Justia Civil Procedure Opinion Summaries

Articles Posted in US Court of Appeals for the Third Circuit
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SHI, owned by Vik, borrowed funds from Deutsche Bank (Bank). SHI entered a limited partnership (LP) agreement with Devon and invested $25 million, Bank issued margin calls. SHI claimed that it lacked funds to satisfy the calls. Bank sued SHI in England and Wales and received a $235,646,345 judgment, which SHI has not satisfied. SHI transferred the Devon Interest to CPR (allegedly related to Vik's father). SHI paid Devon millions of dollars for the transfer. Devon made fund distributions to the limited partners but had difficulties transmitting proceeds to CPR. CPR initiated arbitration to compel Devon to release the Proceeds. The arbitrator denied Bank’s request to intervene. Devon raised counterclaims, seeking a declaration whether the assignment to CPR was enforceable.Meanwhile, Bank sued CPR, SHI, and Devon in Delaware, alleging a conspiracy to commit fraud. The arbitrator denied Devon’s motion to stay proceedings. Devon then refused to participate in the arbitration. The arbitrator awarded CPR the proceeds, plus prejudgment interest, CPR petitioned to confirm the arbitration award; in the Eastern District of Pennsylvania, Devon attempted to interplead Deutsche Bank. Bank answered and sought to set aside the purported transfer of the Devon Interest to CPR, to declare SHI and CPR alter egos, and to find Devon, CPR, and SHI liable for fraud and conspiracy. The Third Circuit affirmed orders confirming the arbitration award, striking the interpleader complaint, and dismissing all third parties and claims and Devon’s counterclaim. View "CPR Management SA v. Devon Park Bioventures LP" on Justia Law

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The Reefer arrived at the Port of Wilmington, Delaware for what its owner, Nederland, expected to be a short stay. Upon inspection, the Coast Guard suspected that the vessel had discharged dirty bilge water directly overboard and misrepresented in its record book that the ship’s oil water separator had been used to clean the bilge water prior to discharge. Nederland, wanting to get the ship back to sea as rapidly as possible, entered into an agreement with the government for the release of the Reefer in exchange for a surety bond to cover potential fines. Although Nederland delivered the bond and met other requirements, the vessel was detained in Wilmington for at least two additional weeks.Nederland sued. The Delaware district court dismissed the complaint, holding that Nederland’s claims had to be brought in the U.S. Court of Federal Claims because the breach of contract claim did not invoke admiralty jurisdiction a claim under the Act to Prevent Pollution from Ships (APPS) failed because of sovereign immunity. The Third Circuit reversed. The agreement is maritime in nature and invokes the district court’s admiralty jurisdiction. The primary objective of the agreement was to secure the vessel's departure clearance so that it could continue its maritime trade. APPS explicitly waives the government’s sovereign immunity. View "Nederland Shipping Corp. v. United States" on Justia Law

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Dr. Polansky was an official at the Centers for Medicare and Medicaid Services (CMS) before consulting for EHR, a “physician advisor” company that provides review and billing certification services to hospitals and physicians that bill Medicare. Polansky became concerned that EHR was systematically enabling its client hospitals to over-admit patients by certifying inpatient services that should have been provided on an outpatient basis.In 2012, Polansky filed suit under the False Claims Act (FCA), 31 U.S.C. 3729, alleging EHR was causing hospitals to bill the government for inpatient stays that were not “reasonable and necessary” for diagnosis or treatment as required by the Medicare program, 42 U.S.C. 1395y(a)(1)(A). His complaint remained under seal for two years while the government conducted its own investigation and ultimately determined it would not participate in the case.In 2019, the government notified the parties that it intended to dismiss the entire action under 31 U.S.C. 3730(c): “[t]he Government may dismiss the action notwithstanding the objections of the [relator]” so long as the relator receives notice and an opportunity to be heard on the Government’s motion. The district court eventually granted the motion. The Third Circuit affirmed. The government is required to intervene before moving to dismiss and its motion must meet the standard of FRCP 41(a). The district court acted within its discretion in granting the government’s motion. View "Polansky v. Executive Health Resources Inc" on Justia Law

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The estates of New Jersey nursing home residents, who died from COVID-19, alleged that the nursing homes acted negligently in handling the COVID-19 pandemic. The nursing homes removed the case to federal court. The district court dismissed the cases for lack of subject-matter jurisdiction.The Third Circuit affirmed rejecting three arguments for federal jurisdiction: federal-officer removal, complete preemption of state law, and the presence of a substantial federal issue. The 2005 Public Readiness and Emergency Preparedness Act (PREP Act), 42 U.S.C. 247d-6d, 247d6e, which protects certain individuals—such as pharmacies and drug manufacturers—from lawsuits during a public-health emergency, was invoked in March 2020 but does not apply because the nursing homes did not assist or help carry out the duties of a federal superior. The PREP Act creates an exclusive cause of action for willful misconduct but the estates allege only negligence, not willful misconduct; those claims do not fall within the scope of the exclusive federal cause of action and are not preempted. The PREP Act’s compensation fund is not an exclusive federal cause of action. The estates would properly plead their state-law negligence claims without mentioning the PREP Act, so the PREP Act is not “an essential element" of the state law claim. View "Estate of Joseph Maglioli v. Alliance HC Holdings, LLC" on Justia Law

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In 2019, Mallet learned that Bundy was its newest competitor in the sale of baking release agents, the lubricants that allow baked goods to readily separate from the containers in which they are made. Bundy was well-known for other commercial baking products when it launched a new subsidiary, Synova, to sell baking release agents. Synova hired two Mallet employees, both of whom had substantial access to Mallet’s proprietary information. That information from Mallet helped Synova rapidly develop, market, and sell release agents to Mallet’s customers.Mallet sued, asserting the misappropriation of its trade secrets. The district court issued a preliminary injunction. restraining Bundy, Synova, and those employees from competing with Mallet. The Third Circuit vacated and remanded for further consideration of what, if any, equitable relief is warranted and what sum Mallet should be required to post in a bond as “security … proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.” A preliminary injunction predicated on trade secret misappropriation must adequately identify the allegedly misappropriated trade secrets. If the district court decides that preliminary injunctive relief is warranted, the injunction must be sufficiently specific in its terms and narrowly tailored in its scope. View "Mallet & Co., Inc. v. Lacayo" on Justia Law

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Current and former mortgage loan officers claim that Citizens Bank forced them—and more than a thousand of their colleagues—to work over 40 hours a week without paying them the overtime they were due under state and federal law. They filed a collective action under the Fair Labor Standards Act (FLSA), 29 U.S.C. 207, and parallel state-law claims that they wished to pursue as a class action under FRCP 23. The district court scheduled a trial on the primary factual issue in the FLSA opt-in collective action but left unresolved whether it would certify a class for the state-law opt-out Rule 23 action.The Third Circuit stayed the trial. Citizens had a sufficient likelihood of success on its mandamus petition, and mandamus is the only relief available. By compelling the FLSA opt-in collective action trial before deciding Rule 23 class certification, the district court “created a predicament for others to unravel” and “clearly and indisputably erred.” Allowing the planned FLSA collective action trial would publicly preview the evidence common to the FLSA and state-law claims, giving potential Rule 23 class members an enormous informational advantage in any subsequent “do-over.” Citizens would suffer irreparable injury absent a stay; a stay will not substantially injure the plaintiffs. View "In re: Citizens Bank, N.A." on Justia Law

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In 1969, Beasley founded a band, “The Ebonys,” one of many bands that created the “Philadelphia Sound.” The Ebonys achieved some commercial success in the 1970s but never reached the notoriety of similar artists such as The O’Jays. Beasley alleges that The Ebonys have performed continuously. Howard joined the band in the mid-1990s. Beasley obtained a New Jersey state service mark for THE EBONYS in 1997. Beasley and his bandmates performed with Howard for several years before parting ways. Each artist claimed the Ebonys name. In 2012, Howard registered THE EBONYS with the Patent & Trademark Office (PTO). Beasley alleges that Howard’s registration has interfered with his business; he has not been able to register a band website that uses “the Ebonys” in its domain name, Howard has kept concert venues from booking Beasley’s performances, Howard has tried to collect royalties from Beasley’s recordings, and Howard has claimed to be the Ebonys’s true founder. Beasley filed unsuccessful petitions with the Trademark Trial and Appeal Board (TTAB) to cancel the mark, contending that Howard defrauded the PTO. The district court relied on claim preclusion to dismiss Beasley’s subsequent complaint. The Third Circuit remanded for a determination of the scope of Beasley’s claims. Trademark cancellation proceedings before TTAB do not have claim preclusive effect against federal trademark infringement lawsuits. TTAB’s limited jurisdiction does not allow trademark owners to pursue infringement actions or the full scope of infringement remedies. The court affirmed the dismissal of any claim that Howard defrauded the PTO. View "Beasley v. Howard" on Justia Law

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Harper runs deliveries under the “Amazon Flex” program, which supplements Amazon’s traditional delivery services. Interested drivers use an app to sign up to drive packages from Amazon warehouses, affiliated grocers, and participating restaurants to home shoppers. Harper signed up, clicking on a brightly colored button stating, “I AGREE AND ACCEPT” following the Terms of Service. The Terms included an arbitration provision with an “opt-out” process and specified that Washington law applies. Harper filed a putative class action on behalf of similarly situated New Jersey Amazon Flex drivers, alleging that Amazon misclassified them as independent contractors when they really are employees. Amazon moved to compel arbitration under the Federal Arbitration Act. Harper cited the exemption for a “class of workers engaged in foreign or interstate commerce,” 9 U.S.C. 1, noting that the drivers make some deliveries across state lines. Amazon argued that the claim is also arbitrable under state law. The district court ordered discovery to determine whether Harper falls within the FAA exception, declining to reach Amazon’s alternative state law argument.The Third Circuit vacated. Federal courts sitting in diversity must decide state law claims, including state arbitrability, even where the FAA may apply. That is a threshold inquiry, ensuring prompt review of state law claims, particularly before turning to discovery to sort through a comparatively complex federal question. View "Harper v. Amazon.com Services, Inc." on Justia Law

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In March 2010, Orrstown made a stock offering at $27 per share. SEPTA invested some of its pension funds in Orrstown stock during this offering and later purchased Orrstown stock on the open market. In 2011-2012 Orrstown made disclosures concerning its financial health. Orrstown’s stock price dropped following each disclosure falling to $8.20 by April 2012.SEPTA filed a purported class action in May 2012, on behalf of a “Securities Act Class" of investors who purchased Orrstown stock “in connection with, or traceable to,” Orrstown’s 2010 Registration Statement, and the “Exchange Act Class” of investors who later purchased Orrstown stock on the open market. A first amended complaint added the Underwriters and the Auditor. The district court dismissed the amended complaint without prejudice for failure to meet pleading requirements. SEPTA filed its Second Amended Complaint in February 2016. The court dismissed all Securities Act claims against Orrstown but did not dismiss the Exchange Act claims except for some individual Orrstown officers. The court dismissed all claims against the Underwriters and the Auditor. The parties began discovery, which triggered a lengthy process in which the parties sought to have federal and state regulators review the relevant documents. In April 2019, SEPTA moved for leave to file a Third Amended Complaint, arguing it had identified evidence to support previously-dismissed claims through discovery.The court granted SEPTA’s motion despite the expiration of the three-year (Securities Act) and five-year (Exchange Act) repose periods. The Third Circuit affirmed. Federal Rule of Civil Procedure 15(c), which provides an exception more commonly applied to statutes of limitations, also allows amendment of a pleading after the expiration of a repose period here because the Rule’s “relation-back” doctrine leaves the legislatively-mandated deadline intact and does not disturb any of the defendants’ vested rights. View "Southeastern Pennsylvania Transportation Authority v. Orrstown Financial Services Inc." on Justia Law

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Ellison, an orthopedic surgeon who practices in California, wants to move to New Jersey and practice in the RWJBarnabas Health system. In order to obtain staff privileges, Ellis sought certification by the American Board of Orthopaedic Surgery (ABOS) around 2012. ABOS only certifies surgeons who successfully complete its multistep certification examination. Ellison passed the first step of ABOS’s exam, but ABOS prohibited him from taking the second step until he first obtained medical staff privileges at a hospital. Ellison has yet to apply for staff privileges. He believes the New Jersey hospitals where he desires to practice will reject his application, as their bylaws provide that they generally grant privileges only to physicians who are already board certified. Ellison sued ABOS in 2016. ABOS removed the matter to federal court. Ellison amended his complaint to allege that ABOS violated the Sherman Act, 15 U.S.C. 1. The District Court dismissed Ellison’s complaint for failure to state a claim for relief.The Third Circuit vacated with instructions to dismiss the case for lack of standing. Ellison has not attempted to apply for medical staff privileges or taken any concrete steps to practice in New Jersey. His assertions that ABOS has injured him are speculative. View "Ellison v. American Board of Orthopaedic Surgery" on Justia Law