In re: Hertz Global Holdings — civil / securities — affirmance — Jordan

The Third Circuit today affirmed a district court’s ruling that plaintiffs had failed to plead a “strong inference of scienter” for their claim under the Private Securities Litigation Reform Act. The opinion lays out in devastating detail the allegations that Hertz overstated its profits, but ultimately concludes that likeliest inference from this evidence is that the Hertz-executive defendants were “just bad leaders,” not that they engaged in systemic fraud.

Joining Jordan were Ambro and Hardiman. Arguing counsel were Douglas Wilens of Florida for the plaintiffs, Adam Unikowsky of Jenner & Block for Hertz, and Gregory Markel of New York for one of the executives.

Walker v. Senior Deputy Coffey — civil rights — partial affirmance — Roth

The Third Circuit today held that a prosecutor and an agent were entitled to qualified immunity for using a facially invalid subpoena to get a woman’s work emails, because the woman didn’t have a clearly established right to privacy for the content of her work emails, at least where the employer had authority over the emails and consented to turn them over in response to the invalid subpoena. The opinion notes the Court’s “dismay[]” at the prosecutor’s and agent’s action here: their subpoena left the date, time, place of production, and party blank. (Assistant General Counsel at Penn State Katherine Allen, identified in the opinion, complied with it anyway.)

My two cents: I have no view on whether applying qualified immunity here is a correct application of controlling law, but I believe the outcome here illustrates the awfulness of qualified immunity. Law enforcement officials get to serve cartoon subpoenas with impunity if the law isn’t also clear enough yet that what they get with the cartoon subpoenas was constitutionally protected? If it’s clear they used wrongful means to get something, that would be all qualified immunity requires in my world.

The court remanded to allow the plaintiff to amend her Stored Communications Act claim.

Joining Roth were Jordan and Stearns D. Mass by designation. Arguing counsel were Geoffrey Johnson of Jenkintown for the woman and John Knorr III for the state.

Long v. SEPTA — civil — partial reversal — Fisher

Philadelphia’s public-transit authority, SEPTA, violated the Fair Credit Reporting Act by failing to send job applicants who had prior criminal convictions copies of the background checks that it  relied on when it rejected their applications. The district court rejected the applicants’ FCRA claims on the ground that they had alleged only a bare procedural violation without any concrete injury such as an error in their background check.

Today, the Third Circuit reversed in part because “the FCRA does not condition the right to receive a consumer report on whether having the report would allow an individual to stave off an adverse employment action. Rather, the statute applies to all consumers.” As to standing, the court reiterated its recent caselaw “‘decidedly in favor of allowing individuals to sue to remedy violations of their statutory rights, even without additional injury.”

Joining Fisher were Chagares and Restrepo. Arguing counsel were Deepak Gupta of Gupta Wessler for the applicants and Elizabeth Malloy of Cozen O’Connor for SEPTA.

Lupu v. Loan City LLC — civil — partial reversal — Ambro

The Third Circuit today held that, under Pennsylvania law, a title insurer’s duty to defend an insured is assessed claim-by-claim by comparing the insurance contract to the complaint, rejecting application of the “in for one, in for all” rule.

Joining Ambro were McKee and Restrepo. Arguing counsel were Michael Coughlin of Kaplin Stewart for title insurer and Brett Messinger of Duane Morris for the insured.

US ex rel. Silver v. Omnicare — civil / qui tam — reversal — Chagares

The False Claims Act, which allows whistleblowers to sue for frauds against the government, has a provision that prevents FCA actions that rely substantially on allegations already known to the public. An FCA relator alleged a kickback scheme — that a pharmacy gave below-cost rates to one category of nursing home customers in exchange for favorable treatment of the pharmacy from the homes as to another category of customers. The district court granted summary judgment based on the public-disclosure bar, relying in part on public evidence that the unlawful practice occurred in the industry generally. Today, the Third Circuit reversed, holding that the suit was not barred by the public-disclosure bar because publicly-known facts did not point to specific fraudulent transactions by this specific pharmacy.

Joining Chagares were Vanaskie and Fuentes. Arguing counsel were Shauna Itri of Berger & Montague for the whistleblower and Michael Manthei of Holland & Knight for the pharmacy.

Delaware Riverkeeper Network v. Secretary, PA DEP — civil / environmental — affirmance — Hardiman

The Third Circuit today rejected an environmental group’s Clean Water Act challenge to a Pennsylvania natural-gas pipeline project. The court also distinguished a First Circuit ruling in holding that the state agency’s water-quality certification was final and appealable even though the administrative appeal of the certification is still pending.

Joining Hardiman were Jordan and Scirica. Arguing counsel were Aaron Stemplewicz of the Delaware Riverkeeper Network and Mark Freed of Curtin & Heefer for the environmentalists, Joseph Cigan III for the state, and John Stoviak of Saul Ewing for the pipeline builder.

Taksir v. Vanguard Group — civil / securities — affirmance — Chagares

An investor sued Vanguard, alleging that Vanguard advertised stock-trade commissions for certain customers of $2, but then actually charged $7. The district court rejected Vanguard’s argument that the class-action suit was barred by the Securities Litigation Uniform Standards Act, and, in an interlocutory appeal, today the Third Circuit affirmed.

Joining Chagares were Smith and Fuentes. Arguing counsel were Stuart Steinberg of Dechert for Vanguard and Christopher Nelson of the Weiser Law Firm for the investor.

Cup v. Ampco Pittsburgh Corp. — civil — reversal — Hardiman

In a dispute between a union and an employer over retiree benefits, the district court granted the union’s request for arbitration, but today the Third Circuit reversed on the ground that the collective bargaining agreement did not cover retirees. The court also held that a district court order compelling arbitiration, dismissing the substantive claims without prejudice, and administratively closing the case is an appealable final order.

Joining Hardiman were Smith and Restrepo. Arguing counsel were Nathan Kilbert of the United Steelworkers for the union and Jeremy Blumenfeld of Morgan Lewis for the employer.

The Third Circuit issued four precedential opinions yesterday, but I’m posting about them today because I was in a meeting all afternoon for a new CA3 appeal I’m doing.

Geness v. Cox — civil rights and disability — partial reversal — Krause

An intellectually disabled man with mental illness was charged for a crime that may not have occurred, found incompetent to stand trial, and then held without a trial for nearly a decade. Then, when the man finally got a hearing, the prosecutor voluntarily dismissed the charges due to—get this—”substantive evidentiary issues in this matter that likely could and would impair the Commonwealth’s ability to meet its burden of proof, even if the defendant were competent.”

So the man filed a lawsuit against the arresting officer, Jason Cox, who is now the  the town’s police chief, alleging violations of his civil rights and his rights under the Americans with Disability Act. In a searing opinion, the Third Circuit affirmed dismissal of the man’s civil-rights claims (“Absurd as it may seem that Geness was detained for nine years for a crime that may not have occurred and now cannot pursue relief under § 1983, multipoint failures in the criminal justice system have brought us to this juncture.”) but reinstated his due process and ADA claims to let him amend.

Joining Krause were Smith and Greenaway. Arguing counsel were Joel Sansone of Massimo Terzigni for the plaintiff and former CA3 staff attorney Carol VanderWoude of Marshall Dennehey for the officer.

Lifewatch Services v. Highmark — antitrust — reversal — Ambro

One of life’s great law-nerd pleasures is reading an Ambro opinion deciding a consequential business case. Want a quick master-class on how crisp topic sentences can turn daunting and dry into lucid and engaging? Read this opinion.

The introduction:

The seller of a medical device, believing it was shut out of the market for it, brought suit on federal antitrust grounds against associated health insurance companies. The claim was that they shielded themselves from patient demand for the seller’s device by agreeing to deny coverage as “not medically necessary” or “investigational,” even while the medical community, other insurers, and independent arbiters viewed it as befitting the standard of care. The District Court dismissed the claim. For the reasons that follow, we reverse its judgment and remand the case for further consideration.

Joining Ambro were Restrepo and Fuentes. Arguing counsel were Gary Elden of Shook Hardy for the device maker and Daniel Laytin of Kirkland & Ellis for the insurers.

Tanksley v. Daniels — civil / copyright — affirmance — Fisher

A Philadelphia man “wrote, produced, directed, filmed, starred in, and copyrighted” a television pilot about an African American hip hop mogul, and he pitched it to a top television producer. Several years later, that same producer launched Empire, the Fox television series about an African American hip hop mogul. The Philadelphia man sued, alleging copyright infringement and other claims. The Third Circuit affirmed the district court’s dismissal based on a comparison of the two shows’ characters, settings, and storylines.

Joining Fisher were Chagares and Vanaskie. Arguing counsel were Mary Bogan and Predrag Filipovic of IFight4Justice for the Philadelphia man and Richard Stone of Jenner Block and Mathieu Shapiro of Obermayer for the defendants.

Conard v. Pa. State Police — civil rights — partial reversal — Greenberg

The Third Circuit reversed the dismissal a fired police dispatcher’s First Amendment retaliation claim. The opinion “clarif[ied] the applicable First Amendment legal standard in two respects”:

First, we conclude that the framework for First Amendment claims brought by government employees against their employers does not apply to Conard’s retaliation claim, because the speech which Conard alleges triggered the retaliation against her—filing administrative complaints and a lawsuit against her former employer— occurred after she had left her State Police employment….

Second, in the context of this action, Conard was not required to plead that defendants engaged in retaliatory conduct “of a particularly virulent character,” a standard applicable to retaliation claims where the retaliatory conduct involves speech by a public employee defendant.

Joining Greenberg were Chagares and Fuentes. Arguing counsel were former Hardiman clerk Eric Hamilton of Williams & Connolly for the fired dispatcher and Howard Hopkirk of the Pa. Attorney General’s office for the defendants. The opinion closed by thanking Conard’s appellate counsel “for having represented her in a fine way on a pro bono basis.”

Bland v. City of Newark — civil rights — reversal — Hardiman

The Third Circuit today held that police officers were entitled to qualified immunity from suit after shooting an unarmed man 16 to 18 times at the end of a dangerous high-speed car chase when they thought he was armed and unwilling to surrender.

Joining Hardiman were Smith and Bibas. Arguing counsel were Peter Ventrice of Brause Brause & Ventrice and Lucas Phillips Jr. of East Orange NJ for the plaintiffs and Michael Walters of the state AG’s office and Gary Lipshutz of the Newark Law Dept. for the defendants.

Berardelli v. Allied Services Inst. of Rehab. Medicine — civil / disability — reversal — Krause

The Third Circuit today held that the Rehabilitation Act, like the Americans with Disabilities Act, generally requires covered actors to accommodate the service animals used by persons with disabilities. The case arose after a school refused to allow a girl with epilepsy to attend school with her service dog trained to detect seizures.

Joining Krause were Ambro and Rendell. Arguing counsel were Arleigh Helfer III of Schnader for the girl and James Conaboy of James Conaboy for the school.

In re: W.R. Grace — bankruptcy — partial reversal — Ambro

Today’s opinion opens, “Mass-tort liability of entities with asbestos operations typically results in their filing for bankruptcy protection,”  and few would disagree. Two decades ago the Supreme Court described the scale of asbestos litigation as elephantine, and it continues on today, with the Third Circuit still playing a central role.

Asbestos bankruptcy reorganizations often include an injunction that channels asbestos liability claims to a trust — not just claims against the debtor itself, but also claims against other entities such as the debtor’s insurers. The question in today’s opinion was whether the legal claims of a group of plaintiffs against an asbestos company’s insurers were subject to the chaneling injunction. The court agreed with the bankruptcy court that the claims fell within the terms of the injunction, but it remanded to reconsider whether chaneling their claims was allowed by the bankruptcy code.

Joining Ambro were McKee and Restrepo. Arguing counsel were Daniel Cohn of Boston for the appellants and Michael Giannotto of Goodwin Procter for the appellees.

Augustin v. City of Phila. — municipal — reversal — Hardiman

The Third Circuit today held that a district court erred in granting summary judgment in favor of a group of landlords who challenged on due process grounds Philadelphia’s system for imposing and enforcing liens to collect debts for commercial and residential gas service.

Joining Hardiman were Smith and Brann MDPA by designation. Arguing counsel were Craig Gottlieb of the city law department for the city and the formidable Irv Ackelsberg of Langer Grogan for the landlords.

Ricks v. Shover — prisoner civil rights — reversal — Rendell

The Third Circuit today issued an important new prisoner-rights ruling, holding that a single act of sexual abuse without force or injury can violate the Eighth Amendment:

Whether sexual abuse can constitute “cruel and unusual punishment” under the Eighth Amendment is a matter of first impression in our Court. We write today to state in plainest terms that it does. Our society requires prisoners to give up their liberty, but that surrender does not encompass the basic right to be free from severe unwanted sexual contact.

The court reversed the district court’s dismissal of the prisoner’s Eighth Amendment sexual-abuse claim against a guard who allegedly rubbed his erect penis against the prisoner during a pat-down search. It stated, ” Absent more specific allegations as to the severity of Keil’s conduct or the surrounding context, including the need for the search, we cannot conclude that he plausibly violated Ricks’ right to be free from “cruel and unusual punishments,” but remanded to allow the prisoner to amend his complaint. The court also reversed the dismissal of an excessive-force claim against a supervisor who allegedly slammed the prisoner into a wall when he protested.

Joining Rendell were Chagares and Scirica. Arguing counsel were former Smith clerk and Boies Schiller associate James Kraehenbuehl for the prisoner and Claudia Tesoro of the PA Attorney General’s office for the guards. The court noted that Kraehenbuehl represented the prisoner pro bono and thanked him for “the high caliber of representation” he provided.

GBForefront v. Forefront Mgmt — civil — reversal — Jordan

What a stellar opinion introduction:

This case requires us to consider whether, in assessing
diversity-of-citizenship jurisdiction under 28 U.S.C. § 1332(a),
the citizenship of a traditional trust is determined differently
than that of a business trust. In light of the Supreme Court’s
decision in Americold Realty Trust v. Conagra Foods, Inc., 136
S. Ct. 1012 (2016), we conclude that the citizenship of a
traditional trust is based only on the citizenship of its trustee.
In so holding, we acknowledge that Americold Realty
abrogates part of our opinion in Emerald Investors Trust v.
Gaunt Parsippany Partners, 492 F.3d 192 (3d Cir. 2007),
which stated that it was unnecessary to distinguish between
types of trusts when determining diversity jurisdiction. Id. at
198 n.10, 205.

Based on the distinction we recognize today between
traditional trusts and business trusts, we will vacate the District
Court order dismissing this case for lack of jurisdiction.
Because the record on appeal is insufficient for us to proceed
further, we will remand the case with instructions to determine
whether the trusts at issue are of the traditional or business
variety and whether there is diversity jurisdiction. We also
instruct the District Court to give leave to further amend the
complaint within a reasonable time to cure defective
jurisdictional allegations.

Nothing left for me to say.

Joining Jordan were Roth and Mariani MDPA by designation. Arguing counsel were Christopher Nucifora of Kaufman Dolowich for the appellant and Gary Fellner of New York for the appellees.

In re: Petition of Frescati Shipping — civil / admiralty — reversal in part — Smith

An oil tanker struck an abandoned anchor resting on the bottom of the Delaware River and spilled over a quarter-million gallons of crude oil, a spill that cost $143 million to clean up. Predictably, years of complicated litigation (including a 41-day trial and a 31-day post-remand hearing)  ensued over who must pay the clean-up bill: the shipper, the oil company (Citgo, represented here by Carter Phillips), or the government.

Today, the Third Circuit issued a 61-page opinion that, broadly speaking, came out in favor of the shipper and the government and against Citgo. The opinion decided numerous issues, notably that Citgo was not equitably entitled to a 50% reduction of its clean-up cost to the government and that Citgo waived a defense by first raising it 10 years into the case. The opinion is a gem, engaging and clear.

Joining Smith were Hardiman and Brann MDPA by designation. Arguing counsel were Timothy Bergère and John Levy of Montgomery McCracken for the shipper, Anne Murphy of the DOJ appellate section for the government, and Carter Phillips of Sidley Austin for the oil company.

Shuker v. Smith & Nephew — civil — reversal in part — Krause

By federal statute, the makers of certain medical devices who comply with stricter federal safety requirements get preemption from any state safety requirements. But some medical devices are made up of multiple components–if some components comply with the stricter federal standards, while others don’t, is a suit challenging the design of the entire device pre-empted?

Today, the Third Circuit described that question as an issue of first impression in the circuit courts. It answered it by holding that pre-emption is assessed component-by-component, not device-by-device, which in turn means that if the alleged defect in the device does not involve a freestanding defect in the non-preempted component — if it challenges only a defect in the preempted component, or (I think) the interaction between preempted and non-preempted components –then the claim is preempted.

Joining Krause were Jordan and Greenaway. Arguing counsel were Robert Astrachan of Zajac & Arias for the plaintiffs below and Sara Gourley of Sidley Austin and Joseph Lang of Florida for the device makers.

Tatis v. Allied Interestate — consumer / FDCPA — reversal — Hardiman

The Third Circuit today held that sending a settlement letter for a time-barred debt can be actionable under the Fair Debt Collection Practices Act even if the letter does not threaten legal action.

It’s a fascinating case for a few reasons:

• the counsel match-up was David vs. Goliath–a junior consumer lawyer against a past president of the American Academy of Appellate Lawyers–and the junior lawyer won;
• the panel was composed of the Third Circuit’s three most conservative active judges, but it ruled in favor of the consumer; and
• the opinion was authored by Judge Hardiman, reportedly a Supreme court short-lister, and it pointedly disagreed with a dissenting opinion by another Supreme Court short-lister, Sixth Circuit Judge Kethledge.

Joining Hardiman were Chagares and Jordan. Arguing counsel were Ari Marcus of Yitzchak & Zelman for the consumer and James Martin of Reed Smith for the debt collector.

Panico v. Portfolio Recovery Assocs. — civil — reversal — Restrepo

Applying Delaware statute-of-limitations law, the Third Circuit today reversed a grant of summary judgment in favor of the defendants in a putative class-action suit under the Fair Debt Collection Practices Act. The main dispute on appeal involved whether the defendant sought to collect on debts after the statute of limitations on those debts had already run.

Joining Restrepo were Vanaskie and Krause. Arguing counsel were Philip Stern of Stern Thomasson for the plaintiff and David Anthony of Troutman Sanders for the debt collector.

Finkelman v. NFL — civil — reversal — Fuentes

The introduction of today’s opinion:

Plaintiff Josh Finkelman had the once-in-a-lifetime opportunity to buy tickets to Super Bowl XLVIII held in his home state of New Jersey in February 2014. However, the National Football League (“NFL”) withheld almost all of these tickets—99%—from the general public for league insiders, offering the remaining 1% to lucky winners of a lottery that all could enter. To get his tickets, Finkelman turned to the secondary market, purchasing two tickets with a face value of $800 each for $2000 each. One month before the Super Bowl, he filed suit, alleging that the NFL’s ticket distribution violated New Jersey law. Specifically, Finkelman claims that the NFL’s withholding of more than 5% of the available tickets for the Super Bowl violated the New Jersey Ticket Law. He has now had two opportunities before our Court to show that he has Article III standing to pursue this claim. In our first decision on this subject, we found that he did not. He has since added claims about how the NFL’s secondary ticket market functioned and how the NFL’s actions raised ticket prices on the secondary market. The District Court found that these additional allegations remained insufficient to allege Finkelman’s standing. We disagree. Based on the plausible economic facts pleaded in Finkelman’s amended complaint, we conclude that Finkelman has standing and we therefore have subject matter jurisdiction over this case. We defer action on the merits of this appeal pending decision by the Supreme Court of New Jersey on the pending petition for certification of questions of state law.

My post on the prior appeal is here.

Joining Fuentes were Smith and Stark D.Del. by designation. Arguing counsel were Bruce Nagel of Nagel Rice for the ticketbuyer and Jonathan Pressment of Haynes & Boone for the league.

Wellman v. Butler Area School Dist. — civil / disability — reversal — Shwartz

The Third Circuit today held that a plaintiff’s suit under the Americans with Disabilities Act, the Rehabilitation Act, and section 1983 was subject to the administrative-exhaustion requirement of the Individuals with Disabilities Education Act. Since the plaintiff earlier had released all claims that could have been brought at an administrative hearing, the Third Circuit held that this suit must be dismissed with prejudice, vacating the district court’s dismissal-without-prejudice order.

Joining Shwartz were Smith and Jordan. Arguing counsel were Edward Olds of Olds Russ for the student and Thomas Breth of Dillon McCandless for the district.

Barna v. Board of School Directors — civil rights — partial reversal — Chagares

After a man was “threatening and disruptive” at several school board meetings, the school board banned him from attending any of its future meetings. The man sued the board and various individuals, alleging the denial of his First Amendment rights. The district court, adopting a magistrate judge’s recommendation, granted summary judgment to all defendants based on qualified immunity. Today, the Third Circuit reversed in part, upholding summary judgment for the individuals but reversing and remanding as to the school board, which under a 1980 Supreme Court ruling does not enjoy qualified immunity. The court did not decide whether the ban was in fact unconstitutional.

There was an interesting procedural wrinkle here: the appellant apparently inadvertently failed to argue that school boards are not entitled to qualified immunity. The Third Circuit held that the the issue was forfeited, not waived, and that “truly exceptional circumstances” existed to excuse the forfeiture given the district court’s clear legal error and the absence of surprise.

Joining Chagares were Greenaway and Restrepo. Arguing counsel were Jonathan Phillips of Orwigsburg, PA for the appellant and Thomas Specht of Marshall Dennehey for the school board. Also listed as counsel for the appellant was Gary Marchalk, who died tragically earlier this year.

This opinion was issued yesterday. I normally post cases the same day, but I had a big deadline in my Texas capital habeas case.

Mullin v. Administrator — civil rights — partial reversal — Fuentes

The compelling introduction to yesterday’s opinion:

A little over two years into the civil-rights suit brought by Joan Mullin (“Mullin”) over the tragic prison suicide of her son, Robert Mullin (“Robert”), Mullin’s attorney received a discovery document with the potential to reshape the case. A previously undisclosed investigative report about the night Robert died contained statements by fellow New Jersey inmates about a prison guard who allegedly refused Robert’s requests for psychiatric assistance—and urged Robert to kill himself instead. But while Mullin’s attorney received this report mid-case, it was not reviewed in a timely fashion. Instead, due to a clerical error, the disc containing the relevant disclosures was misfiled, and not fully accessed until about ten months later. By that time, Mullin’s operative complaint—premised on a less direct knew-or-should-have-known theory of Robert’s vulnerability to suicide—had already been dismissed in large part. The District Court denied Mullin’s request for leave to amend her complaint, due in part to the delay caused by counsel’s error and, after additional motion practice, granted summary judgment in favor of the one remaining defendant, bringing the litigation to a close.

Mullin’s appeal encompasses both the dismissal of her operative complaint and the order denying further leave to amend. The latter is the focus of this opinion. For the reasons set forth below, we conclude that the decision denying leave to amend amounted to an impermissible exercise of discretion. Some of the factors relied upon to deny leave are not supported by the record or are at odds with our case law. And while we do not intend to minimize counsel’s mistake, it does not, standing alone, support denying leave to amend. Accordingly, we will vacate the order denying leave to amend and will remand for further proceedings.

I think most lawyers who’ve handled complex cases would (nervously) agree with the opinion’s later observation that the lawyers’ error  was “the kind that could affect any law firm no matter how well run.”

It’s an interesting case, an engaging opinion, and a significant ruling on amending civil complaints (and habeas petitions) under Rule 15.

Joining Fuentes were Chagares and Vanaskie. Arguing counsel were Shelley Stangler for the appellant and Gregory Bueno of the NJ AG’s office for the appellees.

Zimmerman v. Corbett — civil — reversal — McKee

A staffer for a PA state legislator was prosecuted for obstructing an investigation into whether Democratic staffers were doing campaign work on state time. After the charges against him were dismissed, he brought a malicious prosecution suit against various defendants, including Tom Corbett (the Republican state AG at the time of the prosecution, and later the governor). The district court denied the defendant’s motion to dismiss, but today the Third Circuit reversed, holding that there was probable cause to prosecute.

Joining McKee were Cowen and Fuentes. Arguing counsel were Joshua Autry of Lavery Faherty for the appellants and Devon Jacob of Mechanicsburg for the appellee.

H.E. v. Walter D. Palmer Leadership Learning Partners Charter School — disability — reversal — Krause

Parents of children with disabilities filed an administrative complaint against a charter school for allegedly failing to meet its obligations under the Individuals with Disabilities Education Act. The administrative hearing officer dismissed their complaint, so the parents sued in federal court, asking the court to vacate the hearing officer’s dismissal and remand for a hearing. The district court did as the plaintiffs asked, but it refused to award them attorneys’ fees as the prevailing party. Today, the Third Circuit reversed, holding that the fee denial was an appealable final order and that the plaintiffs’ purely procedural victory sufficed to entitle them attorneys’ fees under the IDEA.

Joining Krause were Ambro and Scirica. The case was decided without oral argument.

McGann v. Cinemark USA — disability — reversal — Restrepo

A blind and deaf man asked a movie theater to provide him with a tactile interpreter so that he could experience a movie there. If you think that sounds silly or contrived, here’s some context:

McGann has experienced movies in theaters for many
years. He enjoys attending movies in person for a number of
reasons; among others, it affords him the opportunity to
participate in discussions about the movies with his friends and
family. Before his wife passed away in 2001, she would
provide him with tactile interpretation during movies in the
theater. Since then, McGann has attended movies at a local
Carmike Cinema. Carmike provided him with tactile
interpretation services for movie presentations at his request.

In November 2014, McGann became interested in
experiencing the movie Gone Girl (Twentieth Century Fox
Film Corp. 2014), after hearing about it from his family and
reading about it online using Braille. After he contacted his
customary Carmike Cinema to inquire about attending a
presentation of the movie, he learned it was no longer playing
there. So he sought another theater in which to experience it.

When the theater refused to provide him with a tactile interpreter, he sued it under the Americans with Disabilities Act. After a bench trial, the district court ruled in the theater’s favor based on its view that movie-theater tactile interpreters were not covered by the ADA. Today, the Third Circuit reversed. Significantly, the court did not reach the theater’s defense that having to provide tactile interpreters would cause it an undue burden, instead remanding that issue for the district court to consider first.

Time to fire up the “Federal judges are activists! Plaintiffs are snowflakes!” internet hate machine? I hope not.

UPDATE: Right on cue, National Review posts, “A Contender for the Silliest Decision of the Year Award.” The author, who says he views the ADA as unconstitutional, laments that “activist judges will keep pushing it further and further.”

Joining Restrepo were Smith and McKee. Arguing counsel were Carol Horowitz of the Disability Rights Network of Pennsylvania for the patron, M. Brett Burns of Hunton & Williams for the theater, and Bonnie Robin-Vargeer for the DOJ as amicus.

Employer Trustees of Western PA Teamsters v. Union Trustees of Western PA Teamsters — labor — reversal — Vanaskie

When labor negotiations deadlocked over employee benefits, one side sought appointment of an arbitrator to break the stalemate. The district court denied the request, but today the Third Circuit reversed, holding that the disputes fell within the parties’ agreement to arbitrate.

Joining Vanaskie were Ambro and Scirica. Arguing counsel were Robert Prorok of Cohen & Grigsby for  the appellants and  Joseph Pass of Jubelirer Pass for the appellees.

This post covers the precedential opinions issued yesterday, August 30.

Borrell v. Bloomsburg Univ. — civil rights — reversal — Hardiman

A nurse-anesthetist student was dismissed from her program for refusing to take a drug test required by the private hospital where she was doing a clinical program. The person who decided to dismiss her from the university program was the director of the program, a joint employee of the hospital and the university. The student sued under 1983, and the district court granted her summary judgment, concluding that the hospital and the program director were state actors. After a damages trial, the jury awarded her $415,000 in damages and $1.1 million in punitives which the judge reduced to $250,000 and $750,000.

The Third Circuit reversed, holding that the hospital and the program director weren’t state actors with respect to the decision to dismiss her from the program. The court also held that a university professor who had a role in the dismissal was entitled to qualified immunity.

Joining Hardiman were Fisher in full and Roth in part; Roth concurred in the judgment in part. Arguing counsel were Barry Dyller of the Dyller Law Firm for the student, Jaime Tuite of Buchanan Ingersoll for the hospital and program director, and John Knorr III of the state AG’s office for the professor.

US v. Penn — criminal — affirmance — Smith

The Third Circuit held that a district court did not abuse its discretion when, after opening statements, it removed and replaced a juror with a scheduled surgery.

Joining Smith were Fuentes and Starks D.Del. by designation. The case was decided without oral argument.

Williams v. Pa. Human Relation’s Comm. — employment discrimination — affirmance — Fuentes

The introduction, minus citations:

Cheryl Williams, an African-American woman,
claims that she was subjected to constant harassment at the
Pennsylvania Human Relations Commission (the
“Commission”) by her supervisors, Joseph Retort and Adam
Stalczynski. As a result of this treatment, she alleges she faced a hostile work environment and was ultimately constructively
discharged from her position as a Human Relations
Representative. She then filed this action against the
Commission under Title VII of the Civil Rights Act of 1964
(“Title VII”), seeking damages for the loss of her job and the
harm sustained to her physical and emotional health. She also
included claims against her former supervisors, Retort and
Stalczynski, claiming that they violated her federal rights under
Title VII and the Americans with Disabilities Act (“ADA”)
and they are therefore liable for damages under 42 U.S.C.
§ 1983. On defendants’ motion, the District Court granted
summary judgment in favor of all defendants.

In this case, we address for the first time whether
violations of Title VII and the ADA may be brought through
§ 1983. In light of the comprehensive administrative scheme
established by Title VII and the ADA, we conclude that these
claims, standing alone, may not be asserted under § 1983. And
because we also agree with the District Court that Plaintiff
Cheryl Williams presents no triable issues of fact on her
Title VII claims against the Commission, we will affirm.

Joining Fuentes were Smith and Nygaard. The case was decided without oral argument.

Delaware Riverkeeper Network v. Secretary, Dept. of Environmental Protection — environmental — affirmance — Smith

The Third Circuit rejected another effort by an environmental group to stop an interstate gas pipeline. This time the court also held that the state agency’s decision was final.

Joining Smith were Nygaard and Fuentes. Arguing counsel were Aaron Stemplewicz for the Riverkeepers, Joseph Cigan III for the state, and John Stoviak of Saul Ewing for the intervenor pipeline company

In re: Lipitor Antitrust Litig. — antitrust — reversal — Smith

In a sprawling opinion whose 17-page caption is longer than many published opinions, the Third Circuit today reversed a district court’s dismissal of antitrust suits against companies holding the patents on popular drugs for treating cholesterol and depression. The court rejected the district court’s rulings that the plaintiffs’ allegations were not plausible.

Joining Smith were Ambro and Fisher. The nine (!) arguing counsel were:

• Barry Refsin, Hangley Aronchick, appellants
• Scott Perwin, FL, appellants
• Thomas Sobol, MA, appellants,
• David Sorensen, Berger & Montague, appellants
• Bruce Gerstein, NY, appellants
• James Cecchi, Carella Byrne, appellants
• Renae Steiner, MN, appellants
• Robert Milne, NY, appellees
• Jay Lefkowitz, Kirkland & Ellis, appellees

Kelly v. Maxum Specialty Ins. Gp. — civil — reversal — Chagares

After a plaintiff sued a defendant, the plaintiff filed a federal suit seeking a declaratory judgment on the defendant’s insurer’s coverage. The Third Circuit said this situation is “familiar” and that district courts in this circuit are divided on the “important” question of whether to let the federal suits proceed. Today, the court reversed a district court’s dismissal, holding that a federal declaratory-judgment coverage suit was not substantially similar to the underlying civil suit and that its remand was an abuse of discretion.

Joining Chagares were Hardiman and Scirica. Arguing counsel were Sina Bahadoran of Florida for the insurer, John Reed Evans of Donnelly & Associates (formerly of Selective Law Group) for an insurance broker, and Gregory Kowalski of Pansini & Mezrow for the plaintiff.

Moon v. Breathless — civil / employment / arbitration — reversal — Greenaway

The Third Circuit today reversed a district court’s ruling granting summary judgment in favor of arbitration. The case arose when a woman who performed at the Breathless Men’s Club sued the club under the Fair Labor Standards Act and two state laws alleging employee wage-and-hour violations. The club argued, and the district court agreed, that her suit was barred by an arbitration clause in its contract with the woman, which by its terms applied to disputes “under this Agreement.” Applying New Jersey law, the Third Circuit held that courts should decide the arbitrability issue and that the clause did not cover this suit mainly because it arose under statutes, not under the contract.

Joining Greenaway were Fisher and Hardiman. Arguing counsel were Jeremy Abay of Sacks Weston for the woman and Marc Gross, formerly of Greenbaum Rowe but now at Fox Rothschild, for the club.

Plains All American Pipeline v. Cook — civil — partial reversal — Fisher

After Delaware initiated proceedings to review whether a company’s property was subject to seizure under the state’s escheat law, the company filed suit, alleging various constitutional violations. The district court dismissed the suit, mainly on ripeness grounds because the suit was filed before Delaware assessed liability or sought to make its review findings enforceable. Today, the Third Circuit reversed in part, holding that the company’s as-applied procedural due process claim was ripe, but otherwise affirming. The court declined to affirm the dismissal of the due process claim on alternative grounds, citing circuit precedent that absent exceptional circumstances the court will decline to consider an issue not passed on below and finding no exceptional circumstances.

Joining Fisher were Chagares and Scirica. Arguing counsel were Jeremy Marwell of Vinson and Elkins for the company, Steven Rosenthal of Washington DC for one group of appellees, and Ryan McManus of Boston for another appellee.

Castleberry v. STI Group — civil / employment discrimination — reversal — Ambro

The Third Circuit today reversed a district court’s dismissal of an employment-discrimination suit. The court resolved its inconsistent caselaw on the harassment necessary to establish a hostile work environment, stating, “The correct standard is ‘severe or pervasive.” Applying this standard, the court held that a single act of harassment — a supervisor’s use of what the opinion called “the ‘n-word'” — constituted severe conduct sufficient to state a hostile-work-environment claim.

Joining Ambro were Vanaskie and Restrepo. Arguing counsel were Richard Swartz of Swartz Swidler for the employees and Donna Walsh of Myers Brier for the employers.

Susinno v. Work Out World — civil / consumer — reversal — Hardiman

A company allegedly called a person’s cell phone and left a recorded sales pitch on her voicemail. She sued, alleging that the message violated the Telephone Consumer Protection Act’s prohibition on prerecorded calls to cell phones. The district court dismissed on the grounds that Congress wasn’t protecting people against single calls and that one message caused no concrete injury. Today, the Third Circuit disagreed on both points and reversed.

Joining Hardiman were Krause and Stengel EDPA by designation. Arguing cousel were Timothy Sostrin of Chicago for the plaintiff, Joshua Bauchner of Ansell Grimm for the company, and Andrew Pincus of Mayer Brown for the Chamber of Commerce as amicus.

In re World Imports — bankruptcy — reversal — Hardiman

The Bankruptcy Code gives priority to creditors who sold goods “received by the debtor within 20 days before the bankruptcy petition was filed. Today, the Third Circuit held that “received” requires physical possession.

Joining Hardiman again were Krause and Stengel EDPA. Arguing counsel were Kirk Burkley of Bernstein-Burkley for the appellants and David Braverman of Braverman Kaskey for the appellees.

Hamilton v. Bromley — civil — affirmance — Fisher

A father sued in federal court alleging a conspiracy to deprive him of contact with his son. After filing suit, he gained custody of his son pending the outcome of state-court litigation. Today the Third Circuit affirmed dismissal of the father’s suit, holding that the father’s custody mooted his federal case, but also that the district court erred in dismissing under Younger abstention without deciding mootness.

Joining Fisher were Hardiman and Roth (although Hardiman did not join the part of the opinion where the court said because it lacked jurisdiction it could not decide the Younger issue and that the district court applied the wrong Younger test.) Arguing counsel were Jon Heintz of Jones Day for the father, James Johnson of State College for the mother, Amy Marshall of Babst Calland for a youth home, and Michael Daley of the state AOC for a state judge. The opinion thanked Jones Day for handling the appeal pro bono and for the quality of counsel’s representation.

Daubert v. NRA Group — civil / consumer — reversal in part — Fisher

“This case,” today’s Third Circuit’s opinion begins, “— involving tens of thousands of dollars in statutory damages, half a jury trial, and cross-appeals — stems from a debt collector’s pursuit of $25 in unpaid medical bills.” After debt collector called a medical patient’s cellphone 69 times over 10 months (!), he sued them, alleging that they violated the Telephone Consumer Protection Act. He also alleged that the collection letters they sent him violated the Fair Dept Collection Practices Act. The district court granted summary judgment in the plaintiff’s favor on the TCPA claim, but granted judgment as a matter of law in the defendant’s favor on the FDCPA claim. Today, the Third Circuit affirmed on the TCPA but reversed on the FDCPA, handing the debt collector a total defeat.

Joining Fisher were Hardiman and Roth. Arguing counsel were Richard Perr of Fineman Krekstein and Carlo Sabatini of the Sabatini Law Firm. (The caption doesn’t say who represented whom, but their respective practice areas suggest that Perr represented the debt collector and Sabatini represented the plaintiff.)

Norman v. Elkin — civil — reversal in part — Jordan

After the two shareholders in a company disagreed over the majority shareholder’s actions, the minority shareholder sued. “It was the beginning of a long and tortuous litigation trail,” the Third Circuit explained today in an opinion that won’t end that trail:

We conclude that the District Court erred in concluding that tolling of the statute of limitations is categorically inappropriate when a plaintiff has inquiry notice before initiating a books and records action in the Delaware courts. Accordingly, we will send most of the claims back to the District Court to determine whether tolling should have applied and, if so, whether any of the claims are nevertheless time-barred. We also conclude that the District Court erred when it vacated the jury’s award of nominal damages for one of Norman’s breach of contract claims. Finally, we hold that Norman’s fraud claim was not supported by sufficient proof of damages and we thus affirm judgment as a matter of law on that claim on the alternative grounds that Elkin has proposed.

Two interesting points:

• The opinion deemed waived two arguments that a party attempted to incorporate by reference from his district-court filings.
• Judge Shwartz disagreed with the panel’s disposition of one of the issues, but instead of writing separately the opinion included a footnote noting her “different perspective on this point.”

Joining Jordan were Smith and Shwartz. Arguing counsel were David Felice of Bailey and Glasser for one side and Steven Caponi of Blank Rome for the other.

Reilly v. City of Harrisburg — civil — reversal — Ambro

The Third Circuit today clarified the standard for granting preliminary injunctions. It’s always been clear that the preliminary injunction test has 4 pieces — (1) probability of success, (2) irreparable injury, (3) harm to others, and (4) public interest — but circuit caselaw has been contradictory about how the burden of proof works. Some cases said the movant has the burden of proving only the first two, while others said the movant must prove all four.

Today, the court held that the movant has the burden of proving only the first two parts of the test. It reasoned that this rule predated the must-prove-all-four cases and thus was binding under the rule that later panels can’t overrule earlier ones. It also reasoned that a contrary result wasn’t required by the Supreme Court’s 2008 statement that  “[a] plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

The underlying case arose from a challenge against Harrisburg’s 20-foot health-care buffer-zone ordinance brought by “sidewalk counselors” who seek to dissuade women from getting abortions. Despite the incendiary nature of the underlying suit, I read today’s opinion as entirely non-ideological and limited to cleaning up how the preliminary-injunction standard works.

Joining Ambro were Jordan and Roth. Arguing counsel were Horatio Mihet of Liberty Counsel for the movants and Joshua Autry of Lavery Faherty for the appellees.

General Refractories v. First State Insurance — insurance — reversal — Vanaskie

If you made a list of the most fun things about being a circuit judge, I suspect that “reviewing the district court ruling of a judge who since has become your colleague on the appeals court” would be pretty far from the top.  But it happens, and yesterday it resulted in a unanimous reversal in an asbestos-insurance-coverage appeal.

The dispute arose from a Pennsylvania insurance policy that excluded losses “arising out of asbestos.” The policyholder argued that this only excluded losses related to raw asbestos, not asbestos-containing products. The insurer argued it excluded both.

The district court — Judge Restrepo, before his 2016 elevation to the Third Circuit — sided with the policyholder, ruling that “asbestos” was ambiguous and that the insurer’s asserted exclusion of asbestos-product liability was unenforceable. But yesterday the Third Circuit reversed, holding that, even if “asbestos” meant only raw asbestos, under PA law the words “arising out of” unambiguously encompassed all losses that would not have occurred but for the raw asbestos, thus including asbestos-product losses.

For the second time in less than a week, the court (indeed, the exact same panel) grappled with whether to rest its holding on a position not asserted below, and again it took the more assertive route. The policyholder argued that the insurer waived its but-for causation argument by not raising it below, instead focusing on the meaning of the word asbestos. The Third Circuit ruled that the two arguments were close enough, and alternatively that, even if the causation argument were waived, this was an exceptional circumstance where the public interest would require it to be heard. “Were we to ignore the consistent and explicit meaning assigned to the phrase in Pennsylvania insurance exclusions,” it said, “we would cast doubt on a tradition of interpretation that many parties have relied upon in defining their contractual obligations.”

It’s hard to be sure from the opinion how sound its no-waiver ruling is, but I think the alternative public-interest ruling is wrong. One sentence — “The causation argument is waived so we don’t reach it and nothing in today’s opinion casts doubt on PA’s well-settled rule” — would have protected state law and the waiver rule.

I’d have predicted that the court would be especially unwilling to reverse one of its own this way, but evidently not so.

Joining Vanaskie were Jordan and Krause. Arguing counsel were Theodore Boutrous Jr. of Gibson Dunn for the insurer and Michael Conley of Offit Kurman for the policyholder.

In re: Lipitor Antitrust Litig. — civil / jurisdiction — partial affirmance — Fisher

In two sprawling MDL antitrust class actions involving drug-company reverse payments consolidated into one appeal, the Third Circuit yesterday addressed two antitrust-jurisdiction issues. First, it held that it (not the Federal Circuit) had jurisdiction over suits involving fraudulent procurement and enforcement of patents, where “patent law neither creates plaintiffs’ cause of action nor is a necessary element to any of plaintiffs’ well-pleaded claims.” Second, it held that the district court erred in denying a post-removal motion to remand to state court on the ground that the defendants had potential federal patent-law defenses, because “federal jurisdiction depends on the content of the plaintiff’s complaint, not a defendant’s possible defenses.” The court remanded appeal involving this second issue for jurisdictional discovery.

Joining Fisher were Ambro and Smith. Amongst a list of counsel that ran 10 pages long in the opinion, arguing counsel for the appellants were: Barry Refsin of Hangley Aronchick, Scott Perwin of Florida, David Sorensen of Berger & Montague, James Cecchi of Carrella Byrne, and James Alioto of California. Arguing for the appellees (the pharmaceutical-company antitrust defendants) were Robert Milne of White & Case, Jay Lefkowitz of Kirkland, and Noah Leibowitz of Simpson Thacher.

Revock v. Cowpet Bay West — civil / housing / disability — reversal — Restrepo

The Fair Housing Act’s protection against housing discrimination covers a disabled person’s reasonable and necessary use of an emotional-support animal in one’s home despite a rule prohibiting one, the Third Circuit ruled today. The court reversed a district court grant of summary judgment in favor of the defendant condominium, holding that a plaintiff’s FHA claim survived her death under federal common law and that there was a factual dispute over whether the condominium refused to accommodate. The court also found a factual dispute over whether the defendants — including a neighbor who criticized the plaintiffs on his blog — interfered with the plaintiffs’ housing rights by harassing them after they complained.

The parties did not dispute, and the court did not decide, whether the plaintiffs were disabled or whether the accommodation they requested was reasonable. Suffice to say emotional-support animals are not universally beloved, as this scathing 2014 New Yorker article confirms.

Restrepo was joined by Fuentes and Vanaskie. Arguing counsel were Karin Bentz of St. Thomas for the plaintiffs; James Parker of Florida, Boyd Sprehn of Benham & Chan, and Kyle Waldner of St. Thomas for the defendants, and April Anderson for the government as amicus supporting the plaintiffs.

UPDATE: I’m mighty skeptical that private citizens should be subject to FHA liability for saying mean things online about emotional-support-animal-owning neighbors. I think it’s not unlikely that private citizens will say mean things about today’s opinion.

Ramirez v. Vintage Pharmaceuticals — civil / class action — reversal — Vanaskie

In 2005, Congress passed the Class Action Fairness Act to make it easier for defendants to keep large class actions from being decided by state courts. Under CAFA, a suit can be eligible for removal if more than 100 plaintiffs seek a joint trial, but consolidation only for pretrial purposes doesn’t qualify.

Today, the Third Circuit ruled in favor of defendants seeking to keep a case in federal court, holding that language in the 100+ plaintiffs’ single complaint that “claims have been filed together . . . for purposes of case management on a mass tort basis” wasn’t clear enough to defeat removal: “Where, as here, more than 100 plaintiffs file a single complaint containing claims involving common questions of law and fact, a proposal for a joint trial will be presumed unless an explicit and unambiguous disclaimer is included.”

Joining Vanaskie were Chagares and Krause. Arguing counsel were Angela Vicari of Arnold & Porter for the defendants and Keith Bodoh of Georgia for the plaintiffs.

In re: Fosamax — civil — reversal — Fuentes

Plaintiffs alleged that an osteoporosis drug sold by Merck caused thigh-bone fractures. Merck sought summary judgment, arguing that the plaintiffs’ product-liability claims were preempted because the FDA would not have approved the warning the plaintiffs tendered. Today, the Third Circuit vacated, emphasizing that the predictive preemption defense at issue is “demanding” and that the plaintiffs’ evidence was enough to defeat summary judgment.

Of particular note is this paragraph near the end of the opinion:

There is a deeper problem lurking in the District Court’s decision to grant Merck a merits judgment in all of the MDL cases. A mass tort MDL is not a class action. It is a collection of separate lawsuits that are coordinated for pretrial proceedings—and only pretrial proceedings—before being remanded to their respective transferor courts.170 Some purely legal issues may apply in every case. But merits questions that are predicated on the existence or nonexistence of historical facts unique to each Plaintiff—e.g., whether a particular Plaintiff’s doctor would have read a warning in the Adverse Reactions section and ceased prescribing Fosamax as a result—generally are not amenable to across-the-board resolution. Each Plaintiff deserves the opportunity to develop those sort of facts separately, and the District Court’s understandable desire to streamline proceedings cannot override the Plaintiffs’ basic trial rights.171 As a technical matter, Merck’s actual burden at the summary judgment stage was to prove that there is no genuine dispute in every single MDL case that Plaintiffs’ doctors would have continued to prescribe Fosamax even if the fracture warning had been added to the Adverse Reactions section before May 2009. It could not do so, and the District Court’s grant of summary judgment on the merits was therefore erroneous.

Joining Fuentes were Chagares and Restrepo. The opinion ran 78 pages with 172 footnotes. Superstar arguing counsel were former Assistant to the Solicitor General David Frederick of Kellogg Hansen for the plaintiffs and John Beisner of Skadden Arps for Merck. Audio of the oral argument is here.

In re: Horizon Healthcare — class action — reversal — Jordan

The Third Circuit today ruled in favor of a putative class of data-theft victims who sued the company that their data was taken from. The introduction of the Court’s opinion:

The dispute at the bottom of this putative class action began when two laptops, containing sensitive personal information, were stolen from health insurer Horizon Healthcare Services, Inc. The four named Plaintiffs filed suit on behalf of themselves and other Horizon customers whose personal information was stored on those laptops. They allege willful and negligent violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq., as well as numerous violations of state law. Essentially, they say that Horizon inadequately protected their personal information. The District Court dismissed the suit under Federal Rule of Civil Procedure 12(b)(1) for lack of Article III standing. According to the Court, none of the Plaintiffs had claimed a cognizable injury because, although their personal information had been stolen, none of them had adequately alleged that the information was actually used to their detriment.

We will vacate and remand. In light of the congressional decision to create a remedy for the unauthorized transfer of personal information, a violation of FCRA gives rise to an injury sufficient for Article III standing purposes. Even without evidence that the Plaintiffs’ information was in fact used improperly, the alleged disclosure of their personal information created a de facto injury. Accordingly, all of the Plaintiffs suffered a cognizable injury, and the Complaint should not have been dismissed under Rule 12(b)(1).

Joining Jordan was Vanaskie. Judge Shwartz concurred in the judgment based on her view that the plaintiffs’ loss of privacy, apart from any statutory violation, constitutes injury in fact. Arguing counsel were associate Erich Schork of Chicago for the plaintiffs and Kenneth Chernof, litigation co-chair of Arnold & Porter, for the company.

Malandi v. Montclair State Univ. — civil — reversal — Krause

The Third Circuit today held that Montclair State University is an “arm of the state” and thus entitled to Eleventh Amendment immunity from federal suit. The opinion resolves a split among district courts in the circuit and gives a thorough review and application of the court’s Eleventh Amendment precedent applicable to state universities.

Joining Krause were Ambro and Thompson D-NJ by designation. Arguing counsel were Jennifer McGruther for New Jersey and Michael DiChiara of Krakower DiChiara for the appellees.

United Steel Paper & Forestry Rubber Manu. Allied Ind. & Svc. Workers Int’l Union AFL-CIO-CLC v. Gov’t Virgin Is. — labor — reversal — Fisher

The introduction of yesterday’s opinion is a model of concision and clarity:

In 2011, the Virgin Islands faced a severe budget crisis as a result of the economic recession. In response to this crisis, the Government of the Virgin Islands enacted the Virgin Islands Economic Stability Act of 2011 (“VIESA”), 2011 V.I. Sess. Laws 84, which reduced most Government employees’ salaries by 8%. Many of the Government employees, however, were covered by collective bargaining agreements negotiated on their behalf by their representative unions. The collective bargaining agreements, agreed to and signed by the Governor on behalf of the Government, set forth detailed salary and benefit schedules to be paid to covered Government employees.

The unions brought suit alleging that the salary reductions in VIESA constituted an impermissible impairment of the collective bargaining agreements, in violation of the Contract Clause of the United States Constitution. The District Court, after a bench trial, held that VIESA did not violate the Contract Clause. We will reverse.

The court rejected the government’s mootness argument, finding the ‘evading review’ exception inapplicable but ruling that the challenged law’s continuing collateral consequences preclude mootness. On the merits, the court ruled that VIESA violated the Contract Clause because it was unreasonable: the government knew about the financial crisis when it negotiated the contracts it later voided, and it promised the unions it could pay the contract rates in exchange for other concessions. Said the court, “The Contract Clause is not toothless.”

Joining Fisher were Krause and Roth. Arguing counsel were Nathan Kilbert for the unions and Samuel Walker for the government.

UPDATE: News coverage in the St. Thomas Source is here.

Marshall v. Commissioner PA DOC — capital / ripeness — dismissal — per curiam

Having already removed his first set of appointed lawyers, a capital inmate moved to remove the next set of lawyers, too. While his motion was still pending, he filed a notice of appeal, and some time after the district court denied the motion. Today, the Third Circuit dismissed the appeal for lack of jurisdiction, holding that the district court’s post-notice ruling did not cure the lack of ripeness.

The opinion was per curiam; the panel was Smith, Hardiman, and Restrepo. The case was decided without argument.

South Jersey Sanitation v. Applied Underwriters Captive Risk Assurance Co. — civil / arbitration — reversal — Greenaway

The Third Circuit today reversed a district’s denial of a motion to compel arbitration, holding that the challenges to arbitration failed because they applied to the contract as a whole instead of the arbitration agreement alone, and thus were issues for the arbitrator to decide instead of grounds to avoid arbitration.

Joining Greenaway were Jordan and Hardiman. Arguing counsel were Thomas Quinn of Wilson Elser for the appellant and Louis Barbone of Jacobs & Barbone for the appellee.

Zaloga v. Borough of Moosic — civil rights — reversal — Jordan

The Third Circuit today reversed a district court’s denial of summary judment on qualified-immunity grounds. The introduction:

This case is an appeal from an interlocutory decision denying defendant Joseph Mercatili’s claim to qualified immunity. Dr. Edward Zaloga, who had been engaged in an ongoing feud with local government officials, publicly opposed Mercatili’s reelection as the President of the Moosic, Pennsylvania Borough Council. Mercatili allegedly retaliated against Zaloga by seeking to damage his business interests.

Zaloga brought this § 1983 suit against several county entities and individuals, alleging various constitutional violations, including Mercatili’s retaliation. The United States District Court for the Middle District of Pennsylvania granted the defendants’ motion for summary judgment with respect to all defendants except Mercatili. The Court decided that Mercatili’s claim to qualified immunity depended on disputed facts and would have to be resolved by a jury.

Mercatili now appeals, arguing that he is entitled to qualified immunity because his conduct, even if Zaloga’s allegations are true, did not violate clearly established law. We agree and will reverse and remand for the District Court to grant summary judgment in Mercatili’s favor.

Joining Jordan were Smith and Rendell. Arguing counsel were Joshua Autry of Lavery Law for the appellants and Joseph Healey of O’Malley Harris for the appellees.

Smiley v. E.I. DuPont — employment — reversal — Rendell

Employees of DuPont sued the company under the FLSA and state law for not paying them overtime for their off-the-clock time donning and doffing their uniforms and consulting with other employees. DuPont argued that it didn’t have to pay them this overtime because instead it paid them for their meal-break time, which it was not legally required to do. It argued that it could use the meal time for which it paid employees to offset the other time for which it didn’t. The district court agreed with DuPont, but today the Third Circuit reversed.

Joining Rendell were Vanaskie and Krause. Arguing counsel were Thomas Marrone for the employees, David Fryman of Ballard Spahr for Dupont, and Rachel Goldberg for the US Department of Labor as amicus curiae.

Federal Trade Comm’n v. Penn State Hershey Medical Ctr. — antitrust — reversal — Fisher

The Third Circuit today ruled that the government was entitled to a preliminary injunction blocking the proposed merger of the two largest hospitals in the Harrisburg, Pa., area. The district court had denied the injunction, ruling that the FTC had failed to properly define the relevant geographic market. The Third Circuit’s review was plenary because the lower court misapplied economic theory. On the merits, it explained:

We find three errors in the District Court’s analysis. First, by relying almost exclusively on the number of patients that enter the proposed market, the District Court’s analysis more closely aligns with a discredited economic theory, not the hypothetical monopolist test. Second, the District Court focused on the likely response of patients to a price increase, completely neglecting any mention of the likely response of insurers. Third, the District Court grounded its reasoning, in part, on the private agreements between the Hospitals and two insurers, even though these types of private contracts are not relevant to the hypothetical monopolist test.

Joining Fisher were Greenaway and Krause. Arguing counsel were William Efron for the FTC and Louis Fisher of Jones Day for the hospitals.

Early news coverage by Pennlive here and Legal Intelligencer here. My prior post on the case (quoting a former FTC general counsel saying the district court’s ruling was “appallingly bad”) is here.

Didon v. Castillo — treaty — reversal — Greenaway

The Hague Convention allows a parent to petition for return of a child who has been removed from her country of “habitual residence” in violation of the parent’s rights. In a clear and thorough opinion, the Third Circuit today held that the Hague Convention does not permit a child to have two “habitual residence” countries at the same time, and ruled that the parent’s petition here must be dismissed because the child’s country of habitual residence does not recognize the Hague Convention.

Joining Greenaway were McKee and Fisher. Arguing counsel were civil appeals lawyer Anthony Vetrano of Vetrano Vetrano & Feinman for today’s losing parent and Michelle Pokrifka of CGA Law Firm for the winning parent.

Black v. Montgomery County — civil rights — reversal — Chagares

The Third Circuit today reversed a district court’s grant of summary judgment in favor of defendants in a remarkable civil rights suit, holding that the plaintiff was seized for purposes of her Fourth Amendment malicious-prosecution claim and that she stated a valid due process claim for fabricated evidence even though she was acquitted at trial. The case arose from what the plaintiff alleged was a badly bungled fire investigation and prosecution; the accused was found not guilty of arson after the jury deliberated less than 40 minutes.

Joining Chagares were Krause and Scirica. Arguing counsel for the appellant was Michael Schwartz of James, Schwartz & Associates; for the appellees, Carol Vanderwoude of Marshall Dennehey, Philip Newcomer of the Montgomery County Solicitor’s Office, and Claudia Tesoro of the Office of the Attorney General.

DePolo v. Board of Supervisors — civil — dismissal of appeal — McKee

The Third Circuit held that a ham radio operator’s federal suit challenging denial of permission to build a 180-foot radio tower (!) was precluded by his failure to appeal a prior adverse ruling by a township zoning appeals board.

Joining McKee were Ambro and Scirica. Arguing counsel were Fred Hopengarten of Massachusetts (whose solo telecom practice focuses on antenna and tower issues and whose website includes an image of his Third Circuit bar admission certificate) for the appellant, and Maureen McBride of Lamb McErlane and John Larkin of Gawthrop Greenwood for the appellees.

NY Shipping Assoc v. Waterfront Comm’n — affirmance — Nygaard

The Third Circuit upheld district court rulings upholding the NY Waterfront Commission’s power under an interstate compact to require non-discriminatory hiring policies.

Joining Nygaard were Fuentes and Roth (the case was argued on July 9, nine days before Fuentes went senior, so the panel composition comported with 3d Cir. IOP 3.1 even though all three judges were senior at the time the opinion issued). Arguing counsel for various appellants were Donato Caruso of New York and Kevin Marrinan of New York, and Peter Hughes of Ogletree Deakins; arguing counsel for appellees was Phoebe Sorial of the NY Harbor Waterfront Commission.

Doe v. Hesketh — civil — reversal — Greenaway

Matthew Mancuso adopted a five-year-old girl, sexually abused her, took photos and videos of the abuse, and traded this child pornography online. He was convicted of sexual exploitation of a minor and received a sentence that included $200,000 in restitution to the victim. The victim later sued Mancuso under 18 USC 2255, but the district court held that the civil suit was barred by the prior restitution award. Today, the Third Circuit reversed, holding that section 2255 allows victims to sue for damages even if they already have received restitution for the same conduct.

Joining Greenaway were Scirica and Roth. Arguing counsel were Sidney Moore of Georgia for the appellant and Stanley Greenfield of Greenfield & Kraut for the appellee.

In re: Nickelodeon Consumer Privacy Litig. — civil — partial affirmance — Fuentes

The opinion’s cogent introduction:

Most of us understand that what we do on the Internet is not completely private. How could it be? We ask large companies to manage our email, we download directions from smartphones that can pinpoint our GPS coordinates, and we look for information online by typing our queries into search engines. We recognize, even if only intuitively, that our data has to be going somewhere. And indeed it does, feeding an entire system of trackers, cookies, and algorithms designed to capture and monetize the information we generate. Most of the time, we never think about this. We browse the Internet, and the data-collecting infrastructure of the digital world hums along quietly in the background.

Even so, not everything about our online behavior is necessarily public. Numerous federal and state laws prohibit certain kinds of disclosures, and private companies often promise to protect their customers’ privacy in ways that may be enforceable in court. One of our decisions last year, In re Google Inc. Cookie Placement Consumer Privacy Litigation, addressed many of these issues. This case addresses still more.

This is a multidistrict consolidated class action. The plaintiffs are children younger than 13 who allege that the defendants, Viacom and Google, unlawfully collected personal information about them on the Internet, including what webpages they visited and what videos they watched on Viacom’s websites. Many of the plaintiffs’ claims overlap substantially with those we addressed in Google, and indeed fail for similar reasons. Even so, two of the plaintiffs’ claims—one for violation of the federal Video Privacy Protection Act, and one for invasion of privacy under New Jersey law—raise questions of first impression in our Circuit.

The Video Privacy Protection Act, passed by Congress in 1988, prohibits the disclosure of personally identifying information relating to viewers’ consumption of video-related services. Interpreting the Act for the first time, we hold that the law permits plaintiffs to sue only a person who discloses such information, not a person who receives such information. We also hold 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. In our view, the kinds of disclosures at issue here, involving digital identifiers like IP addresses, fall outside the Act’s protections.

The plaintiffs also claim that Viacom and Google invaded their privacy by committing the tort of intrusion upon seclusion. That claim arises from allegations that Viacom explicitly promised not to collect any personal information about children who browsed its websites and then, despite its assurances, did exactly that. We faced a similar allegation of deceitful conduct in Google, where we vacated the dismissal of state-law claims for invasion of privacy and remanded them for further proceedings. We reach a similar result here, concluding that, at least as to Viacom, the plaintiffs have adequately alleged a claim for intrusion upon seclusion. In so doing, we hold that the 1998 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.

Accordingly, we will affirm the District Court’s dismissal of most of the plaintiffs’ claims, vacate its dismissal of the claim for intrusion upon seclusion against Viacom, and remand the case for further proceedings.

Joining Fuentes were Shwartz and Van Antwerpen. Arguing counsel were Jason Barnes for the appellants, David O’Neil of Debevoise & Plimpton and Michael Rubin of Wilson Sonsini for appellees, and Alan Butler of the Electronic Privacy Information Center and Jeffrey Wall of Sullivan & Cromwell for amici.

Davis v. Wells Fargo — civil — vacate in part — Jordan

The Third Circuit vacated in part in this messy civil appeal arising out of a foreclosure dispute between a homeowner, Wells Fargo bank, and an insurer. The court affirmed dismissal of the homeowner’s claims against Wells Fargo on claim preclusion and statute-of-limitations grounds. But the court reversed the dismissal of claims against the insurer. The district court had dismissed the case on standing grounds because the homeowner sued the wrong corporate entity, but the Third Circuit explained that “this case is not about standing at all” and that whether plaintiff sued the right defendant should have been decided under Rule 12(b)(6), not 12(b)(1). The opinion gives a lucid analysis of when each rule applies and why it matters.

While affirming dismissal of the claims against Wells Fargo, the court included this striking footnote:

Although we affirm the District Court’s dismissal of Davis’s claims against Wells Fargo, we would be remiss if we did not add a note about the disturbing allegations he has made. If they are true, the bank locked Davis out of his home before starting foreclosure proceedings, initiated a series of fraudulent assignments of the mortgage, and obtained insurance on the Property as part of a kickback scheme with the insurer while Davis paid excessive premiums. Although the insurance should have covered the leak and damage to the wall, Wells Fargo allegedly settled the damage claim for a payment of $317 – for roof repairs – but then took no action to actually repair the roof. And all of this took place during and around the time that Davis was serving three years of active duty in the United States Army in a time of war.

When asked about those facts during oral argument, Wells Fargo did not dispute their veracity, nor did its counsel seem particularly concerned about the brazenly exploitative character of the alleged actions of the bank. In one telling portion of the argument, when asked whether the bank had the right to make an insurance claim, take money for a roof repair, and then pocket that money and not make the repair, all while knowing the result could be further deterioration and structural damage to the Property, counsel said simply, “that is what the mortgage gives them the right to do.” See Oral Argument, http://www2.ca3.uscourts.gov/oralargument/audio/15-2658Davisv.WellsFargo.mp3, at 19:13-19:38 (argued March 2, 2016). If the allegations are true, they raise serious questions about bad faith that we are not now in a position to address. Suffice it to say, however, that although we affirm the dismissal of Davis’s claims, we hope the allegations of the amended complaint do not reflect Wells Fargo’s actual business practices.

Congratulations, Wells Fargo and counsel on your appellate victory!

Joining Jordan were Greenberg and Scirica. Arguing counsel were Earl Raynor for the homeowner, Stacey Scrivani of Stevens & Lee for Wells Fargo, and Matthew Faranda-Diedrich of Dilworth Paxson for the insurer.

In re: Asbestos Prods. Liability — civil — reversal — Hardiman

A railroad worker was exposed to asbestos used for insulation on railcars. He contracted asbestosis and mesothelioma and sued the railcar manufacturers under state law. The defendants argued that the state-law claims were pre-empted, and the district court agreed and dismissed the suit. Today the Third Circuit reversed, holding that the district erred procedurally by dismissing based on facts that were not pled in the complaint. The court acknowledged that the district court could treat the motion as one for summary judgment instead of dismissal, but held that summary judgment was not appropriate here either because the defendants did not provide evidentiary support for the district court’s factual finding, or, at a minimum, there was a factual dispute and the court had to draw inferences in the non-movant’s favor.

Joining Hardiman were Ambro and Nygaard. Arguing counsel were John Roven of Houston for the appellant (joined on the brief by Howard Bashman ) and Holli Pryer-Baze of Akin Gump and Joseph Richotte for the appellees.

Hamilton Park v. 1199 SEIU — civil / arbitration — partial reversal — Ambro

The Third Circuit today affirmed in part and reversed in part in an appeal arising from an arbitration. The opening of the opinion aptly lays out the basics:

Hamilton Park Health Care Center filed a petition to vacate an arbitration award in a dispute with the 1199 SEIU United Healthcare Workers East union. The District Court denied the petition and confirmed the award. On appeal, Hamilton Park asserts that the Court erred by approving a multi-year arbitration award when the parties’ collective bargaining agreement (“CBA”) only contemplated a single-year award. Because the parties consented at arbitration to a multi-year award, we affirm this portion of the Court’s order.

Hamilton Park also argues that, even if a multi-year award is permissible, the Court should have severed a provision authorizing a new round of arbitration at a later date. We agree; thus we reverse and remand as to this portion of the order.

The conclusion clarifies the basis for reversal:

Our deference to an arbitrator’s award does not include the rubber stamping of a self-perpetuating arbitration provision that the parties did not agree to include. We therefore reverse the portion of the District Court’s order approving the inclusion of a new arbitration provision for disputes arising for the year starting June 30, 2015. We remand the case with instructions for the Court to void only the portion of the award providing for that arbitration. We affirm the Court’s order in all other respects.

(Citation and footnote omitted).

Joining Ambro were Jordan and Scirica. The case was decided without oral argument.

Today’s opinion was the court’s first published opinion since March 11.

Goldenstein v. Repossessors Inc — civil — partial reversal — Krause

Oh, what a story. (The facts are taken from the opinion.)

A guy borrowed $1000 from a lender, offering his car as collateral. The interest rate on this loan was 250 percent. The lender wired the money into the guy’s account, and then the lender started withdrawing $208 each month. After two months the guy took the money out of the account because he didn’t realize it was the lender making those withdrawals. The next month, when the lender couldn’t withdraw the third payment, it promptly contracted to repossess the guy’s car. Then — the lender having already collected $415 in monthly installments and $50 as a transfer fee — the repossessor told the guy that to get his car back — this is just a few months after the guy took out the $1000 loan — he had to sign a release, pay a $250 repossession fee, and pay $2143 to satisfy the loan.

Which he did. Then he sued, under RICO, the FDCPA, and state law. Eye poppingly, the district court granted summary judgment, on all claims, against the guy.

Today, the Third Circuit affirmed as to one claim — upholding denial of the FDCPA claim because the defendants had a right to possess the car even if the underlying loan was illegally usurious — but reversed on everything else. The court emphatically rejected the district court’s view that RICO’s prohibition against collecting unlawful debt did not apply to seizing collateral. And the court reversed the summary judgment on the state law claims after offering this withering observation:

The District Court granted summary judgment against Goldenstein on his PFCEUA and UCC claims without addressing the substance of the PFCEUA claim, without even mentioning the UCC claim, and despite the fact that Appellees did not argue those claims in their motion for summary judgment.

Kapow.

Joining Krause were Greenaway and Greenberg. Arguing counsel were Robert Salvin for the guy and Neal Thakkar for the appellees.

S.B. v. KIndercare Learning — civil — jurisdictional dismissal — Sloviter

After a child was allegedly injured at a daycare center, her mother sued in state court. The daycare removed the case to federal court. The plaintiffs retained a new lawyer, who sought to voluntarily dismiss without prejudice because the child (age 4) was too young to explain her injury. The district court granted dismissal but ordered the plaintiffs to pay the daycare’s attorney fees and refile within 4 years (extendable for good cause). The plaintiffs appealed. and today the Third Circuit held that the voluntary dismissal without prejudice here was not an appealable final order. The court left open the possibility that a litigant could appeal the attorney fees once their amount had been set, and that a litigant could appeal the conditions in an appeal from a later dismissal with prejudice for failing to comply.

Joining Sloviter were Smith and Hardiman. The case was decided without argument.

Mammaro v. NJ Division of Child Protection — civil rights — reversal — Ambro

New Jersey child services took away a mother’s one-and-a-half-year-old child for “a few days” because the mother twice tested positive for marijuana and moved out of approved housing. After the mother got her infant back, she filed a civil rights suit against child services and the caseworkers involved. The district court dismissed the suit against child services but refused to dismiss a substantive due process claim against the caseworkers. The caseworkers appealed, and today the Third Circuit reversed, holding that the caseworkers were protected by qualified immunity. The court assumed a consensus of persuasive authority that temporary removal of a child could violate due process, but found no consensus that removing the infant was an “unconstitutional interference with the parent-child relationship” because no prior case so held.

Practitioners should take special note of a footnote in the opinion, inserted apparently at Chief Judge McKee’s request:

A hair follicle test [of the mother] in November 2011 showed a very small amount of marijuana and cocaine, but the amount found was too low to meet the standard for a positive test.

Although Chief Judge McKee joins this opinion in its entirety, he notes his concern with the misleading nature of the Division’s brief on this point. The brief stated that Mammaro “submitted to a hair follicle drug test, which was positive for cocaine and marijuana.” However, at oral argument, after counsel for Mammaro represented that she never tested positive for cocaine, the Division’s counsel (who was involved in drafting the brief) was given an opportunity to clarify whether the hair follicle test for cocaine was positive, as represented in the brief, or negative. Counsel first responded that the result was “inconclusive,” but then
conceded that Mammaro’s hair follicle analysis was “negative” for cocaine.

* * * given the thresholds employed by the lab and the Division’s own guidelines, Mammaro’s test results were negative.

Chief Judge McKee believes that it is (at best) unfortunate and (at most) disingenuous and intentionally misleading for the Division to have stated, without qualification or explanation, that Mammaro was using cocaine. The failure to explain or qualify such an assertion is particularly egregious here where the focus of our inquiry is the reasonableness of the challenged interference with Mammaro’s custody of her child, and the alleged bad faith of the Division. Moreover, the misstatement in the brief should not be minimized merely because the removal of Mammaro’s child preceded the disputed cocaine analysis. By its own statement, the Division provided the misleading lab results for “background information.” Since the information was, by the Division’s own admission, irrelevant to its decision to interfere with
Mammaro’s parental rights, Chief Judge McKee is concerned that it may have been offered in an attempt to “poison the [analytical] well.”

Not how any appellate attorney wants to be remembered in a published circuit opinion.

Joining Ambro were McKee and Hardiman. Arguing counsel were Michael Walters of the state attorney general for the child services defendants and Kenneth Rosellini for the mother.

Cunningham v. M&T Bank — civil — affirmance — Ambro

The Third Circuit upheld a district court’s ruling that a class-action lawsuit was barred by the statute of limitations and not subject to equitable tolling based on any fraudulent concealment.

Joining Ambro were McKee and Scirica. The case was decided without argument.

United States ex rel. Moore & Co. v. Majestic Blue Fisheries — qui tam — reversal — Rendell

The False Claims Act enables someone to sue someone else for defrauding the government — FCA suits are commonly called qui tam suits. (For example, there’s a big qui tam suit against disgraced cyclist Lance Armstrong related to his doping while sponsored by the US Postal Service.) This case involves a law firm that brought a qui tam suit alleging that foreign nationals fraudulently obtained fishing licenses reserved for citizens. The district court granted summary judgment for the defendants, but today the Third Circuit reversed. The main issue was whether the law firm’s suit survived the FCA’s public disclosure bar, and the court held that it did because it alleged information that was independent of and materially added to publicly disclosed information about the alleged fraud.

Joining Rendell were Vanaskie and Nygaard. Arguing counsel were Clay Naughton for the law firm and Robert Salcido of Akin Gump for the appellees.

Wiest v. Tyco Electronics Corp. — civil — affirmance — Greenberg

The Third Circuit today affirmed a district court’s ruling granting summary judgment against a former employee in an action for retaliation brought under the Sarbanes-Oxley Act.

Joining Greenberg were Fuentes and Chagares. The case was decided without oral argument.

Connelly v. Lane Construction — employment discrimination — vacate & remand — Jordan

Sandra Connelly was a truck driver. According the suit she later filed, her male co-workers harrassed her, and her complaints about this harassment strained her work relationships. When the company then laid off drivers, she alleged, she was let go before less-senior male drivers, and when the company recalled laid-off drivers, the company brought back less-senior men but not her. She sued under title VII and state law, but the district court dismissed based its conclusion that she failed to plead a sufficiently plausible gender-discrimination claim. Today, the Third Circuit vacated that dismissal, holding that Connelly’s claims were sufficient to survive a motion to dismiss. The court reiterating that a complaint need not establish a prima facie case in order to survive dismissal, and that the test is whether the complaint is plausible on its face, a test that can be met “even if one believed it ‘unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits.'”

Joining Jordan were Fisher and Chagares. Arguing counsel were Emily Town (formerly of Stember Cohn but now a WDPA clerk) for the employee, Samantha Clancy (formerly of Ogletree Deakins but now corporate counsel) for the appellant, and Christine Back for the EEOC as amicus appellant. (Neither Town nor Clancy are on their firms’ websites.)