Justia Civil Procedure Opinion Summaries

The Haistens sold discounted animal pesticides and drugs online from their South Carolina home. They operated in violation of multiple FDA and EPA regulations. They sold counterfeit DVDs of movies and television shows that they obtained from China. The Haistens ignored cease-and-desist letters from state regulators and animal pesticides companies. Department of Homeland Security agents began making undercover purchases from the Haistens. Customs and Border Protection (CBP) seized shipments of counterfeit DVDs. Agents then searched the Haistens’ home, which revealed unapproved animal pesticides and drugs, counterfeit DVDs, and business records. In the ensuing prosecution, Count 14 charged the Haistens with trafficking counterfeit DVDs that were seized by CBP officers in Cincinnati. Count 15 charged them with trafficking counterfeit DVDs, that were seized at their home. Defense counsel did not request a jury instruction on improper venue or move for acquittal on Counts 14 or 15 for lack of proper venue in the Eastern District of Pennsylvania. The Haistens appealed, challenging an evidentiary ruling and a statement the government made during its summation. The Third Circuit affirmed.The Haistens then sought relief under 28 U.S.C. 2255, arguing that their trial counsel was ineffective for failing to challenge venue on Counts 14 and 15. The Third Circuit remanded the denial of that motion for the district court to conduct an evidentiary hearing on whether their counsel had a strategic reason for not raising a defense based on improper venue. View "United States v. Haisten" on Justia Law

A fire at the Barclay assisted living facility caused four residents’ deaths. Their estates sued Barclay and Johnson Controls, which maintained and monitored Barclay’s fire-suppression system. After Barclay and its liability insurers settled with the estates, the insurers sued Johnson in federal court, asserting diversity jurisdiction. The insurers alleged that they stood in the shoes of Barclay as its subrogees and were entitled to damages for the settlement payments they made on Barclay’s behalf. The insurers are structured as reciprocal insurance exchanges--distinct legal entities that can sue or be sued but without corporate existence. Each is an unincorporated association whose subscribers exchange contracts and pay premiums for the purpose of insuring themselves and each other. The subscribers are simultaneously both the insureds of and insurers to one another, with the exchanges of insurance between them effected by a common representative.The district court, reasoning that there was no clear Pennsylvania subrogation law prohibition on insurers “asserting tort-based claims against third-party tortfeasors,” denied Johnson’s motion to dismiss. The Third Circuit vacated without reaching the issue of the availability of the tort claims under Pennsylvania law. Before any federal court can decide the merits of such a question, it must have jurisdiction, which may be lacking in this case. For purposes of diversity jurisdiction, the citizenship of reciprocal insurance exchanges turns on the citizenship of their subscribers, who may not be completely diverse from Johnson. Additional fact-finding is needed. View "Peace Church Risk Retention Group v. Johnson Controls Fire Protection LP" on Justia Law

The Delaware River Basin Commission banned high-volume hydraulic fracturing (fracking) within the Delaware River Basin, reflecting its determination that fracking “poses significant, immediate and long-term risks to the development, conservation, utilization, management, and preservation of the [Basin’s] water resources.” The ban codified a “de facto moratorium” on natural gas extraction in the Basin since 2010. Two Pennsylvania state senators, the Pennsylvania Senate Republican Caucus, and several Pennsylvania municipalities challenged the ban, alleging that the Commission exceeded its authority under the Delaware River Basin Compact, violated the Takings Clause, illegally exercised the power of eminent domain, and violated the Constitution’s guarantee of a republican form of government.The Third Circuit affirmed the dismissal of the suit for lack of standing. No plaintiff alleged the kinds of injuries that Article III demands. Legislative injuries claimed by the state senators and the Republican Caucus affect the state legislature as a whole; under Supreme Court precedent, “individual members lack standing to assert the institutional interests of a legislature.” The municipalities alleged economic injuries that are “conjectural” and “hypothetical” rather than “actual and imminent.” None of the plaintiffs have standing as trustees of Pennsylvania’s public natural resources under the Pennsylvania Constitution's Environmental Rights Amendment because the fracking ban has not cognizably harmed the trust. View "Yaw v. Delaware River Basin Commission" on Justia Law

In 2007, Sovereign extended a $15 million line of credit to REMI to fund residential mortgage loans. Kaiser guaranteed REMI’s obligations. Sovereign and Kaiser agreed that any judgment entered against Kaiser would bear interest at the Prime Rate plus six percent per annum, not at the statutory rate of interest after judgment. REMI defaulted. Sovereign sued REMI and Kaiser. The parties resolved the case by agreement, which the district court entered as a $1,560,430.24 consent judgment in 2010. The Judgment was silent about any applicable interest rate.In 2017, Kaiser moved to declare that judgment had been satisfied. The district court denied the motion, ordering that the applicable interest rate is the federal statutory post-judgment interest rate, fixed by the Federal Reserve Bank, at 0.26%; and that REMI may serve discovery to determine the status of payments made toward the Consent Judgment. The court reasoned that no clear, unambiguous, and unequivocal language in the Consent Judgment demonstrated an intent to depart from the rate of interest provided by 28 U.S.C. 1961. The Third Circuit affirmed. It is incumbent on the parties to detail, with precision and with clarity, the bargain they have struck. The failure to do so in a consent judgment precludes a district court from enforcing an otherwise-silent provision one party asks it to enforce. View "Sovereign Bank v. Remi Capital Inc." on Justia Law

In the 1990s, Aldossari’s company, Trans Gulf, entered into an agreement in Saudi Arabia with three other businesses to establish and operate an oil refinery in Saint Lucia, a Caribbean island nation. Crude oil was to be sourced from the Saudi government or its national oil company, Saudi Aramco. The project went forward, but, Aldossari alleged, the owners of the three contract counterparties – one of whom became the Crown Prince of Saudi Arabia –refused to pay Trans Gulf its share of the proceeds. Two decades later, the soon-to-be Crown Prince promised to pay Aldossari but never did. Aldossari, transferred his rights to his minor son, a U.S. citizen.The federal district court dismissed Aldossari’s subsequent tort and contract claims. The Third Circuit affirmed, holding that dismissal of the claims against a deceased defendant was proper because Aldossari failed to allege any basis for exercising subject-matter jurisdiction over those claims. As for the surviving defendants, the lack of any meaningful ties between those defendants and the United States in Aldossari’s claims defeats his effort to sue them in the U.S. The Foreign Sovereign Immunities Act precludes subject-matter jurisdiction over the claims against Saudi Arabia and Saudi Aramco. The case was remanded with directions to dismiss without prejudice since none of the dispositive rulings reach the merits. View "Aldossari v. Ripp" on Justia Law

Clemens, then an employee, provided ExecuPharm with sensitive information, including her address, social security number, bank, and financial account numbers, insurance, and tax information, passport, and information relating to her family. Clemens’s employment agreement provided that ExecuPharm would “take appropriate measures to protect the confidentiality and security” of this information. After Clemens left ExecuPharm, a hacking group (CLOP) accessed ExecuPharm’s servers, stealing sensitive information pertaining to current and former employees, including Clemens. CLOP posted the data on the Dark Web, making available for download 123,000 data files pertaining to ExecuPharm, including sensitive employee information. ExecuPharm notified current and former employees of the breach and encouraged precautionary measures. Clemens reviewed her financial records and credit reports for unauthorized activity; placed fraud alerts on her credit reports; transferred her bank account; enrolled in ExecuPharm’s complimentary one-year credit monitoring services; and purchased three-bureau additional credit monitoring services for herself and her family for $39.99 per month.Clemens's suit under the Class Action Fairness Act, 28 U.S.C. 1332(d), was dismissed for lack of Article III standing. The court concluded that Clemens’s risk of future harm was not imminent, but “speculative.” Any money Clemens spent to mitigate the speculative risk was insufficient to confer standing; even if ExecuPharm breached the employment agreement, it would not automatically give Clemens standing to assert her breach of contract claim. The Third Circuit vacated. Clemens’s injury was sufficiently imminent to constitute an injury-in-fact for purposes of standing. View "Clemens v. Execupharm Inc" on Justia Law

In 2015, the Ninth Circuit affirmed summary judgment in favor of Guam taxpayers in their class action lawsuit against the territorial government. Guam had excessively withheld income taxes to support government spending. Some taxpayers got their refunds through an “expedited refund” process that devolved into arbitrariness and favoritism. The district court had certified a class of taxpayers who were entitled to but did not receive timely tax refunds.Duncan then filed a purported class action challenging the Virgin Islands' income tax collection practices. Duncan alleged that the Territory owed taxpayers at least $97,849,992.74 in refunds for the years 2007-2017, and that, for the years 2011-2017, the Territory failed to comply with the requirement in Virgin Islands Code title 33, section 1102(b), that the Territory set aside 10 percent of collected income taxes for paying refunds, leaving the required reserve underfunded by $150 million. The district court denied class certification, citing Duncan’s receipt of a refund check from the Territory during the pendency of her lawsuit; the check, while not the amount Duncan claims, called into question Duncan’s standing and made all of her claims atypical for the putative class. The Third Circuit vacated, rejecting the conclusion that the mid-litigation refund check deprived Duncan of standing and rendered all of her claims atypical. In evaluating whether Duncan was an adequate representative, the district court applied an incorrect legal standard. View "Duncan v. Governor of the Virgin Islands" on Justia Law

In 2008, Tiversa, a cybersecurity company, informed LabMD, a medical testing business, that it had found LabMD’s confidential patient information circulating in cyberspace and that it could help LabMD respond to the data leak. LabMD’s own investigation revealed no leak. LabMD accused Tiversa of illegally accessing the patient information. Tiversa submitted a tip to the FTC, prompting an investigation. The FTC enforcement action and the reputational damage ruined LabMD. In 2014, a former Tiversa employee disclosed that the patient information did not spread from a leak but that Tiversa had accessed LabMD’s computer files and fabricated evidence of a leak.LabMD sued. In one suit, the district court dismissed claims of defamation and fraud after prohibiting the discovery or use of expert testimony. After finding that LabMD and its counsel breached those discovery limits, the court awarded fees and costs to the defendants, struck almost all of LabMD’s testimonial evidence, and revoked its counsel’s pro hac vice admission. When LabMD’s replacement counsel later tried to withdraw, the court denied that request. LabMD failed to pay the monetary sanctions; the Court held it in contempt. The second lawsuit, asserting similar fraud claims, was dismissed.The Third Circuit vacated in part. The prohibition on expert testimony was unwarranted; the court abused its discretion in imposing sanctions and erred in denying the motion to withdraw. LabMD’s other claims, in that case, were properly dismissed. In the second case, the court affirmed; LabMD did not challenge independently sufficient grounds for the decision. View "LabMD, Inc v. Tiversa Holding Corp" on Justia Law

A yacht owned by Raiders ran aground. Raiders had insured the vessel with GLI, which denied coverage stating the yacht’s fire-extinguishing equipment had not been timely recertified or inspected notwithstanding that the vessel’s damage was not caused by fire. GLI sought a declaratory judgment that Raiders’ alleged failure to recertify or inspect its fire-suppression equipment rendered the policy void from its inception. Raiders responded with five counterclaims, including three extra-contractual counterclaims arising under Pennsylvania law for breach of fiduciary duty, insurance bad faith, and breach of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.Concluding the policy’s choice-of-law provision mandated the application of New York law and precluded Raiders’ Pennsylvania law-based counterclaims, the district court dismissed those claims. The court rejected Raiders’ argument that applying New York law would contravene Pennsylvania public policy, thereby making the choice-of-law provision unenforceable under Supreme Court precedent (Bremen (1972)), which held that under federal admiralty law a forum-selection provision is unenforceable “if enforcement would contravene a strong public policy of the forum in which suit is brought.” The Third Circuit vacated. Bremen’s framework extends to the choice-of-law provision at issue; the district court needed to consider whether Pennsylvania has a strong public policy that would be thwarted by applying New York law. View "Great Lakes Insurance SE v. Raiders Retreat Realty Co LLC" on Justia Law

PPG, a Pittsburgh company, developed a new kind of plastic for airplane windows, “Opticor™ A former PPG employee, Rukavina, agreed to share proprietary information concerning Opticor with TMG, a China-based manufacturer. TMG contacted the PPG subcontractor that made Opticor window molds, asking it to manufacture the same molds, attaching photographs and drawings from a proprietary report. The subcontractor alerted PPG, which notified the FBI, which executed warrants to search Rukavina’s email account and residence. Rukavina was charged with criminal theft of trade secrets.PPG filed a civil action against TMG, under RICO, 18 U.S.C. 1962(c)-(d) and Pennsylvania law. TMG did not respond to the complaint, nor did it answer requests for admissions. More than a year after TMG should have appeared the clerk entered a default. PPG asserted actual damages of $9,909,687.31. Four months later, TMG appeared and unsuccessfully moved to set aside the default. The court held that PPG had sufficiently established TMG’s liability and was entitled to treble damages, an injunction, and attorneys’ fees, costs, and expenses. The court found that $8,805,929 of the claimed actual damages were supported by sufficient evidence and entered judgment for $26,417,787.The Third Circuit affirmed. TMG effectively conceded the complaint’s allegations. Under the Uniform Trade Secrets Act, it can be appropriate to measure unjust enrichment from a misappropriated trade secret by looking at development costs that were avoided but would have been incurred if not for the misappropriation. The district court carefully analyzed such evidence; its methodology and conclusion are sound. View "PPG Industries Inc v. Jiangsu Tie Mao Glass Co Ltd" on Justia Law