constand v. William H. Cosby, Jr. - Third Circuit
Headline: Third Circuit Holds that Cosby's Request to Reseal Documents Containing Sexual Admissions is Moot

Area of Law: Civil Procedure, Mootness

Issue(s) Presented: Has William Cosby's appeal to reseal documents become moot due to the public disclosure of their contents?

Brief Summary:

William H. Cosby, Jr. made damaging admissions regarding his sexual conduct in a 2005 deposition. Documents from the deposition were sealed from public view by an interim order issued by the District Court. In 2015, the District Court issued an order that the documents be immediately unsealed. Wide dissemination of the documents by prominent news sources promptly followed, which made public that Cosby had engaged in extramarital affairs; acquired Quaaludes and engaged in sexual relations with a woman after she ingested the drug; and had given money to one woman and offered money to Constand. The Third Circuit rejected Cosby's argument that resealing the documents would at least slow the dissemination of their contents and might affect whether they could be used against him in other litigation. It held that the appeal had become moot due to the public disclosure of their contents so that resealing the documents would have no effect.

Extended Summary:
William H. Cosby, Jr. appealed to the Court the District Court order unsealing certain documents that revealed damaging admissions he made in a 2005 deposition regarding his sexual behavior. There was no stay of that order, and the contents of the documents received immediate and wide publicity. The unsealed documents result from a complaint filed by Andrea Constand against Cosby in the District Court in March 2005. Constand alleged that Cosby has drugged and sexually assaulted her at his home. As part of the discovery process, Constand's counsel took Cosby's deposition and questioned him regarding his relationships with other women, including whether any of these women had ingested Quaaludes prior to a sexual encounter. The documents thus reveal that Cosby made a number of damaging admissions during his deposition, including that he had: engaged in extramarital affairs; acquired Quaaludes and engaged in sexual relations with a woman after she ingested the drug; and given money to one woman and offered money to Constand. However, these documents were sealed under an interim order issued by the District Court in November 2005.

Before the District Court could rule on whether the documents should remain sealed permanently, Cosby and Constand reached a confidential settlement in October 2006, and the case was dismissed shortly thereafter. The interim sealing order continued in effect and the documents remained sealed. The District Court's Local Rules require that the Clerk of Court send a notice to the attorney for the party who submitted the sealed documents stating that the documents will be unsealed unless an objection is filed. Eight years passed without the Clerk taking any action. In December 2014, the AP requested that the Clerk issue such a notice. The Clerk then placed a notice on the District Court docket stating that the documents would be unsealed within 60 days unless an objection was filed. Cosby's counsel filed an objection and the District Court allowed the AP to intervene and argue for lifting the interim sealing order. Cosby did not request a stay at this time. On July 6, 2015, the District Court issued an order that the documents be immediately unsealed and accompanied the order with a 25-page opinion explaining its reasoning.

Without a stay and with the District Court's instruction that the Clerk unseal the documents "forthwith," an AP reporter discovered that the documents were publicly available and downloaded them within minutes of the online posting. Though Cosby's counsel emailed a stay request to the Court less than 20 minutes later, it was too late to prevent the media from publicizing Cosby's damaging admissions. The AP sent out a "news alert" reading "Documents: Cosby admitted in 2005 to getting Quaaludes to give to women he sought sex. Within hours, four more news organizations had published stories regarding the contents of the documents. In addition, The New York Times obtained a full transcript of the deposition and published excerpts on its website. In the wake of this publicity, the District Court did not rule on Cosby's stay request, and he filed a notice of appeal to the Court.

The Court held that Cosby's appeal has become moot due to the public disclosure of their contents. The Associated Press (the "AP") argued in favor of mootness because resealing the documents after they have already become public will have no effect. Cosby argued that this was not the case as resealing the documents would at least slow the dissemination of their contents and might affect whether they could be used against him in other litigation.

The Court noted that it has previously held that appeals seeking to restrain further dissemination of publicly disclosed information are moot. In light of the extensive publicity surrounding Cosby's admissions, the Court was without power to affect the dissemination of the unsealed documents' contents in any meaningful way. Five prominent news organizations published articles about the documents within hours of the District Court's order and the media has repeated his damaging admissions countless times since then. In addition, a Google Search for "Bill Cosby deposition testimony" yields some 81,200 results, some which include full copies of the documents. The Court noted that anyone with an Internet connection can easily obtain images of the original documents online, so it is not clear why anyone would bother filing an additional public records request.

The Court also held that any effect that resealing the documents might have on the numerous other legal proceedings that result from sexual assault allegations against Cosby are not enough to present a live controversy in the appeal. The Court rejected Cosby's argument that resealing the documents would leave him "better positioned" to persuade "the various courts in which he finds himself a party" to limit the use of the documents in the proceedings before them. The Court stated that this argument effectively requested an advisory opinion, and that Cosby failed to cite any authority to the effect that sealing documents in a civil case would render them inadmissible in another litigation. Sealed documents are often admitted into evidence. Thus resealing the documents would not provide Cosby with any meaningful relief and the appeal was moot.

Because the appeal was moot, the Court could not review the merits of the District Court's decision to unseal the document. However, it exercised its equitable discretion to vacate the District Court's order, which would prevent its decision from "spawning any legal consequences." The Court vacated the District Courts' order out of concern for procedural fairness, namely that parties should not remain bound by a decision that the court of appeals cannot review because it has become moot.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152797p.pdf

Panel: Ambro, Smith, and Krause, Circuit Judges

Argument Date: April 13, 2016

Date of Issued Opinion: August 15, 2016

Docket Number: No. 15-2797

Decided: Vacated and Dismissed

Case Alert Author: Cynthia C. Pereira

Counsel: George M. Gowen, III, Patrick J. O'Connor, Counsel for Appellant; Gayle C. Sproul, Elizabeth Seidlin-Bernstein, Counsel for Intervenor-Appellee.

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/24/2016 03:50 PM     3rd Circuit     Comments (0)  

  United States of America v. Everett C. Miller - Third Circuit
Headline: Sentencing Guidelines Investment Enhancement applied to defendant even though he was not registered as an investment advisor

Area of Law: Securities Law

Issue(s) Presented: Does a defendant have to be a registered investment advisor to be subject to the investment enhancement under the Sentencing Guidelines?

Brief Summary:

Appellant Everett C. Miller sold investors over $41 million in phony "promissory notes" and then squandered their money. Miller pled guilty to one count of securities fraud and one count of tax evasions. He was sentenced to 120 month's imprisonment. The Third Circuit rejected Miller's argument his sentence should not have included the Sentencing Guidelines investment enhancement, because he was not an "investment adviser," as defined by the Investment Advisers Act of 1940. The Court held that, based on the text of the investment adviser enhancement and at the definition of investment adviser under the Act, Miller was an "investment adviser" he was in the business of providing securities advice, which he provided for compensation. It was not necessary for him to be a registered investment adviser to be considered one under the Act.

Extended Summary:

Everett C. Miller was the founder, chief executive and sole owner of Carr Miller Capital LLL (Carr Miller), an investment and financial services firm. Carr Miller was based in New Jersey and had more than thirty affiliates and related entities. Between June 2006 and December 2010, Carr Miller received over $41.2 million in capital from more than 190 investors. Miller himself was a registered investment adviser representative under New Jersey securities law. While he only had a high school GED, he passed several securities industry examinations. Through Carr Miller, Miller sold investors "Carr Miller Capital promissory notes, which were securities under the Securities Act of 1933 and the Securities Exchange Act of 1934, and not exempt from federal or state registration requirements. Miller did not register the notes. The notes promised annual returns of between 7 and 20 percent, which varied by investor, plus the return of the principal after nine months. These promises were false.

Miller deceived his investors in various ways. For one, he operated Carr Miller as a Ponzi Scheme as he spent approximately $11.7 million of its investors' principal to repay earlier investors. He also invested in risky business ventures without informing investors. Carr Miller lost approximately $15.7 million of $22.9 million invested by the firm. Carr Miller also comingled investors' funds in seventy-five related bank accounts, which Miller then tapped like a "credit card" for Carr Miller overhead and his own expenses. Miller spent lavishly on luxury cars, home furnishings, electronics, vacations and tickets to entertainment and sporting events. The Arkansas Securities Department opened an investigation of a Carr Miller affiliate in August 2009. This investigation put Miller on notice that his promissory notes were unregistered securities. After becoming aware of the investigation, he knowingly sold almost $5 million in promissory notes to forty new investors. He did not return any of their principal. Instead, Miller used a portion of the funds to repay earlier investors and spent the balance of the money on Carr Miller overhead and his own expenses. This period from August 2009 to December 2010, formed the basis of Miller's securities fraud conviction and led to a stipulated loss amount of $2.5 to $7 million.

Miller pled guilty pursuant to a plea agreement and a cooperation agreement. The parties stipulated to a combined offense level of 29, followed by a 3-level reduction for acceptance of responsibility, resulting in a sentence within offense level 26. Under the cooperation agreement, Miller agreed to provide substantial assistance in exchange for the Government's downward departure motion, further reducing the stipulated offense level of 26 to offense level 23. At Miller's sentencing, the District Court applied the 4-level investment adviser enhancement, rejecting his argument that he did not meet the definition of an "investment adviser." Although the District Court did grant a 3-level downward departure, its having added 4 levels for the investment adviser enhancement, resulted in the downward departure being from offense level 30 to 27 rather than from 26 to 23. The plea agreement was silent as to this enhancement. When the District Court asked the Government for its sentencing recommendation the Government stated that it was requesting a sentence at "offense level 23." However, the District Court did not depart below level 27 and imposed an upward variance of 2 levels. This produced a final offense level of 29 and a Guidelines range of 97 to 121 months' imprisonment. It imposed a sentence of 120 months imprisonment on Miller.

The Court rejected Miller's challenge to the District Court's application of the Sentencing Guidelines investment adviser enhancement. The text of the investment adviser enhancement applies a 4 level enhancement for securities violations where the defendant was an investment advisor. The enhancement adopts the definition of "investment adviser" in the Investment Advisers Act of 1940 which states: "Investment adviser means any person who for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities." The Act enumerates exemptions from this definition, which the Court concluded did not apply to Miller. It also concluded that the structure of the act demonstrated Congressional intent to define "investment adviser" broadly while carving out exemptions.

The Court rejected Miller's argument that he was not an "investment adviser" as he was not in the business of providing securities advice, he did not provide securities advice for compensation and he was not a registered investment adviser. It found that Miller provided securities advice by personally advising individuals to invest in Carr Miller promissory notes. Under the SEC interpretive release, Miller was in "the business" of providing securities advice because he held himself out as a person who provides investment advice. Miller was a registered investment adviser representative, which may involve rendering securities advice.

The Court then looked to the SEC Release for the definition of compensation. The SEC defined compensation as "any economic benefit, whether in the form of an advisory fee or some other fee relating to the total services rendered, commissions, or some combination of the foregoing." Miller provided securities advice to Carr Miller investors for compensation, as based upon Miller's securities advice, investors bought Carr Miller promissory notes. The principal they provided became Miller's compensation when he commingled investors' accounts and spent the money for his own purposes. The Court also rejected his final argument that he was not an "investment adviser" because he was not registered as an investment adviser, but rather as an investment adviser representative. The Court held that registration is not necessary to be an "investment adviser" under the Act. Under the Act some rules apply to registered investment advisers, some to unregistered investment advisers and some to both. The Act prohibits fraud by "any" investment adviser, regardless of registration. As Miller was an "investment adviser" under the Act, despite his failure to register as such, the Court held that the District Court properly applied the investment adviser enhancement. The Court affirmed the District Court's sentence.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152577p.pdf

Panel: Fuentes, Chagares, Restrepo, Circuit Judges

Argument Date:

Date of Issued Opinion: August 12, 2016

Docket Number: No. 15-2577

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Richard Sparaco, Counsel for Appellant; Mark E. Coyne, Norman Gross, Counsel for Appellee.

Author of Opinion: Circuit Judge Restrepo

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/24/2016 03:48 PM     3rd Circuit     Comments (0)  

August 22, 2016
  Freedom From Religion Foundation Inc. v. New Kensington Arnold School District - Third Circuit
Headline: Frequent contact not required for mother of student to challenge a Ten Commandments monument at local high school

Area of Law: Constitutional Law

Issue(s) Presented: Is frequent contact with a religious display required for plaintiff to have standing to challenge a school's Ten Commandments monument?

Brief Summary:

Marie Schaub along with her daughter Doe 1 and the Freedom From Religion Foundation (FFRF) brought suit against the New Kensington-Arnold School District, alleging the district had violated the Establishment Clause by maintaining a monument of the Ten Commandments at its public high school. Schaub saw the monument on occasion and sent her Doe 1 to a different high school to avoid the monument. The Third Circuit held that there is no requirement of frequent contact with a religious display for a person to have standing to challenge the display. It concluded that the issue was not moot because Doe 1 could return to the high school or its campus if the monument was removed.

Extended Summary:

Marie Schaub, her daughter Doe 1, and the Freedom From Religion Foundation (FFRF) sued the New Kensington-Arnold School District alleging that it had violated the Establishment Clause by maintaining a monument of the Ten Commandments at its public high school. In 1956, the New Kensington Fraternal Order of the Eagles, a non-profit charitable organization, donated a monument inscribed with the Ten Commandments to be placed on the grounds of Valley High School in New Kensington. The donation was part of a nationwide program through which local chapters of the organization donated over 140 such monuments. The organization believed that troubled teens would benefit from exposure to the Ten Commandments as a code of conduct. In addition to the text of the Ten Commandments, the monument is adorned with images of an eagle, an American flag, the Star of David, the Chi-Rho symbol, a Masonic eye, and tablets with Hebrew and Phoenician lettering. The monument is near the entrance of the school's gym. Anyone entering the school via this entrance passes within 15 feet of the monument. The parties disagreed about how closely one must approach the monument in order to read its text.

The FFRF, an organization dedicated to promoting separation of church and state, wrote a letter to the Superintendent of the District requesting that the monument be removed. The school board rejected the request. Schaub saw a news report about the letter and the school board's decision on television and contacted FFRF through its website. She maintained that she had been a member of FFRF since August 2012, when she contacted FFRF regarding the lawsuit. Schaub and Doe 1 live within the New Kensington-Arnold School District. Schaub had visited the high school and come into contact with the monument various times. In addition, Doe 1 was scheduled to attend the high school beginning in August 2014, and Schaub planned to drive her to school. Schaub estimated that from the curb, where she would drop someone off at the gym's entrance, she could make out the title of "The Ten Commandments" and the word "Lord" on the monument. The monument can also be seen from the road on which Schaub and Doe 1 frequently travel.

Schaub alleged that the monument brands her as "an outsider because [she] do[es] not follow the particular religion or god that the monument endorses." She wishes to bring up her daughter without religion and does not want her daughter to be influenced by the monument. Doe 1 identifies as non-religious. She had come into contact with the monument at a young age she had never read it. Doe 1 also stated that she "does not feel like she has to believe in god, but that since it's there in front of a school that they kind of want you to be that way." Appellants conceded that the record is silent as to whether Doe 1 had this view at the time the complaint was filed. Schaub decided to send Doe 1 to a different high school, which required her to leave her middle school classmates and attend a school farther from Schaub's home. Schaub claimed that if the monument were removed, she would permit Doe 1 to enroll at the school. Appellants filed suit in District Court seeking declaratory and injunctive relief, nominal damages, and attorney's fees. During the pendency of the lawsuit, Schaub and Doe 1's contact and possible contact with the monument continued. The District Court granted the District's summary judgment motion, concluding that the Appellants lacked standing and their request for injunctive relief was moot.

The Third Circuit reversed, holding that Schaub had standing to seek both nominal damages and injunctive relief, and that her request for injunctive relief is not moot. The Court concluded that a plaintiff must show direct and unwelcome personal contact with the alleged establishment of religion, but there is no requirement that the contact be frequent or that the challenger has altered her behavior to avoid contact. The Supreme Court has established that a single trifle is sufficient to establish standing. Frequent contact with a religious display may strengthen the case for standing but is not required to establish it. In addition, the Court expressed its view that a community member should not be forced to forgo a government service to preserve his or her ability to challenge an allegedly unconstitutional religious display or behavior. However, the Court stated that a passerby who is not a member of the community, and who faces no risk of future contact, may not have an injury in fact sufficient to confer standing. Standing requires that a plaintiff have a concrete grievance that is particularized to her; she cannot simply be expressing a generalized disagreement with activities in a place in which she has no connection. The Court held that Schaub had standing to pursue a nominal damages claim as she demonstrated that her contact with the monument was unwelcome.

The Court also held that Schaub had standing to seek injunctive relief, as Schaub would have contact with the monument while driving Doe 1 to school. In addition, as Doe 1's parent she has an interest in guiding her child's religious upbringing and has standing to challenge actions that seek to "establish a religious preference affecting" her child. The Court made clear that Schaub's decision not to send Doe 1 to the high school does not deprive Schaub of standing to seek injunctive relief. The Court still has the capacity to redress her grievances, as Doe 1 could return to the school if the monument is removed so her claim for injunctive relief is not moot. Schaub was not required to continue suffering the exact injury described in the complaint to maintain her entitlement to relief. The Court concluded that it need not address whether Doe 1 had standing to obtain an injunction, but concluded that the District Court correctly found that she lacked standing to seek nominal damages. The Court held that Doe 1 lacked standing to seek nominal damages, as it was not clear from the record that Doe 1 read or understood the monument until after the suit was filed.

Finally, the Court vacated the order dismissing FFRF's claims. The Court concluded that FFRF's standing was predicated wholly on the standing of Schaub. As the Court concluded that Schaub had standing, it remanded to the District Court to determine whether she was a member of FFRF at the time the complaint was filed, thereby giving FFRF organizational standing to pursue either injunctive relief or nominal damages.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153083p.pdf

Panel: Smith, Hardiman, and Shwartz, Circuit Judges

Argument Date: May 19, 2016

Date of Issued Opinion: August 9, 2016

Docket Number: No. 15-3083

Decided: Affirmed in part, reversed and remanded in part, vacated and remanded in part

Case Alert Author: Cynthia C. Pereira

Counsel: Patrick C. Elliott, Marcus B. Schneider, Counsel for Appellants; Christine Lane, Anthony G. Sanchez, Counsel for Appellee; Richard B. Katskee, Alexander J. Luchenitser, Stephen M. Shapiro, Charles M. Woodworth, Brian D. Netter, Steven M. Freeman, David L. Barkey, Jeffrey I. Pasek, Harsimran Kaur, Gurjot Kaur, Counsel for Amicus Curiae

Author of Opinion: Circuit Judge Shwartz

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/22/2016 02:40 PM     3rd Circuit     Comments (0)  

August 12, 2016
  Delaware Riverkeeper Network v. Secretary Pennsylvania Department of Environmental Protection - Third Circuit
Headline: Third Circuit rejects challenges to the expansion of the Transcontinental Pipeline

Area of Law: Environmental

Issue(s) Presented: Were the permits for the expansion of the Transcontinental Pipeline issued by state agencies appropriate?

Brief Summary:

The Court denied challenges by environmental groups to the Federal Energy Regulatory Commission's (FERC) approval of expansion of the transcontinental gas pipeline operated by Transco. The expansion involved construction of four new pipeline "loops" and the upgrade of turbines at four compressor stations in Pennsylvania and New Jersey. FERC completed an Environmental Assessment of the project and issued a Certificate of Public Convenience and Necessity. The certificate was conditioned on Transco's receipt of "all applicable authorizations under federal law" enumerated in the Environmental Assessment, some of which were to be obtained from New Jersey and some from Pennsylvania. The Pennsylvania and New Jersey Departments of Environmental Protection (PADEP and NJDEP) reviewed the expansion proposal for potential water quality impacts, and both issued the permits required by FERC's Environmental Assessment. Environmental groups challenged the underlying state agency decisions. The Court concluded that NJDEP and PADEP did not act arbitrarily or capriciously in issuing the permits and thus denied the petitions.

Extended Summary:

Transcontinental Gas Pipe Line Company, LLC (Transco), operates the Transcontinental pipeline, a 10,000-mile pipeline that extends from South Texas to New York City. Transco requested federal approval for the expansion of the Leidy Line, which connects gas wells in Central Pennsylvania with the main pipeline. The project consisted of the construction of four new pipeline "loops" and the upgrade of turbines at four compressor stations in New Jersey and Pennsylvania. Loops are sections of pipe connected to the main pipeline system that reduce the loss of gas pressure and increase the flow efficiency of the system. Compressor stations serve a similar function, using turbines to increase the pressure and rate of flow at given points along the pipeline's route. Transco proposed installing approximately thirty miles of loops. FERC completed the requisite Environmental Assessment in August 2014, and issued the certificate of public convenience and necessity. The certificate was conditioned on Transco's receipt of "all applicable authorizations under federal law" enumerated in the Environmental assessment, some of which were to be obtained from New Jersey and some from Pennsylvania.

Under the Clean Water Act, the Pennsylvania and New Jersey Departments of Environmental Protection (PADEP and NJDEP) reviewed the expansion proposal for potential water quality impacts. Both agencies issued the necessary permits. The New Jersey portion of the project is substantially complete. Several environmental groups challenged the state permits. The petitions were consolidated for review.

The Court first rejected PADEP and NJDEP's challenge that the Court lacked subject matter jurisdiction to review the petitions. The Riverkeeper and the Foundation, in petitioning the court for review, invoked Section 19(d) of the Natural Gas Act that confers original jurisdiction on Courts of Appeals over certain state and federal permitting actions for interstate natural gas pipelines. Both PADEP and NJDEP contested whether that provision applied, as they alleged that they did not act "pursuant to Federal law' in issuing Water Quality Certifications, permits, and Letters of Interpretation to Transco. The Court found that that although the Clean Water Act makes clear that states have the right to promulgate water quality standards as they see fit, the issuance of Water Quality Certification is not purely a matter of state law. Specifically, a Water Quality Certification confirms compliance with sections of the Clean Water Act, therefore it cannot exist without federal law. The Court also found that each of the permits issued by NJDEP were rooted in NJDEP's exercise of authority that it assumed pursuant to Sections 401 and 404 of the Clean Water Act.

The Court also dismissed NJDEP and Transco's argument that the petition for review was moot because construction was complete and Transco had been conducting mitigation and restoration. Thus, any procedural remedy would be ineffectual. Holding that the central question in a mootness analysis is "whether changes in circumstances that prevailed at the beginning of the litigation have forestalled any occasion for meaningful relief, the Court concluded that the case was not moot, as NJDEP may monitor mitigation outcomes following completion of mitigation. Therefore, possible effectual relief remained because future environmental analysis might lead NJDEP to require additional mitigation from Transco.

The Court also rejected PADEP and NJDEP's assertions that the petitions were barred by the sovereign immunity provided by the Eleventh Amendment. The Court held that New Jersey and Pennsylvania's voluntary participation in the regulatory schemes of the Natural Gas Act and the Clean Water Act constituted a waiver of sovereign immunity, given the clear language in those statutes subjecting their actions to federal review. A state may waive its immunity by engaging in conduct that demonstrates the state's consent to suit in federal court. The Court concluded that Section 19(d) of the Natural Gas Act grants the Courts of Appeals jurisdiction to review "state agency action" and the language is unambiguous. New Jersey and Pennsylvania's participation in the regulatory scheme of the Clean Water Act with respect to interstate natural gas facilities, pursuant to Section 19(d), constituted a waiver of their immunity from suits brought under the Natural Gas Act. In effect, Section 19(d) of the Natural Gas Act created a small carve out from sovereign immunity. Under this limited carve out, federal judicial review is proper over those state actions regarding interstate natural gas facilities pursuant to the Clean Water Act and the Clean Air Act.

The Court ultimately held that the petitions lacked merit. The Court reviewed the state agencies' interpretation of federal law and reviewed under the arbitrary and capricious standard state actions take pursuant to federal law. Agency action is arbitrary and capricious when the agency fails to examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between facts found and the choice made. The Court concluded that NJDEP did not act arbitrarily or capriciously with respect to three errors alleged by the Foundation: NJDEP deprived the Foundation of sufficient opportunity to comment, NJDEP issued the Freshwater Wetlands Individual Permits based on unsupported conclusions, and NJDEP erred in determining that Transco met the requirements for the Flood Hazard Area Individual Permits and hardship exceptions for those permits. The Court also concluded that that PADEP did not act arbitrarily or capriciously in regards to the two challenges raised by the Riverkeeper: PADEP failed to review an environmental assessment prepared by Transco before issuing the Water Quality Certification, as required by state regulations; and the material that PADEP did review were substantially insufficient. The Court determined that the Riverkeeper had failed to demonstrate prejudice from the alleged errors.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152122p.pdf

Panel: Greenaway, Jr., Scirica, and Roth, Circuit Judges

Argument Date: October 29, 2015

Date of Issued Opinion: August 8, 2016

Docket Number: No. 15-2122; 15-2158

Decided: Denied

Case Alert Author: Cynthia C. Pereira

Counsel: Aaron J. Stemplewicz (Argued) Counsel for Petitioners Delaware Riverkeeper Network and Maya Van Rossum; Katherine V. Dresdner, Aaron Kleinbaum, Susan J. Kraham Edward Lloyd (Argued), Counsel for Petitioners New Jersey Conservation Foundation Stony Brook Millstone Watershed Association and Friends of Princeton Open Space; Joseph S. Cigan, III (Argued), Kimberly Hummel Childe, Margaret O. Murphy, Curtis C. Sullivan, Counsel for Respondents Secretary Pennsylvania Department of Environmental Protection and Pennsylvania Department of Environmental Protection; Pamela S. Goodwin, Patrick F. Nugent, John F. Stoviak (Argued), Elizabeth U. Witmer, Counsel for Intervenor Respondent Transcontinental Gas Pipe Line Corp.; Mark A. Collier, John E. Doyle, Timothy P. Malone, Lewin J. Weyl (Argued), Counsel for Respondent New Jersey Department of Environmental Protection; Michael K. Rutter, Heather N. Oehlmann, Christine A. Roy (Argued), Richard G. Scott, Counsel for Respondent Transcontinental Gas Pipe Line Corp

Author of Opinion: Circuit Judge Roth

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/12/2016 01:35 PM     3rd Circuit     Comments (0)  

August 5, 2016
  Roy Langbord v. United States Department of the Treasury - Third Circuit en banc
Headline: Third Circuit affirms Government's ownership of stolen 1933 Double Eagle Coins

Area of Law: Property, civil forfeiture

Issue(s) Presented: Was the Mint required to file a forfeiture action under CAFRA to keep coins which were submitted to it solely for authentication by putative owners?

Brief Summary:

The dispute regarded the rightful ownership of ten pieces of gold, rare 1933 Double Eagles, which were supposed to be melted shortly after they were minted, when the US went off the gold standard. A few of the 1933 Double Eagles escaped this fate when they were stolen by the Philadelphia Mint's cashier and distributed by a Philadelphia merchant. Since 1944, the United States has attempted to locate and recover all extant 1933 Double Eagles. One was sold to King Farouk of Egypt in 1944 and acquired in 1995 by Stephen Fenton, an English coin dealer. When Fenton attempted to resell that coin to a collector in New York, the government seized it. The government agreed to resolve its dispute with Fenton by auctioning the coin and splitting the $7,590,020 proceeds. A year after the auction, Joan Langbord, daughter of the merchant, discovered ten 1933 Double Eagles in a family safe-deposit box. Her attorney, who had also represented Fenton in his dispute, contacted the Mint in an effort to resolve the Langbords' claim in the same manner. The Langbords agreed to turn the coins over for authentication only. The Mint took possession of the ten 1933 Doubles Eagles in 2004, authenticated them in 2005, but refused to return them to the Langbords.

The en banc decision reversed the panel and affirmed the District Court's declaratory judgment that, because the coins were not authorized to be removed from the Mint, they remained property of the United States. It also found that the Mint's refusal to return the coins was a seizure but not a forfeiture and thus the judicial forfeiture action by the United States, ordered by the District Court, was not time-barred under CAFRA.

Extended Summary:

This appeal dealt with a dispute over ten pieces of gold. The Langbords claimed to be the rightful owners of the gold pieces while the Government claimed that they were the property of the United States. The ten gold pieces, 1933 Double Eagles, had a face value of $20. The renowned sculptor August Saint-Gaudens designed these Double Eagles in 1907 at the request of President Theodore Roosevelt and millions were manufactured between 1907 and 1933 as legal tender. However, in 1933 President Franklin Delano Roosevelt signed a series of orders which prohibited the nation's banks from paying out gold.

That same year, the United States Mint in Philadelphia struck 445,500 Double Eagles, but they were never issued. Instead all but 500 of the Double Eagles were placed into the Mint's vault and the remaining coins were held by the Mint's cashier. By 1937, all of the 1933 Double Eagles held at the Philadelphia Mint were supposed to have been melted. This was not the case as some coins were transferred among collectors, which prompted an investigation by the Secret Service in 1944. The Secret Service recovered a small number of the 1933 Double Eagles and determined that they had been stolen from the Mint by George McCann, who was the Mint's cashier from 1934 to 1940. The Secret Service also concluded that the coins had been distributed by Israel Switt, a Philadelphia merchant, who was also Joan Langbord's father.

Since 1944, the United States has attempted to locate and recover all extant 1933 Double Eagles. The only exception has been a 1933 Double Eagle sold to King Farouk of Egypt on 1944 and later acquired in 1995 by Stephen Fenton, an English coin dealer. When Fenton attempted to resell that coin to a collector in New York, the government seized it and a protracted legal dispute ensued. The government agreed to resolve its dispute with Fenton because the Treasury Department had improvidently issued an export license for the coin when it was sold to King Farouk in 1944. The Fenton-Farouk coin was sold at auction in 2002 for $7,590,020 and the net proceeds were divided equally between Fenton and the Government pursuant to their settlement agreement. A year after the auction, Joan Langbord allegedly discovered ten 1933 Double Eagles in a family safe-deposit box. Her attorney, Barry Berke, who had also represented Fenton in his dispute, contacted the Mint in an effort to resolve the Langbords' claim in the same way. After a meeting with Mint officials, the Langbords agreed to turn the coins over for authentication but reserved "all rights and remedies." The Mint took possession of the ten 1933 Doubles Eagles in 2004 and authenticated them in 2005, but then refused to return them to the Langbords.

The Langbords then brought suit in the United States District Court for the Eastern District of Pennsylvania, alleging violations of the United States Constitution, the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), the Administrative Procedure Act, as well as common law torts. The District Court issued a split decision. It found that the Mint violated the Fourth and Fifth Amendments in refusing to return the coins. But it ruled in favor of the Government's declaratory judgment claim that the coins "were not authorized to be taken from the United States Mint and that therefore, as a matter or law, all of the 1933 Double Eagles remain property belonging to the United States." It ordered the Government to initiate judicial forfeiture proceedings to compensate for its Constitutional violations. A jury found in favor of the Government. The Langbords prevailed on appeal to the Third Circuit, but the Court vacated the panel opinion and agreed to hear the case en banc.

The en banc Court found that the Government's forfeiture action was not time-barred. Under CAFRA, any person claiming property seized in a nonjudicial forfeiture proceeding may file a claim with the appropriate official after the seizure. The government must then file a complaint for forfeiture no later than 90 days after a claim has been filed. If the government does not file a complaint for forfeiture, it must release the property and take no further action to effect the civil forfeiture of the property. The Court rejected the Langbords' argument that their seized asset claim started the ninety-day period for the government to file a complaint. It determined that property must be seized in a nonjudicial forfeiture proceeding before a seized asset claim triggers the ninety-day statutory period. The Mint's retention of the coins did not initiate a nonjudicial forfeiture proceeding because it was a seizure but not a forfeiture. A seizure is the act of taking possession of property by legal right or process and forfeiture involves a transfer of title from one party to another. Through a seizure the government obtains possession while through forfeiture it obtains ownership of property. As government actors regularly seize property with the intention of returning it, it follows that a seizure alone does not initiate a forfeiture proceeding because it does not implicate the transfer of legal title. In addition, the Court stated that the government had determined that it was not obligated to initiate forfeiture proceedings because it had merely repossessed its own property. As a result, neither the Mint nor any other federal agency took any steps to initiate a nonjudicial forfeiture. In fact, the government had explicitly disclaimed any intent to forfeit the coins, instead choosing to assert its ownership rights.

The Court also affirmed the District Court's declaratory judgment that the Government was the owner of the coins. The Court held that CAFRA only precludes declaratory judgments that affect forfeiture, and in this case the Government was attempting to regain possession of what it believed to be its own property. The Court also determined that the declaratory judgment action fit within the pattern of cases typically decided by a court sitting in equity, as it fits the equitable pattern of an action to quiet title.

The Court rejected the Langbords' arguments that evidentiary errors entitled them to a new trial. The Court found no error in admitting the evidence related to Switt's prior forfeiture, but that portions of both the Secret Service reports about the 1944 investigations and the expert's testimony should have been excluded. However, the Court concluded that those evidentiary errors were harmless. Finally, it rejected the Langbords' last argument that the District Court erroneously instructed the jury on the intent necessary to establish liability under 18 U.S.C. §641. The Court stated that the Supreme Court has held that a conviction under the statute requires a jury to find the criminal intent to wrongfully deprive another of possession of property. The Court determined that the District Court's instructions conveyed exactly this point of law as it instructed the jury that it was required to find that whoever stole or embezzled did so knowingly, defined as exercising a deliberate choice. The Court concluded that the District Court's definition of "knowingly" accorded with its model jury instructions, and was therefore proper.

Judge Rendell, joined by Judges McKee and Krause, dissented. The dissent argued that the Mint's refusal to return the coins was a forfeiture sufficient to start the clock under CAFRA, and that the Government's failure to file a forfeiture action within the 90-day time period barred the later action.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/124574p2.pdf

En Banc: McKee, Chief Judge; Ambro, Fuentes, Smith, Fisher, Chagares, Jordan, Hardiman, Vanaskie, Schwartz, Krause, and Rendell, Circuit Judges

Argument Date: October 14, 2015

Date of Issued Opinion: August 1, 2016

Docket Number: No. 12-4574

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Barry H. Berke, Eric A. Tirschwell, Counsel for Appellants; Zane David Memeger, Robert A. Zauzmer, Jacqueline C. Romero, Nancy Rue, Counsel for Appellees

Author of Opinion: Circuit Judge Hardiman

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/05/2016 01:50 PM     3rd Circuit     Comments (0)  

August 2, 2016
  United States of America v. Robert Menendez - Third Circuit
Headline: District Court did nor err in refusing to dismiss Senator Menendez's indictment under the Speech or Debate Clause

Area of Law: Constitutional Law

Issue(s) Presented: Did the District Court err in refusing to dismiss Senator Menendez's indictment for soliciting and accepting gifts from Dr. Melgen and in exchange using the power of his office to influence enforcement actions against Dr. Melgen and to encourage the State Department and Customs and Border Patrol to intervene on his behalf in a contract dispute with the Dominican Republic?

Brief Summary:

In 2015, a federal grand jury indicted United States Senator Robert Menendez of New Jersey for soliciting and accepting numerous gifts from his friend Dr. Salomon Melgen. The indictment alleged than in exchange for the gifts, Senator Menendez used the power of his office to influence an enforcement action by the Centers for Medicare and Medicaid Services and to encourage the State Department and the U.S. Customs and Border Patrol to intervene on Dr. Melgen's behalf in a multi million contract dispute with the Dominican Republic. The Third Circuit affirmed the denial of his motion to dismiss the indictment. It held that the ruling that his efforts to intervene on behalf of Dr. Melgen were not legislative acts protected by the Speech and Debate clause, was not clearly erroneous. The Court also rejected Menendez's argument that the charges under the Federal Ethics Act violated the separation of powers doctrine.

Extended Summary:

The twenty-two count Indictment of Senator Menendez alleged that in 2009, the Centers for Medicare and Medicaid Services (CMS) suspected that Dr. Melgen, a Florida-based ophthalmologist, had overbilled Medicare for $8.9 million from 2007 to 2008 by engaging in a prohibited practice known as "multi-dosing." Medicare policy required that each patient who was taking the drug Lucentis be treated using a separate vial of the drug. However, Dr. Melgen routinely used the solution from a single vial to treat multiple patients. As he was reimbursed as if he used a separate vial for each patient, CMS believed Dr. Melgen was paid for more vials of the drug than he actually used.

The indictment avers that, before CMS began formal proceedings against Dr. Melgen, Senator Menendez instructed his Legislative Assistant to call the doctor about "a Medicare problem we need to help him with." Both Menendez's Legislative Assistant as well as his Deputy Chief of Staff called Dr. Melgen twice regarding the matter. Once CMS formally notified Dr. Melgen that it may seek reimbursement for the overbilled drugs, the Deputy Chief of Staff emailed the Legislative Assistant advising, "I think we have to weigh in on Dr. Melgen's behalf... to say they can't make him pay retroactively." Senator Menendez's staff continued to work with Dr. Melgen's lobbyist on the CMS dispute and arranged for the Senator to speak with the then-acting Principal Deputy Administrator and Director of CMS. The conversation did not resolve Dr. Melgen's dispute and the senator directed his Chief of Staff to "determine who has the best juice at CMS and the United States Department of Health and Human Services (HHS)."

In 2012, Senator Menendez discussed multi-dosing with Marilyn Tavenner, the then-acting Administrator of CMS. Evidence in the record suggests they met to discuss her nomination to become the permanent administrator of CMS. To prepare for the meeting, the Senator met with Dr. Melgen's lobbyist and during the meeting he pressed Ms. Tavenner about multi-dosing and advocated on behalf of the position favorable to Dr. Melgen. However, there is no evidence that there was mention of Dr. Melgen or his case during this meeting. A follow-up call between the Senator and Tavenner took place a few weeks later. Before the phone call, Dr. Melgen's lobbyist prepared a memorandum titled "Talking Points: CMS Policy," which was incorporated into a separate memorandum prepared for the Senator. The memorandum stated that the subject of the call was to discuss the issue of Medicare reimbursement when a physician multi-doses from a single dose vial, but also made several specific references to Dr. Melgen's case such as "we're talking about payments made in 2007-2008." However, there is no evidence that Senator Menendez mentioned Dr. Melgen by name to Ms. Tavenner. During the call, Ms. Tavenner stated that CMS would not alter its position on multi-dosing and Senator Menendez then threatened to raise the issue of multi-dosing directly with Kathleen Sebelius, the then-Secretary of HHS who oversaw CMS.

A week later, a meeting took place among Senators Reid and Menendez and Secretary Sebelius. The Senator met with Dr. Melgen's lobbyist before the meeting and received a summary of the latest developments in Dr. Melgen's case. During the meeting, Senator Menendez advocated on behalf of Dr. Melgen's position on the dispute, focusing on his specific case and asserting unfair treatment of it. An administrator who accompanied Secretary Sebelius to this meeting told the FBI he did not recall anyone mentioning Dr. Melgen by name, but said it was clear to him that the Senators were talking about Dr. Melgen as his case was an isolated issue as opposed to a general problem. Secretary Sebelius told Senator Menendez that because Dr. Melgen's case was in the administrative appeals process, she had no power to influence it.

In February 2012, Dr. Melgen obtained ownership of a contract held by a company in the Dominican Republic named ICSSI. The contract gave ICSSI the exclusive right to install and operate X-ray imaging equipment in Dominican ports for up to 20 years and required all shipping containers to be X-rayed at a tariff of up to $90 per container. ICSSI and the Dominican Republic disputed the validity of the contract and began to litigate this issue. A former Menendez staffer who worked for Dr. Melgen requested a phone call with Assistant Secretary of State William Brownfield to discuss the matter. A State Department official reported to the Assistant Secretary that the former staffer had "dropped the name of Sen. Menendez pretty squarely as having an interest in the case." The staffer later met with the Assistant Secretary and referenced New Jersey connections to the dispute. Senator Menendez also met with Assistant Secretary Brownfield about U.S. policy relating to Dominican port security. At the meeting, the Senator advocated for Dr. Melgen's interest in his foreign contract dispute, expressed dissatisfaction with the State Department's lack of initiative in the case and threatened to call a hearing if there was no solution.

In addition, the indictment alleged that under the Ethics Act, Senators are required to file with the Secretary of the United States' Senate, an annual financial disclosure form reporting income, gifts, and financial interests from the prior calendar year. Senator Menendez did not report gifts, which Dr. Melgen and his companies gave him, including private, chartered, and first-class commercial flights, a car service, and hotel stays in Paris and Punta Cana. The Indictment also claims that the Senator engaged in conduct "in the district of New Jersey and elsewhere" to falsify, conceal, and cover up those allegedly reportable gifts."

A federal grand jury charged Senator Menendez and Dr. Melgen in April 2015. The 22-count indictment charged that from 2006 to 2013 Menendez solicited and accepted numerous gifts from Melgen, and in exchange used the power of his office to influence the enforcement action against Dr. Melgen by CMS and to encourage the State Department and Customs to intervene on Melgen's behalf in the contract dispute with the Dominican Republic. The Senator moved to dismiss the indictment on several grounds, including the Speech or Debate privilege and with respect to count 22 alleging reporting violations under the Ethics Act, the separation of powers among the Branches of Government. The District Court denied the motions to dismiss and the case was then appealed to the Third Circuit, which affirmed.

The Third Circuit rejected Menendez's argument that his actions were protected by the Speech or Debate Clause, holding that the Clause protects legislative acts, and finding that the District Court's determination, that the facts alleged were not legislative, was not clearly erroneous. Although the Clause protects senators from criminal or civil liability based on their legislative acts and creates a privilege against the use of "evidence of a legislative act" in a prosecution or before a grand jury, it does not make them immune from criminal responsibility.

The Court stated that informal efforts to influence the Executive Branch were ambiguously legislative in nature. Senator Menendez's acts were not privileged under the Clause as the acts alleged were essentially lobbying on behalf of a particular party and outside of the constitutional safe harbor. The Court considered the preparations for the challenged acts as evidence that Dr. Melgen was the primary focus of the communications, as the Senator received preparatory memorandums from Melgen's lobbyist. The Court also took into account evidence suggesting that Dr. Melgen and his lobbyist were particularly interested in following up with Senator Menendez in all of the challenged acts.

Although Senator Menendez alleged that the acts were concerned with broader issues of policy and therefore constitutionally protected, the Court held that existence of evidence that supports an alternative finding does not mean that the District Court's findings were clearly erroneous. Here, the District Court's account of the evidence was plausible, as there was sufficient evidence that the focal point of Menendez's meetings with officials was Dr. Melgen and their predominant purpose was to pursue a political resolution to his dispute. That Senator Menendez framed those meetings using the language of policy does not entitle them unvaryingly to Speech or Debate protection. As a result, the Third Circuit affirmed the District Court's conclusion that the Speech or Debate Clause does not protect any of the challenged acts.

The Court also rejected Menendez's argument that Count 22 of his indictment violated the separation of powers. Menendez argued that the Ethics Act is unconstitutional as applied to the Senate because the Constitution's Rulemaking Clause commits the power to set and enforce ethical standards for Senators to the Senate alone. As a result, the executive branch may not punish any conduct regulated by the Ethics Act, because the Senate had incorporated it into Senate Rule 34. The Court held that Rule 34 allows the Senate to punish Ethics Act violations; it does not undermine the Executive Branch's authority to prosecute a Senator for those violations. Menendez also alleged that Count 22 was incapable of being decided by a court because it required the Judicial Branch to resolve ambiguities in the Senate Rules. However, the Court rejected said argument stating that Senator Menendez had not identified any particular Senate Rule that would necessarily be interpreted in the course of his prosecution, let alone one that is so vague as to be non-justiciable. Menendez also argued that his Ethics Act disclosures are protected legislative acts under the Speech or Debate Clause. The Third Circuit ruled that Ethics Act filings are not legislative acts protected by the Speech or Debate Clause as they are not "an integral part of the deliberate and communicative processes by which members participate in committee and Senate proceedings."

The Court also rejected Menendez's challenge to venue for Count 22, finding he had failed to pursue the argument in his brief and there was no abuse of discretion in rejecting the challenge below.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153459p.pdf

Panel: Ambro, Jordan and Scirica, Circuit Judges

Argument Date: February 29, 2016

Date of Issued Opinion: July 29, 2016

Docket Number: No. 15-3459

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Raymond M. Brown, Scott W. Coyle, Abbe David Lowell, Christopher D. Man, Jenny R. Kramer, Stephen M. Ryan, Counsel for Appellant; Joseph P. Cooney, Peter M. Koski, Monique Abrishami, Amanda R. Vaughn, Counsel for Appellee

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/02/2016 11:42 AM     3rd Circuit     Comments (0)  

  Jane Doe v. Alan Hesketh--Third Circuit
Headline: Child pornography victim entitled to pursue civil damages suit even though she had previously received restitution from her victimizer

Area of Law: Damages, Civil Procedure

Issue(s) Presented: Did the District Court err in dismissing a child pornography victim's civil suit for damages against her victimizer because she had previously received a restitution award for the criminal offense?

Brief Summary:

Plaintiff Jane Doe was sexually abused for five years by her adopted father, Mathew Mancuso. The sexual abuse was documented via photographs and videos that were then distributed through online chat rooms. Mancuso was eventually charged with sexual exploitation of a minor and possession of child pornography. Mancuso pled guilty to sexual exploitation and, as part of his plea agreement, paid $200,000 in mandatory restitution to Doe.

Doe later sued Mancuso under a federal statute that provides a civil right of action to victims of several federal crimes. She sought damages for his possession and distribution of child pornography depicting her. The District Court dismissed her complaint, asserting that her receipt of restitution barred her civil claim against Mancuso.

The Third Circuit reversed the District Court's dismissal, holding that the civil right of action provided by the statute is available to "any person" who, while a minor, was victim of a violation of a predicate statute resulting in personal injury. In addition, it concluded that the statute does not limit the availability of the civil right of action to cases where the victim has not been compensated by a restitution order. The Court also determined that collateral estoppel did not apply because Doe was not a party to Mancuso's prior criminal proceeding, not in privity with a party, and did not have a full and fair opportunity to litigate the question of her damages.


Extended Summary:

The plaintiff-appellant Jane Doe was adopted by defendant-appellee Mathew Mancuso when she was five years old. Over a period of five years, Mancuso sexually abused Doe and documented said abuse through photographs and videos. This material was then distributed through online chat rooms in exchange for media that the documented the sexual abuse of other children. Mancuso was eventually arrested after law enforcement investigations identified him as Doe's abuser. A federal grand jury indicted Mancuso on the charges of sexual exploitation of a minor and of possession of material depicting the sexual exploitation of a minor. Mancuso entered into a plea agreement, pleading guilty to sexual exploitation while the government dismissed the count of possession of child pornography. However, in the agreement Mancuso acknowledge his responsibility for possession of child pornography and agreed to pay mandatory restitution to Doe in the amount of $200,000.

Doe later filed a civil suit against fourteen purported class representative defendants in District Court, including Mancuso. She sought damages against Mancuso for his possession and distribution of child pornography depicting her, under a federal statute that provides a civil right of action in federal district court to victims of several federal crimes. In District Court, Mancuso argued that her prior receipt of restitution in his criminal case barred Doe's civil claim against him because the sentencing judge intended to fully compensate Doe for both the convicted and dismissed charges in his indictment. The District Court agreed with Mancuso and granted his motion to dismiss.

The Third Circuit reversed, holding that the text of the statute provides a civil right of action to "any person" who, while a minor, was victim of a violation of a predicate statute resulting in personal injury. It concluded that the text in no way limits the availability of the civil right of action to cases in which a victim has not been compensated in the past by a restitution order. This construction of the statute is consistent with Congress's remedial scheme for child victims of sex crimes, as procedures governing the award of mandatory restitution provide that "a conviction of a defendant for an offense involving the act giving rise to an order of restitution shall estop the defendant from denying the essential allegations of that offense in any subsequent Federal civil proceeding brought by the victim."

The Court stated that the legislative history and possible Congressional purposes for providing the civil action supported the plaintiff. Congress may have wanted to give victims a chance to prove a higher level of damages than that which a sentencing court found during the limited fact-finding proceedings of sentencing. During sentencing a victim's participation is limited, while a civil action allows victims to fully litigate the question of damages in front of a jury. By providing procedures for later civil suits, Congress may also have wanted to shield victims from participating in the criminal sentencing of their victimizers while the victims are so close in time to the damaging effects of the offense. Statements made by legislators suggest that the law's general purpose is to provide both compensation to child pornography victims and a measure of deterrence to possessors and distributors of child pornography. The Third Circuit stated that its construction of the statute to allow a victim who has received criminal restitution to bring a civil suit furthers these goals.

The Third Circuit rejected the argument that collateral estoppel barred Doe's claim. The Court concluded that Doe was neither a party to Mancuso's prior criminal proceeding nor in privity with a party, and did not have a full and fair opportunity to litigate the question of her damages. During sentencing, the government was the party that advocated for its desired level of restitution. As Doe was not a party to the prior criminal sentencing proceeding, she had limited opportunity to influence the process, and therefore to litigate the question of damages. As a result, collateral estoppel did not prevent Doe from litigating the question of her damages based on Mancuso's criminal conduct.


The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151381p.pdf

Panel: Greenaway, Jr., Scirica, and Roth, Circuit Judges

Argument Date: October 28, 2015

Date of Issued Opinion: July 5, 2016

Docket Number: No. 15-1381

Decided: Reversed and remanded

Case Alert Author: Cynthia C. Pereira

Counsel: Sidney L. Moore, III, Counsel for Appellant; Stanley W. Greenfield, Counsel for Appellee

Author of Opinion: Circuit Judge Greenaway

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/02/2016 09:25 AM     3rd Circuit     Comments (0)  

  In Re: Nickelodeon Consumer Privacy Litigation - Third Circuit
Headline: Class of children has claim of intrusion upon seclusion against Viacom and Google but dismissal of other wiretap and computer claims is upheld.

Area of Law: Cyber Law

Issue(s) Presented: Did the District Court err dismissing a class action suit against Viacom and Google under the Federal Wiretap Act, the California Invasion of Privacy Act, the Federal Stored Communications Act, the New Jersey Computer Related Offenses Act, the Video Privacy Protection Act, and Intrusion upon Seclusion?

Brief Summary:

In this multidistrict class action claim, children younger than 13 alleged that defendants, Viacom and Google, unlawfully collected their personal information on the Internet. Viacom owns the Children's television station Nickelodeon and also operates Nick.com, a website geared towards children that offers streaming videos and interactive games. The plaintiffs alleged that Viacom and Google unlawfully used cookies to track children's web browsing and video watching habits on Viacom's websites, with the purpose of selling targeted advertising based on users' web browsing.

The Third Circuit affirmed dismissal of most of the plaintiffs' claims, but vacated dismissal of the claim for intrusion upon seclusion against Viacom. Plaintiffs' wiretapping claim failed because, under the court's previous holding in Google, companies that place cookies on a computing device are parties to any communications that they acquire. Like the federal wiretapping statute, the California Invasion of Privacy Act does not apply where the alleged interceptor was a party to the communications. The Federal Stored Communications Act claim fails because, under Google, personal computing devices are not protected. The New Jersey Computer Related Offenses Act claim fails because the plaintiffs did not allege the kind of injury that the statute requires, which is damage to business or property. The Video Privacy Protection Act claim fails because the Act permits plaintiffs to sue only a person who discloses such information, not a person who receives such information. However, the Court held that in regards to Viacom, the plaintiffs adequately alleged a claim for intrusion upon seclusion. The plaintiffs successfully alleged an intentional intrusion, an invasion of their privacy by Viacom, and that the intrusion on their privacy was highly offensive to the ordinary reasonable person.

Extended Summary:

In this multidistrict consolidated class action, plaintiffs were children younger than 13 who alleged that the defendants, Viacom and Google, unlawfully collected personal information about them on the Internet, such as what webpages they visited and what videos they watched on Viacom's websites. Viacom owns the Children's television station Nickelodeon and also operates Nick.com, a website geared towards children that offers streaming videos and interactive games. When a child registers to use Nick.com, the child provides his or her birthday and gender to Viacom and chooses a username and password. However, the plaintiffs asserted that Viacom's registration form included a message stating: "Hey grown-ups: We don't collect any personal information about your kids. Which means we couldn't share it even if we wanted to."

The plaintiffs alleged that Viacom and Google unlawfully used cookies to track children's web browsing and video watching habits on Viacom's websites. They claimed that the defendants collected information about children through: Viacom placing its own first-party cookie on the computers of persons who visit its websites; Google placing third-party cookies on the computers of persons who visit Viacom's websites; and Viacom providing Google with access to the profile and other information contained within Viacom's first-party cookies. In the aggregate, the plaintiffs claimed that Viacom disclosed to Google, and Google collected and tracked children's usernames, genders, birthdates, IP addresses, browser settings, unique device identifiers, operating systems, screen resolution, browser versions, and web communications. The plaintiffs alleged that the purpose of gathering this information was to sell targeted advertising based on users' web browsing. Plaintiffs raised six claims of violations of the Wiretap Act, the Stored Communications Act, the California Invasion of Privacy Act, the Video Privacy Protection Act, the New Jersey Computer Related Offenses Act, and a claim under New Jersey common law for intrusion upon seclusion. The District Court dismissed all of the plaintiffs' claims.

A previous Third Circuit opinion, In re Google Inc. Cookie Placement Consumer Litigation, addressed various of the plaintiff's claims. The Wiretap Act does not make it unlawful for a person to intercept electronic communication if the person is a party to the communication. The District Court determined that Google was a party to all communications with the plaintiffs' computers or was permitted to communicate with the plaintiffs' computes by Viacom, which was itself a party to all such communications. The Third Circuit affirmed the District Court's dismissal of plaintiffs' federal Wiretap Act claim, concluding that under Google, companies that place cookies on a computing device are parties to any communications that they acquire.

The Third Circuit also affirmed the District Court's dismissal of plaintiffs' California Invasion of Privacy Act. This act prohibits the interception of wire communications and disclosure of the contents of such intercepted communications. The Court concluded that, as with the federal wiretapping statute, under Google the California act does not apply where the alleged interceptor was a party to the communications. The Third Circuit also affirmed the District Court's dismissal of the Federal Stored Communications Act, holding that, under Google, that Act does not protect personal computing devices. The Third Circuit also affirmed dismissal of claims under the New Jersey Computer Related Offenses Act because the plaintiffs failed to allege damage to business or property as required.

The Third Circuit also upheld dismissal of the claim under the Video Privacy Protection Act, which prohibits the disclosure of personally identifying information relating to viewers' consumption of video-related services. The Court held that the Video Privacy Protection Act permits plaintiffs to sue only a person who discloses such information, not a person who receives such information; and that the Act's prohibition on the disclosure of personally identifiable information applies only to the kind of information that would readily permit an ordinary person to identify a specific individual's video-watching behavior. The Court concluded that the kind of disclosures at issue in the case, involving digital identifiers like IP addresses, fell outside the Act's protections.

The Third Circuit held that in regards to Viacom, the plaintiffs adequately alleged a claim for intrusion upon seclusion. The plaintiffs claimed that Viacom and Google invaded their privacy by committing the tort of intrusion upon seclusion. They alleged that Viacom explicitly promised not to collect any personal information about children who browsed its websites and then proceeded to do exactly that. The Court found that the plaintiffs successfully alleged an intentional intrusion, an invasion of their privacy by the defendant, and that the intrusion on their privacy was highly offensive to the ordinary reasonable person. These allegations were supported by the fact that Viacom tracked their online behavior without their explicit permission to do so and Viacom's promise to not collect any personal information created an expectation of privacy. In addition, the Court held that the Children's Online Privacy Protection Act, a federal statute that empowers the Federal Trade Commission to regulate websites that target children, does not preempt the plaintiffs' state-law privacy claim.


The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151441p.pdf


Panel: Fuentes, Shwartz, and Van Antwerpen, Circuit Judges

Argument Date: December 8, 2015

Date of Issued Opinion: June 27, 2016

Docket Number: No. 15-1441

Decided: Vacated in part, affirmed in part

Case Alert Author: Cynthia C. Pereira

Counsel: Jason O. Barnes, Douglas A. Campbell, Frederick D. Rapone, Barry R. Eichen, Evan J. Rosenberg, James P. Frickleton, Edward D. Robertson III, Edward D. Robertson, Jr., Mary D. Winter, Mark C. Goldenberg, Thomas Rosenfeld, Adam Q. Voyles, Counsel for Appellants; Alan J. Butler, Marc Rotenberg, Counsel for Amicus Curiae Electronic Privacy Information Center; Jeremy Feigelson, David A. O'Neil, Seth J. Lapidow, Stephen M. Orlofsky, Counsel for Appellee Viacom, Inc.; Colleen Bal, Michael H. Rubin, Tonia O. Klausner, Jeffrey J. Greenbaum, Joshua N. Howley, Counsel for Appellee Google, Inc.; Jeffrey B. Wall, Counsel for Amicus Curiae Chamber of Commerce of the United States of America.

Author of Opinion: Circuit Judge Fuentes

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/02/2016 09:20 AM     3rd Circuit     Comments (0)  

July 22, 2016
  Candice Staruh v. Superintendent Cambridge Springs SCI - Third Circuit
Headline: Refusal to admit hearsay confession did not violate defendant's due process right to present a defense to charges she murdered her son.

Area of Law: Due Process

Issue(s) Presented: Did Pennsylvania Courts' refusals to admit a hearsay confession did violate defendant's due process right to present her defense where defendant's mother refused to confess under oath?

Brief Summary:

The day before Candice Staruh's homicide trial, for the killing of her three-year-old son, her mother Lois confessed to the crime to a defense investigator. However, she confessed under circumstances that did not subject her to criminal liability. The Pennsylvania trial court refused to admit Lois's hearsay confession at Candice's trial, as it concluded that it lacked the indicia of trustworthiness that is required under Pennsylvania's Rules of Evidence. The Pennsylvania Superior Court concluded that the trial court's refusal to admit the confession was a proper application of Pennsylvania's Rules of Evidence.

The Third Circuit affirmed the denial of Staruh's subsequent habeas petition, which had asserted that she was denied her due process right to present her defense. The Third Circuit held that Lois's statements had no credibility and she was merely attempting to prevent her daughter from going to jail while at the same time avoid criminal liability for herself.

Extended Summary:

Candice Staruh was charged with the death of her three year old child, Jordan. On October 27, 2003 emergency medical services found Staruh's son Jordan without a pulse. He had bruises all over his body, along with vomit on the floor and in his mouth, face and neck. Staruh claimed that the bruising was caused by prior falls from a stool and horseplay with Jordan's four year old brother Kamden.

A forensic pathologist concluded in an autopsy that the bruises were a mix of older and more recent injuries, and were too severe to have been caused by Kamden. He also found material consistent with duct tape on Jordan's back, and the pattern of bruising on the victim's abdomen and back was consistent with being bound by duct tape. He determined that Jordan's death was caused by blunt force trauma to the head and deemed the manner of death to be a homicide. The police also noted the deplorable hygienic state of the house where Staruh resided with her mother and her three children.

Staruh was arrested and charged with first and third degree murder, aggravated assault, and endangering the welfare of a child. Lois, Candice's mother, was also arrested and pleaded guilty to endangering the welfare of children. At the plea agreement hearing, her attorney stated that Lois was not admit to causing any injury to Jordan, she had only violated her duty of care regarding the condition of her home.

On the eve of Candice's trial, her mother Lois confessed to the crime during an interview with a defense investigator. During this interview, Lois admitted to the investigator that she had abused Jordan by hitting him on the ribs with a metal sweeper pipe numerous times, throwing him against the wall where he would hit his head, and restraining him with duct tape to keep him from getting up during the night. Lois had denied responsibility for the crime for two and a half years. When she confessed she refused to do so under circumstances under which she would have been criminally liable, stating that if she was questioned in court, she intended to invoke her Fifth Amendment privilege. Lois was appointed counsel to represent her in her capacity as witness.

During trial Kamden and the three persons who he made statements to testified for the prosecution. Staruh's defense implied that it was Lois and not Candice who had killed Jordan. The defense elicited testimony from Kamden that he sometimes called Lois "mom" and from Candice's ex-sister-in-law who stated that Lois beat Jordan. Staruh also testified on her own behalf, claiming that Lois abused Jordan and had also abused her as a child. She claimed she was afraid of her mother and had recently been diagnosed with battered woman syndrome. Staruh also testified that on the day that Jordan died, he was on a stool watching cartoons; she laid down for a few seconds and got up when she head him fall. When she went to check on him, Jordan was throwing up and having trouble breathing. Although in her testimony Candice placed full blame for the bruises on her mother, she never identified her mother as the cause of Jordan's death. During trial, Lois stated that she was unwilling to testify and asserted her Fifth Amendment rights.

The trial court refused the defense's request for Lois to assert the Fifth Amendment in presence of the jury and to introduce the statements that Lois had made to the investigator as statements against her penal interests pursuant to Pennsylvania Rule of Evidence 804(b)(3). The trial court concluded that the statements lacked the indicia of trustworthiness required under the rule. The jury found Staruh guilty of third degree murder, aggravated assault, and endangering the welfare of a child and she was sentenced to 18 to 40 years imprisonment.

The Third Circuit upheld the denial of Staruh's habeas petition. It rejected Staruh's argument that hat the Supreme Court's decision in Chambers v. Mississippi, mandated reversal.
The Court compared the indicia in Chambers, which provided considerable assurance of reliability. Each confession in Chambers was made spontaneously to a close acquaintance shortly after the murder had occurred, each was corroborated by other evidence in the case, and each confession was self-incriminatory and against interest.

The Court found that there were no comparable assurances of reliability in Staruh's case. Lois never signed a written confession or indicated intent to be held liable for the murder. She also maintained her innocence for over two and a half years, including under oath at her guilty plea hearing.

It agreed with the Superior Court that Lois' statements had no indicia of credibility, as she was merely hoping to prevent that her daughter be convicted of murder while avoiding criminal liability herself. The Court therefore affirmed the denial of Staruh's habeas petition.



The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151650p.pdf

Panel: Smith, Hardiman, and Nygaard, Circuit Judges

Argument Date:

Date of Issued Opinion: June 30, 2016

Docket Number: No. 15-1650

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Frederick W. Ulrich, Counsel for Appellant; David J. Freed, Matthew P. Smith, Charles J. Volkert, Counsel for Appellee.

Author of Opinion: Circuit Judge Smith

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/22/2016 03:18 PM     3rd Circuit     Comments (0)  

  USA v. Ralph Dennis - Third Circuit
Headline: Defendant entitled to jury instruction on the entrapment defense in reverse sting operation.

Area of Law: Criminal Law

Issue(s) Presented: Was defendant entitled to a jury instruction on an entrapment defense, where he produced evidence that ATF agents induced him to participate in a reverse sting designed to incriminate him?

Brief Summary:


The Third Circuit reversed defendant's conviction for conspiracy to rob a drug stash house and for carrying a gun in the commission of a crime. Defendant argued that Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) agents induced him, through a friend, to participate in a reverse sting that was designed to incriminate him and co-conspirators. Dennis's friend induced him to cooperate in the robbery by claiming that he needed to conduct the robbery in order to help his ailing mother. Dennis did not have any previous charges or convictions for robbery or violent crimes. The Court held that the District Court should have given an entrapment instruction on the robbery and gun possession charges, and thus vacated the judgment of conviction and sentence and remanded for a new trial.


Extended Summary:

Defendant Dennis asserted that the district court erred by denying his request to instruct the jury on an entrapment defense and by denying his motion for dismissal asserting outrageous prosecution. Dennis was convicted of conspiracy to rob a narcotics "stash house" and was also convicted of carrying a firearm during the commission of the crime.

Dennis alleged that agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), induced him through a friend, to participate in a reverse sting that was designed to incriminate him and co-conspirators. In June 2012, ATF agents in Camden, New Jersey met with Kevin Burk. Burk is a convicted felon who was facing forgery charges and who was cooperating with law enforcement as a confidential informant. Burk told the agents about the defendant and their long history of committing crimes together. Dennis had many prior arrests.

The ATF instructed Burk to enlist Dennis's help in carrying out a robbery and provided him with a backstory. Dennis initially declined Burk's repeated efforts to enlist Dennis but he finally agreed to help Burk rob a cocaine stash house when Burk told him that the job was necessary to help Burk's mother who had cancer. Burk advised Dennis that the robbery was planned by "Rock," a Mexican drug cartel courier, and that it would yield a street value of $2 million. Later on, Mitchell and Hardee, both acquaintances of Dennis, also agreed to assist in the robbery.

Burk set up the first meeting between the ATF agents, Mitchell and Dennis. Before the meeting Burk advised them that they needed to "play the role" to impress Rock, so that they would be able get the job. During the meeting, Dennis stated that they would have to put down the guards in the stash house and that he would bring two guns. Dennis later testified that he was saying these things solely to impress Rock. He also testified that he did not own a gun.
Rock offered Mitchell and Dennis a chance to back out, which they both declined. During two later meetings, Dennis suggested that they use stun guns to subdue the guards and made it clear that he would not enter the stash house. Rather, Dennis would stay parked outside and would be listening on a cell phone. During the last meeting before the robbery, Burke pressed that it was necessary for Dennis to have a gun in his role as lookout and then provided Dennis with a gun.

On the day of the robbery, the group traveled to a storage facility to prepare for and rehearse the robbery. Rock talked through the details of how the stash house is set up. The group then walked through the robbery and rehearsed how it would unfold. After they had completed the walk-though, ATF agents rushed into the scene and arrested Dennis, Mitchell, and Hardee.

At Dennis's trial, the District Court refused his request for a jury instruction on entrapment. Dennis appealed this denial after his conviction. The Third Circuit concluded that entrapment occurs when a defendant who is not predisposed to commit the crimes does so as a result of the government's inducement. The defendant has the burden of production on two elements: inducement by the government to commit the crime and the defendant's lack of predisposition to commit the crime.

The Court concluded that Dennis met his burden to raise a question about inducement based on the central role that Burk played in getting Dennis to participate in the scheme. Dennis had no known connections to the crimes that the ATF was investigating, and was only targeted after Burk produced his name. In addition, Burk's personal relationship to Dennis contributed to his involvement as it allowed Burk to appeal to Dennis's sympathies based on the story of Burk's sick mother. The Court thus concluded that Burk's efforts combined with the substantial financial payoff that was offered to Dennis exceeded a situation in which the government merely opened up an opportunity for committing a crime.

The Court also found Dennis met his burden of production for the second element, predisposition. Dennis argued that the record contained sufficient evidence to meet his burden that he lacked a predisposition to commit this crime. He focused on the absence of robbery or violent crimes in his criminal history, his testimony of turning away previous opportunities to join Burk in robberies, and expert testimony presented during his trial of his vulnerability to being persuaded due to his low IQ.

The Court held that the timing of the motion did not alter the need for the District Court to refrain from invading the jury's territory. The District Court erred by weighing evidence and by improperly drawing inferences against Dennis on the robbery and firearm charges and that Dennis had presented sufficient evidence to create reasonable doubt about his predisposition to commit these crimes.

The Court also reject the government's harmless error argument, hat because Dennis was still able to proffer all of his evidence on entrapment, the jury was able to weigh the evidence, and it still convicted Dennis. The Court rejected this argument, stating that if Dennis's motion for an entrapment instruction had been granted, the government would have had the burden of disapproving entrapment beyond a reasonable doubt. Therefore, the jury weighed the evidence without considering whether the government carried its burden of proving beyond a reasonable doubt that it did not entrap Dennis.

However, the Court affirmed Dennis's conviction for conspiracy to distribute and possess with intent to distribute. It concluded that his criminal history of convictions for possession and distribution of cocaine and marijuana contradicted Dennis's assertion that he was not predisposed to commit this crime.

The Court further rejected Dennis's argument that the indictment against him should be dismissed on the basis of outrageous prosecution that violated his right to due process. The Court stated that Dennis failed to meet the higher evidentiary burden of showing that the government essentially "created the crime for the sole purpose of obtaining a conviction."


The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/143561p.pdf


Panel: Ambro, Hardiman, and Nygaard, Circuit Judges

Argument Date: November 19, 2015

Date of Issued Opinion: June 24, 2016

Docket Number: No. 14-3561

Decided: Vacated in part, affirmed in part

Case Alert Author: Cynthia C. Pereira

Counsel: Lawrence S. Lustberg, Jillian T. Stein, Benjamin z. Yaster, Counsel for Appellant; Mark E. Coyne, Glenn J. Moramarco, Counsel for Appellee.

Author of Opinion: Circuit Judge Nygaard

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 07/22/2016 03:15 PM     3rd Circuit     Comments (0)  

June 6, 2016
  Nikki Bruni v. City of Pittsburgh - Third Circuit
Headline: District Court erred in dismissing pro-life sidewalk counselors' First Amendment challenge to Pittsburgh's 15-Foot buffer zone ordinance

Area of Law: First Amendment

Issue(s) Presented: Did the District Court err in dismissing plaintiffs' First Amendment facial challenge to the City of Pittsburgh buffer zone ordinance that prohibits protesting and demonstrating within 15 feet of health care facilities?

Brief Summary: Plaintiffs challenged an ordinance of the City of Pittsburgh that prohibits certain speech within 15 feet of health care facilities, particularly certain abortion clinics. The plaintiffs engage in "sidewalk counseling," a form of pro-life advocacy whereby the plaintiffs try, through close conversation, to persuade women to forgo abortion services. Plaintiffs claim the ordinance is facially unconstitutional under the Free Speech and Due Process Clauses, in that the "buffer zone" limits their ability to approach people near the clinics and that the City has unbridled discretion in establishing the buffer zones.

The Third Circuit vacated the dismissal of the free speech claims. Applying an intermediate scrutiny standard, the Third Circuit reasoned that the sidewalk counseling here is core political speech entitled to maximum protection. The City cannot burden it without first trying, or at least demonstrating that it has seriously considered, less restrictive measures. Thus, the Third Circuit reversed the District Court's dismissal so that the claims could be considered after appropriate development of a factual record. However, the Third Circuit affirmed the dismissal of the Due Process claim, noting that the First Amendment covers all of the plaintiffs' conventions.

Extended Summary: Plaintiffs, Nikki Bruni and several others, engage in "sidewalk counseling," a form of pro-life advocacy, outside of a Pittsburgh Planned Parenthood. Plaintiffs challenged a Pittsburgh ordinance that establishes a 15-foot buffer zone, which prohibits congregating, picketing, or demonstrating within 15 feet from any entrance to a hospital and/or health care facility. Although the ordinance applies to all hospital and health care facilities entrances, the City has only demarcated two actual zones, both around abortion clinics. Plaintiffs engage in their sidewalk counseling around one clinic in particular, which has a yellow marking of the 15-foot zone. The City interpreted the plaintiffs' form of expression as "demonstrating" and thus banned under the ordinance.

Plaintiffs claim that the zone is facially unconstitutional under the Free Speech Clause of the First Amendment, in that it makes it difficult for them to engage in their sidewalk counseling, which, unlike protesting, requires close, personal, interactions. They are unable to distinguish patients from passersby at the required 15-foot distance from the entrance. Plaintiffs also challenged the ordinance under the Due Process Clause of the Fourteenth Amendment due to the the ordinance's allegedly vesting unbridled discretion in City officials.

To analyze the free speech claim, the Court first considered whether the ordinance restricts speech based upon its content. If it does, the applicable standard is strict scrutiny - that is, the ordinance is presumptively unconstitutional and justified only if the government proves it is narrowly tailored to serve a compelling state interest. On the other hand, if the ordinance is content-neutral, it is evaluated with intermediate scrutiny - that is, whether the ordinance is narrowly tailored to serve a significant government interest.

Plaintiffs pointed to recent Supreme Court precedent holding that statutes regulate content by defining regulated speech by its function or purpose. Thus, by defining prohibited expression as that which involves "demonstrating" or "picketing," the Pittsburgh ordinance limits speech by its content and thus strict scrutiny should be applied. However, the Third Circuit held that the plaintiffs' complaint included a viable free speech challenge to the ordinance under the lower, intermediate scrutiny standard. Moreover, the Third Circuit had previously found a similar buffer zone ordinance to survive the heightened level of strict scrutiny and thus avoided overruling that precedent by evaluating the present ordinance under the lower standard instead.

Thus, the Third Circuit evaluated the present buffer zone under intermediate scrutiny. The Court surveyed the Supreme Court cases ruling on similar buffer zone and "floating bubble zone" ordinances. A 36-foot buffer zone was upheld after it was amended from a prior rule that enjoined specific protesters from blocking or interfering with public access to the clinic proved insufficient to serve the government's stated interests. A general floating bubble zone was struck down because it would be difficult for protesters to know how to remain in compliance with the rule and thus created a substantial risk that much more speech will be burdened than the injunction by its terms prohibit. However, an eight-foot floating bubble zone was upheld as it satisfied intermediate scrutiny's narrow tailoring requirement. Such a distance still allowed speech at a "normal conversational distance."

However, in McCullen, the Supreme Court struck down a Massachusetts 35-foot buffer zone as insufficiently narrowly tailored under intermediate scrutiny. Similar to the current plaintiffs, the petitioners in McCullen engaged in "sidewalk counseling" requiring personal, caring conversations as opposed to chanting slogans and displaying signs as a form of protest. The Supreme Court reasoned that, even if the counselors could be seen from the buffer zone's distance, if all the women could hear are the "vociferous opponents" of abortions, then the zones effectively stifled the counselors' message. Moreover, the speech was occurring on public streets and sidewalks - a quintessential public forum.

The McCullen Court then balanced what it found to be a significant burden on speech with the means chosen to effectuate the government's purpose, i.e., the buffer zone. The Supreme Court pointed to less speech-restrictive alternatives, such as existing local ordinances banning obstruction of public ways. Also, the Commonwealth could not demonstrate that it had attempted or seriously considered alternative measures. Thus, the Supreme Court struck down the buffer zone.

Applied here, the Third Circuit noted that like McCullen and the other Supreme Court buffer zone cases, the City's interest in protecting women's freedom to seek pregnancy-related services and ensuring public safety are significant. Still, the ordinance must be narrowly tailored to that interest. Although the 15-foot zone is indeed less than the 35-foot one in McCullen, the Third Circuit noted that none of the Supreme Court cases turned solely on size of the zones. The size not being dispositive, the Court looked to the allegations of the Complaint broadly. They allege that the zones make it difficult for the plaintiffs to engage in sidewalk counseling, prayer, and other activities and that their conversations with women are thus less frequent and less successful. In this way, the burden on the plaintiffs' speech is akin to that imposed on the petitioners in McCullen.

Having established that the zone creates a significant burden on speech, the Third Circuit next held that there are a variety of alternate approaches the City could have employed to serve its interest. Moreover, the City did not demonstrate that it seriously undertook to address the problem with less intrusive tools available to it, nor did it show that it considered different methods.

Plaintiffs also maintained that the ordinance violated the due process clause because it gives the City unbridled discretion to create buffer zones. The Third Circuit held that the District Court properly dismissed this claim, because where a particular Amendment provides an explicit source of protection against a particular government behavior, that Amendment and not the generalized notion of "substantive due process" must be the guide for analyzing the claims. Here, the First Amendment was the more explicit source for the plaintiffs' claims against the buffer zones.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151755p.pdf.

Panel: Fuentes, Jordan, and Vanaskie, Circuit Judges

Argument Date: November 6, 2015

Date of Issued Opinion: June 1, 2016

Docket Number: No. 15-1755

Decided: Vacated in part, affirmed in part

Case Alert Author: Elizabeth C. Dolce

Counsel: Matthew S. Bowman, David A. Cortman, Elissa M. Graves, and Lawrence G. Paladin, Jr., Counsel for Appellants; Michael E. Kennedy, Matthew S. McHale, and Lourdes Sanchez Ridge, Counsel for Appellees; Erek L. Barron, Counsel for Amicus Curiae.

Author of Opinion: Circuit Judge Jordan

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 06/06/2016 12:47 PM     3rd Circuit     Comments (0)  

May 27, 2016
  United States of America v. Jean Robert Nerius - Third Circuit
Headline: No presumption of judicial vindictiveness arises where a revised sentence is shorter than the sentence originally imposed

Area of Law: Federal Sentencing

Issue(s) Presented: Is a revised sentence that is one month shorter than the sentence originally imposed sufficient to support a presumption of judicial vindictiveness?

Brief Summary: Jean Robert Nerius, while in custody at a Pennsylvania penitentiary, pled guilty to resisting or impeding correctional employees and damaging property. He was sentenced as a career offender to 37 months' imprisonment, at the lower end of career offender sentencing range. However, while his appeal was pending, the Supreme Court voided the clause that served the basis of his classification as a career offender. No longer deemed a career offender under the applicable rules, Nerius' qualified for the lower 30-to-37-month range. He was resentenced to 36 months.

Nerius claimed his new sentence was presumptively vindictive because it fell at the upper end of the non-career offender sentencing guideline range, while his original sentence was at the lower end of the career offender range. The Third Circuit held that, because his revised sentence was lower than the original sentence, there was no presumption of judicial vindictiveness, and that Nerius presented no evidence of actual vindictiveness. Thus, the Third Circuit affirmed the revised sentence.

Extended Summary: Nerius, while in custody at the United States Penitentiary in Lewisburg, Pennsylvania, committed several offenses, including biting a correctional employee's finger and breaking the sprinkler in his cell. He pled guilty to resisting correctional officers and damaging property within special maritime and territorial jurisdiction of the United States. Given the violent nature of the offenses and his criminal record, Nerius qualified as a career offender. Countering this with his acceptance of responsibility, sentencing guidelines resulted in an advised range of 37 to 46 months. Nerius sought a sentence below this range for his good behavior, which the District Court denied in the context of his violent actions and long criminal history. But acknowledging his recently improved behavior, the District Court sentenced at the bottom of the career offender range, with concurrent 37-month sentences for each count. Nerius appealed.

While his appeal was pending, the Supreme Court found the clause that served as the basis of Nerius' classification as a career offender void for vagueness. Thus, Nerius' case was vacated and remanded for resentencing. Because he no longer qualified as a career offender, his sentencing fell within the 30-to-37-month range. Based on good behavior, Nerius again sought a lower sentence or at least one towards the lower end of the range. However, the District Court sentenced at the top of the revised range, with concurrent 36-month sentences. Nerius appealed, claiming judicial vindictiveness and a violation of due process because at his initial sentencing, he was sentenced at the bottom of the then-applicable range, and at his resentencing, he was sentenced near the top of the revised range.

The Supreme Court has held that a presumption of judicial vindictiveness arises when a defendant receives a higher sentence after having successfully attacked his first conviction. This presumption focuses on the total length of the initial versus revised sentences. If the presumption does not apply - that is, the revised sentence is shorter - the appellant can succeed by showing actual vindictiveness in the sentencing judge. Under this framework, the Third Circuit affirmed Nerius' revised sentence. The Court acknowledged that Nerius' revised sentence fell at the top of the range, while his original sentence was at the bottom of the range. Still, he received a shorter sentence at resentencing, and thus the presumption of vindictiveness was not triggered. Moreover, Nerius showed no actual vindictiveness in the absence of the presumption.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153688p.pdf

Panel: Smith, Hardiman, and Shwartz, Circuit Judges

Argument Date: May 20, 2016

Date of Issued Opinion: May 25, 2016

Docket Number: No. 15-3688

Decided: Affirmed

Case Alert Author: Elizabeth C. Dolce

Counsel: Stephen R. Cerutti, II, Esquire and Eric Pfisterer, Esquire, Counsel for Appellee; D. Toni Byrd, Esquire and Ronald A. Krauss, Esquire, Counsel for Appellant.

Author of Opinion: Circuit Judge Shwartz

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt





Area of Law: Federal Sentencing

Issue(s) Presented: Is a revised sentence that is one month shorter than the sentence originally imposed sufficient to support a presumption of judicial vindictiveness?

Brief Summary: Jean Robert Nerius, while in custody at a Pennsylvania penitentiary, pled guilty to resisting or impeding correctional employees and damaging property. He was sentenced as a career offender to 37 months' imprisonment, at the lower end of career offender sentencing range. However, while his appeal was pending, the Supreme Court voided the clause that served the basis of his classification as a career offender. No longer deemed a career offender under the applicable rules, Nerius' qualified for the lower 30-to-37-month range. He was resentenced to 36 months.

Nerius claimed his new sentence was presumptively vindictive because it fell at the upper end of the non-career offender sentencing guideline range, while his original sentence was at the lower end of the career offender range. The Third Circuit held that, because his revised sentence was lower than the original sentence, there was no presumption of judicial vindictiveness, and that Nerius presented no evidence of actual vindictiveness. Thus, the Third Circuit affirmed the revised sentence.

Extended Summary: Nerius, while in custody at the United States Penitentiary in Lewisburg, Pennsylvania, committed several offenses, including biting a correctional employee's finger and breaking the sprinkler in his cell. He pled guilty to resisting correctional officers and damaging property within special maritime and territorial jurisdiction of the United States. Given the violent nature of the offenses and his criminal record, Nerius qualified as a career offender. Countering this with his acceptance of responsibility, sentencing guidelines resulted in an advised range of 37 to 46 months. Nerius sought a sentence below this range for his good behavior, which the District Court denied in the context of his violent actions and long criminal history. But acknowledging his recently improved behavior, the District Court sentenced at the bottom of the career offender range, with concurrent 37-month sentences for each count. Nerius appealed.

While his appeal was pending, the Supreme Court found the clause that served as the basis of Nerius' classification as a career offender void for vagueness. Thus, Nerius' case was vacated and remanded for resentencing. Because he no longer qualified as a career offender, his sentencing fell within the 30-to-37-month range. Based on good behavior, Nerius again sought a lower sentence or at least one towards the lower end of the range. However, the District Court sentenced at the top of the revised range, with concurrent 36-month sentences. Nerius appealed, claiming judicial vindictiveness and a violation of due process because at his initial sentencing, he was sentenced at the bottom of the then-applicable range, and at his resentencing, he was sentenced near the top of the revised range.

The Supreme Court has held that a presumption of judicial vindictiveness arises when a defendant receives a higher sentence after having successfully attacked his first conviction. This presumption focuses on the total length of the initial versus revised sentences. If the presumption does not apply - that is, the revised sentence is shorter - the appellant can succeed by showing actual vindictiveness in the sentencing judge. Under this framework, the Third Circuit affirmed Nerius' revised sentence. The Court acknowledged that Nerius' revised sentence fell at the top of the range, while his original sentence was at the bottom of the range. Still, he received a shorter sentence at resentencing, and thus the presumption of vindictiveness was not triggered. Moreover, Nerius showed no actual vindictiveness in the absence of the presumption.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153688p.pdf.

Panel: Smith, Hardiman, and Shwartz, Circuit Judges

Argument Date: May 20, 2016

Date of Issued Opinion: May 25, 2016

Docket Number: No. 15-3688

Decided: Affirmed

Case Alert Author: Elizabeth C. Dolce

Counsel: Stephen R. Cerutti, II, Esquire and Eric Pfisterer, Esquire, Counsel for Appellee; D. Toni Byrd, Esquire and Ronald A. Krauss, Esquire, Counsel for Appellant.

Author of Opinion: Circuit Judge Shwartz

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 05/27/2016 02:36 PM     3rd Circuit     Comments (0)  

  Prometheus Radio Project v. Federal Communications Commission - Third Circuit
Headline: In its Third Go-round with the FCC, the Third Circuit Holds the Agency Has Delayed in its Diversity Initiatives and Obligation to Examine its Broadcast Ownership Rules and Improperly Enacted a Television Joint Sales Agreement Rule

Area of Law: Administrative Law, Communications

Issue(s) Presented: Has the FCC unreasonably delayed in its obligations to consider new definitions for "eligible entities" under its diversity initiatives and to conduct its Quadrennial Review of broadcast ownership rules? Did the FCC improperly enact a television joint sales agreement rule?

Brief Summary: The Third Circuit held that the Federal Communications Commission's (FCC) nearly 10 year delay in meeting its court-ordered duty to redefine "eligible entities" for its preferences intended to promote minority and female broadcast ownership was unreasonable. The Court ordered the FCC to act promptly, specifically to gather adequate data on minority and female broadcast ownership and redefine "eligible entity" in a way that is more likely to promote diversity.

Second, the Third Circuit rejected broadcast owners' petition to wipe all the ownership rules off the books in response to the FCC's failure to make progress on meeting its statutory requirement to conduct Quadrennial Reviews of its common ownership rules, but warned that the FCC must carry out its legislative mandate or else face likely future litigation over the rules.

Last, the Third Circuit vacated a new FCC ownership rule designed to address the perceived problem of companies evading common ownership limits through influence exerted by advertising contracts known as joint sales agreements. Because the FCC enacted this rule without conducting the required analysis of its impact on the public interest, the Third Circuit vacated the rule and remanded the issue to the FCC.

Extended Summary: The FCC has a statutory obligation to promote minority and female broadcast ownership. To do so, the FCC has created license, construction permit, and other financing preferences to certain entities. Historically, FCC chose these entities based on race and gender of the ownership, but after the Supreme Court put significant limits on gender and race classifications, the FCC has enacted facially neutral means to support minorities. Specifically, the FCC defined an "eligible entity" as one that qualifies as a small business under the revenue-based definition used by the Small Business Administration. This measure has been criticized because there is no evidence that small businesses are more likely owned by minorities and females.

The FCC also has a statutory obligation to examine its broadcast ownership rules every four years. The broad purpose of the ownership rules is to limit consolidation in the industry and thus promote competition. From these Quadrennial Reviews, the FCC must determine whether any of its ownership rules are still necessary in the public interest as the result of competition and repeal or modify such rules as needed.

In 2004 and 2011, the Third Circuit heard challenges based on the FCC's delays in its diversity initiatives and Quadrennial Reviews. First, the FCC was held to have delayed meaningful consideration of its "eligible entity" definition. As noted, an eligible entity was a small business as measured by its revenues. In 2004, the Third Circuit instructed the FCC to evaluate definitions of "eligible entity" more likely to produce minority and female broadcast ownership, for example, by giving preferences for socially and economically disadvantaged businesses. However, by 2011, the FCC still had its revenue-based measure in place, citing poor data on existing minority and female ownership as its reason for failure to reevaluate. Thus, in 2011, the Third Circuit again ordered the FCC to consider the proposed alternate definitions.

In the present opinion, the Third Circuit noted that the FCC punted consideration of the new definitions again, similarly citing insufficient data. Although the FCC issued reports confirming the underrepresentation of minorities and women, it tentatively rejected alternate definitions and maintained the revenue-based one. For example, the FCC rejected the definition based on socially and economically disadvantaged businesses because it claimed that classification likely would not pass a strict scrutiny standard - not because of any information about whether it would increase minority or female ownership.

Here, the Third Circuit found that the FCC's failure to comply with the Court's previous orders were unreasonable. First, the agency had a duty to act since the first opinion in 2004. Second, the delay was considered unreasonable in relation to the importance of the particular statutory authority - an obligation to promote minority and women ownership. Third, due to the delay, several potentially workable definitions of "eligible entity" could not take effect. Lastly, the Third Circuit did not consider the FCC's lack of good data an administrative error, inconvenience, or practical difficulty justifying its delay.

Second, in 2011, Third Circuit held that the FCC Quadrennial Reviews were overdue - the last completed review was in 2006 and results released in 2008. As of the current opinion, two review cycles have passed without any action and the FCC has rolled the 2010 review into the 2014 review, which is still ongoing. The FCC did not provide any cogent explanation for why the Review has not been completed, but noted it would be complete by the end of 2016.

The Third Circuit listed costs from this delay, including five broadcast ownership rules in limbo. For example, in 1975, the FCC completely banned the common ownership of a daily newspaper and a television or radio station in the same market. Approximately a decade ago, the FCC determined this complete ban to be unnecessary and against the public interest, but that some restrictions were still necessary. However, due to the delay in the ownership rule review process, successful alternatives have not been found and thus the complete ban remains.

The broadcast company owners seeking deregulation argued that because of the FCC's failure to review, all five broadcast ownership rules in limbo should be vacated - in other words, the Court should "wipe the slate clean." The Third Circuit refused to vacate, noting that despite FCC's delay, it can probably justify some restrictions on broadcast ownerships and eliminating these rules would create a free-for-all in the industry. Moreover, the deregulation petitioners failed to first seek more appropriate relief, such as an Administrative Procedure Act order, and therefore waived those less-drastic options. In sum, the Third Circuit refused to vacate and warned that the FCC must meet its 2016 Review deadline or else face likely additional litigation regarding the potentially outdated ownership rules.

Lastly, in the present opinion, the Third Circuit discussed a challenge to FCC restrictions on common ownership of broadcast TV stations in the same market. To prevent companies from circumventing its ownership limits through clever contracting, the FCC has enacted "attribution" rules. For example, a joint sale agreement (JSA) allows one station to sell advertising spots but not programming to a second station. Under a JSA attribution rule, the sale of more than fifteen percent of the station's weekly advertising is attributed, or counted, towards its ownership cap.

In 2004, the Third Circuit upheld the FCC's same-market radio JSA attribution rule to be in the public interest in that it prevented common ownership rules from being undermined. The rule was not considered arbitrary nor capricious, but rather one that more accurately reflected the conditions of local markets. However, in 2014, the FCC extended this rationale to same-market television JSAs, meaning that sales of television advertising spots over the fifteen-percent threshold counted as common ownership subject to the FCC's limits. The FCC reasoned that holders of advertising interests confer a sufficient degree of control and ability to affect the programming decisions of the station. In other words, JSAs over the fifteen-percent threshold "look enough like ownership to count as such."

The Third Circuit vacated this expansion of attribution rules to television JSAs. As noted above, the FCC has obligations to conduct Quadrennial Reviews of its ownership rules and retain, repeal, or modify its rules based on a reasoned analysis. The Third Circuit agreed with the deregulation petitioners that the FCC did not fulfill this prerequisite obligation to review and determine whether the expansion of attribution rules to same-market television JSAs is in the public interest. The Third Circuit invited the FCC to replace the rule with a new one or evaluate whether the expansion is indeed in the public interest on remand.

In sum, the Third Circuit held that the FCC has delayed too long on the eligibility entity definition, as well as on its Quadrennial Review responsibilities. For the former, the Court ordered mediation to set appropriate deadlines. The Third Circuit also vacated the FCC's television JSA rule and remanded the matter to the FCC.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/153863p.pdf.

Panel: Ambro, Fuentes, and Scirica, Circuit Judges

Argument Date: April 19, 2016

Date of Issued Opinion: May 25, 2016

Docket Number: Nos. 15-3863, 15-3864, 15-3865 & 15-3866

Decided: Vacated and remanded

Case Alert Author: Elizabeth C. Dolce

Counsel: Colby M. May, Esquire, Counsel for Petitioner, Howard Stirk Holdings, LLC;

Kim M. Keenan, Esquire and David Honig, Esquire, Counsel for Intervenor Petitioner Multicultural Media, Telecom and Internet Council;

Eve Klindera Reed, Esquire and Brett A. Shumate, Esquire, Counsel for Intervenor Petitioner Mission Broadcasting Inc.;

Jonathan B. Sallet, General Counsel, David M. Gossett, Deputy General Counsel, Jacob M. Lewis, Associate General Counsel, Clifford G. Pash, Jr., Esquire, James M. Carr, Esquire and Richard K. Welch, Esquire, Counsel for Respondent Federal Communications Commission;

William J. Baer, Assistant Attorney General, Kristen C. Limarzi, Esquire and Robert J. Wiggers, Esquire, Counsel for Respondent United States of America;

Helgi C. Walker, Esquire, Ashley S. Boizelle, Esquire, Lindsay S. See, Esquire, Rick Kaplan, Esquire and Jerianne Timmerman, Esquire, Counsel for Petitioner/Intervenor Respondent National Association of Broadcasters;

Patrick F. Philbin, Esquire, Counsel for Petitioner/Intervenor Respondent Nexstar Broadcasting, Inc.;

Angela J. Campbell, Esquire, Eric G. Null, Esquire, Andrew J. Schwartzman, Esquire and Drew T. Simshaw, Esquire, Counsel for Petitioner/Intervenor Respondent Prometheus Radio Project, Other Intervenor Respondents Benton Foundation, Common Cause, Media Alliance, Media Council Hawaii, National Organization for Women Foundation, Office of Communication, Inc. of the United Church of Christ, National Association of Broadcast Employees and Technicians - Communications Workers of America;

David E. Mills, Esquire, Jason E. Rademacher, Esquire and Barry J. Ohlson, Esquire, Counsel for Amicus Petitioner Cox Media Group, Inc.;

William J. Kolasky, Jr., Esquire, Kathleen M. Fones, Esquire, Katherine L. Steele, Esquire, Morgan J. Feder, Esquire, Justin Ben-Asher, Esquire, Sigrid Jernudd, Esquire, Geoffrey A. Manne, Esquire and R. Benjamin Sperry, Esquire, Counsel for Amicus Petitioner International Center for Law and Economics

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 05/27/2016 02:11 PM     3rd Circuit     Comments (0)  

May 23, 2016
  Fair Housing Rights Center v. Post Goldtex GP, LLC - Third Circuit
Headline: Fair Housing Act Accessibility Requirements Do Not Apply to Commercial Buildings Originally Constructed Before the Act's Effective Date but Converted into Residential Units After that Date

Area of Law: Housing Law

Issue(s) Presented: Do the design and accessibility requirements of the Fair Housing Act (FHA), apply to a commercial building that was originally constructed before the requirements' effective date, but converted into residential units after that date?

Brief Summary: A warehouse in Philadelphia, built in 1912 and originally used for manufacturing, was converted into an apartment building starting in 2010 by Post Goldtex and KlingStubbins. The Fair Housing Rights Center in Southeastern Pennsylvania (FHRC) conducted a site visit which revealed violations of the FHA design and construction accessibility requirements, e.g., units with kitchen counters too high for persons in wheelchairs. FHRC brought claims of housing discrimination. The District Court granted Goldtex's motion to dismiss based on the Department of Housing and Urban Development's (HUD) interpretation of the FHA, which exempts converted buildings built before March 13, 1991, the effective date of the design and construction requirements.

The Third Circuit agreed. The Court found that first, the design and construction provision was ambiguous on the issue of whether converted buildings are exempted; second, that the HUD interpretations on point were reasonable, not inconsistent with the statute, and reflected legitimate policy choices by the agency; and third, that those HUD interpretations consistently conclude that the accessibility requirements do not apply to buildings like the Goldtex apartments that are not newly constructed and not first occupied after the effective date of the requirements.

Extended Summary: In 2010, Post Goldtex bought what was originally the Smaltz Building, built in Philadelphia in 1912 and used as a factory and later for manufacturing and other business pursuits. By the end of the 1990s, the Smaltz Building had fallen into disrepair. After purchasing the building, Post Goldtex gutted it and converted it to a 163-unit apartment building, designed by KlingStubbins. The building began accepting tenants in 2013. FHRC, a non-profit corporation that investigates potentially discriminatory housing practices, conducted a site visit of the Goldtex Apartment Building in April 2014. The visit revealed numerous violations of FHA design and construction requirements, including entrance doors that were too heavy, door thresholds that were too high, and units with kitchen counters too high for persons in wheelchairs.

FHRC sued under the FHA, claiming housing discrimination against persons with disabilities. The District Court dismissed FHRC's action. The Court agreed with Goldtex's argument that the plain language of the FHA and the HUD's interpretive guidance clearly exempt converted buildings like the Goldtex Apartment Building built before March 13, 1991, the effective date of the design and construction requirements.

On appeal, FHRC argued that the HUD regulation exempting converted buildings should be found invalid because it is contrary to the unambiguous language of the FHA. The provision in question states that FHA requirements apply "in connection with the design and construction of covered multifamily dwellings for first occupancy after [March 13, 1991]." FHRC argued that this language clearly reveals Congress' intention that the accessibility requirements apply to any dwellings constructed and occupied after the provision's effective date, regardless of when the actual building was originally constructed. On the other hand, Goldtex argued that the FHA plain language clearly shows that Congress did not mean to limit "first occupancy" to a residential context, meaning that any kind of occupancy - residential, commercial, or otherwise - before the effective date would exempt the building from the requirements.

As evidenced by the parties' conflicting interpretations, the Third Circuit determined that the provision's plain language does not clearly answer whether Congress intended to limit access requirements to residential occupancy, commercial occupancy, or both. Nor does the language clearly show whether Congress intended to require buildings constructed before March 13, 1991 but remodeled after that date to comply with the accessibility requirements. Because the plain language of the statute is not clear, the Third Circuit turned to the HUD interpretations and the FHA's implementation regulations. The Court gave HUD's interpretation weight because it is not inconsistent with or forbidden by the FHA statutory requirements and the FHA's general policy of access for persons with disabilities.

HUD defines "first occupancy" as a building never before used for any purpose. This, the Third Circuit concluded, clearly exempts the Goldtex Apartment Building, which was used for several purposes since 1912, and thus "first occup[ied]" before March 13, 1991. The Court also looked to similar HUD guidance on conflicts between accessibility requirements and local historic preservation codes for support. HUD has clearly stated that in neighborhoods subject to historic codes, existing facilities converted to dwelling units are not subject to FHA's accessibility requirements, nor are alterations, rehabilitations, or repairs of covered multifamily dwellings. Lastly, the Court pointed to a U.S. Department of Justice and HUD joint statement noting that the FHA does not apply to alterations or renovations of nonresidential buildings into residential buildings.

In sum, based on clear HUD interpretative regulations and other guidance, the Third Circuit held that the FHA accessibility requirements do not apply to buildings like the Goldtex Apartment Building that are converted from existing buildings and first occupied, for residential or commercial purposes, before the effective date of the requirements.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/151366p.pdf.

Panel: Fuentes, Smith, and Nygaard, Circuit Judges

Argument Date: October 6, 2015

Date of Issued Opinion: May 17, 2016

Docket Number: No. 15-1366

Decided: Affirmed

Case Alert Author: Elizabeth C. Dolce

Counsel: Stephen F. Gold, Esquire and Rocco J. Iacullo, Esquire, Counsel for Appellant; Walter S. Zimolong, III, Esquire, Counsel for Appellee Post Goldtex; Anthony W. Hinkle, Esquire, Kathryn E. Pettit, Esquire, Kevin B. Watson, Esquire, and Barbara W. Mather, Esquire, Counsel for Appellee KlingStubbins.

Author of Opinion: Circuit Judge Nygaard

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 05/23/2016 02:59 PM     3rd Circuit     Comments (0)  

  United States v. One Palmetto State Armory PA-15 Machinegun Receiver/Frame, Unknown Caliber Serial Number: LW001804; Wat
Headline: The Second Amendment Does Not Protect the Possession of Machine Guns

Area of Law: Second Amendment

Issue(s) Presented: Is the Gun Control Act's ban on machine gun possession facially unconstitutional under the Second Amendment? And does the ban apply to a trust despite "trusts" not being included in the statutory list of persons to which the ban applies?

Brief Summary: Ryan S. Watson, sole trustee of Watson Family Gun Trust, applied to make and register a machine gun. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) eventually disapproved Watson's application, and Watson was asked to surrender his machine gun. Watson claimed the ban on machine gun possession was facially unconstitutional under the Second Amendment. Watson alternatively claimed that ban did not apply to the Watson Family Gun Trust because the ban only speaks to "persons" and a trust is not a person under the statute.

The Third Circuit held that the Second Amendment does not protect the possession of machine guns and thus, the ban is not unconstitutional. The Second Amendment, the Court noted, only protects weapons "in common use" - not dangerous or unusual weapons, like machine guns. The Third Circuit also held that although "trust" is not one of the listed entities in the statutory definition of "person," machine guns held in trust are not exempt from the ban. Watson, the trustee, is the individual human being seeking to possess a gun on behalf of the trust and is therefore prohibited from any conduct forbidden to natural persons by the ban.

Extended Summary: Watson, sole trustee of Watson Family Gun Trust, applied to make and register an M-16-style machine gun. ATF mistakenly approved his request. After realizing the mistake, ATF disapproved Watson's application, and Watson was asked to surrender the gun he made. He did so under protest. That same day, Watson filed suit against the U.S. Attorney General and ATF Director, claiming the ban on machine gun possession, the Gun Control Act, was unconstitutional facially and as applied to him (although he did not assert any facts for the ban as applied to him, so the Third Circuit did not consider it). Watson alternatively claimed that the ban does not apply to the Watson Family Gun Trust because the ban only speaks to "persons" and a trust is not a person under the statute's definition.

The Gun Control Act prohibits private manufacture of machine guns by making it unlawful for any person to transfer or possess a machine gun. Narrow exceptions exist for certain government entities and machine guns lawfully possessed before 1986. The Act defines "person" as an individual, corporation, company, association, firm, partnership, society, or joint stock company.

The Third Circuit agreed with the District Court in holding that the ban does not violate the Second Amendment, and thus the Gun Control Act's ban of machine guns is not unconstitutional. The Court looked to the Second Amendment as interpreted in the Supreme Court case, District of Columbia v. Heller. There, the Supreme Court held that the Second Amendment only protects weapons "in common use," such as handguns used for self-defense in the home, and not dangerous or unusual weapons. Machine guns, according to the Third Circuit and other courts, are not commonly used for lawful purposes like sporting use or personal protection and, therefore, are outside the scope of Second Amendment protection. Moreover, Heller suggests machine guns and other arms most useful in military service may be banned without burdening Second Amendment rights.

The Third Circuit also rejected Watson's argument that the ban does not apply to a trust, as it is not a "person" under the statute. Although "trust" is not one of the listed entities in the statutory definition of "person," a trust is not an entity distinct from its trustees. Watson is the individual human being seeking to possess a gun on behalf of the trust; regardless of his status as trustee, he is also a natural person and therefore prohibited from any conduct forbidden to natural persons by the ban. Also, to interpret "persons" as Watson does would allow anyone to avoid liability by placing a machine gun in trust - an exception the Third Circuit noted would swallow the rule.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/152859p.pdf.

Panel: Ambro and Krause, Circuit Judges; Anne E. Thompson, District Judge

Argument Date: April 4, 2016

Date of Issued Opinion: May 18, 2016

Docket Number: No. 15-2859

Decided: Affirmed

Case Alert Author: Elizabeth C. Dolce

Counsel: Alan A. Beck, Esquire, David R. Scott, Esquire, and Stephen D. Stamboulieh, Esquire, Counsel for Appellant; Patrick Nemeroff, Esquire, Michael S. Raab, Esquire, Jacqueline C. Romero, Esquire, and J. Alvin Stout, III, Esquire, Counsel for Appellee; Robert J. Olson, Esquire, and William J. Olson, Esquire, Counsel for Amicus-Appellants; Joran Eth, Esquire, James R. McGuire, Esquire, and Adam M. Regoli, Esquire, Counsel for Amicus-Appellee.

Author of Opinion: District Judge Thompson

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 05/23/2016 02:38 PM     3rd Circuit     Comments (0)  

  United States v. Johnny Vasquez-Algarin - Third Circuit
Headline: Third Circuit Expands Definition of Probable Cause for Entry of Third Party Residences.

Area of Law: Criminal, Search and Arrest Warrants

Issues Presented: How certain must officers be that a suspect resides at and is present at a particular address before forcing entry into a private dwelling?

Brief Summary: Officers obtained an arrest warrant for a suspect and information that he was living at a residence in Harrisburg, Pennsylvania. Upon arriving and knocking on the door, there was no response but the officers had reason to believe someone was inside and entered forcibly. They did not find the suspect, but Defendant as well as evidence of drug related crimes was present, and they made an arrest. The Third Circuit determined that the entry was unlawful and the evidence must be suppressed. The Court reasoned that law enforcement with only an arrest warrant can force entry into a home only if they have probable cause to believe the arrestee resides at and is present within the residence.

Extended Summary: An arrest warrant for Edguardo Rivera was issued in 2010 for homicide. Deputy Marshal Duncan received information from another officer that Rivera was "staying" or "residing" at an address in Harrisburg, Pennsylvania. Upon arriving at the residence with other officers and knocking on the door, they received no response but heard movement inside to indicate there were people attempting to hide their presence. The officers then made a forcible entry. Rivera was not in the house at the time, but Defendant Vasquez-Algarin was present and also in plain view was paraphernalia indicating intent to distribute illicit substances. A protective sweep revealed additional drugs, weapons, and keys for a stolen car. The officers then arrested him, having no previous warrant up to that point.
Vasquez-Algarin and his two brothers, who also lived with him, were charged with federal distribution and possession with intent to distribute cocaine and conspiracy. He pled not guilty and moved to suppress the evidence found at the scene. The district court denied the motion, finding that the officers had probable cause to believe the fugitive was both a resident at the scene and present when they arrived. Vasquez-Algarin was convicted on both counts, and he appealed the decision on the grounds that the officers needed a search warrant to enter the home when the suspect did not in fact reside there.
The Court began by explaining that the entry was reasonable if the police had sufficient information to support a reasonable belief that the suspect was present and resided there at the time. To satisfy reasonable belief, the police needed probable cause to make entry. In order to determine reasonableness, the Court examined existing Supreme Court standards as they applied to the constitutionality of in-home arrests.
After reviewing Supreme Court precedent, the Court reasoned that law enforcement with only an arrest warrant can force entry into a home only if they have probable cause to believe the arrestee resides at and is present within the residence. In application to the present case, there was no such probable cause and as such the entry was unlawful as well as the subsequent finding of evidence and arrest. There was no adequate evidence that Rivera was a resident of the house in question and no knowledge of whether he was inside at the time as opposed to anyone else.
The Court concluded by addressing whether the good faith requirement should apply to such circumstances. Applying Supreme Court jurisprudence, the Court determined the good faith exception did not apply. Evidence that the officers were themselves concerned Rivera may not have lived there dispensed with this argument, as well as the fact that a reasonable officer may have concluded the search was illegal.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/151941p.pdf

Panel: Fuentes, Krause, Roth, Circuit Judges

Argument Date: February 11, 2016

Date of Issued Opinion: May 2, 2016

Docket Number: No. 1-11-cr-00200-001

Decided: Vacated and Remanded.

Case Alert Author: John Farrell

Counsel: Ronald A. Krauss, Esq., Frederick W. Ulrich, Esq. [Argued], counsel for Appellant; Daryl F. Bloom, Esq. [Argued], Stephen R. Cerutti, II, Esq., counsel for Appellee

Author of Opinion: Judge Krause

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 05/23/2016 11:20 AM     3rd Circuit     Comments (0)  

April 19, 2016
  In Re: National Football League Players Concussion Injury Litigation - Third Circuit
Headline: Third Circuit Affirms Class Certification for Massive NFL Concussion Settlement

Area of Law: Class Action, Entertainment

Issues Presented: Are retired NFL players a valid group for class certification if they file alleging damages related to head injuries?

Brief Summary: A number of suits from retired NFL players were aggregated into a class action against the organization for medical issues related to head injuries suffered during play. The class and defendant chose to settle at the District Court level, but certain members of the class objected to the validity of the settlement. The Third Circuit affirmed the District Court's class certification, and to the fairness of the proposed settlement, which resulted in over $1 billion being allocated to retired and deceased NFL players with certain Qualifying Diagnoses.

Extended Summary: In July 2011, former players in the National Football League sued in California Superior Court, alleging that the NFL failed to take reasonable action in protecting them from chronic risks of head injuries. The complaint claimed that the conduct inherent in a football game puts players at risk of repeated head trauma that can lead to severe mental disorders and brain injury. Additionally, the complaint alleged not only that the NFL was aware of the risk at which it was putting its players, but that it spread deliberate disinformation to keep them unaware of the true dangers of head injuries. The players also brought suit against Riddell for defective helmet design. This case concerned only the NFL.

The defense removed to federal court on the grounds that federal labor law preempted the claims, and moved to consolidate other such claims. In January 2012 the case was heard in the Eastern District of Pennsylvania as multidistrict litigation. Specifically, the NFL moved to dismiss claiming Collective Bargaining Agreements were the proper method of resolution, as per Int'l Bhd. of Elec. Workers v. Hechler 481 U.S. 851, 852 - 53 (1987). The players argued their negligence and fraud claims would not require federal interpretation of collective bargaining agreements.

In the midst of these arguments the parties agreed to a settlement of $765 million to compensate players and pay for medical exams. In January 2014 cases counsel filed a class action complaint and sought approval for class certification. After minor motions between the parties, they moved forward with a proposed settlement on April 22, 2015. It would uncap the compensation award, provide compensation for affected players, and provide funding for players about injury prevention. The awards to individual players would be modified depending on when the player retired, how long they played, and whether they suffered injuries unrelated to their NFL career.

The proposed class was all players who retired before July 7, 2014, creating subclasses of those who were or were not diagnosed with certain specific diseases identified as being connected to head trauma.

Certain members of the class objected to the proposed settlement, challenging its validity and the certification of the class.

Analyzing the factors for class certification, the court found that the retired player base was sufficiently numerous, as required by 23(a)(1). Their claims contained common critical factual questions, also satisfying commonality. While the defense argued there were differences in the way and periods of time over which the players were injured, the court dismissed this argument because the NFL displayed a consistent course of conduct for the entirety of the players. The objectives of the class were similarly typical, satisfying 23(a)(3).

As to adequacy of representation, the court disagreed that not appointing outside counsel removed adequacy, as such a measure was not required. They further disagreed that there was potential for conflict of interest, as the appointed counsel disclosed his status to all of the players involved in the action, and to the District Court. The incentives of the class members themselves, including both subclasses, were aligned such that there could be no fundamental conflict of interest.

The court further found that questions of fact predominated over the claims of the class, validating their certification under 23(b)(3). The conduct of the NFL and scientific questions regarding the class members' injuries were identical among the plaintiffs. The court especially distinguished Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997), which denied class certification in a nationwide asbestos suit but did leave room for mass tort actions to clear the hurdle of predominance.

Reviewing the settlement itself, the court applied an initial presumption of fairness, following its precedent to allow for such in cases of procedural equality. It also found that the District Court adequately applied precedent in examining whether the settlement was fair, specifically, the factors spelled out in In Re Prudential Insurance Company, 148 F.3d at 323. Going through these factors itself, the Court agreed with the District Court that the settlement was procedurally fair and would adequately represent the interests of the class.

Certain objectors argued that the settlement was unfair in that it excluded CTE as one of the qualifying diagnoses for players, thus making the settlement unfair. The court relied on earlier evidence showing that CTE was not well understood, the vast majority of players diagnosed with it would be compensated under another diagnosis, and the existing scientific knowledge does not justify compensation based on possible though unknown future effects. There were some post-litigation events that took place which the court felt did not affect the science or substance of the case at hand.

Objectors also argued the District Court erred in approving the procedure for attorney's fees, but the court believed they had adequate notice and objections were not raised in the adequate time.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/152206p.pdf

Panel (if known): Ambro, Hardiman, Nygaard

Argument Date: November 19, 2015

Date of Issued Opinion: April 18, 2016

Docket Number: 15-2206, 15-2217, 15-2230, 15-2234, 15-2272, 15-2273 15-2290, 15-2291, 15-2292, 15-2294, 15-2304 & 15-2305

Decided: Affirmed

Case Alert Author: John Farrell

Counsel: TerriAnne Benedetto Esq., David R. Buchanan Esq., Diogenes P. Kekatos Esq., Christopher A. Seeger Esq., Samuel Issacharoff Esq. [Argued], Gene Locks Esq., David D. Langfitt Esq., Dianne M. Nast Esq., Stephen F. Rosenthal Esq., Steven C. Marks, Arnold Levin Esq., Frederick S. Longer Esq., Brad S. Karp Esq., Theodore V. Wells Jr. Esq., Lynn B. Bayard Esq., Bruce A. Birenboim Esq., Walter R. Reiman Esq., Beth A. Wilkinson Esq., Paul D. Clement Esq., Andrew Ferguson Esq., David Zachary Hudson Esq., Robert M. Bernstein Esq., Robert C. Heim Esq., Sol H. Weiss Esq., Counsel for Appellees
Alan B. Morrison Esq., Scott L. Nelson Esq., Counsel for Amicus Appellant Public Citizen Inc.

Shana De Caro Esq., Michael V. Kaplen Esq., Counsel for Amicus Curiae Brain Injury Association of America

Christopher A. Bandas Esq., Howard J. Bashman Esq., [Argued] Gary P. Lightman Esq., Glenn A. Manochi Esq., Counsel for Appellants Craig and Dawn Heimburger

Edward W. Cochran Esq., John J. Pentz Esq., Counsel for Appellants Cleo Miller Judson Flint; Elmer Underwood; Vincent Clark, Sr.; Ken Jones; Fred Smerlas; Jim Rourke; Lou Piccone; James David Wilkins II

George W. Cochran Esq., Counsel for Appellant Curtis L. Anderson

Joseph Darrell Palmer Esq., Jan L. Westfall, Counsel for Appellant Darren R. Carrington

Richard L. Coffman Esq., Deepak Gupta Esq., [Argued] Matthew W.H. Wessler Esq., Jonathan E. Taylor, Esq. Mitchell A. Toups, Esq. Jason C. Webster, Esquire, Counsel for Appellants
Raymond Armstrong; Nathaniel Newton, Jr.; Larry Brown; Kenneth Davis; Michael McGruder; Clifton L. Odom; George Teague; Drew Coleman; Dennis DeVaughn; Alvin Harper; Ernest Jones; Michael Kiselak; Jeremy Loyd; Gary Wayne Lewis; Lorenzo Lynch; Hurles Scales, Jr.; Gregory Evans; David Mims; Evan Ogelsby; Phillip E. Epps; Charles L. Haley, Sr.; Kevin Rey Smith; Darryl Gerard Lewis; Curtis Bernard Wilson; Kelvin Mack Edwards, Sr.; Dwayne Levels; Solomon Page; Tim McKyer; Larry Barnes; James Garth Jax; William B. Duff; Mary
Hughes; Barbara Scheer; Willie T. Taylor

Lance H. Lubel, Esq., Adam Q. Voyles, Esq. Mickey L. Washington, Esq., Charles L. Becker, Esquire [Argued]; Counsel for Appellants Liyongo Patrise Alexander; Charlie Anderson; Charles
E. Arbuckle; Cassandra Bailey, as Representative of the Estate of Johnny Bailey; Ben Bronson; Curtis Ceaser, Jr.; Larry Centers; Darrell Colbert; Harry Colon; Christopher Crooms; Jerry W. Davis; Tim Denton; Michael Dumas; Corris Ervin; Doak Field; Baldwin Malcolm Frank; Derrick Frazier; Murray E. Garrett; Clyde P. Glosson; Roderick W. Harris; Wilmer K. Hicks, Jr.; Patrick Jackson; Gary Jones; Ryan McCoy; Jerry James Moses, Jr.; Anthony E. Newsom; Rance Olison; John Owens; Robert Pollard; Derrick Pope; Glenell Sanders: Thomas Sanders; Dwight A. Scales; Todd Scott; Frankie Smith; Jermaine Smith; Tyrone Smith; James A. Young, Sr.

Jared H. Beck, Esq., Elizabeth Lee Beck, Esq. Antonino G. Hernandez, Esq., Cullin A. O'Brien Esq. [Argued], Jeffrey J. Cairlanto, Esq. Counsel for Appellant Scott Gilchrist, individually and on behalf of the Estate of Carlton Chester "Cookie" Gilchrist

Dwight P. Bostwick, Esq., Cyril V. Smith, Esq., Ramya Kasturi, Esq., Counsel for Appellants
Jimmie H. Jones; Ricky Ray; Jesse Solomon

Stuart D. Lurie, Esq., Michael H. Rosenthal, Esq., Counsel for Appellant Andrew Stewart

Steven F. Molo, Esq. [Argued], Thomas J. Wiegand, Esq., Kaitlin R. O'Donnell, Esq., Eric R. Nitz, Esq. Rayiner I. Hashem, Esq., Jeffrey M. Klein, Esq., William T. Hangley, Esq., Michele
D. Hangley, Esq. Linda S. Mullenix, Esq., Counsel for Appellants Alan Faneca; Roderick "Rock" Cartwright; Jeff Rohrer; Sean Considine

David S. Coale, Esq., Edward J. Dennis, Esq., Kent D. Krabill, Esq., Counsel for Appellant James Mayberry

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 04/19/2016 09:41 AM     3rd Circuit     Comments (0)  

January 20, 2016
  Trump Entertainment Resorts v. USDC for the District of Delaware - Third Circuit
Headline: Third Circuit Holds Debtors Can Reject Expired Collective Bargaining Agreements Under Bankruptcy Code §1113

Area of Law: Bankruptcy

Issues Presented: Whether a Chapter 11 debtor-employer is able to reject the continuing terms and conditions of a Collective Bargaining Agreement (CBA) under § 1113 of the Bankruptcy Code after the CBA has expired?

Brief Summary: The appellee, Trump Entertainment Resorts (the debtor), filed for Chapter 11 bankruptcy and moved to reject its Collective Bargaining Agreement (CBA) with Unite Here Local 54 (the Union) under 11 U.S.C. § 1113. The bankruptcy court granted the debtor's motion to reject the CBA, finding that the debtor had made good faith efforts to renegotiate the expired CBA and to hold the debtor to the conditions of the CBA would prevent it from reorganizing. The bankruptcy court balanced the equities and held that the equities balanced in favor of rejecting the CBA. The union appealed the bankruptcy court's decision, arguing that its expired CBA is protected under the National Labor Relations Act and the bankruptcy court did not have authority to grant the debtor's motion to reject the CBA. The Third Circuit found that § 1113 applies to both current and expired CBAs. The court further found that the debtor had complied with its obligations under § 1113 in order to reject the CBA to reorganize in light of the bankruptcy. The debtor made a good faith effort to renegotiate the CBA and the Union stonewalled the debtor's efforts throughout the process. The Third Circuit affirmed the bankruptcy court's ruling granting the motion to reject the CBA.

Extended Summary: The appellee, Trump Entertainment Resorts (the debtor), filed for Chapter 11 bankruptcy. Prior to filing for bankruptcy, the debtor attempted to renegotiate its CBA with the appellant, Unite Here Local 54 (the Union). The Union was initially unresponsive and then delayed negotiations with the debtor. Unable to reach an agreement with the Union, and facing the risk of the casino going under which would result in all jobs lost and liquidating the assets, the debtor moved to reject the expired CBA under 11 U.S.C. §1113. The bankruptcy court granted the motion to reject the expired CBA, finding that the balance of equities favored rejecting the CBA.

The Union first challenged whether a bankruptcy court could grant a motion to reject an expired CBA under §1113. The Union argued that expired CBAs are protected under the National Labor Relations Act (NLRA) and the bankruptcy court erred in its interpretation of §1113 because it directly conflicted with the protections under NLRA. The Third Circuit reviewed the bankruptcy court's decision de novo. The court determined that the NLRA yields to §1113 only for reasons that permit the debtor to stay in business. Additionally, the Third Circuit concluded that § 1113 does apply to expired CBAs. Therefore, the bankruptcy court correctly applied the statute in granting the debtor's motion to reject the expired CBA.

In its argument, the Union compared a CBA to an executory contract, contending that under 11 U.S.C. § 365 a debtor cannot reject an executory contract and, therefore, a debtor cannot reject an expired CBA under § 1113. The court disagreed with the Union's argument, noting the important distinction between an executory contract and a CBA. Unlike with an executory contract, a debtor is still bound by the terms and conditions of a CBA even after it has expired. The court stated that under bankruptcy law it is preferable for a debtor to preserve jobs by rejecting a CBA than to lose jobs entirely because it had to comply with an expired CBA. The Third Circuit affirmed the judgment of the bankruptcy court, granting the debtor's motion to reject the CBA.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/144807p.pdf


Panel (if known): Schwartz, Scirica, and Roth, Circuit Judges

Argument Date: March 4, 2015

Date of Issued Opinion: January 15, 2016

Docket Number: No. 14-4807

Decided: The Third Circuit affirmed the judgment of the bankruptcy court holding that a debtor can reject an expired CBA under §1113.

Case Alert Author: Sarah Kiewlicz

Counsel: Kathy L. Krieger, Esquire, Darin M. Dalmat, Esquire, Evin F. Isaacson, Esquire, William T. Josem, Esquire, for appellant; Roy T. Englert, Jr., Esquire, Joshua S. Bolian, Esquire, for appellees Trump Entertainment Resorts; Mark B. Conlan, Esquire, for appellee Official Committee of Unsecured Creditors of Trump Entertainment Resorts; James T. Bentley, Esquire, Lawrence V. Gelber, Esquire, for appellee National Retirement Fund; Allan S. Brilliant, Esquire, G. Eric Brunstand Jr., Esquire, for appellee First Lien Lenders; Diana O. Embree, Esquire, Barbara A. O'Neill, Esquire, Paul A. Thomas, Esquire, for amicus appellant National Labor Relations Board; David M. Bass, Esquire, Michael D. Sirota, Esquire, for amicus appellee 710 Long Ridge Road Operating Company II, LLC, 240 Church Street Operating Company II, LLC, 1 Burr Road Operating Company II, LLC, 245 Orange Avenue Operating Company II, LLC and 107 Osbourne Street Operating Company II, LLC


Author of Opinion: Roth, J.

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 01/20/2016 08:55 AM     3rd Circuit     Comments (0)  

  Josh Finkelman v. National Football League - Third Circuit
Headline: Football Fans Lack Article III Standing to Sue NFL For Alleged Super Bowl Ticketing Violations

Area of Law: Constitutional Law, Article III Standing

Issue Presented: Whether plaintiffs alleged facts that were sufficient to establish constitutional standing for the NFL's alleged ticketing violations when they did not purchase tickets for the Super Bowl through NFL's lottery system or at all?

Brief Summary: Plaintiff/Appellants Josh Finkelman and Ben Hoch-Parker wanted to purchase tickets to Super Bowl XLVIII. Finkelman chose not to enter the NFL lottery for tickets and, instead, purchased two tickets on the resale market for a price higher than face value. Hoch-Parker did not purchase tickets at all. Plaintiffs then brought a class action against the National Football League ("NFL") in the District of New Jersey, alleging that the NFL's ticketing practices violated New Jersey's Ticket Law and resulted in unjust enrichment. The District Court dismissed the case for failure to state a claim. The Third Circuit affirmed the District Court's dismissal of Hoch-Parker's claim for lack of standing. The Third Circuit found that by not purchasing tickets at all, the amount of damages he allegedly suffered was indeterminate and, thus, he lacked standing. The Third Circuit also concluded that Finkelman failed to allege facts sufficient to establish standing under two theories. First, Finkelman failed to establish that but for the NFL's alleged withholding of tickets, he would have been able to purchase a face-price ticket. Additionally, Finkelman failed to establish that he paid a higher price in the resale market due to the NFL's alleged withholding of tickets. Both of these theories rested on speculation, which is insufficient to establish Article III standing. Therefore, because the District Court lacked subject matter jurisdiction to reach Finkelman's claims, the Third Circuit vacated its dismissal on the merits of the Ticket Law and unjust enrichment claims.

Extended Summary: Plaintiffs Josh Finkelman and Ben Hoch-Parker wanted to purchase tickets to Super Bowl XLVIII. Finkelman purchased two tickets on the resale market for a price higher than face value while Hoch-Parker did not purchase tickets at all. Plaintiffs then brought a class action against the National Football League ("NFL") and affiliated entities in the District of New Jersey, alleging that the NFL's ticketing practices violated New Jersey law. Plaintiffs claimed that the NFL's method of selling tickets violated New Jersey's Ticket Law and resulted in unjust enrichment.

New Jersey's Ticket Law limits the number of tickets that can be held back from sale to the general public to five percent of the available seating in any venue or performance. Only one percent of tickets sold were available to the public and the only way to obtain a ticket was to participate in a lottery. However, neither Finkelman nor Hock-Parker ended up entering the lottery and instead Finkelman purchased two tickets for $2,000 per ticket on the resale market.

The District Court dismissed the case for failure to state a claim and Plaintiffs appealed. The District Court concluded that the Ticket Law's five percent limitation on withholding tickets applies solely to tickets that are intended for release to the general public. Here, none of the tickets sold through the lottery were withheld and therefore the NFL did not violate the Ticket Law. The District Court also concluded that Finkelman could not prove causation because he could not demonstrate that he suffered any injuries resulting from the NFL's alleged misconduct since he did not enter the lottery. Additionally, the Court found that Hoch-Parker lacked standing because by not purchasing tickets, or entering the lottery, he could not have suffered any harm. Lastly, the District Court dismissed the unjust enrichment claim because the relationship between Plaintiffs and the NFL was too remote to be viable.

The Third Circuit focused on whether either Plaintiff had standing to sue for the alleged violations. To establish Article III standing, a plaintiff must demonstrate injury-in-fact, causation, and redressability. The Third Circuit concluded that neither Plaintiff had standing to bring the case in federal court because otherwise anyone who purchased a ticket on the resale market would have standing on nothing more than speculative assertions of causation and injury.

Hoch-Parker did not have standing because by not purchasing tickets, the amount of damages he allegedly suffered was indeterminate. Hoch-Parker argued that his injury was the "lost opportunity" he suffered by not being able to attend the Super Bowl, but the Third Circuit rejected that argument. The Third Circuit found that there was an insufficient connection between Hoch-Parker's claimed injury and the challenged conduct of withholding tickets.

Additionally, the Third Circuit concluded that Finkelman failed to allege facts sufficient to establish standing. The Court reasoned that if Plaintiff's theory was accepted, everyone who bought a ticket could sue the NFL for any costs above face price whether they participated in the ticket lottery or not. The Third Circuit also rejected Finkelman's argument that he paid a higher price in the resale market due to the NFL's alleged withholding of tickets. However, there was no way of knowing whether the withholding of tickets had the effect of increasing or decreasing prices on the resale market. Because Finkelman only presented speculation, he failed to establish Article III standing. The Third Circuit then dismissed the appeal for lack of jurisdiction. To view the full opinion, click here: http://www2.ca3.uscourts.gov/opinarch/151435p.pdf

Panel: Fuentes, Smith, and Barry, Circuit Judges

Argument Date: Oct. 8, 2015

Issued Opinion: Jan. 14, 2016

Docket Number: 15-1435

Decided: Affirmed in part, vacated in part.

Case Alert Author: Morgan Haas

Counsel: Bruce H. Nagel, Esq., Robert H. Solomon, Esq., Greg M. Kohn, Esq., and Andrew Pepper, Esq., Attorneys for Appellants; Jonathan D. Pressment, Esq., William Feldman, Esq., Karen A. Confoy Esq., and Steven J. Daroci, Esq., Attorneys for Appellees.

Author of Opinion: Judge Fuentes

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 01/20/2016 08:52 AM     3rd Circuit     Comments (0)  

January 13, 2016
  Laurence Kaplan v. Saint Peter's Healthcare System - Third Circuit
Headline: Under ERISA, only a church can establish a plan that qualifies for an exemption under the church plan exemption.

Area of Law: ERISA: Employee Retirement Income Security Act

Issue Presented: Does a plan maintained and established by a church agency qualify for the church plan exemption?

Brief Summary: St. Peter's, a non-profit healthcare entity, established a non-contributory retirement benefit plan and filed an application with the IRS seeking a church plan exemption. Laurence Kaplan filed a class action suit against St. Peter's claiming it failed to comply with ERISA. The IRS affirmed St. Peter's retirement plan as a exempt church plan for tax purposes in August 2013 and St. Peter's moved to dismiss Kaplan's suit arguing it did not need to comply with the ERISA provisions because it was exempt.
The District Court found that because St. Peter's was not a church it could not establish an exempt church plan. The Third Circuit affirmed the District Court's findings by relying on the language in subsection 3(33)(A), which requires that all exempt plans be established by a church and maintained by a church or church agency. While the IRS affirmed St. Peter's plan as exempt, the Third Circuit found that ruling was at odds with the statutory text of subsection 3(33)(A) and therefore not entitled to deference. The Third Circuit concluded that ERISA only exempts plans established by a church. Because St. Peter's is not a church and therefore a church did not establish its retirement plan, the plan does not qualify for the church plan exemption. Thus, the Third Circuit affirmed the District Court's denial of St. Peter's motion to dismiss.

Extended Summary: St. Peter's is a non-profit healthcare entity that runs various facilities, including a hospital and employs over 2.800 people and has ties to the Roman Catholic Diocese of Metuchen, New Jersey. In 1974, St. Peter's established a non-contributory retirement benefit plan. In 2006, St. Peter's filed an application with the IRS seeking a church plan exemption. In March 2013, Laurence Kaplan filed a class action suit against St. Peter's claiming it failed to comply with ERISA requirements. In August 2013, the IRS affirmed St. Peter's retirement plan as an exempt church plan for tax purposes. St. Peter's moved to dismiss Kaplan's suit, arguing that, because it was exempt under ERISA, it was not required to comply with the provisions and hence there was no claim.
The District Court concluded that St. Peter's was not a church and therefore could not establish an exempt church plan. Subsection 3(33)(A) requires that all exempt plans be established by a church and the 1980 amendments allows those plans maintained by church agencies to also be exempt. However, St. Peter's argued that the language of subsection 3(33)(C)(i) allows a plan to be exempt if it is maintained by a church agency even if it wasn't established by a church. However, this is incorrect as Congress specifically chose to limit the church plan exemption to only plans established by a church. Additionally, the language of the 1980 amendments, which excluded the second "established" to avoid ambiguities in its interpretation, supports this. Because St. Peter's is not a church, the exemption is unavailable.
Limiting the exemption to plans established by churches is supported by the legislative history of subsection 3(33). The court refused to give deference to the 1983 decision of the IRS to issue exemptions to plans not established by churches because this position of the IRS was in the form of a general counsel memorandum. Such an interpretation is only entitled to deference to the extent that it has the power to persuade. This interpretation lacks the power to persuade because it does not consider the church establishment requirement of subsection 3(33)(A) and is therefore at odds with the statutory text.
In 1974, pension plans established by a church had been exempted from ERISA. St. Peter's argument for dismissal was based on the ground that its plan qualifies for the church plan exemption. Because that exemption is unavailable as a church did not establish the plan, the Third Circuit affirmed the District Court's denial of the motion to dismiss.

The full opinion is available at http://www2.ca3.uscourts.gov/opinarch/151172p.pdf


Panel (if known): Chief Judge McKee, Circuit Judges Ambro, and Hardiman

Argument Date: October 8, 2015

Date of Issued Opinion: December 29, 2015

Docket Number: No. 15-1172

Decided: Affirm District Court's denial of St. Peter's motion to dismiss.

Case Alert Author: Morgan Haas

Counsel: Jeffrey J. Greenbaum, Esq., James M. Hirschhorn, Esq., and Katherine M. Lieb, Esq., Counsel for Appellants. Monya M. Bunch, Esq., Karen L. Handorf, Esq., Matthew A. Smith, Esq., Michelle C. Yau, Esq., Ron Kilgard, Esq., Lynn L. Sarko, Esq., Counsel for Appellee. Jeremy P. Blumenfeld, Esq., Counsel for Amicus Appellant. Mark E. Chopko, Esq., Marissa Parker, Esq., Brandon Riley Esq., and Lisa Gilden, Esq., Counsel for Amicus Appellant. Jared M. Haynie, Esq., and James A. Sonne, Esq., Counsel for Amicus Appellant. Mary E. Signorille, Esq. and Roberta L. Steele, Esq., Counsel for Amicus Appellees. Laurence A. Hansen, Esq., G. Daniel Miller, Esq., Counsel for Amicus Appellant. Richard H. Frankel, Esq., Karen W. Ferguson, Esq., and Norman P. Stein, Esq., Counsel for Amicus Appellee. Patrick C. Elliott, Esq., and Andrew L. Seidel, Esq., Counsel for Amicus Appellee. Gregory M. Lipper, Esq., Ayesha N. Kahn, Esq. and Daniel Mach, Esq., Counsel for Amicus Appellees.

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 01/13/2016 01:23 PM     3rd Circuit     Comments (0)  

January 12, 2016
  Sandra Connelly v. Lane Construction Co. - Third Circuit
Headline: Third Circuit Clarifies Pleading Standard to Survive Rule 12(b)(6) Motion to Dismiss

Area of Law: Employment Law, Civil Procedure

Issues Presented: What level of specificity do Title VII disparate treatment and retaliation claims require to meet Twombly/Iqbal standard of pleading?

Brief Summary: Plaintiff Sandra Connelly sued her former employer, Lane Construction Co., for sexual harassment and wrongful termination. She alleged that she had made regular formal complaints to the company for sexual harassment, which the company failed to address or rectify. She further alleged that she was eventually laid off, and not rehired, as a result of her complaints about the harassment. Plaintiff's case was dismissed for failure to state a claim upon which relief could be granted. She appealed to the Third Circuit which found the district court had misapplied the Twombly/Iqbal standard, and that her factual allegations were sufficient to survive a motion to dismiss.

Extended Summary: Defendant is a multistate construction company which hired Plaintiff as a truck driver in 2006. She was fifth in seniority and was the only female employee. According to her complaint, Plaintiff began being cursed at and belittled on a daily basis by her male co-workers after ending a romantic relationship with one of those co-workers.

In early 2009, Plaintiff learned that Defendant employees could make job-related complaints through the company's "Ethics Line," which she eventually called multiple times to report harassment by her co-workers. Later another employee made an unwanted sexual advance towards Plaintiff and she requested transfer to another facility. The supervisor responded with disbelief that the coworker would act that way and although he promised Plaintiff a transfer, she did not receive one. The harassment, and Plaintiff's complaints to the Ethics Line, continued throughout 2010. At some point during 2011, Plaintiff refused to drive a truck with a flat tire and steering problems, and she was berated and later laid off well before the typical season had ended. She alleged that she was never recalled to work even though other male co-workers with less seniority were recalled.

Plaintiff filed a lawsuit in the Western District of Pennsylvania, alleging gender-based disparate treatment, sexual harassment, hostile work environment, and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, and the Pennsylvania Human Relations Act, 43 P.S. § 951. After filing an amended complaint, Defendant filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which the district court granted. The district court held that Plaintiff failed to sufficiently plead that she was not rehired due to gender and also failed to allege sufficient facts to establish a plausible claim for retaliation. Plaintiff then appealed to the Third Circuit, which vacated the decision of the district court.

In so holding, the Court reasoned that the district court incorrectly evaluated the amended complaint as if Plaintiff was required to establish a prima facie case of disparate treatment and retaliation in order to survive a motion to dismiss. Instead, the correct pleading standard, post-Twombly, is whether the complaint contains enough factual allegations "to raise a reasonable expectation that discovery will reveal evidence of the necessary elements." The Court then disregarded the legal conclusions of the amended complaint and determined that the remaining factual allegations raised a reasonable expectation that discovery would reveal evidence that Plaintiff was a member of a protected class who was fired for discriminatory reasons and that the firing was a result of retaliation for protected Title VII activity. Given the extensive history of her alleged harassment by male employees, her repeated complaints concerning that treatment, and the lack of clear justification for Defendant's failure to rehire her, the amended complaint set forth claims that were plausible on its face.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/143792p.pdf

Panel (if known): Fisher, Chagares, Jordan

Argument Date: September 15, 2016

Date of Issued Opinion: January 11 2016

Docket Number: 2:13-cv-1402

Decided: Reversed and Remanded

Case Alert Author: John Farrell

Counsel: John E. Stember, Esq., and Emily E. Town, Esq. [Argued] for Plaintiff; Samantha M. Clancy, Esq. [Argued] an Maria Greco Danaher, Esq. for Defendant; Christine J. Back, Esq. [Argued] for Amicus Appellant

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 01/12/2016 02:02 PM     3rd Circuit     Comments (0)  

December 17, 2015
  Michtavi v. Scism - Third Circuit
Headline: Third Circuit Holds That Prison Officials Have Qualified Immunity Because an Inmate Did Not Have a Clearly Established Constitutional Right Under the Eight Amendment to Treatment for Retrograde Ejaculation Condition.

Area of Law: Constitutional law

Issues Presented: Were prison officials entitled to qualified immunity on an inmate's claim under the Eighth Amendment of a right to treatment for his retrograde ejaculation condition.

Brief Summary: Shemtov Michtavi filed a claim against various prison officials for the failure to give him medication to treat his retrograde ejaculation condition. Michtavi filed an Eighth Amendment claim for the failure, asserting that the condition was a serious medical need. The Third Circuit found that the District Court's definition of the right at issue as either the right to treatment of a serious medical condition or the right to procreation was too broad. Here the specific conduct at issue was the failure to treat retrograde ejaculation, which could lead to impotence and infertility. Thus, the question was whether the prison officials were obligated to treat conditions that have the result of impotence or infertility. The Third Circuit then determined that the officials were entitled to qualified immunity on the claim because the right was not clearly established. Because there was neither Supreme Court nor appellate precedent holding that there was a constitutional right to medical treatment for retrograde ejaculation, infertility, or erectile dysfunction, the court found there was no authority establishing this right.

Extended Summary: This case concerns the issue of whether Shemtov Michtavi had a constitutional right under the Eight Amendment to receive treatment for his retrograde ejaculation condition. Michtavi was incarcerated at Allenwood and received an operation to treat his prostate. After the surgery, Michtavi noticed that the quantity of his ejaculation had decreased. Michtavi was diagnosed with retrograde ejaculation and asked the Federal Bureau of Prisons ("BOP") to treat him. Michtavi contended that the BOP should treat him because the condition could cause him to become impotent. Michtavi met with Dr. Chopra, the doctor who performed the prostate surgery, and was told about a possible medication that would help close the hole that was opened during the surgery, so as to prevent the ejaculate from leaking into the bladder. The BOP did not provide the medication because it stated that it did not treat impotence and sexual dysfunction was not medically necessary. Michtavi then filed a lawsuit against the BOP and prison officials, claiming an Eighth Amendment violation for deliberate indifference to his serious medical need. The officials moved for summary judgment based on qualified immunity. The District Court denied their motion because there was a question as to whether retrograde ejaculation was a serious medical need requiring treatment under the Eighth Amendment.

The Third Circuit first looked to the definition of the right at issue. The court determined that the District Court's definition of the right at issue, as either the Eighth Amendment right to treatment of a serious medical condition or as a fundamental right to procreate, was too broad. The right at issue must pertain to the specific conduct at issue. The Third Circuit stated that the District Court's broad definition did not account for the particular conduct at issue in this case. The Third Circuit stated that the particular conduct at issue in this case was the failure to treat retrograde ejaculation, which could lead to impotence and infertility. Therefore the question was whether the BOP is obligated to treat conditions that can result in impotence and/or infertility.

Next, the Third Circuit analyzed whether this right of issue is clearly established. Specifically, the court stated that there must be precedent indicating that the specific right at issue was clearly established beyond debate. The Third Circuit found that there was no Supreme Court or appellate precedent to support a claim that prison officials must treat retrograde ejaculation, infertility, or erectile dysfunction. Therefore, there was no authority that clearly established a right for prison inmates to receive treatment for conditions that result impotence and/or infertility. The Third Circuit held that because there was no clearly established right, the officials were entitled to qualified immunity. The Third Circuit reversed and remanded the case to the District Court with instruction to enter summary judgment in favor of the appellants.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/144104p.pdf

Panel (if known): Vanaskie, Sloviter, and Rendell, Circuit Judges

Argument Date: September 11, 2015

Date of Issued Opinion: December 14, 2015

Docket Number: 14-4104

Decided: Reversed and remanded

Case Alert Author: Trisha Stein

Counsel: Barbara L. Herwig, Esq., Lowell V. Sturgill, Jr., Esq, Melissa A. Swauger, Esq., Counsel for Appellants; Shemtov Michtavi, Pro Se Appellee.

Author of Opinion: Judge Rendell

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 12/17/2015 03:53 PM     3rd Circuit     Comments (0)  

November 11, 2015
  In re: Google Inc. Cookie Placement Consumer Privacy Litigation - Third Circuit
Headline: Tracking Cookies Placed on Browsers Even After Internet Users Employ Cookie Blockers Do Not Violate Federal Surveillance Law

Area of Law: Wiretap Act, Cyberspace

Issue Presented: Do tracking cookies placed on users' web browsers by internet advertising businesses violate federal law when the businesses placed the cookies on the browsers in contravention of the browsers' cookie blockers and the businesses' own public statements?

Brief Summary: Defendants placed tracking cookies on Plaintiffs' web browsers by exploiting loopholes in the cookie blockers on Plaintiffs' browsers while publicly assuring that the cookie blockers were blocking their tracking cookies. Plaintiffs brought three federal claims against Defendants pursuant to the Wiretap Act, Stored Communications Act, and Computer Fraud and Abuse Act. Plaintiffs' claim that Defendants violated the Wiretap Act failed because Defendants were parties to the communication. Plaintiffs' claim that Defendants violated the Stored Communications Act failed because the Act did not apply to private computing devices. Plaintiffs' claim that Defendants violated the Computer Fraud and Abuse Act also failed because Plaintiffs failed to allege that they suffered a loss. Plaintiffs also brought several claims under the California Constitution and California tort law.

Extended Summary: Plaintiffs brought a class action against Defendants, who run internet advertising businesses, alleging that Defendants placed tracking cookies on Plaintiffs' web browsers by exploiting loopholes in the cookie blockers on Plaintiffs' browsers. Defendants exploited loopholes in Plaintiffs' cookie blockers while publicly assuring that the cookie blockers were blocking the very third-party tracking cookies the Defendants placed on Plaintiffs' browsers.

When a user, such as one of the Plaintiffs, types a Universal Resource Locator ("URL") into a web browser, the server for that webpage instructs the browser to request advertisements from the third party internet advertiser responsible for serving the advertisements, such as one of the Defendants, for the particular requested webpage. Defendants deliver their advertisements directly to users from their own servers and serve different advertisements to different visitors. Internet advertisers are able to tailor advertisements to their audience by placing third party cookies on user's computing devices. These cookies keep track of and monitor an individual user's web activity over every website on which the internet advertisers inject ads. The internet advertiser then uses the internet histories of users to create detailed profiles on individuals.

Some web browsers, including Safari and Internet Explorer, designed built-in features called cookie blockers to prevent third party internet advertisers from installing cookies on a user's browser. The Defendants knew about the existence, functionality, and purpose of these cookie blockers. Defendant Google assured users that the cookie blockers were in place, making specific assurances about the existence, functionality, and purpose of the Safari browser cookie blocker. However, Defendant Google and other Defendants discovered loopholes in the cookie blockers and placed cookies on browsers with activated blockers, including those of Plaintiffs.

Plaintiffs brought three federal claims against Defendants pursuant to the Wiretap Act, Stored Communications Act, and Computer Fraud and Abuse Act. Beginning with the Federal Wiretap Act, Plaintiffs demonstrated that the contents of an electronic communication were intentionally intercepted by Defendants' servers. While URLs may function as location identifiers that route information and, as such, may be permissible under Federal surveillance law, URLs may also be part of or contain the substantive information conveyed to a recipient. Interception of content is impermissible under Federal surveillance law.

Congress contemplated the overlap of information that serves a routing function and content function. URLs can contain both content and routing information because they often produce the words of a search engine query or identify the website that a user views. Whether a URL involves content depends on how much information would be revealed by disclosure of the URL. However, consistent with cases holding that numbers dialed from a telephone after a call has already been set-up constitute content even where the original dialed numbers do not, post-domain name portions of the URL were designed to communicate to the visited website which webpage content to send to the user.

However, Defendants did not violate the Wiretap Act because section 2511(2)(d)'s exception applied. Section 2511(2)(d) provides that no cause of action will lie against a private person where such person is a party to the communication unless such communication is intercepted to commit a criminal or tortious act. Plaintiffs' browsers directly communicated with Defendants about the webpages they sought to visit. The Defendants placed tracking cookies on web browsers in the process of injecting their advertisements, which were served directly from Defendants as third party internet advertisers. Defendants' cookies would not be able to associate a browser's web activity with a unique person as Plaintiffs alleged unless Defendants directly received advertisement requests for webpages that Plaintiffs visited. Thus, Defendants were parties to the communication because they acquired Plaintiffs' internet history information when Plaintiffs' browsers sent that information directly to Defendants in the course of requesting webpage advertising content. Plaintiffs failed to point to any criminal or tortious acts that were secondary to Defendants' acquisition of the communication and involved tortious or criminal use of the interception's fruits.

Next, Plaintiffs' claim under the Stored Communications Act failed. The Act requires Defendants to have intentionally accessed a facility through which an electronic communication service is provided without authorization. Alternatively, the Act requires Defendants to have intentionally exceeded authorization to access that facility thereby obtaining, altering, or preventing authorized access to an electronic communication while in electronic storage. However, Defendants accessed Plaintiffs' personal computing device, and an individual's personal computing device is not protected by this Act. Congress meant for the Act to protect information held by centralized communication providers; home computers were already protected by the Fourth Amendment. Thus, the Act did not apply to Plaintiffs' personal computing devices.

Plaintiffs' final federal claim that Defendants violated the Computer Fraud and Abuse Act also failed. The Act applies where persons suffered damage or loss because a third party intentionally accessed a computer without authorization or exceeded authorized access and obtained information from a protected computer. However, Plaintiffs failed to allege that they suffered a loss because they failed to show that they would have made economic use of the information collected by Defendants themselves or Defendants prevented them from capturing the full value of their internet usage. Furthermore, they did not show that they incurred costs, lost opportunities to sell their information, or lost the value of the data that was collected by others.

Plaintiffs stated several claims under the California Constitution and California tort law. Plaintiffs adequately plead their freestanding privacy claims against Google, but their claims against Google under the California Invasion of Privacy Act, California Unfair Competition Law, and California Consumers Legal Remedies Act failed.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/134300p.pdf

Panel (if known): Fuentes, Fisher, and Krause, Circuit Judges

Date of Argument: December 11, 2014

Date of Issued Opinion: November 10, 2015

Docket Number: No. 13-4300

Decided: Dismissal of the three federal law claims brought against all Defendants is affirmed, dismissal of the freestanding privacy claims against Google under the California Constitution and California tort law vacated, and dismissal of other California state law claims affirmed

Case Alert Author: Sarah Adams

Counsel: Jason O. Barnes, Esq., James P. Frickleton, Esq., Edward D. Robertson, Jr., Esq., Brain R. Strange, Esq., counsel for Appellants; Colleen Bal, Esq., Michael H. Rubin, Esq., Anthony J. Weibell, Esq., counsel for Appellee Google Inc.; Edward P. Boyle, Esq., David N. Cinotti, Esq., Travis S. Hunter, Esq., Rudolf Koch, Esq., counsel for Appellee Vibrant Media Inc.; Lisa M. Coyle, Esq., Douglas H. Meal, Esq., counsel for Appellees Media Innovation Group LLC and WPP PLC.

Author of Opinion: Judge Fuentes

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 11/11/2015 01:09 PM     3rd Circuit     Comments (0)  

October 26, 2015
  The Hanover Insurance Company v. Urban Outfitters, Inc.; U.O.Com, LLC; Urban Outfitters Wholesales, Inc.; Anthropologie,
Headline: Third Circuit Holds "Prior Publication" Exclusion Applies When Advertisements are Sufficiently Similar

Area of Law: Liability Insurance; "Prior Publication" Exclusion

Issues Presented: Did the District Court err in determining that the "prior publication" exclusion applies if the information shows the advertisements are not "fresh wrongs" because they are sufficiently similar?

Brief Summary:

The Navajo Nation sued Urban Outfitters for trademark infringement. Urban Outfitters tendered the complaint to OneBeacon and Hanover Insurance companies. In 2010, OneBeacon issued a fronting policy to Hanover, making Hanover the reinsurer. Hanover issued a separate commercial general liability and umbrella policy which excluded coverage for "personal and advertising injury" liability arising from oral or written publication material which took place before the beginning of the policy. The Third Circuit first looked to the timeline and determined that the complaint does not list a date with complete certainty, but mentions March 16, 2009, multiple times. This date is sixteen months before Hanover took over the insurance responsibilities. The Third Circuit then looked to the exception for "fresh wrongs" finding that in order to qualify the act must be filed as a separate tort or substantially different. The Third Circuit found that the advertisements that were issued by Urban Outfitters were within a common theme and therefore not "fresh wrongs." Ultimately, the Court found that the "prior publication" exclusion applies because the advertisements at issue were originally placed before Hanover was responsible for Urban Outfitter's liability insurance.

Extended Summary:

The "prior publication" exclusion of liability insurance contracts prevents a company from obtaining ongoing insurance coverage for a continuing course of tortious conduct. The Third Circuit considered the scope of the "prior publication" exclusion. In 2012, the Navajo Nation sued Urban Outfitters and its affiliates for trademark infringement. Navajo Nation alleged that Urban Outfitters advertised, promoted, and sold its goods under the 'Navaho' and 'Navajo' names and marks on the internet and in stores. Urban Outfitters tendered the complaint to OneBeacon America Insurance Company and Hanover Insurance Company. OneBeacon provided commercial general liability and umbrella liability coverage to Urban Outfitters prior to 2010. In 2010, OneBeacon issued a fronting policy to Urban Outfitters providing identical coverage with Hanover as the responsible insurer. A fronting policy is a risk management technique in which an insurer underwrites a policy to cover a specific risk but then cedes the risk to a reinsurer. In this case, the fronting company is OneBeacon and the reinsurer is Hanover. Hanover issued separate commercial general liability and umbrella policies to Urban Outfitters. Hanover issued policies that excluded coverage for "personal and advertising injury" liability arising from oral or written publication material which took place before the beginning of the policy. Hanover sought a judicial declaration that is was not responsible for Urban Outfitters' defense or indemnification and the District Court granted the motion in 2013. The District Court held that Hanover had no duty to defend or indemnify since Hanover did not begin insurance coverage until sixteen months after the alleged infringement began. Urban Outfitters and OneBeacon appealed the District Court's judgment for Hanover.

Both sides acknowledge an absence of binding authority. In interpreting an insurance contract, the Third Circuit looked first to the terms of the policy which are a manifestation of the intent of the parties. Second, the Third Circuit looked to the the terms and compared those terms to the allegations in the claim. Hanover contends that it has no duty to defend since its policies specifically excluded coverage for personal and advertising injury liability arising from oral or written publication of material whose first publication took place before the policy period. Thus, the Third Circuit must determine whether Urban Outfitters' liability-triggering conduct preceded or postdated that policy period's inception. The complaint does not specifically state when the offensive conduct occurred. It uses phrases like, "as early as" and "at least since." Urban Outfitters urged the Third Circuit to use extrinsic evidence to determine whether Hanover owes a duty to defend. The Third Circuit declined because Pennsylvania law provides that the determination of a duty to defend depends on the language of the policy and allegations of complaint. Additionally, the advocacy of extrinsic evidence is misguided. To abandon a complaint because the plaintiff neglects to provide a date-certain timeline would undermine disputes by eroding the predictability of reliance that a single pleading ensures.

Based on the contents of the complaint, Navajo Nation's description of Urban Outfitter's conduct is remarkedly consistent. Thus, Urban Outfitters advertised goods in a manner in violation of its trademark with the fixed date of at least March 16, 2009. Hanover was not responsible for Urban Outfitters' liability insurance coverage until sixteen months later, unless the underlying complaint contains allegations of "fresh wrongs" that occurred during Hanover's policy periods. There is no binding authority in this Court as to what constitutes a "fresh wrong." The Ninth Circuit recently defined "fresh wrongs" as new matter which is not substantially similar to the material published before the coverage period. In the Ninth Circuit case, the insurer was excused of its duty to defend, even with differences in pre and post coverage advertisements. Additionally, the Court found that post coverage ads were not "fresh wrongs" because the plaintiff did not allege that the advertisements were separate torts and they arose out of similarity of the advertising idea of the plaintiff.

In Pennsylvania, an insurer's duty to defend is broader than its duty to indemnify, although there may be reasonable limits imposed. Variations occurring within a common, clearly identifiable advertising objective do not give rise to "fresh wrongs," unless there is a substantive difference between the advertisements. The "prior publication" exclusion applies to an insurer from its duty to defend if that insurer has assumed coverage responsibility after the liability-triggered conduct. In order to determine if the two or more sets of advertisements share a common objective, courts may look to whether the plaintiff charged the insured with separate torts. Other determinative factors include whether there is a lull between pre and post coverage advertising initiatives and whether there is a common theme relating to the violation. In this case, Urban Outfitters is accused of an apparently continuous string of trademark infringement and related violations. In the complaint, Navajo Nation listed the dates accompanied by a qualifier denoting continuity, such as "since" and "at least." Navajo Nation did not charge Urban Outfitters with committing separate torts before and during Hanover's coverage period. In fact, Navajo Nation alleged that Urban Outfitters started using the Navajo name with all relevant instrumentalities of infringement well before Hanover's coverage period commenced.

The Third Circuit determined that the latter ads were not "fresh wrongs" and therefore the "prior publication" exclusions apply. Hanover has no duty to defend Urban Outfitters in this action. The purpose of insurance is to disperse the risk but an insurer cannot insure against something that has already begun. The "prior publication" exclusion prevents a continuing tortfeasor from passing the risk for its misconduct on to an unwriting insurer. Urban Outfitters engaged in similar liability-triggering behavior both before and during Hanover's coverage period and therefore the exclusion applies. The Third Circuit affirmed the District Court's judgment granting Hanover's motion.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/143705p.pdf

Panel: Ambro, Scirica, and Roth, Circuit Judges

Argument Date: March 3, 2015

Date of Issued Opinion: October 23, 2015

Docket Number: No. 14-3705

Decided: Affirmed

Case Alert Author: Jessica Wood

Counsel:

Ilan Rosenberg, Esq., Jacob C. Cohn, Esq., Dorothy A. Hickok, Esq. Counsel for Appellants

Andrew J. Gallogly, Esq. Counsel for Appellee

Author of Opinion: Roth, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mary Levy

    Posted By: Susan DeJarnatt @ 10/26/2015 01:51 PM     3rd Circuit     Comments (0)  

October 15, 2015
  Syed Farhaj Hassan v. City of New York - Third Circuit
Headline: Third Circuit Says Muslim Groups Can Bring Lawsuit Against City of New York for Targeting Them With Special Police Surveillance Because of Their Religious Affiliation

Area of Law: Civil Rights

Issue Presented: Do allegations that a police department has targeted Muslim individuals and institutions for special surveillance based solely on their religious affiliation state valid claims of discrimination under the United States Constitution?

Brief Summary: This case involves the constitutionality of police surveillance on members of a particular religious group based solely on their membership in the religion and not on any specific conduct of particular members that raised concerns of criminality. Plaintiffs were individuals and entities associated with the Islamic faith. They alleged that that the City of New York targeted them in a wide-ranging surveillance program conducted by the New York City Police Department because Plaintiffs were Muslim or believed to be Muslim. The Third Circuit Court of Appeals found that Plaintiffs claims of unconstitutional behavior should not have been dismissed without a trial on the merits by the District Court. Plaintiffs plausibly alleged that the surveillance was discrimination based on religious affiliation. The Court found religious affiliation to be a suspect classification and was therefore subject to a heightened degree of scrutiny under the Equal Protection Clause of the US Constitution. The City of New York had the burden of justifying its surveillance program as necessary to further an important, perhaps even compelling, government interest. Because the City had failed to do so in its motion to dismiss, it was appropriate to remand the case to the District Court for further determination of the merits.

Extended Summary:
Plaintiffs were individuals and other entities associated with the Islamic faith. They alleged that the City of New York (the "City") targeted them in a wide-ranging surveillance program (the "Program") conducted by the New York City Police Department ("NYPD") beginning after the September 11 terrorist attacks. Plaintiffs alleged that they were targeted because they were Muslim or believed to be Muslim. In their complaint, Plaintiffs alleged that the Program was based on the false and stigmatizing premise that the Muslim religious identity was a permissible proxy for criminality. Thus, the Program endorsed pervasive surveillance of Muslim individuals, businesses, and institutions not visited upon individuals, businesses, and institutions of any other religious faith or the public at large.

The NYPD executed the Program by monitoring the lives of Muslims, their businesses, houses of worship, organizations, and schools in the City and surrounding states, particularly New Jersey, through such means as snapping pictures, taking videos, recording conversations, and infiltrating Muslim-affiliated locations. The Plaintiffs also alleged that the Program intentionally targeted Muslims by using ethnicity as a proxy for faith because the NYPD expressly chose to exclude people and establishments that had ancestries of interest under the Program if they were not Muslim. The reports that resulted from this surveillance provided names and other identifying information about individuals, businesses, and organizations. According to Plaintiffs, however, none of the information collected showed any indication of criminal activity. The Program was initially conducted in secret, but the Program was disclosed to the public by various news media and has become public knowledge in New Jersey and elsewhere.
The District Court granted the City's motion to dismiss, and Plaintiffs appealed the District Court's decision to the Third Circuit Court of Appeals.

In its opinion, the Third Circuit found that plaintiffs had plausibly alleged intentional discrimination under the Equal Protection Clause of the Fourteenth Amendment. To plausibly allege intentional discrimination, Plaintiffs' religious affiliation must have been a substantial factor in their being surveilled more than members of any other religion. Plaintiffs plausibly alleged that the Program was facially discriminatory against Muslims because they alleged that the Program relied on an express classification of Muslims for disfavored treatment. To support their allegations, Plaintiffs alleged ample factual content about the Program above and beyond what the Federal pleading rules required, allowing the Court to draw the reasonable inference that the City is liable for the misconduct alleged. Plaintiffs also alleged that all these persons and entities were surveilled without any reasonable suspicion of wrongdoing to explain the NYPD's investigation. Therefore, Plaintiffs plausibly alleged that the Program was facially discriminatory.
Furthermore, the City intentionally discriminated against Plaintiffs. The City meant to single out Plaintiffs because they were Muslim or believed to be Muslim. Even if the NYPD was subjectively motivated by a legitimate law-enforcement purpose, such as public safety, they intentionally discriminated against Plaintiffs if they wouldn't have surveilled them had they not been Muslim.
The Third Circuit went on to find that the City's alleged intentional discrimination against Plaintiffs was not legally justified. According to the Court, classifications based on religious affiliation should trigger heightened scrutiny under the Equal Protection Clause, because religion is a suspect classification. Although this was an issue of first impression in the Third Circuit, the Court noted that a number of its sister courts - the Second, the Eighth, the Ninth and the Tenth Circuits - has reached the same conclusion. The Court found that discrimination based on religion is suspect because it is based on a characteristic that people should not be compelled to change because it is fundamental to their identities. Additionally, religious discrimination was suspect because it had a long a history of being used as a tool for the oppression and subordination of minority groups and has been intertwined with discrimination based on other protected characteristics like national origin and race in the past. Finally, Congress and the Executive Branch forbade religious discrimination in statutes, such as Title VII and the Patriot Act, and executive pronouncements. However, the Court did not determine which level of heightened scrutiny the Program should be subject to - either intermediate scrutiny or strict scrutiny - because the City bore the burden of proof with respect to both standards, and because it believed it was more appropriate for the District Court to make that determination in the first instance on remand.

Because heightened scrutiny applied to the City's conduct, the City needed to demonstrate a much stronger justification for its conduct and a much tighter relationship between the means employed and the ends served by the conduct. The City bore the burden of proof of justifying the means and ends of its conduct. The City could not have simply asserted that the Program was justified by national security and public safety. The City did not meet its burden on its motion to dismiss. The relationship between the City's justification and discriminatory means employed must have been sustained by objective evidence and not merely by the potential threat to national security and public safety. Moreover, even if the City were justified in employing a discriminatory classification to further a compelling state interest, it was constrained in how it could have pursued that end.

Accordingly, the Third Circuit reversed the District Court's decision to grant the defendant's motion to dismiss and remanded the case to the District Court for further proceedings consistent with the opinion.

For the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/141688p.pdf

Panel (if known): Ambro, Fuentes, and Roth, Circuit Judges

Date of Argument: January 13, 2015

Date of Issued Opinion: October 13, 2015

Docket Number: No. 14-1688

Decided: Reversed

Case Alert Author: Sarah Adams

Counsel: Baher A. Azmy, Esq., Ghita Schwarz, Esq., Omar Farah, Esq., Glenn Katon, Esq., Farhana Khera, Esq., Adil Haq, Esq., Lawrence S. Lustberg, Esq., Joseph A. Pace, Esq., Partia Dolores Pedro, Esq., counsel for Appellants; Zachary W. Carter, Corporation Counsel of the City of New York, Richard P. Dearing, Esq., Peter G. Farrell, Esq., Celeste Koeleveld, Esq., Alexis Leist, Esq., Anthony DiSenso, Esq., William Oates, Esq., Cheryl Shammas, Esq., Odile Farrell, Esq., counsel for Appellee; Ayesha N. Khan, Esq., Gregory M. Lipper, Esq., Alexander J. Luchenitser, Esq., counsel for Amicus Appellant Americans United for Separation of Church and State; Benjamin C. Block, Esq., William Murray, Esq., Stephen J. Schulhofer, Esq., Robert L. Rusky, Esq., counsel for Amicus Appellants Karen Korematsu, Jay Hirabayashi, and Holly Yasui; Brian D. Boyle, Esq., Walter E. Dellinger, III, Esq., Deanna M. Rice, Esq., Nausheen Hassan, Esq., counsel for Amicus Appellants 100 Blacks in Law Enforcement Who Care, Chris Burbank, and Eric Adams; Gregory J. Wallance, Esq., W. Stewart Wallace, Esq. Michael Robertson, Esq., counsel for Amicus Appellants Asian American Legal Defense and Education Fund, American Arab Anti-Discrimination Committee, Universal Muslim Association of America Advocacy, South Asian Americans Leading Together, Shia Rights Watch, New Jersey Muslim Lawyers Association, National Network for Arab American Communities, National Lawyers Guild New York City Chapter, Muslim Public Affairs Council, Muslim Legal Fund of America, Muslim Consultative Network, Muslim Bar Association of New York, Muslim American Civil Liberties Coalition, Creating Law Enforcement Accountability and Responsibility, Arab American Association of New York, Asian Americans Advancing Justice - Asian Law Caucus, and South Asian Organization, Project SALAM; Ronald K. Chen, Esq., Edward Barocas, Esq., Jeanne LoCicero, Esq., Alexander Shalom, Esq., counsel for Amicus Appellants American Civil Liberties Union of New Jersey, LatinoJustice PRLDEF, Mexican American Legal Defense and Educational Fund, Bill of Rights Defense Committee, Garden State Bar, Association, Hispanic Bar Association of New Jersey, and Association of Black Women Lawyers of New Jersey; Bruce D. Brown, Esq., Gregg P. Leslie, Esq., Jamie T. Schuman, Esq., Jennifer A. Borg, Esq., counsel for Amicus Appellants Reporters Committee for Freedom of the Press and North Jersey Media Group Inc.; Michael W. Price, Esq., Faiza Patel, Esq., counsel for Amicus Appellant Brennan Center for Justice at New York University School of Law; Allen P. Pegg, Esq., counsel for Amicus Appellants Sikh Coalition, Interfaith Alliance Foundation, National Council of the Churches of Christ in the USA, Union for Reform Judaism, Central Conference of American Rabbis, Women of Reform Judaism, Islamic Society of North America, Bend the Arc: A Jewish Partnership for Justice, Hindu Temple Society of North America, Auburn Theological Seminary, National Council of Jewish Women, Universal Muslim Association of America, American Humanist Association, Sikh American Legal Defense and Education Fund, Muslim Alliance in North America National Religious Campaign Against Torture, Reconstructionist Rabbinical Association, Imam Mahdi Association of Marjaeya, Muslims for Peace, T'ruah: The Rabbinic Call for Human Rights, Ta'leef Collective, Muslim Congress, Unitarian Universalist Legislative Ministry of New Jersey, Queens Federation of Churches, Inc., Northern California Islamic Council, Council of Islamic Organization of Greater Chicago, and Islamic Shura Council of Southern California.

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 10/15/2015 01:31 PM     3rd Circuit     Comments (0)  

October 5, 2015
  In re: Revel AC Inc. - Third Circuit
Headline: Third Circuit Grants Stay Pending Appeal, Preserving IDEA's Lease Agreement in Revel's Sale of its Casino

Area of Law: Bankruptcy, Appellate Procedure

Issues Presented: Whether a putative leaseholder is entitled to a stay pending its appeal of a Bankruptcy Court order allowing Revel to sell its casino free and clear of IDEA's lease under §363(f)(4).

Brief Summary: Appellant, IDEA, appealed the district court's denial of a stay to prevent Revel AC, appellee, from selling its casino free and clear of IDEA's lease. The Third Circuit reviewed the appeal de novo as to the irreparable harm factor, instead of applying abuse of discretion because the case involved a purely legal determination. The court analyzed the appeal by balancing the four stay factors using a "sliding-scale" approach. The Third Circuit first found that IDEA would suffer irreparable harm if the stay was not granted. The court noted that the harm IDEA would suffer was greater than the speculative harm Revel would suffer if the stay was granted. Additionally, the court balanced the public interest and its analysis tilted toward Revel. Finally, the court determined that IDEA was assured to succeed on the merits because Revel had provided no factual or legal basis that it did not have a lease with IDEA. The Third Circuit reversed the district court and stayed the portion of the sale order that allowed Revel to sell the casino free and clear of IDEA's lease.

Extended Summary: Appellant, IDEA, operated a night club within the Revel AC Casino in Atlantic City. Revel AC declared bankruptcy and decided to sell the casino; however, Revel intended to sell the casino free and clear of the lease it had with IDEA. IDEA filed two declaratory actions with the Bankruptcy Court which were denied. Additionally, IDEA requested a stay pending appeal from the District Court which was also denied. IDEA appealed to the Third Circuit, and the court reviewed the appeal de novo, as to the irreparable harm factor, because the case involved a purely legal determination. The Court also found the denial of a stay to be appealable as a final order because letting the sale proceed would moot IDEA's claim entirely.

The court used a four-factor stay analysis to determine whether the District Court erred in denying the stay. The test analyzes (1) whether the stay applicant has made a strong showing that [it] is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. The Third Circuit noted that if the movant does not meet the requirements of the first two factors then it is unnecessary to analyze the second two factors and the stay should be denied. If it does meet the first two factors, then the court will balance the relative harms and consider all four factors under a sliding scale approach, balancing the harms to the parties and the public and requiring a stronger showing of success on the merits where the party seeking the stay faces less harm and a lesser showing if the harm is greater.

The Third Circuit began its four-factor stay analysis with the last two factors, balancing the harms to Revel and IDEA, as well as the public interest. The Third Circuit found that IDEA would not only lose its multi-million dollar investment, but also the opportunity to operate its once profitable business. Thus, IDEA showed sufficient irreparable harm to it should a stay be denied. Revel argued on appeal that granting the stay would potentially jeopardize the entire sale of the casino to Polo North, not only substantially harming Revel, but also harming the public interest since a failure to sell would result in 4,000 jobs lost. The court found that the potential harm a stay would cause to Revel was at best speculative. Thus, the court stated that the balance of harms tilted, at least moderately, in favor of IDEA. The court next looked to balance the harms and benefits to the public interest. It compared the potential loss of 4,000 jobs in Atlantic City to the interest in properly applying the Bankruptcy Code and protecting the rights of tenants in commercial properties. Ultimately, the court found that the public interest balancing test slightly favored Revel.

After balancing all the harms, the court next looked to see if IDEA had made a strong showing of the likelihood of success on the merits. The Third Circuit only addressed one of IDEA's three arguments, whether the Bankruptcy and District Courts erred in holding that Revel met one of § 363(f)'s statutorily enumerated conditions to sell its assets free and clear. Revel denied that IDEA had a lease and argued there was a bona fide dispute under § 363(f)(4) because IDEA had filed declaratory judgment actions. The Third Circuit disagreed, finding that the mere filing of a declaratory judgment action does not create a bona fide dispute under § 363(f)(4). The court further noted that Revel did not present any factual or legal basis to deny that IDEA had a lease. Thus IDEA's success on the merits was assured which tilted the entire balancing scale ultimately in favor of granting the stay. The Third Circuit reversed the district court and stayed only the part of the sale order that allowed Revel to sell the casino free and clear of IDEA's lease.

Judge Shwartz filed a dissenting opinion.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/151253p.pdf

Panel (if known): Ambro, Shwartz, and Krause, Circuit Judges

Argument Date: February 6, 2015

Date of Issued Opinion: September 30, 2015

Docket Number: No. 15-1253

Decided: Reversed the District Court and stayed the portion of the sale order that allowed Revel to sell the casino free and clear of IDEA's lease.

Case Alert Author: Sarah Kiewlicz

Counsel: Jeffrey A. Cooper, Esquire, Jonathan I. Rabinowitz, Esquire, Barry J. Roy, Esquire, counsel for appellant IDEA; Michael Viscount, Jr., Esquire, John H. Strock, Esquire, Jason N. Zakia, Esquire, John K. Cunningham, Esquire, counsel for appellees Revel AC; Stuart J. Moskovitz, Esquire, counsel for appellee Polo North; Richard W. Riley, Esquire,
Sommer L. Ross, Esquire, counsel for appellees Wells Fargo

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/05/2015 10:41 AM     3rd Circuit     Comments (0)  

  In re: Revel AC Inc. - Third Circuit
Headline: Third Circuit Grants Stay Pending Appeal, Preserving IDEA's Lease Agreement in Revel's Sale of its Casino

Area of Law: Bankruptcy, Appellate Procedure

Issues Presented: Whether a putative leaseholder is entitled to a stay pending its appeal of a Bankruptcy Court order allowing Revel to sell its casino free and clear of IDEA's lease under §363(f)(4).

Brief Summary: Appellant, IDEA, appealed the district court's denial of a stay to prevent Revel AC, appellee, from selling its casino free and clear of IDEA's lease. The Third Circuit reviewed the appeal de novo as to the irreparable harm factor, instead of applying abuse of discretion because the case involved a purely legal determination. The court analyzed the appeal by balancing the four stay factors using a "sliding-scale" approach. The Third Circuit first found that IDEA would suffer irreparable harm if the stay was not granted. The court noted that the harm IDEA would suffer was greater than the speculative harm Revel would suffer if the stay was granted. Additionally, the court balanced the public interest and its analysis tilted toward Revel. Finally, the court determined that IDEA was assured to succeed on the merits because Revel had provided no factual or legal basis that it did not have a lease with IDEA. The Third Circuit reversed the district court and stayed the portion of the sale order that allowed Revel to sell the casino free and clear of IDEA's lease.

Extended Summary: Appellant, IDEA, operated a night club within the Revel AC Casino in Atlantic City. Revel AC declared bankruptcy and decided to sell the casino; however, Revel intended to sell the casino free and clear of the lease it had with IDEA. IDEA filed two declaratory actions with the Bankruptcy Court which were denied. Additionally, IDEA requested a stay pending appeal from the District Court which was also denied. IDEA appealed to the Third Circuit, and the court reviewed the appeal de novo, as to the irreparable harm factor, because the case involved a purely legal determination. The Court also found the denial of a stay to be appealable as a final order because letting the sale proceed would moot IDEA's claim entirely.

The court used a four-factor stay analysis to determine whether the District Court erred in denying the stay. The test analyzes (1) whether the stay applicant has made a strong showing that [it] is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. The Third Circuit noted that if the movant does not meet the requirements of the first two factors then it is unnecessary to analyze the second two factors and the stay should be denied. If it does meet the first two factors, then the court will balance the relative harms and consider all four factors under a sliding scale approach, balancing the harms to the parties and the public and requiring a stronger showing of success on the merits where the party seeking the stay faces less harm and a lesser showing if the harm is greater.

The Third Circuit began its four-factor stay analysis with the last two factors, balancing the harms to Revel and IDEA, as well as the public interest. The Third Circuit found that IDEA would not only lose its multi-million dollar investment, but also the opportunity to operate its once profitable business. Thus, IDEA showed sufficient irreparable harm to it should a stay be denied. Revel argued on appeal that granting the stay would potentially jeopardize the entire sale of the casino to Polo North, not only substantially harming Revel, but also harming the public interest since a failure to sell would result in 4,000 jobs lost. The court found that the potential harm a stay would cause to Revel was at best speculative. Thus, the court stated that the balance of harms tilted, at least moderately, in favor of IDEA. The court next looked to balance the harms and benefits to the public interest. It compared the potential loss of 4,000 jobs in Atlantic City to the interest in properly applying the Bankruptcy Code and protecting the rights of tenants in commercial properties. Ultimately, the court found that the public interest balancing test slightly favored Revel.

After balancing all the harms, the court next looked to see if IDEA had made a strong showing of the likelihood of success on the merits. The Third Circuit only addressed one of IDEA's three arguments, whether the Bankruptcy and District Courts erred in holding that Revel met one of § 363(f)'s statutorily enumerated conditions to sell its assets free and clear. Revel denied that IDEA had a lease and argued there was a bona fide dispute under § 363(f)(4) because IDEA had filed declaratory judgment actions. The Third Circuit disagreed, finding that the mere filing of a declaratory judgment action does not create a bona fide dispute under § 363(f)(4). The court further noted that Revel did not present any factual or legal basis to deny that IDEA had a lease. Thus IDEA's success on the merits was assured which tilted the entire balancing scale ultimately in favor of granting the stay. The Third Circuit reversed the district court and stayed only the part of the sale order that allowed Revel to sell the casino free and clear of IDEA's lease.

Judge Shwartz filed a dissenting opinion.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/151253p.pdf

Panel (if known): Ambro, Shwartz, and Krause, Circuit Judges

Argument Date: February 6, 2015

Date of Issued Opinion: September 30, 2015

Docket Number: No. 15-1253

Decided: Reversed the District Court and stayed the portion of the sale order that allowed Revel to sell the casino free and clear of IDEA's lease.

Case Alert Author: Sarah Kiewlicz

Counsel: Jeffrey A. Cooper, Esquire, Jonathan I. Rabinowitz, Esquire, Barry J. Roy, Esquire, counsel for appellant IDEA; Michael Viscount, Jr., Esquire, John H. Strock, Esquire, Jason N. Zakia, Esquire, John K. Cunningham, Esquire, counsel for appellees Revel AC; Stuart J. Moskovitz, Esquire, counsel for appellee Polo North; Richard W. Riley, Esquire,
Sommer L. Ross, Esquire, counsel for appellees Wells Fargo

Author of Opinion: Circuit Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/05/2015 10:41 AM     3rd Circuit     Comments (0)  

October 1, 2015
  National Parks Conservation Association v. Environmental Protection Agency - Third Circuit
Headline: EPA Failed to Explain How It Reached Conclusions Regarding Pennsylvania's SIP Where Pennsylvania's SIP Was Flawed in Several Respects

Area of Law: Environmental law

Issue Presented: Under the Clean Air Act, should the EPA disapprove of a State Implementation Plan where it failed to identify all available retrofit control technologies, improperly concluded what the baseline level for certain emissions should be, used an improper metric in calculating the cost-effectiveness of additional pollution controls, and underestimated the visibility impact of each source of pollution by not considering the cumulative visibility impact?

Brief Summary: Pennsylvania submitted its regional haze State Implementation Plan ("SIP") to the United States Environmental Protection Agency ("EPA") pursuant to the Clean Air Act in December 2010. On July 13, 2012, the EPA finalized its limited approval of Pennsylvania's SIP after promulgating a Federal Implementation Plan ("FIP") for multiple states, including Pennsylvania, and replacing the "cap and trade" program with the Cross-State Air Pollution Rule ("Transportation Rule"). The Court found that the EPA failed to explain how it reached many of its conclusions regarding Pennsylvania's SIP, which itself failed to explain many of its conclusions. However, the Court agreed with Pennsylvania's alternative pollution control limits and evaluation of the cost-effectiveness of the pollution controls that were available for each BART-eligible source in its SIP.

Extended Summary: In December 2010, Pennsylvania submitted its regional haze State Implementation Plan ("SIP") to the United States Environmental Protection Agency ("EPA") pursuant to the Clean Air Act. The Clean Air Act aims to repair and prevent impairment of visibility in Class I areas, such as certain national parks and wilderness areas. Pennsylvania elected to treat thirty-four pollution sources as sources that are eligible for an emission limitation based on the degree of reduction that can be achieved through the best available retrofit technology ("BART"). These sources were BART-eligible. Pennsylvania also chose to follow the better-than-BART approach with respect to the eight fossil fuel electric generating stations that have a capacity of 750 megawatts or more because these stations participated in the "cap and trade" program, which Pennsylvania reasoned was better than BART at reducing emissions.

Pennsylvania could identify BART-eligible sources in its SIP in compliance with the Clean Air Act and the Regional Haze Rule. After Pennsylvania's SIP determined which sources were BART-eligible, it needed to determine which of these sources were subject to BART. A source was subject to BART if it emitted any air pollutant which may reasonably be anticipated to cause or contribute to any impairment of visibility in any mandatory Class I Federal area. If a source was subject to BART, Pennsylvania must have weighed five factors to determine the appropriate emission limitations. The EPA issued BART Guidelines to help states determine BART-eligible sources and the appropriate emission limitations. Use of the Guidelines was required for any fossil-fueled power plant with a total electricity generating capacity of 750 megawatts or more and advisory for smaller sources.

Furthermore, Pennsylvania could implement another program if it demonstrated that the other program was better-than-BART at reducing emissions. However, whichever approach Pennsylvania chose, it was required to submit a SIP to the EPA. The EPA was then obligated to determine whether the SIP met the requirements of the Clean Air Act. If Pennsylvania's SIP was insufficient, the EPA needed to enact its own Federal Implementation Plan ("FIP").

The EPA approved of Pennsylvania's SIP to the extent its BART analysis was compliant with the Clean Air Act and the regional haze regulations and disapproved of Pennsylvania's SIP to the extent that it relied on the "cap and trade" program. On June 7, 2012, the EPA promulgated an FIP for multiple states including Pennsylvania that replaced the "cap and trade" program with the Cross-State Air Pollution Rule ("Transportation Rule"). On July 13, 2012, the EPA finalized its limited approval of Pennsylvania's SIP. The EPA upheld its final rule on April 30, 2014 (the "Final Rule") after being challenged by the National Parks Conservation Association, Sierra Club, and Clean Air Council (collectively the "Conservation Groups").

The Conservation Groups sought the Court's review of the EPA's Final Rule on the basis that the EPA arbitrarily and capriciously approved Pennsylvania's SIP.

First, the Conservation Groups argued that the EPA should not have allowed Pennsylvania to rely on the Transport Rule for the sources with an electricity generating capacity of 750 megawatts or more in lieu of conducting a source-specific BART analysis. However, the Conservation Groups were attempting to use this appeal from the administrative proceedings that lead to the Final Rule under review to challenge decisions that the EPA reached in separate proceedings; the merits of the Transport Rule and Pennsylvania's reliance on it were addressed in the rule the EPA issued to many states prior to the Final Rule under review here. The Conservation Groups could not take this approach, and even if they could, the Clean Air Act mandates that the proper court to hear this sort of challenge would be the United States Court of Appeals for the District of Columbia Circuit.

Next, the Conservation Groups argued that Pennsylvania's source-specific BART analysis failed to comply with the Guidelines in many respects. By approving Pennsylvania's SIP despite these deficiencies, the EPA violated the Clean Air Act. In response to several of the Conservation Groups' arguments, the Court found that the EPA failed to explain how it reached many of its conclusions regarding Pennsylvania's SIP, and Pennsylvania's SIP itself failed to explain many of its conclusions. The Conservation Groups' arguments with which the Court agreed focused on the SIP's failure to identify all available retrofit control technologies, Pennsylvania's improper conclusion of what the baseline level for certain emissions should be, Pennsylvania's improper metric used in calculating the cost-effectiveness of additional pollution controls, and Pennsylvania's underestimated visibility impact of each source of pollution.

The Court found that Pennsylvania's SIP failed to identify or describe all the upgrades considered for BART-eligible sources or explain why these controls were rejected, thus the SIP failed to identify all available retrofit control technologies. The EPA also failed to explain how it evaluated Pennsylvania's analysis with so little information provided in the SIP.

The Court agreed that Pennsylvania improperly concluded what the baseline level for certain emissions should be because Pennsylvania did not express a reason for selecting the emission limit that it did. Further, the EPA arbitrarily approved Pennsylvania's BART analysis. The EPA argued that its approval of Pennsylvania's SIP was harmless error, but the EPA failed to justify its position in light of its obligation to disapprove of a SIP that does not comply with the Clean Air Act.
The Court also agreed that Pennsylvania used an improper metric to calculate the cost-effectiveness of additional pollution controls. The EPA concluded in its Final Rule that Pennsylvania's chosen metric was flawed but did not provide any meaningful explanation as to why the EPA ignored these flaws, which it conceded were present.

Lastly, the Court found that Pennsylvania underestimated the visibility impact of each source of pollution. Namely, Pennsylvania did not consider the cumulative visibility impact where its source-specific BART analysis required it to calculate the visibility improvement that could be achieved through the implementation of additional pollution controls. The EPA failed to articulate a satisfactory explanation for its decision to approve Pennsylvania's SIP despite the recognized flaws in its BART analysis and cost-effectiveness calculations.

However, the Court agreed with the EPA's arguments regarding alternative pollution control limits and Pennsylvania's evaluation of the cost-effectiveness of the pollution controls available for each BART-eligible source.

With regard to the issue of alternative pollution control limits, the Court found that the Guidelines did not require states to consider exact emission limits determined to be the best available control technology ("BACT") or lowest achievable emission rate ("LAER") but to consider the technologies used to achieve BACT and LAER. Furthermore, the Guidelines created a presumption that if a state relied on the maximum achievable control technology ("MACT"), its SIP satisfied the BART. However, the Guidelines did not require a state to rely on the MACT.

The Court also agreed that Pennsylvania's evaluation of the cost-effectiveness of the pollution controls available for each BART-eligible source was proper because nothing in the Clean Air Act required Pennsylvania to set a fixed threshold of cost-effectiveness.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/143147p.pdf

Panel (if known): Ambro, Vanaskie, and Shwartz, Circuit Judges.

Date of Argument: April 14, 2015

Date of Issued Opinion: September 29, 2015

Docket Number: No. 14-3147

Decided: 2014 Final Rule vacated to the extent it approved Pennsylvania's source-specific BART analysis and remanded to the EPA for further proceedings.

Case Alert Author: Sarah Adams

Counsel: David S. Baron, Esq., Charles McPhedran, Esq., counsel for Petitioners; Kate R. Bowers, Esq., Regina McCarthy, Esq., counsel for Respondent; Robert A. Reiley, Esq., Kristen M. Furlan, Esq., counsel for Intervenor Pennsylvania Department of Environmental Protection; Chet M. Thompson, Esq., Kristen L. Nathanson, Esq., counsel for Intervenor Homer City Generation LP.

Author of Opinion: Judge Vanaskie

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/01/2015 10:37 AM     3rd Circuit     Comments (0)  

  Goldman, Sachs & Co. v. Athena Venture Partners, L.P. - Third Circuit
Headline: Third Circuit Adopts Constructive Knowledge Standard for Waiver in the Arbitration Context

Area of Law: Arbitration, Waiver

Issue Presented: In the arbitration context, does a party waive a claim based on the conduct of an arbitrator if the party had constructive knowledge of facts indicating partiality or other misconduct of the arbitrator but failed to raise those concerns before or during the arbitration?

Brief Summary: Athena Venture Partners submitted a legal dispute with Goldman Sachs to arbitration as per a prior agreement between the parties, and two separate arbitration sessions were heard by a three-member panel. After the first session, the Financial Industry Regulatory Authority ("FINRA") disclosed that one of the panel members was charged with the unauthorized practice of law. Athena did not object to the panel member's continued participation on the panel and did not conduct further investigation on the panel member. After the panel found in favor of Goldman, Athena conducted further investigation on the panel member and found that the panel member failed to disclose additional legal issues. The Court held that Athena could not challenge the arbitration award on the grounds that the panel member's conduct and failure to disclose violated both FINRA's rules and the parties' agreement to arbitrate. Athena waived its right to challenge the award on those grounds under the constructive knowledge standard.

Extended Summary: This case concerns how waiver applies in the arbitration context. Athena Venture Partners submitted a legal dispute with Goldman Sachs to arbitration as per a prior agreement between the parties. A three-member panel of arbitrators conducted two separate arbitration hearings in November 2011 and October 2012 under Financial Industry Regulatory Authority ("FINRA") rules. After the first panel session, FINRA disclosed that one of the panel members was charged with the unauthorized practice of law. Neither Goldman nor Athena objected to the panel member's continued participation on the panel, and neither Goldman nor Athena conducted further investigation on the panel member. The panel found in favor of Goldman Sachs.

After the award, Athena conducted further investigation on the panel member and found that the panel member failed to disclose additional legal issues. Athena filed a motion to vacate the arbitration award on the grounds that the panel member's conduct and failure to disclose violated both FINRA's rules and the parties' agreement to arbitrate. The District Court agreed and vacated the arbitration award, remanding the case for rehearing before a new arbitration panel. Goldman appealed.

On appeal, Goldman argued that Athena waived its right to challenge the arbitration award because Athena failed to challenge the panel member's participation on the panel until after the award. Further, Goldman argued that the District Court erred in vacating the award.

The Court adopted the constructive knowledge standard for waiver in the arbitration context and held that Athena waived its right to challenge the panel member's fitness to serve as an arbitrator. Athena waived its right to challenge the panel member's participation because it had constructive knowledge of the panel member's malfeasance.

The constructive knowledge standard requires that a complaining party either knew or should have known of facts indicating partiality or other misconduct of an arbitrator. When a party knew or should have known of facts indicating a panel member's malfeasance but chose not to spend time and money investigating the issue further, that party waives the right to challenge the arbitration decision on the ground that the arbitrator was unfit to serve. The constructive knowledge standard encourages investigation of an arbitrator's malfeasance by holding parties responsible for information they knew or should have known. The standard prevents a losing party from having a second bite at the apple and promotes the arbitration goals of efficiency and finality. Moreover, it would allow a party to challenge the award if it had no way of discovering the panel member's malfeasance beforehand.

Here, Athena had constructive knowledge of the panel member's additional legal issues because the initial disclosure did or should have provoked alarm. Athena should have investigated the panel member's background further while the arbitration was ongoing. If Athena had investigated the panel member's background further once the initial disclosure was made, it likely would have discovered the panel member's additional legal issues.

As the Court found that Athena waived its right to seek vacatur of the award, it did not reach consideration of Goldman's second argument.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/133461p.pdf

Panel (if known): Ambro, Fuentes, and Nygaard, Circuit Judges.

Date of Argument: October 21, 2014

Date of Issued Opinion: September 29, 2015

Docket Number: No. 13-3461

Decided: District Court's order vacating the arbitration award is reversed and Goldman's motion to confirm the arbitration award remanded for further proceedings.

Case Alert Author: Sarah Adams

Counsel: Kathryn E. Deal, Esq., Edward M. Posner, Esq., counsel for Appellants; David R. Moffit, Esq., counsel for Appellee.

Author of Opinion: Judge Fuentes

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 10/01/2015 09:55 AM     3rd Circuit     Comments (0)  

September 23, 2015
  United States of America v. Edward Ross - Third Circuit
Headline: Monetary Special Assessments at Sentencing Do Not Constitute "Custody" for Purposes of Habeas Corpus Statutes

Area of Law: Criminal Law, Habeas Corpus

Issue Presented: Can a special assessment constitute "custody" as required by habeas corpus statutes?

Brief Summary: On collateral attack, Ross argued that his trial and appellate counsel provided ineffective assistance of counsel for failing to challenge a deficient jury instruction and the sufficiency of the evidence on one of his convictions. However, the relief Ross sought was not cognizable under section 2255 because he was not claiming to be released from "custody." The $100 special assessment imposed upon him at sentencing did not constitute "custody."

Extended Summary: This case concerns the threshold requirement of 28 U.S.C. § 2255 to vacate, set aside, or correct a criminal sentence for ineffective assistance of counsel where a petitioner's trial and appellate counsel failed to challenge a deficient jury instruction and the sufficiency of the evidence on one count of conviction. Ross was convicted of several criminal charges, including possession of a machine gun in violation of 18 U.S.C. § 922(o), and sentenced to eight years' supervised release, a fine of $3,000, and eight $100 special assessments for each count of conviction. On collateral attack, Ross argued that his trial and appellate counsel provided ineffective assistance of counsel for failing to challenge a deficient jury instruction and the sufficiency of the evidence on his conviction under section 922(o).

Section 2255 provides a remedy for prisoners in custody to claim the right to be released upon certain grounds, such as where the sentence imposed violated the Constitution or laws of the United States. After noting that the Court was bound by the text of section 2255 on collateral attack, the Court held that the relief Ross sought was not cognizable under section 2255 because he was not claiming to be released from "custody."

The Court rejected Ross's argument that the $100 special assessment imposed upon him at sentencing constituted "custody." In federal habeas statutes, the term "custody" was meant to reserve the writ of habeas corpus as a remedy for severe restraints on individual liberty. In order for a petitioner to be in "custody," the restraints on him or her must be (1) severe, (2) immediate, and (3) not shared by the public generally. Ross failed to meet the severity requirement because a $100 special assessment involved no physical restraint. Monetary penalties, without more, were not significant restraints on liberty as contemplated by the "custody" requirement in habeas corpus statutes. Here, even when a special assessment was imposed in conjunction with a wrongful conviction, Ross failed to meet the "custody" requirement of section 2255.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/134447p.pdf

Panel (if known): Fisher, Jordan, and Shwartz, Circuit Judges.

Date of Argument: June 3, 2015

Date of Issued Opinion: September 15, 2015

Docket Number: No. 13-4447

Decided: District Court's order denying relief vacated, and District Court directed to dismiss Ross's section 2255 motion.

Case Alert Author: Sarah Adams

Counsel: Will W. Sachse, Esq., Katherine U. Davis, Esq., Ellen L. Mossman, Esq., John McClam (Law Student), counsel for Appellant; Emily McKillip, Esq., Floyd J. Miller, Esq., Robert A. Zauzmer, Esq., counsel for Appellee.

Author of Opinion: Judge Jordan

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/23/2015 03:01 PM     3rd Circuit     Comments (0)  

  J.B. v. James B. Fassnacht et al. - Third Circuit
Headline: Florence Applies to Juvenile Detainees Committed to the General Population of a Detention Center

Area of Law: Criminal Law, Juvenile Law

Issue Presented: Does Florence apply to all juveniles committed to the general population of a juvenile detention facility thus requiring all juvenile detainees to undergo a strip search?

Brief Summary: Florence applied to juveniles committed to the general population of a juvenile detention facility because the institutional security risks faced by prisons outweighed any constitutional right to privacy of juvenile detainees. The security risks to prisons were the same whether the detainee was a juvenile or an adult. The state, as de facto guardian of juvenile offenders while they were detained, had an interest in screening juvenile offenders in order to provide appropriate care for the juveniles. Furthermore, an individualized, reasonable suspicion inquiry rather than a blanket policy allowing strip searches would be unworkable. Lastly, Florence did not include an exception for juvenile detainees.

Extended Summary: This case concerns whether Florence v. Board of Chose Freeholders of County of Burlington, where the Supreme Court of the United States held that all arrestees committed to the general population of a detention center may be required to undergo a close visual inspection while undressed, applied to juvenile offenders.

As in Florence, the Court balanced a juvenile detainee's privacy interests with the risks to their wellbeing and to institutional security. The Court observed that juvenile detainees face a substantial risk of psychological damage if forced to endure a strip search, and a juvenile maintains an enhanced right to privacy. However, after balancing juvenile detainees' privacy interests against the security interests of a prison or other detention facility, the institutional security risks outweighed any constitutional right to privacy of juvenile detainees.

Florence recognized that detainees posed a risk to security in prisons, and those risks were the same whether the detainee was a juvenile or an adult. Just like an adult detainee, a juvenile detainee could carry a communicable disease, possess signs of gang membership, and attempt to smuggle contraband into the detention facility. Juvenile detainees posed significant dangers to other detainees and juvenile detention center staff. Furthermore, the state had the responsibility to act as a juvenile's de facto guardian while he or she was detained, thus the state had a responsibility to screen juvenile detainees for signs of disease, self-mutilation, or abuse in the home. Sensitive scanning devices and narcotic scanners would not adequately protect penological interests in the security and care of juveniles. Therefore, detention facilities' security interests outweighed the privacy interests of juvenile detainees.

In addressing Plaintiff's arguments, the Court found that an individualized, reasonable suspicion inquiry rather than a blanket policy allowing strip searches would be unworkable. Detention facility administration could not practicably classify inmates by their current and prior offenses prior to the intake strip search. Moreover, the Supreme Court recognized the utility of blanket policies in prison administration. A policy that allowed prison administrators to engage in an individualized inquiry of whether or not to subject a juvenile detainee to a strip search would likely be less evenhanded and increase the risk of danger to the general population.

Furthermore, Florence did not include an exception for juvenile detainees. The Supreme Court left open the possibility of exceptions, but the Court interpreted Florence to contemplate exceptions for particular factual scenarios not yet before the court rather than for juveniles as a class. The Supreme Court used broad, sweeping language when describing who will be subjected to a strip search and what constituted a jail. The only qualification the Supreme Court included in deciding Florence was that the detainee must be admitted to the general population.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/143905p.pdf

Panel (if known): Fuentes, Nygaard, and Roth, Circuit Judges.

Date of Argument: July 9, 2015

Date of Issued Opinion: September 15, 2015

Docket Number: No. 14-3905

Decided: Reversed District Court order denying Defendants' motion for summary judgment

Case Alert Author: Sarah Adams

Counsel: Charles R. Starnes, Esq., Brian H. Leinhauser, Esq., David J. MacMain, Esq., counsel for Appellants; Kevin C. Allen, Esq., counsel for Appellees.

Author of Opinion: Judge Fuentes

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/23/2015 02:57 PM     3rd Circuit     Comments (0)  

  In re: ICL HOLDING COMPANY, INC., et al.- Third Circuit
Headline: Third Circuit Holds That The Code's Creditor-Payment Hierarchy Was Not Invoked Because After Secured Lenders Buy A Company And Then Make a Subsequent Agreement With The Company's Unsecured Lenders Using Its Own Funds, Those Funds Are Not Part Of The Estate Property.

Area of Law: Bankruptcy

Issues Presented: Whether certain payments by a § 363 purchaser in connection with acquiring the debtors' assets should be distributed according to the Code's creditor-payment hierarchy and what constitutes estate property?

Brief Summary: After LifeCare experienced extreme financial loss, it was in debt amounting to $484 million. An entity formed by secured lenders offered to purchase LifeCare outright for all of its cash and assets for $320 million. The secured lenders were owed $355 million by LifeCare. LifeCare accepted the offer. A committee of unsecured lenders (the "Committee") and the United States of America objected to the sale because LifeCare would be left with no assets and would therefore receive nothing from what was owed to them. The secured lenders and the Committee reached an agreement in which the Committee would withdraw its objection in return for the secured lenders agreeing to deposit $3.5 million in trust for the benefit of the general unsecured creditors. The Government appealed in this case from the Bankruptcy Court's approval of the sale and the Settlement Agreement between the Committee and secured lenders. The Government sought to alter the both the sale and the agreement. The Third Circuit first rejected LifeCare and the Committee's claim that the Government's appeal was moot. On the merits, the Third Circuit held that because the secured lenders used their own funds to make payments to unsecured lenders, the money did not qualify as estate property. Further, the Court held that under the sale order, any money that remained in escrow went back to where it came from, which was the secured lenders' account. The Third Circuit held that it the funds were not estate property and affirmed the lower court's ruling.

Extended Summary: This case concerns an entity formed by secured lenders buying out LifeCare Holdings, Inc.'s ("LifeCare") assets in order to acquire 90 percent of the debt owed to the secured lenders, and a subsequent settlement agreement with the Committee of Unsecured Creditors (the "Committee"). LifeCare's debt was $484 million, of which $355 million was secured. The secured lenders offered to buy LifeCare outright for all of its cash and assets. The secured lenders offered to credit $320 million of the $355 million that they were owed. LifeCare agreed to this option. The secured lenders also agreed to pay the legal and accounting fees for LifeCare and the Committee, as well as LifeCare's wind-down fees.

LifeCare and its 34 subsidies filed for bankruptcy one day after entering into the Asset Purchase Agreement with the secured lenders. LifeCare received permission from the Bankruptcy Court to sell all of its assets through a Court-supervised auction under 11 U.S.C § 363(b)(1). The secured lenders were the successful bidders. The United States and the Committee objected to the asset transfer. The Committee argued that the sale would not allow LifeCare to even have the ability to pay for administrative expenses. The United States argued that the sale would result in capital-gains tax liability estimated at $24 million. The secured lenders and the Committee entered into a deal, which consisted of the Committee removing its objection and instead supporting the sale and in return the secured lenders agreed to deposit $3.5 million dollars in trust for the benefit of the general unsecured creditors. The secured lenders and the Committee entered into a Settlement Agreement.

On April 2, 2013, the Bankruptcy Court accepted the proposed sale to the secured lenders. The Bankruptcy Court addressed the Government's code based fairness objection and stated that the administrative fee monies put into escrow by the secured lenders were not estate property. Therefore the Bankruptcy Court held that those funds were not subject to distribution by LifeCare's creditors, and the Government had no claim to them. The Committee was a junior creditor and the Government was a senior creditor, thus the Government contended that the settlement allowed for the bypass of it, which violated the absolute priority rule. The lower court rejected this argument and held that the Settlement Agreement allowed the secured lenders to directly pay the Committee, and therefore was not part of LifeCare's property. Further, because it was not LifeCare's property, the absolute priority rule was not invoked. The lower court accepted the Settlement Agreement. The Government then appealed the denial of its request for a stay to the District Court. The District Court agreed with the Bankruptcy Court that the funds at issue were not property of the estate and thus not subject to the Code's distribution rules. The District Court denied the Government's stay request because the request did not meet the threshold that there was a sufficient likelihood it would succeed on the merits. The Government then appealed to the Third Circuit.

As to the merits of the Government's appeal, the Third Circuit first looked at the claim that the settlement sums should be treated as estate property because the secured lenders' payment to the Committee was an increased bid for LifeCare's assets. The Court disagreed and held that because the secured lenders used their own funds to make payments to unsecured lenders, it could not conclude that the money qualified as estate property. Further, the Court acknowledged that the sums paid by the secured lenders to the Committee did not at anytime belong to LifeCare. The Third Circuit explained that its analysis rested on whether the settlement money was given to the Committee as consideration for the assets bought at the § 363 sale. The Court concluded that those assets were not in consideration.

The Third Circuit also considered whether the fees and wind-down expenses, which make up the escrow funds, qualified as property of the estate. The Court held that through the Asset Purchase Agreement, all of the LifeCare's assets, including its cash, were purchased by the secured lenders. Thus, the Government's argument that the residual cash from the sale, such as the monies for fees and wind-down expenses, were LifeCare's property was erroneous. Under the sale order, any money that remained in escrow went back to where it came from, which was the secured lenders' account. The Third Circuit held that it could not conclude the funds were estate property. The Third Circuit noted that the Bankruptcy Code's creditor-payment hierarchy only becomes an issue when distributing estate property. Therefore, the Court held that that even if the rule applies in a § 363 context, it was not violated in this case. To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/142709p.pdf


Panel (if known): Ambro, Fuentes, and Roth, Circuit Judges

Argument Date: January 14, 2015

Date of Issued Opinion: September 14, 2015

Docket Number: No. 14-2709

Decided: Affirmed.

Case Alert Author: Trisha Stein

Counsel: Tamara W. Ashford, David A. Hubbert, Thomas J. Clark, Bethany B. Hauser, Christopher Williamson, Charles M. Oberly, III, Ellen W. Slights, Counsel for Appellant, The United States of America; and Anthony W. Clark, Kristhy M. Peguero, Felicia G. Perlman, Matthew N. Kriegel, Candice Korkis, Kenneth S. Ziman, for Appellees ICL Holding Co., Inc.,
Boise Intensive Care Hospital Inc., CareRehab Services LLC, Crescent City Hospitals LLC,
LifeCare Healthcare Holdings Inc., LifeCare HoldCo LLC, Lifecare Ambulatory Surgery Center Inc., Lifecare Holding Co. of Texas LLC, Lifecare Holdings Inc., Lifecare Hospital at Tenaya LLC, Lifecare Hospitals LLC, Lifecare Hospitals of Chester County Inc., Lifecare Hospitals of Dayton Inc., Lifecare Hospitals of Fort Worth LP, Lifecare Hospitals of Mechanicsburg LLC, Lifecare Hospitals of Milwaukee Inc., Lifecare Hospitals of Ne Orleans LLC, Lifecare Hospitals of North Carolina LLC, Lifecare Hospitals of North Texas LP, Lifecare Hospitals of Northern Nevada Inc., Lifecare Hospitals of Pittsburgh LLC, Lifecare Hospitals of San Antonio LLC, Lifecare Hospitals of Sarasota LLC, Lifecare Hospitals of south Texas Inc., Lifecare Investments LLC, Lifecare Investments 2 LLC, Lifecare Management Services LLC, ICL Holding Co., Inc.,
Boise Intensive Care Hospital Inc., CareRehab Services LLC, Crescent City Hospitals LLC, LifeCare Healthcare Holdings Inc., LifeCare HoldCo LLC, Lifecare Ambulatory Surgery Center Inc., Lifecare Holding Co. of Texas LLC, Lifecare Holdings Inc., Lifecare Hospital at Tenaya LLC, Lifecare Hospitals LLC, Lifecare Hospitals of Chester County Inc., Lifecare Hospitals of Dayton Inc., Lifecare Hospitals of Fort Worth LP, Lifecare Hospitals of Mechanicsburg LLC, Lifecare Hospitals of Milwaukee Inc., Lifecare Hospitals of Ne Orleans LLC, Lifecare Hospitals of North Carolina LLC, Lifecare Hospitals of North Texas LP, Lifecare Hospitals of Northern Nevada Inc., Lifecare Hospitals of Pittsburgh LLC, Lifecare Hospitals of San Antonio LLC, Lifecare Hospitals of Sarasota LLC, Lifecare Hospitals of south Texas Inc., Lifecare Investments LLC, Lifecare Investments 2 LLC, Lifecare Management Services LLC; and Laura D. Jones, Peter J. Keane, James E. O'Neill, Bradford J. Sandler, for Appellee Official Committee of Unsecured Creditors; and Stanley B. Tarr, Michael D. DeBaecke, Ira S. Dizengoff, Abid Quershi, Scott Alberino, Ashleigh L. Blaylock, for Appellee Steering Committee

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/23/2015 02:53 PM     3rd Circuit     Comments (0)  

  In re Chocolate Confectionary Antitrust Litigation - Third Circuit
Headline: Evidence of Canadian Antitrust Conspiracy Insufficient to Prove Existence of U.S. Antitrust Conspiracy

Area of Law: Antitrust Law

Issue Presented: Can evidence of a contemporaneous antitrust conspiracy in a foreign market prove the existence of an antitrust conspiracy in the U.S. market?

Brief Summary: Evidence of a contemporaneous antitrust conspiracy in a foreign market did not prove the existence of an antitrust conspiracy in the U.S. market because the evidence was ambiguous. Plaintiffs alleged that the Chocolate Manufacturers conspired to raise prices on chocolate candy products in 2002, 2004, and 2007 in violation of the Sherman Act. However, the Chocolate Manufacturers were participants in an oligopolist market. The Chocolate Manufacturers' interdependent decision-making could have led to higher prices under "conscious parallelism." Plaintiffs failed to create an inference of a conspiracy by showing conscious parallelism and certain "plus factors" including evidence of a Canadian conspiracy. Plaintiffs failed to prove a U.S. conspiracy with evidence of a Canadian conspiracy because they failed to show that the Canadian conspiracy evidence was relevant to or facilitated the U.S. conspiracy.

Extended Summary: This case concerns how courts should view evidence of a contemporaneous antitrust conspiracy in a foreign market when that evidence is offered to prove the existence of an antitrust conspiracy in the U.S. market. Federal law prohibits conspiracies in unreasonable restraint of trade or commerce under § 1 of the Sherman Act. Horizontal price fixing among competitors is a restraint of trade that is deemed per se unreasonable. Individual Plaintiffs and a Direct Purchaser Class (collectively "Plaintiffs") alleged that the Hersey Company, Nestle USA, Inc., and Mars, Inc. (collectively, "the Chocolate Manufacturers") conspired to raise prices on chocolate candy products in 2002, 2004, and 2007 in violation of the Sherman Act. Plaintiffs argued that this case presented a per se unreasonable restraint on trade. Thus, Plaintiffs had to show that the Chocolate Manufacturers agreed to fix prices under a common design in order to show that the Chocolate Manufacturers violated the Sherman Act.

However, the U.S. chocolate market was an oligopolistic market. The economic theory of interdependence provides that in oligopolistic markets, one firm's change in output or price will noticeably impact the market and other firms. Further, oligopolists could independently decide that the industry would be better served by higher prices and cause a rise in prices. Interdependent decision-making that leads to higher prices is "conscious parallelism" and lawful under the Sherman Act. In order to ensure that the Court punishes actual agreement rather than unilateral, independent conduct, Plaintiffs must create a reasonable inference of a conspiracy bearing in mind the nature of an oligopolist market. Thus, Plaintiffs must supplement a showing of conscious parallelism with "plus factors."

Plaintiffs failed to create an inference of a conspiracy by showing motive or actions against self-interest because the evidence Plaintiff presented was consistent with interdependence. Plaintiffs could not show that the anticompetitive price increases were the result of unlawful price-fixing rather than lawful, rational interdependence.

Plaintiffs also failed to create an inference of a conspiracy by showing traditional conspiracy evidence. First, Plaintiffs sought to prove a U.S. conspiracy with evidence of a Canadian conspiracy. Plaintiffs argued that the Court could reasonably infer a domestic conspiracy from evidence of a Canadian conspiracy because the Canadian market was a similar adjacent market, it involved the same participants, a jury should be permitted to weigh the Canadian conspiracy evidence, and the Canadian conspiracy "actuated" or facilitated the U.S. conspiracy. The Direct Purchaser Class argued that the Canadian conspiracy enhanced the plausibility of a conspiracy among the Chocolate Manufactures.

The Court held that the Canadian conspiracy evidence was ambiguous and, without more, a conspiracy in a foreign country generally did not prove a domestic conspiracy. First, Plaintiffs failed to show a link between the Canadian conspiracy and the Chocolate Manufacturers' conduct in the U.S. The people involved in the Canadian conspiracy were different from the people involved in the alleged U.S. conspiracy. The Canadian Chocolate Manufacturers were distinct legal entities operating under the laws of a different country. The circumstances surrounding the Canadian conspiracy, including the involvement of a direct purchaser and major distributor of chocolate in fixing prices, were very different from the circumstances of the alleged U.S. conspiracy. Plaintiffs' argument merely amounted to the allegation that if a conspiracy to fix prices happened in Canada, it could happen in the U.S. Plaintiffs' argument was insufficient to show a conspiracy especially when the anticompetitive price increases were consistent with lawful, rational interdependence.

Furthermore, the Court rejected the argument that the Canadian conspiracy "actuated" or facilitated the U.S. conspiracy. The actuation theory presumed that the Chocolate Manufacturers knew about the unlawful conduct in Canada, and that knowledge gave them the confidence to engage in the alleged U.S. conspiracy. Plaintiffs needed to show more than similar outcomes in Canada and the U.S. Rather, Plaintiffs needed to show that Canadian conduct actuated the U.S. conduct. In other words, the Chocolate Manufacturers needed to have known the cause of the outcomes they observed in Canada. At most, a series of emails between U.S. Hersey executives and upper management in Hershey Canada inferred that some Hershey executives in the U.S. knew about the Canadian conspiracy. However, the Canadian conspiracy could not have facilitated a U.S. conspiracy if Hershey acted unilaterally and the other two alleged conspirators were unaware of the Canadian conspiracy.

Second, Plaintiffs sought to prove a U.S. conspiracy with other traditional conspiracy evidence. Plaintiffs argued that the Chocolate Manufacturers exchanged information before fixing prices. However, Plaintiffs' argument failed because possession of competitive information did not amount to evidence of concerted action to fix prices. Plaintiffs failed to show that the source, substance, timing, and effect of the advanced pricing information inferred a concerted action to fix prices.

Plaintiffs also failed to show a reasonable inference of concerted action by arguing that the Chocolate Manufacturers had opportunities to conspire. The 2002 sale process of Hershey and improper communications between individuals of the Chocolate Manufacturers who did not have pricing authority did not create an inference of a conspiracy absent evidence of suspect meetings or conversations about pricing. Lastly, Plaintiffs failed to show that the Chocolate Manufacturers' pretextual reasons for their price increases, namely that the Chocolate Manufacturers raised prices because of raised costs, created a reasonable inference of a conspiracy. While costs increased for the Chocolate Manufacturers during the alleged conspiracy time period, Plaintiffs argued that the prices did not rise in proportion with the rise in costs. Plaintiff's argument failed. Even if their pretextual argument was stronger, it would not create a reasonable inference of a conspiracy by itself. To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/142790p.pdf

Panel (if known): Fisher, Hardiman, and Roth, Circuit Judges.

Date of Argument: April 30, 2015

Date of Issued Opinion: September 15, 2015

Docket Numbers: Nos. 14-2790 through 14-2795

Decided: Sept. 15, 2015

Case Alert Author: Sarah Adams

Counsel: Scott E. Perwin, Esq., Kenny Nachwalter, Steve D. Shadowen, Esq., counsel for Appellants in 14-2790; Moira E. Cain-Mannix, Esq., Brian C. Hill, Esq., Scott D. Livingston, Esq., Bernard D. Marcus, Esq., Joseph T. Lukens, Esq., counsel for Appellants in 14-2791; Daniel H. Gold, Esq., counsel for Appellant in 14-2792; Richard L. Coffman, Esq., David P. Germaine, Esq., Alberto Rodriguez, Esq., Joseph M. Vanek, Esq., Steve D. Shadowen, Esq., counsel for Appellants in 14-2793; Ruthanne Gordon, Esq., Michael J. Kane, Esq., H. Laddie Montague, Jr., Esq., Hilary K. Scherrer, Esq., Roberta D. Liebenberg, Esq., Adam Pessin, Esq., counsel for Appellants in 14-2794; Eric L. Bloom, Esq., counsel for Appellant in 14-2795; William F. Cavanaugh, Jr., Esq., Stephanie M. Gyetvan, Esq., Adeel A. Mangi, Esq., counsel for Appellees Hershey Co. and Hershey Canada, Inc.; Nicole L. Castle, Esq., David Marx, Esq., Stefan M. Meisner, Esq., counsel for Appellees Mars, Inc. and Mars Snackfood United States LLC; Peter E. Moll, Esq., Daniel J. Howley, Esq., Adam L. Hudes, Esq., Stephen M. Medlock, Esq., Carmine R. Zarlenga, III, Esq., counsel for Appellee Nestle USA, Inc.

Author of Opinion: Judge Fisher

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/23/2015 02:50 PM     3rd Circuit     Comments (0)  

September 15, 2015
  Brand Marketing Group LLC v. Intertek Testing Services NA - Third Circuit
Headline:
The Third Circuit holds that punitive damages are available for negligent misrepresentation claims.

Area of Law: Tort

Issues Presented:
Whether punitive damages are per se unavailable for negligent misrepresentation?

Brief Summary:
A jury found Intertek Testing Services, N.A., Inc. liable to Brand Marketing Group, LLC for negligent misrepresentation and awarded Brand $1,045,000 in compensatory and $5 million in punitive damages. Interk appealed. The Third Circuit affirmed, finding that punitive damages are available for negligent misrepresentation claims and that there is an exception to the economic loss doctrine for negligent misrepresentation relied on by a third party.

Extended Summary:
A jury found Intertek liable to Brand Marketing Group for negligent misrepresentation and awarded Brand over $6 million in damages. Intertek was responsible for ensuring that Brand's product, a vent-free heater, complied with the relevant safety standard. Intertek represented to Brand that the product complied with that standard. Brand then entered into a contract with Ace Hardware Corporation to sell the product, but it was not in fact compliant with the relevant standard and Ace refused to sell it and demanded a refund. Ace ultimately filed a lawsuit against Brand and was awarded $611,060 in damages.
Brand sued Intertek for negligent misrepresentation. The jury awarded Brand $725,000 in past compensatory damages and $320,000 in future compensatory damages, and $5 million in punitive damages. Intertek unsuccessfully moved for post-trial relief and then timely appealed.
Intertek first argued on appeal that Brand's case was foreclosed by the economic loss doctrine because Intertek's negligence resulted in only economic damages. The Court noted that the Supreme Court of Pennsylvania has recognized an exception for negligent misrepresentation claims. The plain text of Restatement (Second) of Torts § 552(2)(a) permits claims by a third party when a professional provides information and knows that the recipient intends to supply it to the third party. The Court held that Intertek knew that somebody aside from the manufacturer would rely on its testing. Therefore, the district court correctly permitted Brand's negligent misrepresentation claim to proceed under Pennsylvania's exception to the economic loss doctrine.
The Court also considered whether punitive damages are available for negligent misrepresentation claims. The Court noted that the Pennsylvania. Supreme Court had held that punitive damages may be awarded in negligence cases if the plaintiff proves greater culpability than ordinary negligence at trial. The Court held that a plaintiff may undertake the additional burden of proving a heightened culpability required to sustain a punitive damages claim in negligence suits and in negligent misrepresentation cases specifically. The Third Circuit rejected Intertek's remaining arguments and affirmed the district court's denial of its post-trial motions. To view the full opinion, click here: http://www2.ca3.uscourts.gov/opinarch/143010p.pdf


Panel: Fisher, Hardiman, and Roth, Circuit Judges

Argument Date: April 28, 2015

Date of Issued Opinion: September 10, 2015

Docket Number: No. 14-3010

Decided: Affirmed.

Case Alert Author: Yolanda Felix

Counsel: William T. Hangley, Esq., Matthew A. Hamermesh, Esq., Dina L. Hardy Grove, Esq. for Appellant Intertek Testing Services N.A., Inc.; Brendan B. Lupetin, Esq. for Appellee Brand Marketing Group LLC d/b/a Thermablaster.

Author of Opinion: Judge Hardiman

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/15/2015 10:38 AM     3rd Circuit     Comments (0)  

September 11, 2015
  Young v. Martin et al. - Third Circuit
Headline: District Court erred in granting summary judgment where it failed to apply the excessive force test to mentally ill prisoner's claim of an Eighth Amendment violation against prison officials who strapped him in a restraint chair for fourteen hours.

Area of Law: Constitutional Law; Eighth Amendment

Issue(s) Presented: Whether the district court erred by granting summary judgment in favor of the Defendants by concluding that they did not violate Young's Eighth Amendment rights when they strapped him in a restraint chair naked for fourteen hours even though he posed no imminent threat of bodily harm to himself or others.

Brief Summary: A prisoner in a Pennsylvania correctional facility was secured in a four-point restraint chair naked for fourteen hours after an incident where he left his cell, which had been mistakenly left open. This prisoner had a history of mental illness, which had been exacerbated during years of solitary confinement.

The Third Circuit found that the prisoner's Eighth Amendment claims against the prison officials regarding the use of the restraint chair should be analyzed under the excessive force test as articulated by the United States Supreme Court. Applying that test, and drawing all reasonable inferences in favor of Young, the Third Circuit noted that reasonable minds could differ as to whether Young was already subdued when restrained, whether the situation leading up to the restraint constituted an emergency situation, and whether he was subjected to substantial harm and pain without penological justification.

Because genuine disputes of material fact existed as to whether Defendants' use of the restraint chair constituted excessive force in violation of the Eighth Amendment, the Third Circuit held that the district court erred in granting summary judgment to Defendants.

Extended Summary: Leonard G. Young, Jr., is a Pennsylvania prisoner with a long history of mental illness, including bipolar disorder and schizophrenia dating back to his childhood. For over six years, he has been held in solitary confinement in either restrictive housing or mental health units. Since his detention in solitary confinement, his symptoms have intensified, including episodes of hallucinations, paranoia, self-harm, and suicide attempts.

On September 20, 2009, Young's cell door was mistakenly unlocked and left open. Young exited, climbed several flights of stairs, and ended up on an internal roof in the law library. After a few minutes of yelling down his protests regarding prisoners' rights, Young followed correctional officers' (COs) orders to come down. He further complied with COs as they handcuffed him, but when Young then refused to walk by laying on the ground, his ankles were shackled and the COs carried him down another staircase.

Young was then placed face down on the ground and further restrained by four COs. Young remained motionless and did not struggle. Still, he was placed in a spit mask, his clothes were cut off, and a strip search was performed. After placement in a restraint chair was authorized by Defendants "to prevent [Young] from harming himself or staff," he was strapped into the chair naked with a smock placed over his lap. He did not physically resist, but he did complain that the restraints were too tight and cried out in pain while being strapped into the chair.

At 8:46 p.m., Young was wheeled into an air-conditioned cell and left naked except for the smock. A nurse evaluated him and found the restraints were too tight. He fell asleep, awoke at 5:20 a.m., and was cooperative in agreeing to see a psychiatrist and take medication. Later that morning, still in the chair, Young became agitated and stated he would "act out" when released. He was released at 10:30 a.m., totaling nearly fourteen hours in the chair. This exceeded the two-hour maximum recommended by the chair's manufacturer and the eight-hour maximum, absent special authorization, permitted by the prison's regulations. Defendants conceded that there was no evidence on record that anyone authorized a restraint exceeding the eight-hour maximum. Moreover, because of the air-conditioning blowing on his naked body during this period, Young's legs become numb and he could not walk upon his release and had to be wheeled back to his restrictive housing unit.

Young sued Defendants, claiming his placement in the chair constituted excessive force in violation of the Eighth Amendment. The district court granted Defendants' motion for summary judgment, noting that Defendants acted professionally and did not use excessive force because Young was agitated, violence-prone, and stated he would act out upon his release from the chair. Young appealed. The Third Circuit first had to determine whether to analyze Young's Eighth Amendment claim under the excessive force test or the condition of confinement test. The Eighth Amendment prohibits the infliction of cruel and unusual punishment. This prohibition bars prison officials from using excessive force against inmates and it imposes an affirmative duty on prison officials to provide humane conditions of confinement.

The Third Circuit examined a United States Supreme Court case that addressed whether the use of mechanical restraints constituted cruel and unusual punishment. The Supreme Court held that because the prisoner was subdued leading up to his restraint and no longer posed a safety risk, subjecting him to substantial risk of physical harm and unnecessary pain, discomfort, and humiliation in the way described served no penological justification. This was "unnecessary and wanton" and constituted cruel and unusual punishment under the Eighth Amendment. Although Defendants argued that the Supreme Court applied the conditions of confinement test in the leg iron case, the Third Circuit found this to be, in fact, an application of the excessive force analysis. Therefore, the Third Circuit concluded that Young's claims should be analyzed under the excessive force test as articulated by the Supreme Court.

Applying the excessive force test to its review of the record, the Third Circuit found that the district court failed to draw all reasonable inferences in Young's favor, and that there were genuine disputes of material fact regarding whether Defendants' use of the restraint chair violated the Eighth Amendment. First, given that Young was not violent or combative leading up to the restraint, the Court found that reasonable minds could differ as to whether Young posed a risk to himself or others. Second, because Young's cell door was left open, his exit did not amount to a prison break. Also, he complied with COs' orders following the initial roof incident, so a reasonable jury could find that the events of that day did not amount to an emergency situation. Lastly, due to Young's restraints being too tight and the air-conditioning blowing on his naked body during his extended period in the chair, the Court reasoned that Young was entitled to have a jury determine whether he was subjected to a substantial risk of physical harm without penological justification. The Third Circuit, therefore, vacated the grant of summary judgment in favor of Defendants and remanded the case for further proceedings.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/134057p.pdf

Panel: McKee, Chief Judge; Greenway, Jr. and Krause, Circuit Judges

Argument Date: October 29, 2014

Date of Issued Opinion: September 8, 2015

Docket Number: No. 13-4057

Decided: Vacated and remanded

Case Alert Author: Elizabeth C. Dolce

Counsel: Elizabeth F. Collura, Esquire, and Roert J. Ridge, Esquire, Counsel for Appellant; Sandra A. Kozlowski, Esquire, and Kemal A. Mericli, Esquire, Office of Attorney General of Pennsylvania, Counsel for Appellees

Author of Opinion: Circuit Judge Krause

Circuit: Third Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/11/2015 04:17 PM     3rd Circuit     Comments (0)  

September 9, 2015
  In the matter of the search of electronic communications in the account of Chakafattah@gmail.com - Third Circuit
Headline: Fattah Cannot Use Speech or Debate Clause Protections to Stop Search Warrant for His Emails, Third Circuit Holds

Area of Law: Constitutional Law

Issues Presented:

Whether the Speech or Debate Clause of the U.S. Constitution issues raised on appeal can provide the basis for appellate jurisdiction under either the collateral order or the Perlman doctrine.

What does attorney-client privilege or attorney-work product privilege, under Perlman jurisdiction, require as to review to ensure the privilege is maintained.

Whether the Federal Rule of Criminal Procedure 41(g) provides appellate jurisdiction as to unexecuted search warrants for searches of email accounts.

Brief Summary:

U.S. Rep. Chaka Fattah sued to prevent the FBI from using a search warrant to investigate the contents of his private email account in connection with a grand jury probe into alleged fraud, extortion and bribery by the congressman. The Third Circuit held that Fattah could not prevent the search from taking place because any privilege that might result from the Speech and Debate Clause was one of non-use and not one of non-disclosure. Fattah would have ample opportunity to challenge under the Speech and Debate Clause the use of any materials discovered during the search during a subsequent trial. The Court emphasized that the Speech and Debate Clause was not intended to as an absolute shield for members of Congress from investigation for criminal wrongdoing. The Court did conclude, however, that Fattah was entitled to have any documents retrieved by the search warrant reviewed by an independent Justice Department to remove any documents protected by attorney-client privilege before turning them over to prosecuting attorneys.

Extended Summary:

The Government obtained a search warrant to search U.S. Rep. Chaka Fattah's gmail account as part of a federal grand jury investigation into alleged fraud, extortion, and bribery. Fattah filed a motion in the Federal District Court of Eastern Pennsylvania to stop of the warrant from being executed. When his motion was denied, he appealed to the Third Circuit. The main issue on appeal was whether the trial judge's order could be appealed prior to the conclusion of the case as a whole. Under what is known as the collateral order doctrine, judicial review is only available for a very small subset of prejudgment orders - those that (1) conclusively determine the disputed question, (2) resolve and important issue completely separate from the merits of the case, and (3) are effectively unreviewable on appeal from a final judgment.

The Third Circuit held that Fattah's Speech or Debate Clause claim failed to meet the second and third prongs of the collateral order doctrine. The Speech or Debate Clause provides that members of Congress "shall not be questioned in any other Place" "for any Speech or Debate in either House." The Court found that the prejudgment decision on the unexecuted search warrant was not separate from, and could substantially impact, the merits of the case. The Third Circuit further held, because Fattah could later move to suppress the evidence obtained through the search warrant, as well as appeal denial of such a motion, that the decision was effectively reviewable on appeal.

The Third Circuit also found against Fattah on his Perlman doctrine claim. The Perlman doctrine is designed to protect parties from the disclosure of privileged documents held by third parties - in this case Fattah's gmail account being held by Google. The Third Circuit held that, as such, the Speech or Debate Clause is not a privilege protected under the Perlman doctrine. The Third Circuit elaborated that the Speech or Debate Clause protections, forbidding the submission of "legislative act" evidence to a jury, could not extend so far as to shield Congresspersons from criminal investigations. In the course of its discussion, the Court once again noted the difference between disclosure of Speech or Debate Clause documents, which is permitted, and evidentiary use of, Speech or Debate Clause documents, which is prohibited.

The Third Circuit, however, held that the Perlman doctrine did apply to Fattah's claims of attorney-client and work-product privileges. On the merits, the Third Circuit held that the first-level privilege review of documents should be conducted by an independent DOJ attorney and left it to the District Court to further specify requirements for the review process.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/143752p.pdf

Panel: Ambro, Fuentes, Roth - Circuit Judges

Argument Date: January 12, 2015

Date of Issued Opinion: September 2, 2015

Docket Number: 14-3752

Decided: No appellate jurisdiction except as to attorney-client privilege and work-product privilege. Documents falling under those must be reviewed by independent DOJ attorney.

Case Alert Author: Philip Jones

Counsel:

Luther E. Weaver III, Esq. (argued) for Appellant

Kerry W. Kircher, Esq. (argued) (Amicus Attorney Appellant, House of Representatives Bipartisan Legal Advisory Group)

Donald E. Wieand, Jr., Esq. (Amicus Attorney Appellant, Google, Inc.)

Zane David Memeger, Esq., Jack Smith, Esq., Robert A. Zauzmer, Esq. (argued), Eric L. Gibson, Esq., Paul L. Gray, Esq. for Appellees

Author of Opinion: Fuentes, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 09/09/2015 01:06 PM     3rd Circuit     Comments (0)  

  Monroe v. Central Bucks School District - Third Circuit
Headline: Incendiary Posts that Disparage Students Not Protected First Amendment Speech, Third Circuit Holds

Area of Law: First Amendment, Public Employment Law

Issues Presented:
Whether blog posts that disparaged a teacher's students were protected First Amendment speech.

Brief Summary:

Natalie Monroe, a teacher in Bucks School District (the "District"), published a series of blog posts disparaging her students. The District found out about the posts and eventually fired her because of them. Monroe argued that her termination was illegal because the blog posts constituted protected First Amendment speech. The Third Circuit held that, while her speech was of sufficient public interest to warrant some degree of protection, the huge disruption caused by her highly incendiary posts was enough to justify the District's decision to fire her.

Extended Summary:

Monroe, a teacher in Bucks School District, maintained a personal blog wherein she occasionally disparaged her students and their parents. After her blog was discovered by students and reporters, she was suspended, subject to protests and requests by hundreds of students to opt out of being assigned to her classroom. A year after returning to school and receiving a series of negative performance reviews, Monroe was fired and she sued on a retaliation theory for exercising her freedom of speech rights.

The Third Circuit affirmed that Monroe's speech was not protected by the First Amendment. The Third Circuit held that, although Monroe's speech was related to the public interest, that her speech failed the Pickering balancing test - weighing a government employee's free speech rights against the interests of the government as an employer.

The Third Circuit held that Monroe's speech barely met the "public concern" requirement of the Pickering balancing test - where the subject of the speech is of concern to the community or of some significant news interest. The Third Circuit noted that a government employee's speech can meet the public concern requirement as long as it is not solely related to mundane employment grievances. In contrast to the District Court, the Third Circuit found that Monroe's occasional blog posts touching on broader issues such as academic integrity, honor, and the importance of hard work were sufficient to qualify the speech at issue as sufficiently of public concern.

The Third Circuit, however, held that the disruption that discovery of Monroe's blog posts created were sufficient to swing the balance definitively in favor of the government. Distinguishing from cases where the employee in question was participating in whistleblowing activity, the Third Circuit held that, even if her blog posts were speech of the highest value, the disruption caused at the school was so great as to preclude it from protection - because her "expressions of hostility and disgust against her students" would interfere with her duties as a teacher and the functioning of the District overall. The Third Circuit found the District had gone beyond its burden to show merely the possibility of disruption and had, in fact showed evidence of actual disruption. The Third Circuit also found that her year of employment following the blog posts and previous comments by School District officials about respecting Monroe's First Amendment rights did not preclude the District from arguing her speech was not, under the law, protected by the First Amendment.

Judge Ambro filed a dissenting opinion. In it, he argued that the District's termination decision was greatly influenced by Munroe's decision to grant a number of media interviews explaining her side of the situation after she learned of her firing. In Judge Ambro's view, this greatly increased the public significance of her speech, and the District offered insufficient evidence as to how these media interviews, as opposed to her initial blog posts, caused disruption at the school.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/143509p.pdf

Panel: Ambro and Cowen, Circuit Judges, and Restani, Judge

Argument Date: June 8, 2015

Date of Issued Opinion: September 4, 2015

Docket Number: No. 14-3509

Decided: Affirmed

Case Alert Author: Philip Jones

Counsel:

Stanley B. Cheiken, Esq. (Argued) for Appellant

Kimberly A. Boyer-Cohen, Esq. (Argued) for Appellee

Sean A. Fields, Esq. for Amicus Appellee - Pennsylvania School Board Association

Author of Opinion: Cowen, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 09/09/2015 12:06 PM     3rd Circuit     Comments (0)  

September 2, 2015
  National Ass'n for the Advancement of Multijurisdiction Practice v. Castille - 3rd Circuit
Headline: Third Circuit Upholds Constitutionality of Pennsylvania Rule Limiting Ability of Out-of-State Attorneys to Gain Admission to Pennsylvania Bar without Taking PA Bar Exam

Area of Law: Constitutional Law

Issues Presented: Whether Pennsylvania Bar Admission Rule 204, which allows an attorney to join the Pennsylvania Bar by motion, is constitutional.

Brief Summary: Pennsylvania Bar Admission Rule 204 ("Rule 204") allows attorneys from other states to be admitted to practice law in Pennsylvania without taking the Pennsylvania Bar exam, provided they meet a number of conditions, including that they have graduated from an accredited law school and that they have either passed the bar or practiced law for a "major Portion" of five of the preceding seven years in a reciprocal state. Reciprocal states are those states which allow Pennsylvania attorneys the same right to be admitted to practice law in their states without needing to pass the bar as Pennsylvania does for their attorneys. This case was brought by attorneys from two states - Maryland and New Jersey - which do not have reciprocity agreements with Pennsylvania. They argued that Rule 204 was unconstitutional because it violated the Equal Protection Clause of the 14th Amendment to the United States Constitution, as well as the First Amendment, the Privileges and Immunities Clause and the Dormant Commerce Clause. The Third Circuit held that Rule 204 does not violate any of these constitutional provisions.

Extended Summary: The plaintiffs' first claim was that Rule 204 violated the Equal Protection Clause of the 14th Amendment to the United States Constitution. Among other things, the Equal Protection Clause protects a citizen's fundamental right to travel. The Third Circuit, however, found that Rule 204 does not interfere with that right. Attorneys from non-reciprocal states are still allowed to come and practice law in Pennsylvania - they just need to pass the same bar exam that attorneys from Pennsylvania need to pass. The Court also found that the rule is not subject to heightened scrutiny because it does not discriminate based on a suspect class, such as race, religion or national origin.

Plaintiffs next argued that Rule 204 violates their First Amendment rights to free speech and free association. The Court disagreed. The rule does not discriminate based on the content of the plaintiffs' speech nor does it prohibit professional speech. All it does is require the plaintiffs to take an exam if they wish to act as attorneys in Pennsylvania. Regulation of professional speech is permissible so long as there is a rational connection with the applicant's ability to practice in the profession. A requirement that attorneys take and pass a bar examination certainly meets that test. The Court also found no interference with free association because the plaintiffs were still free to advance their viewpoints and because the rule was not meant to punish them for those viewpoints or for their memberships in bar associations from nonreciprocal states.

Finally, plaintiffs argued that Rule 204 violated the Privileges and Immunities Clause of Article IV of the United States Constitution, which bars discrimination against citizens of other states based merely on the fact that they are citizens of another state. While the Third Circuit agreed with plaintiffs that the right to practice law is one of the fundamental rights protected by that clause, it still found no violation. The Court noted that in order for the Clause to apply, a state must regulate based on residency status. But that is not what Rule 204 does. It regulates based on an applicant's state of bar membership, not his or her residency. This means that a Pennsylvania resident who is only a member of the New Jersey bar would be just as ineligible for reciprocity treatment under Rule 204 as a resident of New Jersey who is also only a member of the New Jersey bar. Therefore, the Privileges and Immunities Clause does not apply.
Accordingly, the Third Circuit held that Rule 204 was constitutional, thereby affirming the district court judgment.

To see the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/151481p.pdf

Panel (if known): Chagares, Krause, and Barry, Circuit Judges

Argument Date: June 25, 2015

Date of Issued Opinion: August 26, 2015

Docket Number: No. 15-1481

Decided: Affirmed

Case Alert Author: Sarah Kiewlicz

Counsel: Joseph R. Giannini, Esq. for appellants; Michael Daley, Esq. for appellees

Author of Opinion: Judge Krause

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 09/02/2015 08:59 AM     3rd Circuit     Comments (0)  

August 28, 2015
  FTC v. Wyndham Worldwide Corp. - Third Circuit
Headline: Third Circuit Rules That FTC Can Penalize Weak Cybersecurity at Wyndham Hotels

Area of Law: Cyber Law, Administrative Law

Issues Presented: Does the FTC have authority to regulate cybersecurity under the unfairness prong of § 45(a) and, if so, did Wyndham have fair notice its cybersecurity practices could fall short of that provision?

Brief Summary: The Fair Trade Commission ("FTC") brought suit against Wyndham Worldwide Corporation, a hotel and hospitality company, after three cyberattacks released Wyndham's customers' private data to hackers. At trail, Wyndham argued that the FTC did not have the authority to regulate cybersecurity as an "unfair practice" and that the FTC did not give Wyndham fair notice that its cybersecurity fell short of FTC requirements. When the District Court ruled against Wyndham on these issues, it appealed to the Third Circuit Court of Appeals. The Third Circuit ruled that cybersecurity breaches could constitute "unfair practices" as defined by the statute because they can cause substantial injury to customers. The Court also found that Wyndham did have fair notice that inadequate cybersecurity could constitute unfair practices because the law defines unfair practices as those which can cause substantial injury to consumers. Bad cybersecurity procedures certainly qualify. Moreover, Wyndham had notice that its particular cybersecurity systems could be problematic because they lacked even basic protections, such as firewalls, encryption and strong passwords.

Extended Summary: Wyndham Worldwide is a hotel and hospitality company. Every hotel in the Wyndham system has a property management system that holds customers' names, addresses, telephone numbers, credit card data, and other sensitive information. The hotels all connect their individual property management systems to Wyndham's centralized computer network in Phoenix, Arizona. Because Wyndham did not have effective cybersecurity protection, the Wyndham network was hacked on three separate occasions in 2008 and 2009. The hackers were able to retrieve the private data of over 600,000 Wyndham customers, resulting in $10.6 million lost to fraud. The Federal Trade Commission ("FTC") found that Wyndham had numerous cybersecurity practices which resulted in these breaches. The FTC also alleged that even after the hacks, Wyndham failed to take reasonable measures to improve its cybersecurity. The FTC filed a claim against Wyndham claiming it engaged in unfair and deceptive practices in violation of § 45(a) of the Federal Trade Commission Act (the "Act"). Wyndham filed a motion to dismiss but was denied by the District Court, which then certified the decision on the unfairness claim for interlocutory appeal.

In 1994, Congress amended the Act to clarify the meaning of the term unfair act or practice. According to that amendment, an act is not unlawful unless it "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition." But Wyndham argued that the Act imposed additional limitations on FTC action, including a requirement that the conduct complained of be "unfair" according to that word's ordinary meaning. Assuming, for purposes of argument, that this was true, the Court found that the requirement of unfairness was more than satisfied in this case because Wyndham advertised to its customers that it had installed strong cybersecurity measures in all of its computer networks - something which it had not, in fact, actually done. Wyndham also argued that it should not be held accountable because it was attacked by criminals, the hackers. The Court, however, was not persuaded by this argument considering that Wyndham made no attempt to fix their cybersecurity problems after the first and second attacks.

Wyndham also argued the FTC had failed to give it fair notice as to exactly what kind of practices were actionable. Wyndham insisted that it was entitled to ascertainable certainty as to the actual type of cybersecurity required by the Act. The Court disagreed. It determined that fair notice was satisfied if the company could reasonably foresee that a court could construe its conduct as falling within the meaning of the statute. And in this case, it was clear that Wyndham's cybersecurity was not acceptable. It didn't just have weak firewalls and weak encryption - in many cases, it had no firewalls and no encryption at all. It didn't even require its clients to change passwords. The Court relied on cost/benefit analysis to show that Wyndham could have easily made small changes that would have prevented attacks and fallen within its duties to its customers under the Act. For these reasons, the Third Circuit affirmed the decision of the District Court.
To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/143514p.pdf

Panel (if known): Ambro, Scirica, and Roth, Circuit Judges

Argument Date: March 3, 2015

Date of Issued Opinion: August 24, 2015

Docket Number: No. 14-3514

Decided: Affirmed

Case Alert Author: Shanna Lafferty

Counsel: Kenneth W. Allen, Esq., Eugene F. Assaf, Esq., Christopher Landau, Esq., Susan M. Davies, Esq., Michael W. McConnell, Esq., David T. Cohen, Esq., Douglas H. Meal, Esq., Jennifer A. Hradil, Esq., Justin T. Quinn, Esq., Counsel for Appellants, Jonathan E. Nuechterlein, Esq., David C. Shonka, Esq., Joel R. Marcus, Esq., David L. Sieradazki, Esq., Counsel for Appellee, Sean M. Marotta, Esq., Catherine E. Stetson, Esq., Harriet P. Pearson, Esq., Bret S. Cohen, Esq., Adam A. Cooke, Esq., Kate Comerford Todd, Esq., Steven P.Lehotsky, Esq., Sheldon Gilbert, Esq., Banks Brown, Esq., Karen R. Harned, Esq., Counsel for Amicus Appellants Chamber of Commerce of the U.S.A.; American Hotel & Lodging Association; National Federation of Independent Business, Cory L. Andrews, Esq., Richard A. Samp, Esq., John F. Cooney, Esq., Jeffrey D. Knowles, Esq., Mitchell Y. Mirviss, Esq., Leonard L. Gordon, Esq., Randall K. Miller, Esq., Counsel for Amicus Appellant Electronic Transactions Association; Washington Legal Foundation, Scott M. Michelman, Esq., Jehan A. Patterson, Esq., Counsel for Amicus Appelees Public Citizens Inc; Consumer Action; Center for Digital Democracy, Marc Rotenberg, Esq., Alan Butler, Esq., Julia Horwitz, Esq., John Tran, Esq., Catherine N. Crump, Esq., Chris Jay Hoofnagle, Esq., Justin Brookman, Esq., G.S. Hans, Esq., Lee Tien, Esq., Counsel for Amicus Appellees Electronic Privacy Information Center; American Civil Liberties Union; Samuelson Law; Technology & Public Policy Clinic; Center for Democracy & Technology; Electronic Frontier Foundation

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 08/28/2015 08:40 AM     3rd Circuit     Comments (0)  

  National Collegiate Athletic Association, et al. v. Governor of the State of New Jersey, et al. - Third Circuit
Headline: New Jersey Sports Gambling Not Allowed Under Federal Law

Area of Law: Sports gambling

Issue Presented: Whether New Jersey's law which partially repeals certain prohibitions on sports gambling violates federal law?

Brief Summary: In 2014, New Jersey's legislature passed a law which partially repealed New Jersey's statewide ban on sports gambling. The new law allowed sports betting at casinos and racetracks. Five sports leagues (the "Leagues") sought to enjoin New Jersey from giving effect to its law on the grounds that the partial repeal violated the Professional and Amateur Sports Protection Act ("PASPA"), a federal statute which makes it unlawful for a state to "authorize by law" sports betting. The Third Circuit Court of Appeals held that a partial repeal equated to an authorization in violation of PASPA. New Jersey has multiple laws prohibiting sports gambling that were not repealed by its 2014 law. The selectivity of the law partially repealing New Jersey's prohibitions on sports gambling permitted certain entities to engage in sports gambling while not permitting others to engage in sports gambling, resulting in an authorization by law for those entities permitted to engage in it. In addition, New Jersey did not enact a sports gambling scheme when Congress offered to allow New Jersey to do so within one year of PASPA's enactment.

Extended Summary: This case concerns New Jersey's partial repeal of its prohibitions on sports gambling. In 2014, New Jersey's legislature passed SB 2460 which partially repealed certain prohibitions on sports gambling. The law limited sports wagering to people twenty-one years or older and to casinos and racetracks. The law also prohibited wagering on New Jersey college teams and on any collegiate competition occurring in New Jersey. Five sports leagues (the "Leagues") sought to enjoin New Jersey from giving effect to its law on the grounds that the partial repeal violated a federal statute, the Professional and Amateur Sports Protection Act ("PASPA").

PASPA provides that a governmental entity cannot license or authorize by law sports gambling. In 2011, New Jersey amended its constitution to allow the state legislature to authorize by law sports gambling. In 2012, the New Jersey Legislature enacted the Sports Wagering Act, which established an elaborate licensing system for sports gambling at casinos and racetracks. The Leagues challenged this law as a violation of PASPA in National Collegiate Athletic Ass'n v. Governor of New Jersey (Christie I). The Third Circuit agreed, and the law was overturned. New Jersey had argued that PASPA was unconstitutional under the anti-commandeering doctrine, which prohibits the federal government from requiring state legislatures to keep existing laws in place. But the Court held that PASPA did not require New Jersey to keep its ban on sports gambling in place, but rather prevented it from passing new laws authorizing gambling. Because that is what the new law did -- authorize sports gambling through an elaborate licensing procedure -- the law was prohibited by PASCA. If New Jersey had repealed all of its laws on sports gambling, then the law would have been permissible.
In response to the Christie I decision, New Jersey tried once again in 2014 to allow sports gambling by passing SB 2460. Instead of setting up a system that regulated sports gambling, the new law repealed all state laws and regulations that authorized, licensed or prohibited sports gambling at casinos and racetracks in New Jersey. The Leagues challenged this new law, arguing that it authorized by law sports gambling in contravention of PASPA. New Jersey countered that the law was permissible under the decision in Christie I because it was a repeal of gambling laws, and Christie I specifically said that a repeal of all sports gambling laws would be permissible. If the laws are repealed, Christie I held that the authorization to gamble would come not from the state but from the inherent powers retained by the people.

The Court concluded that the 2014 law violated PASPA and Christie I because it was only a partial repeal of the sports gambling law in the state. Sports gambling outside of casinos and racetracks was still not allowed. And even at casinos and racetracks, the state continued to prohibit gambling on New Jersey collegiate athletics and for people under 21. The court reasoned that this selective repeal meant that the state was, in effect, authorizing gambling, because it was allowing sports gambling in some situations but not in others. Only if the state completely removed itself from gambling decisionmaking would it be in compliance with PASPA's prohibition on state authorization of gambling. But New Jersey had multiple laws prohibiting sports gambling that were not repealed by its 2014 law.
As further support for its decision, the Court noted that Congress had included an exception in PASPA that gave New Jersey the opportunity to create its own sports gambling scheme so long as it did so within one year of PASPA's enactment. New Jersey did not choose to do so. By offering to include a sports gambling scheme for New Jersey as an exception to PASPA, the Congress clearly believed that a sports gambling scheme in New Jersey would otherwise violate PASPA.
Judge Fuentes filed an opinion dissenting from the majority opinion.
To see the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/144546p.pdf

Panel (if known): Rendell, Fuentes and Barry, Circuit Judges

Date of Argument: March 17, 2015

Date of Issued Opinion: August 25, 2015

Docket Numbers: Nos. 14-4546, 14-4568, and 14-4569

Decided: District Court's grant of summary judgment and permanent injunction is affirmed.

Case Alert Author: Sarah Adams

Counsel: John J. Hoffman, Esq., Jeffery S. Jacobson, Esq., Geoffrey S. Brounell, Esq., Stuart M. Feinblatt, Esq., Ashlea D. Newman, Esq., Peter M. Slocum, Esq., Matthew Hoffman, Esq., Ashley E. Johnson, Esq., Theodore B. Olson, Esq., Matthew D. McGill, Esq., counsel for Appellants Governor of the State of New Jersey, David L. Rebuck and Frank Zanzuccki in 14-4546; Elliott M. Berman, Esq., Ronald J. Riccio, Esq., Edward A. Hartnett, Esq., counsel for Appellant New Jersey Thoroughbred Horseman's Association, Inc. in 14-4569; Michael R. Griffinger, Esq., Thomas R. Valen, Esq., Jennifer A. Hradil, Esq., counsel for Appellants Stephen M. Sweeney and Vincent Prieto in 14-4568; Paul D. Clement, Esq., Erin E. Murphy, Esq., William R. Levi, Esq., Taylor Meehan, Esq., Jeffery A. Mishkin, Esq., Anthony J. Dreyer, Esq., William J. O'Shaughnessy, Esq., Richard Hernandez, Esq., counsel for Appellees National Collegiate Athletic Association, National Basketball Association, National Football League, National Hockey League and Office of the Commissioner of Baseball; Joyce R. Branda, Esq., Paul J. Fishman, Esq., Scott R. McIntosh, Esq., Peter J. Phipps, Esq., counsel for Amicus United States of America.

Author of Opinion: Judge Rendell

Circuit: Third Circuit

Case Alert Supervisor: Prof. Mark Anderson

    Posted By: Susan DeJarnatt @ 08/28/2015 08:35 AM     3rd Circuit     Comments (0)  

August 21, 2015
  Han Lee v. Superintendent Houtzdale SCI - Third Circuit
Headline: Habeas Relief Granted Where Admission of Scientific Evidence That Has Been Discredited by Subsequent Scientific Developments Undermined the Fundamental Fairness of the Entire Trial and the Commonwealth Did Not Provide Ample Other Evidence of Guilt

Area of Law: Criminal

Issues Presented:
1. Did the admission of fire-science and gas chromatography evidence that has since been discredited by subsequent scientific developments undermine the fundamental fairness of the entire trial because its probative value was greatly outweighed by the prejudice to Lee?
2. Did the Commonwealth provide ample other evidence of guilt beyond a reasonable doubt?

Brief Summary:
Appellee Han Tak Lee was convicted of murdering his daughter based primarily on scientific evidence that has been discredited by subsequent scientific developments since his trial in 1990. Lee filed a §2254 habeas petition claiming that his conviction and continued incarceration violate due process. The District Court granted habeas relief.
The Third Circuit Court affirms. The Court finds that the admission of the now-debunked fire-science and gas chromatography evidence undermined the fundamental fairness of the entire trial, and that the three sources of remaining evidence that the Commonwealth provided are not sufficient to prove guilt beyond a reasonable doubt. Accordingly, the Court holds that the District Court did not commit plain error by granting habeas relief.

Extended Summary:
Han Tak Lee's daughter, Ji Yun Lee, suffered from severe mental illness throughout her life. After she had a manic episode in July 1989, Han Tak Lee took his daughter to a religious retreat in Monroe County, Pennsylvania. Soon after arriving, Ji Yun went for a walk and returned several hours later soaking wet because she had jumped into a body of water. Later that day, she became agitated and had to be physically restrained. That night a fire began in the Lees' cabin. Han Tak escaped, but his daughter died.
The Commonwealth charged Han Tak Lee with arson and murder. During the eight-day trial, the Commonwealth relied heavily on fire science and gas chromatography evidence to argue that Lee intentionally set the fire to kill his daughter. The defense countered that Ji Yun set the fire as a suicidal act. Lee was convicted on both charges and sentenced to life imprisonment without the possibility of parole.
During an evidentiary hearing on ineffective-assistance-of-counsel claims, the court received evidence about developments in the field of fire science that the panel stated "provided ample reason to question the reliability of the arson investigation." The state court nonetheless denied Lee's claims.
Lee later filed a §2254 habeas petition claiming that (1) his conviction violated due process because it was based on inaccurate and unreliable evidence, and (2) his continued incarceration also lacked due process because newly developed scientific evidence showed he was probably innocent. After the District Court denied Lee's petition and request for an evidentiary hearing, a panel of the Third Circuit Court reversed and ordered the District Court to grant discovery and then reconsider whether to hold an evidentiary hearing. The Court instructed that Lee "must show that the admission of the fire expert testimony undermined the fundamental fairness of the entire trial" because its probative value is greatly outweighed by the prejudice to Lee. The Court also implied that habeas relief should be denied if there is "ample other evidence of guilt."
On remand, following the evidentiary hearing, the Magistrate Judge issued a Report & Recommendation (R&R) finding that the admission of the fire expert testimony undermined the fundamental fairness of the entire trial because the "verdict rest[ed] almost entirely upon scientific pillars which have now eroded." He also found that the Commonwealth failed to show ample other evidence of guilt upon which the jury could have relied. The District Court adopted this R&R without changes and issued an order granting habeas relief unless the Commonwealth retried or released Lee within 120 days. Superintendent Houtzdale and the District Attorney of Monroe County appealed.
On appeal, the Commonwealth did not challenge the determination that the admission of the fire expert testimony undermined the fundamental fairness of the entire trial. The Commonwealth did not object to the Magistrate Judge's assessment of the fire-science and gas chromatography evidence presented at trial, and it conceded that due to scientific developments since Lee's trial in 1990, the bases for all of the fire-science evidence and gas chromatography evidence are now invalid. The Commonwealth only argued that the District Court erred by accepting the Magistrate Judge's conclusion that the trial lacked "ample other evidence of guilt."
The Commonwealth argued that three remaining sources of evidence provided ample other evidence of guilty. First, Monroe County Coroner Robert Allen and Forensic Pathologist Isidore Mihalikis concluded that the cause and manner of death were conflagration and homicide. They both testified that there were minimal or tiny hemorrhages in the upper portion of Ji Yun's neck that suggested strangulation, suffocation, or pressure in the neck. They concluded that this, minimal smoke deposits in the Ji Yun's windpipe and lungs, and a slight elevation of her carbon monoxide levels were all consistent with Ji Yun being strangled before the fire was started.
However, the Magistrate Judge noted, and the Court agrees, that this inference was weak. Both Allen and Mihalikis acknowledged that the autopsy results were consistent with Ji Yun dying by a flashover rather than strangulation, and there was no evidence of petechiae, tiny ruptures of the capillaries, that are present in most strangulation cases. Further, the Court noted that their conclusion that the manner of death was homicide was almost certainly colored by the now-debunked fire-science evidence.
Second, the Commonwealth relied on testimony that in the hours and days after the fire Lee's demeanor showed little sign of grief as a remaining source of evidence. The Magistrate Judge characterized this as "a cultural stoicism which was construed as nonchalance."
Third, the Commonwealth asserted that there was evidence attacking the veracity of Lee's account of what happened the night of the fire. It first points to Lee's testimony that when he walked out the front door, the fire was in the back of the house. This is inconsistent with testimony from two firefighters on the scene that the fire started in the front of the cabin and then traveled to the back. The Commonwealth also pointed to other inconsistencies in six different accounts Lee gave of what happened the night of the fire; however, the Court notes that the basic outline of events remained the same across each account. Further, the Court states that most of the "inconsistencies" identified by the Commonwealth are better characterized as "minor details mentioned on some occasions and omitted on others." The District Court also characterized these discrepancies as "minor," noting that they could be explained by errors in translation from Korean to English.
The Court finds these three sources of evidence unconvincing. It states that, based on the evidence identified by the Commonwealth, it cannot conclude that the District Court committed plain error by adopting the R&R. Accordingly, the Court finds that the Commonwealth has not pointed to ample evidence sufficient to prove guilt beyond a reasonable doubt, and it affirms the District Court's grant of habeas relief.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/143876p.pdf

Panel (if known): Ambro, Fuentes, and Greenberg, Circuit Judges

Argument Date: June 18, 2015

Date of Issued Opinion: August 19, 2015

Docket Number: 14-3876

Decided: Affirmed District Court's grant of habeas relief

Case Alert Author: Jaclyn Poulton

Counsel:
Counsel for Appellants:
Mark S. Matthews, Esq. and Matthew J. Bernal, Esq. (Monroe County District Attorney's Office)

Counsel for Appellee:
Peter Goldberger, Esq. and Pamela A. Wilk, Esq.

Author of Opinion: Judge Ambro

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/21/2015 03:09 PM     3rd Circuit     Comments (0)  

August 17, 2015
  In re: Steven S. Bocchino; U.S. Securities and Exchange Commission v. Steven S. Bocchino - Third Circuit
Headline: Gross Recklessness satisfies scienter requirement for non-dischargeability in bankruptcy.

Area of Law: Bankruptcy

Issues Presented: Is gross recklessness, as opposed to intent to defraud, enough to uphold a Bankruptcy Court's nondischargeability order?

Brief Summary:

Bocchino worked as a stockbroker and made two private placement investments with little or no information. Both of those investments turned out to be fraudulent and the principals were criminally convicted. The SEC then obtained civil judgments against Bocchino for improperly inducing the investors. In 2009, Bocchino filed for Chapter 13 bankruptcy. The Bankruptcy Court issued an order of nondischargeability for the SEC judgments which the District Court affirmed. Bocchino appealed, insisting that the standard for dischargeability was intent to defraud and that his actions were not a proximate cause. The Third Circuit held that the standard for nondischargeability is gross recklessness and that Bocchino's actions were undoubtedly a proximate cause of the failed investments.


Extended Summary:

Steven S. Bocchino appealed the final decision of the District Court that affirmed the Bankruptcy Court's order of nondischargeability of civil judgment debts. The nondischargeability order at issue related to civil judgments against Bocchino for two private placement investments he solicited in 1996 while affiliated with a brokerage firm. Bocchino worked as a stockbroker. The first investment involved an entity known as Traderz. Bocchino learned that Traderz "might go public" and that it might be supported by a popular fashion model. On these facts alone, Bocchino sought investments from clients and received over $40,000 in commissions from Traderz sales. The second private placement involved Fargo and the source of Bocchino's information was unclear. Bocchino only obtained cursory documentation about Fargo before soliciting sales. Bocchino, again, did no independent investigation into the quality of the investment. He received $14,000 in commissions for stock purchases in Fargo. Both Traderz and Fargo turned out to be fraudulent and the principals were criminally convicted.

The SEC brought two civil enforcement actions against those who sold investments in the entities and obtained a judgment ordering Bocchino to pay for disgorgement, prejudgment interest, and civil penalties for inducing investors through high pressure sales tactics and material misrepresentations. In total, Bocchino was liable for $178,967. Bocchino filed for Chapter 13 bankruptcy protection in 2009 and the SEC petitioned the Bankruptcy Court for a determination that the previous judgments were nondischargeable. The SEC contended that the funds were obtained by false pretenses, false representations, or actual fraud. The Bankruptcy Court ordered the civil penalties discharged, but retained the remaining $68,877 as nondischargeable. The Bankruptcy Court acknowledged that Bocchino believed his statements were true but determined that the scienter requirement may be satisfied by grossly reckless behavior. The Bankruptcy Court described Bocchino's actions as egregious and grossly reckless because, as an experienced stockbroker, he knew or should have known that an independent investigation into the quality of the product he was selling was imperative. The District Court affirmed.

On appeal, the Third Circuit noted that the Bankruptcy Code limits the opportunity of insolvency to those who are "honest but unfortunate." Bocchino did not fall into this category due to his gross recklessness, which satisified the knowledge and intent requirements of the nondischargeability provision, section 523(a)(2)(A) of the Bankruptcy Code. The Third Circuit looked to precedent which acknowledged that the provision does not explicitly require reliance, materiality or intentionality. The Third Circuit also examined the Restatement (Second) of Torts to determine that gross recklessness satisfies the common law scienter requirement. Finally, the Court looked to the Supreme Court's analysis of a related bankruptcy provision which determined that liability should be imposed for willful blindness. Therefore, the Third Circuit affirmed the District Court's holding that Bocchino's gross recklessness satisfied the scienter requirement.

The Third Circuit also held that proximate cause had been established because Bocchino's grossly reckless misrepresentations were a substantial factor in causing the investors' harm. It affirmed the District Court's judgment that the actions of Traderz and Fargo were not superseding causes.


Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/144299p.pdf

Panel: Chagares, Krause, and Van Antwerpen, Circuit Judges

Argument Date: Submitted Pursuant to Third Circuit LAR 34.1(a)

Date of Issued Opinion: July 23, 2015

Docket Number: No. 14-4299

Decided: Affirmed

Case Alert Author: Jessica Wood

Counsel:

J. Zac Christman, Esq. Counsel for Appellant
Tracey Hardin, Esq., Josephine T. Morse, Esq., Patricia H. Schrage, Esq. Counsel for Appellee

Author of Opinion: Van Antwerpen, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/17/2015 02:17 PM     3rd Circuit     Comments (0)  

  Michelle Jones v. SEPTA - Third Circuit
Headline: Third Circuit Holds That Suspension with Pay Does Not Constitute an "Adverse Employment Action" under the Substantive Discrimination Provision of Title VII.

Area of Law: Employment

Issue Presented: Does suspension with pay constitute an "adverse employment action" under the substantive discrimination provision of Title VII?

Brief Summary:
In 2011, Michelle Jones was fired by SEPTA where she had been employed for ten years. SEPTA stated that it dismissed Jones for submitting fraudulent timesheets. Jones alleged that her termination was the result of years of unlawful sexual harassment by her supervisor, gender discrimination, and retaliation. The district court entered summary judgment for SEPTA, primarily on the basis that Jones's initial suspension with pay did not constitute an "adverse employment action." In its opinion, the Third Circuit agreed and held that suspension with pay, without more, does not constitute an "adverse employment action" under the substantive discrimination provision of Title VII. The Court also analyzed Jones's claims based on her subsequent suspension without pay and termination, and found that Jones still failed to show a prima facie case for each of her claims. Accordingly, the Third Circuit affirmed the decision of the district court.

Extended Summary:
In 2001, Michelle Jones began working as an administrative assistant in the Revenue Operations Department of the Southeastern Pennsylvania Transportation Authority (SEPTA) under the supervision of Alfred Outlaw. On December 1, 2010, Outlaw suspended Jones with full pay after he discovered apparent fraud in her timesheets. Outlaw referred the timesheet matter to SEPTA's Office of Inspector General (OIG).

Promptly after being suspended with pay, Jones informed SEPTA's Equal Employment Opportunity (EEO) Office that she intended to file a complaint against Outlaw for sexual harassment and retaliation. SEPTA launched an internal investigation. SEPTA found one instance where Outlaw engaged in inappropriate behavior by asking Jones to step on his back to relieve spinal pain. As a result, Outlaw was required to attend a training session regarding SEPTA's sexual harassment policy and he received a demerit on his yearly evaluation. SEPTA's internal investigation was ended in March 2011 when Jones filed a complaint with the Pennsylvania Human Resources Commission alleging that Outlaw had sexually harassed her and other female employees, ordered her to do personal work for him during business hours, and retaliated against her for resisting this mistreatment by accusing her of timesheet fraud.

In February 2011, after an extensive investigation, OIG concluded that Jones collected pay for days she had not worked by submitting fraudulent timesheets. SEPTA suspended Jones without pay on February 22, 2011 and formally terminated her in April 2011. While SEPTA stated that it dismissed Jones for submitting fraudulent timesheets, Jones alleged she was fired because of years of sexual harassment, gender discrimination, and retaliation.

Jones filed suit against SEPTA and Outlaw for alleged gender discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964 and the Pennsylvania Human Rights Act (PHRA), as well as for violations of the Fourteenth Amendment of the United States Constitution, common law wrongful termination, and retaliation in violation of the Family and Medical Leave Act.

The district court dismissed the wrongful termination claim and later granted summary judgment for SEPTA on all of the remaining claims. The district court held that Jones's claims failed because her initial suspension with pay was not an adverse action within the meaning of the employment discrimination laws.

The Third Circuit Court agreed, holding that a paid suspension, without more, does not constitute an adverse action in the substantive discrimination context. The Court explained that a paid suspension is neither a refusal to hire nor a termination, and it does not change compensation. Further, it is not a "serious and tangible" alteration of the "terms, conditions, or privileges of employment," because the terms and conditions of employment ordinarily include the possibility that an employee will be subject to an employer's disciplinary policies in appropriate circumstances.

The Court then analyzed whether the district court erred in granting summary judgment to SEPTA on Jones's claims based on her subsequent suspension without pay and termination. The Court affirmed the district court, finding that Jones failed to demonstrate "some causal nexus" between her gender and the alleged adverse treatment by SEPTA. The Court reasoned that the record lacked evidence supporting an inference that Jones's suspension without pay and termination were the product of discrimination instead of the natural result of SEPTA's investigation into the allegations of timesheet fraud. The Court also analyzed and rejected Jones's remaining claims and, thus, affirmed the decision of the district court granting summary judgment in favor of SEPTA.

To read the full opinion, please visit http://www2.ca3.uscourts.gov/opinarch/143814p.pdf.

Panel (if known): Hardiman, Greenaway, Jr., and Krause, Circuit Judges

Argument Date: March 23, 2015

Date of Issued Opinion: August 12, 2015

Docket Number: 14-3814

Decided: Affirmed

Case Alert Author: Jaclyn Poulton

Counsel:
Attorneys for Appellant, Michelle Precia Jones:
Olugbenga O. Abiona & Brian M. Rhodes

Attorneys for Appellees, SEPTA and Alfred Outlaw:
Danielle Banks & Michelle K. Carson (Stradley, Ronon, Stevens & Young)

Author of Opinion: Judge Hardiman

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 08/17/2015 10:54 AM     3rd Circuit     Comments (0)  

  United States of America v. Eli Chabot; Renee Chabot - Third Circuit
Headline: Third Circuit Holds Foreign Bank Account Records Fall Within Required Records Exception to Fifth Amendment

Area of Law: Constitutional law; Criminal law

Issues Presented: Does the Fifth Amendment privilege against self-incrimination protect foreign bank account records?

Brief Summary:

Eli and Renee Chabot appealed the District Court's decision to grant the IRS's petition to enforce summonses for foreign bank account records. The Third Circuit applied the Supreme Court's three-prong test for the required records exception and ultimately determined that the foreign bank account records were (1) for a regulatory purpose within the IRS; (2) customarily kept due to other statutes; and (3) related to public aspects. Therefore, the exception applied and the Third Circuit affirmed the District Court's decision to enforce summonses for the records.

Extended Summary:

Eli and Renee Chabot appealed the District Court's grant of the Internal Revenue Service's petition to enforce summonses for their foreign bank account records. The Third Circuit joined six other Circuits in holding that these records fall within the required records exception to the Fifth Amendment privilege and therefore affirmed the District Court's decision.

In April 2010, French authorities gave the IRS information regarding the Chabots' undisclosed bank accounts at HSBC Bank. The IRS alleged it had information for the years 2005 through 2007 from Pelsa Business Inc., of which Eli Chabot was the beneficial owner. The IRS issued summonses requesting that the Chabots appear to give testimony and produce documents about their foreign bank accounts. The Chabots notified the IRS that they were asserting their Fifth Amendment privilege against self-incrimination and would not produce the requested documents. The Chabots claimed that the act of producing the documents was protected under the Fifth Amendment even if the actual records sought were not protected. Additionally, they claimed that any exception to the Fifth Amendment privilege based on the required records exception should not apply in this case. The District Court held that the required records exception applied and the Fifth Amendment did not prohibit production of the documents. Thus, the District Court granted the IRS's petition to enforce summonses.

The Chabots argued that (1) allowing the government to rely on the required records exception to enforce the summonses in this case would lead to general governmental abrogation of the Fifth Amendment privilege for any "failure to report" crime; (2) the information that would be gleaned from compliance with the summonses is almost identical to what the government needs to charge the Chabots with the felony of willful failure to report an overseas account in the Report of Foreign Bank and Financial Accounts, thus requiring the Chabots to incriminate themselves; and (3) the records that the regulation requires account holders to keep do not satisfy the three-prong test for applying the required records exception to the Fifth Amendment privilege. Therefore, the question before the Third Circuit was whether the Chabots' account records fell within the required records exception to the Fifth Amendment privilege, and, if so, whether the Chabots' policy concerns defeated the application of this exception. The Third Circuit rejected the Chabots' arguments and found that their account records fell squarely within the required records exception to the Fifth Amendment privilege.

By producing documents, a person acknowledges that the documents exist, admits that the documents are in his or her custody, and concedes that the documents are those that the subpoena requests. The Supreme Court determined that three prongs are required in order for records to fall within the "required records" exception: (1) the reporting or recordkeeping scheme must have an essentially regulatory purpose; (2) a person must customarily keep the records that the scheme requires him to keep; and (3) the records must have "public aspects." As to the first prong, the Third Circuit determined that the government conditions participation in foreign banking on maintaining records and reporting that information. The foreign banking records are, thus, for regulation purposes through the IRS. As to the second prong, the Third Circuit explained that foreign bank account ownership is an activity that many people participate in and is not inherently criminal activity, nor are the regulations designed explicitly to target criminal activity. The Third Circuit also explained that holders of foreign bank accounts as a general group are likely to keep their records, as the regulations mandate, so that the records are considered "customarily kept." Lastly, the Chabots argued that their account records did not have public aspects as owning a foreign bank account is not a public activity. The Third Circuit explained that the Treasury Department circulates the data received by the records for the purpose of implementing economic, monetary, and regulatory public policies, thereby making the records public aspects. Thus, all three prongs of the required records exception to the Fifth Amendment privilege were satisfied.

The Third Circuit also determined that the Chabots failed to raise valid policy or other reasons as to why their bank account records should not be included in the required records exception to the Fifth Amendment privilege. The Third Circuit, thus, affirmed the District Court's grant of the IRS's petition to enforce its summonses.


Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/144465p.pdf

Panel: Ambro and Cohen, Circuit Judges, and Restani, Judge for the United States Court of International Trade, sitting by designation.

Argument Date: June 8, 2015

Date of Issued Opinion: July 17, 2015

Docket Number: No. 14-4465

Decided: Affirmed

Case Alert Author: Jessica Wood

Counsel:

Vivek Chandrasekhar, Esq., Richard A. Levine, Esq. Counsel for Appellants

Robert J. Branman, I, Esq., Robert W. Metzler, Esq. for Appellee

Author of Opinion: Restani, Judge

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 08/17/2015 10:51 AM     3rd Circuit     Comments (0)  

July 20, 2015
  Plaintiff E. Perelman, as a participant in the General Refractories Company Pension Plan for Salaried Employees v. Raymo
Headline: Third Circuit Holds No Individual Constitutional Standing in Employee Pension Plan Suit

Area of Law: ERISA

Issues Presented: Under ERISA, can an employee make a successful pension plan claim for restitution and other equitable monetary relief when the employee fails to show any actual injury to himself?

Brief Summary:

Plaintiff Jeffrey Perelman ("Plaintiff") is member of the employee pension benefit plan ("the plan") of General Refractories Company. Plaintiff brought this suit against his father, Raymond Perelman, and his brother, Ronald Perelman, among others. Plaintiff alleged Raymond, as trustee of the plan, covertly directed the plan's purchase of two million dollars in high-risk stocks to Revlon to allow Ronald, the controlling shareholder of Revlon, to raise capital. The Third Circuit found that Plaintiff had no constitutional standing to assert the claim because he could not show any actual injury to himself as opposed to injury to the plan. The Court also reviewed the five Ursic factors in determining that Plaintiff was not entitled to attorneys' fees or costs. The District Court's decision was affirmed.


Extended Summary:

This suit arose under the Employee Retirement Income Security Act of 1974 ("ERISA"), which governs pension plan beneficiaries. Plaintiff/Appellant Jeffrey Perelman is a part of the employee pension benefit plan ("the plan") of General Refractories Company ("GRC"). Plaintiff alleged that his father, Raymond Perelman, breached his fiduciary duties by covertly investing plan assets in the corporate bonds of struggling companies owned by Plaintiff's brother, Ronald Perelman. Plaintiff argued that, among other things, the transactions were not properly reported and put his benefits in jeopardy. The District Court dismissed Plaintiff's claims for equitable monetary relief for lack of constitutional standing and subsequently granted summary judgment in favor of Defendants on all remaining claims. The Third Circuit affirmed the District Court's decision.

Raymond was a trustee of the GRC plan and served as plan administrator between 2003 and 2005. He exercised discretionary control over management of plan assets and qualified as both a plan fiduciary and "party in interest" under ERISA. Raymond's son, Ronald, is the controlling shareholder of Revlon, Inc. Raymond directed the plan's purchase of two million dollars of high-risk Revlon corporate bonds. Plaintiff alleged that Raymond and Ronald structured the transactions to allow Ronald to raise capital for Revlon. Plaintiff alleged that Defendants misreported these investments to the Internal Revenue Service and Department of Labor.

The Second Amended Complaint asserted claims for breach of fiduciary duty of care, prohibited party-in-interest transactions, failure to diversify plan assets, failure to update or maintain proper plan documents, improper delegation of control of plan assets, and failure to prosecute a co-fiduciary's breach of fiduciary duty. Plaintiff sought equitable monetary relief in the form of restitution for plan losses and disgorgement of profits, injunctive relief including the removal Raymond as a trustee, and attorneys' fees and costs. The District Court initially found that Plaintiff lacked constitutional standing on the claims for equitable monetary relief because he failed to demonstrate an actual injury to himself as opposed to the plan. Shortly after the first complaint, Raymond terminated himself as a trustee and appointed Reliance Trust Company to that the position. Thereafter, the District Court granted summary judgment in favor of Defendants on all remaining claims. The District Court subsequently denied Plaintiff's application for attorneys' fees and costs because he had not achieved success on the merits.

On appeal, Plaintiff raised two main claims. First, Plaintiff argued that he had standing to seek monetary equitable relief because he did suffer an increased risk of plan default, and further that no showing of individual harm was necessary. Second, Plaintiff challenged the denial of attorneys' fees, arguing that his lawsuit was a catalyst for the voluntary resignation of Raymond as trustee, and that the District Court misapplied the five Ursic factors.

This Court examined the three elements of constitutional standing: (1) The plaintiff must suffer an injury-in-fact that is concrete and particularized and actual or imminent; (2) there must be a causal connection between the injury and the conduct complained of; and (3) it must be likely that the injury will be redressed by a favorable decision. Plaintiff claimed that the plan suffered a net diminution of approximately 1.3 million dollars in assets and the plan's risk of default increased dramatically. Nonetheless, he received all of the distributions to which he was entitled. Plaintiff's expert testified that the plan's assets were less than its liabilities under at least one analytical approach and therefore created a question of fact. This Court disagreed, as the framework established by Congress has specific accounting methodologies which the plan's funding ratio met. Thus, the actual harm that is required to sustain constitutional standing for equitable relief was not found.

Finally, Plaintiff claimed that he should receive attorneys' fees and costs based on a "catalyst theory" in which he achieved some degree success on the merits. The Court determined that, although Plaintiff did achieve substantive victories, the relative merits of the parties' positions weighed against the award of attorneys' fees. In addition, Defendants' culpability was speculative and the benefit conferred on plan members other than Plaintiff was limited, which also weighed against the award of fees and costs. The District Court's decision was affirmed in all respects.

Find the full opinion at:

http://www2.ca3.uscourts.gov/opinarch/141663p.pdf

Panel: Ambro, Vanaskie, and Shwartz, Circuit Judges

Argument Date: Submitted Under Third Circuit L.A.R. 34.1(a) on April 17, 2015

Date of Issued Opinion: July 13, 2015

Docket Number: Nos. 14-1663 & 14-2742

Decided: Affirmed

Case Alert Author: Jessica Wood

Counsel:

Paul A. Friedman, Esq., Jonathan S. Goldman, Esq., James T. Smith, Esq., Rebecca D. Ward, Esq., Counsel for Appellant

Ethan M. Dennis, Esq., Clifford E. Haines, Esq., Marjorie M. Obod, Esq., Counsel for Appellee Raymond G. Perelman

Michael S. Doluisio, Esq., William T. McEnroe, Esq., Ryan M. Moore, Esq., Andrew J. Levander, Esq., Counsel for Appellee Ronald O. Perelman

Derek J. Cusack, Esq., Counsel for Appellee General Refractories Company

Author of Opinion: Vanaskie, Circuit Judge

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 07/20/2015 01:49 PM     3rd Circuit     Comments (0)  

  Trinity Wall Street v. Wal-Mart Stores, Inc. - Third Circuit
Headline: Third Circuit Holds SEC Rule May Exclude Shareholder Proposals That Include Product Management Considerations Under the "Ordinary Business Operations" Element of the Rule

Area of Law: SEC; Shareholder Rights

Issues Presented: Under SEC Rule 14a-8, can a shareholder proposal be excluded based on merchandising suggestions when the proposal is strongly related to social policy?

Brief Summary:

Trinity wished to submit a shareholder proposal to Wal-Mart for proxy consideration. The proposal asked Wal-Mart's Board of Directors to develop and implement standards for management in deciding what products to sell, especially in relation to public safety. The SEC has an "ordinary business" exclusion, which allows companies to omit a shareholder proposal if the proposal relates to ordinary business operations. Wal-Mart obtained a "no-action" letter from the SEC, signaling that the SEC would not enforce the proposal against the company. The District Court originally ruled against Wal-Mart, but seven months later, the District Court issued an opinion that reversed its decision and held that the proposal concerned governance and Wal-Mart's product decisions. The Third Circuit examined the SEC Rule over the last forty years and ultimately decided that each case must be examined separately to determine excludability. The Court determined the subject matter of the proposal delved into Wal-Mart's ordinary business operations because the proposal affects what Wal-Mart would examine and consider before selling certain merchandise. The Third Circuit then looked to the policy aspect of Trinity's proposal to determine if it transcends the day-to-day business matters of Wal-Mart. Again, the Court explained that the proposal is so intertwined with Wal-Mart's business matters that even the policy aspects are excludable. The District Court's decision was reversed.

Extended Summary:

Wal-Mart and one of its shareholders, Trinity (an Episcopal parish headquartered in New York City), were engage in a heated dispute over Wal-Mart's practice of selling high-capacity firearms. Wal-Mart rejected Trinity's request to include its shareholder proposal in Wal-Mart's proxy materials for shareholder consideration. Trinity's proposal asked Wal-Mart's Board of Directors to develop and implement standards for management to use in deciding whether to sell a product that (1) "especially endangers public safety;" (2) "has the substantial potential to impair the reputation of Wal-Mart;" and/or (3) "would reasonably be considered by many offensive to the family and community values integral to the Company's promotion of its brand." Trinity's proposal was linked to Wal-Mart's sale of high-capacity firearms.

The Securities and Exchange Commission ("SEC") has an "ordinary business" exclusion that allows a company to omit a shareholder proposal from its proxy materials if the proposal relates to its ordinary business operations. Wal-Mart obtained a "no-action letter" from the SEC signaling that there would be no enforcement action against the company if it omitted the proposal. Trinity filed suit in federal court, seeking to enjoin Wal-Mart's exclusion of the proposal. Although the District Court initially denied Trinity's request, seven months later, it held that the proposal concerned the com