Articles Posted in U.S. Court of Appeals for the Third Circuit

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Third Circuit rejects "reverse" False Claims Act suit involving Small Business Administration. The SBA, a federal agency, provided $90 million to L Capital, a venture capital group, through the purchase of securities. L Capital invested $4 million in preferred shares of Simparel. The Certificate of Incorporation specified that Simparel must pay preferred shareholders accrued dividends if Simparel’s Board exercised its discretion to pay the dividends or if Simparel underwent liquidation, dissolution, or windup. The SBA was appointed as L Capital’s receiver after Simparel failed to comply with its funding agreement. Petras, Simparel’s Chief Financial Officer, claimed that this failure resulted in the SBA becoming a preferred shareholder, entitled to accrued dividends. The Simparel Board never declared dividends nor did Simparel undergo liquidation, dissolution, or windup. Petras claimed that the Simparel defendants engaged in fraudulent conduct—to which he objected—to avoid paying the contingent dividends: hiding Simparel’s deteriorating financial condition; failing to hold board meetings: and neglecting to send the SBA Simparel’s financial statements. The Third Circuit affirmed dismissal of the “reverse FCA” claim. The Simparel defendants could not have “knowingly and improperly avoid[ed] or decrease[d] an obligation” to pay the accrued dividends at the time of their alleged misconduct because the obligation did not yet exist. View "Petras v. Simparel, Inc." on Justia Law

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The Mirabellas alleged that their neighbors extended their backyard into wetlands owned by Montgomery Township, Pennsylvania by fencing the open space, placing playground equipment, and landscaping. They complained to the Township, which removed the fence, required the neighbors to move their playground equipment and required the neighbors to stop landscaping the open space. The Mirabellas alleged the neighbors continued to “cut and clear.” They continued to complain. The Township gave the neighbors permission to mow the open space. The Mirabellas, both attorneys, notified the Township Board that they intended to sue their neighbors and stated that, as the owner of the open space, “the Township will be an indispensable party.” Officials interpreted this as a threat that the Mirabellas would sue the Township and responded that the Township would seek sanctions. The Board’s chair, Walsh, emailed the Mirabellas to “direct all further communications to the Township attorney. Please never contact me, the Board of Supervisors or the Township employees directly.” The Mirabellas attended a Board meeting and protested the destruction of the open space and the emails. The Mirabellas filed suit under 42 U.S.C. 1983, alleging First Amendment violations. The district court rejected claims of qualified immunity. The Third Circuit reversed. While the Mirabellas adequately alleged a retaliation claim and a violation of their right to petition, those rights were not clearly established for purposes of qualified immunity. View "Mirabella v. Villard" on Justia Law

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Edinboro, a Pennsylvania public university, collaborated with Edinboro University Foundation, a nonprofit entity, to construct new dormitories. In 2008, the Foundation amended its Articles of Incorporation to authorize borrowing funds “to acquire, lease, construct, develop and/or manage real or personal property.” The University leased property to the Foundation in a favorable location; the Foundation issued bonds to raise the funds and completed construction. Since 1989, the University required non-commuting first-year and transfer students to reside on-campus for two consecutive semesters. Two and one-half years after the first phase of the new dormitories opened, the University amended its policy to require certain students to reside on-campus for four consecutive semesters. Businesses that provide off-campus housing sued, asserting that the University and the Foundation conspired to monopolize the student housing market in violation of the Sherman Act, 15 U.S.C. 2. Plaintiffs did not sue the University, conceding that it is an arm of the state subject to Eleventh Amendment immunity. The Third Circuit affirmed dismissal. The University’s actions are not categorically “sovereign” for purposes of “Parker” immunity, so the court employed heightened scrutiny, citing the Supreme Court’s decision in Town of Hallie v. City of Eau Claire, (1985), which requires anticompetitive conduct to conform to a clearly articulated state policy. The University’s conduct withstands Hallie scrutiny. The Foundation’s actions were directed by the University, so the Foundation is also immune. View "Edinboro College Park Apartments v. Edinboro University Foundation" on Justia Law

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Maliandi alleges that she began working for Montclair State University (MSU) in 2007 and took medical leave for breast cancer treatment in 2013. Despite having complied with all policies and procedures for taking such leave, Maliandi allegedly was denied her original position when she returned and instead was offered an inferior position, which she declined. She was subsequently terminated. Maliandi then filed suit against MSU, citing the Family Medical Leave Act, 29 U.S.C. 2601 and the New Jersey Law Against Discrimination, N.J. Stat. 10:5-1 to -49. The district court denied a motion dismiss, determining that MSU is not the state’s alter ego for purpose of Eleventh Amendment immunity. The Third Circuit reversed, applying a balancing test to the “close case” and concluding that MSU is an arm of the state. While the funding factor counsels against immunity the status under state law and autonomy factors weigh in favor of extending MSU immunity from suit. In analyzing the funding factor, the court considered the state’s legal obligation to pay a money judgment entered against MSU; alternative sources of funding from which MSU could pay such judgments; and specific statutory provisions that immunize the state from liability for money judgments. View "Maliandi v. Montclair State University" on Justia Law

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From 2009-2012, the federal government appropriated $150 million annually to the government of the Virgin Islands; Willis was Executive Director of the Legislature for the Virgin Islands, with authority to administer contracts. During Willis’s tenure, the legislature’s main building underwent major renovations. Willis was substantially involved in securing contractors. Three contractors later testified that they gave cash or other items of value to Willis to secure more government work or to ensure payment of their invoices. In 2010, the U.S. Department of the Interior audited the legislature’s administrative section while the renovations were taking place and concluded that the legislature had mismanaged public funds. After an investigation, an indictment issued for Willis’s prosecution on extortion charges (18 U.S.C. 1951(a)) and bribery charges (18 U.S.C. 666(a)(1)). The Third Circuit affirmed his conviction and five-year prison term, upholding admission of evidence of Willis’s prior acceptance of bribes. The indictment adequately alleged all required elements of bribery: the parties, the relevant amounts of money exchanged, where the illegal transactions occurred, that Willis used his public position unlawfully, specific details of each transaction, and improper purposes under the federal statutes. The government proved a sufficient nexus between Willis’s conduct or his status as Executive Director and a corresponding effect on federal funds. View "United States v. Willis" on Justia Law

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In 2011, in response to a severe budget crisis, the Government of the Virgin Islands enacted the Virgin Islands Economic Stability Act (VIESA), which reduced most government employees’ salaries by 8%. Many government employees were covered by collective bargaining agreements that set forth detailed salary and benefit schedules. Their unions sued, alleging that the VIESA salary reductions 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. The Third Circuit reversed, first holding that the issue is not moot, although VIESA has expired. The court’s determination will have a preclusive effect in pending arbitration between the unions and the government, concerning wages not paid in the interim. VIESA’s substantial impairment of the collective bargaining agreements was not reasonable in light of the fact that the government knew of its precarious financial condition when it agreed to the contracts. View "United Steel Paper and Forestry Rubber Manufacturing Allied Industrial & Service Workers International Union AFL- CIO- CLC v. Government of the Virgin Islands" on Justia Law

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The district court dismissed, for lack of jurisdiction, a constitutional challenge to an electronic surveillance program operated by the National Security Agency (NSA) under the authority of Section 702 of the Foreign Intelligence Surveillance Act (FISA), 50 U.S.C. 1881a. The court noted that the plaintiff failed to plead facts from which one might reasonably infer that his own communications had been seized by the federal government. The Third Circuit vacated and remanded. The second amended complaint alleged that because the government was “intercepting, monitoring and storing the content of all or substantially all of the e-mail sent by American citizens,” plaintiff’s own online communications had been seized in the dragnet. That allegation sufficiently pleaded standing to sue for a violation of plaintiff’s Fourth Amendment right to be free from unreasonable searches and seizures. Plaintiff may lack actual standing to sue; the government may, on remand to make a factual jurisdictional challenge to that pleading. The alleged facts—even if proven—do not conclusively establish that a dragnet on the scale alleged by plaintiff. On remand, the court must closely supervise limited discovery. View "Schuchardt v. President of the United States" on Justia Law

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The Waterfront Commission of New York Harbor is a bi-state corporate and political entity created by interstate compact in 1953, after years of criminal activity and corrupt hiring practices on the waterfront N.J.S. 32:23-1; N.Y. Unconsol. Laws 9801. In 2013 the Commission opened its Longshoremen’s Register to accept applications for 225 new positions, requiring shipping companies and other employers to certify that prospective employees had been referred for employment compliant with federal and state nondiscrimination policies. Rejecting a challenge, the district court held that the Commission had acted within its authority and had not unlawfully interfered with collective bargaining rights. Such rights were not completely protected under the language of the Compact. The Third Circuit affirmed, noting that opponents had ample notice and opportunity to be heard with respect to the nondiscrimination amendment. Compact Section 5p-(5)(b) clearly provides for inclusion of registrants under “such terms and conditions as the [C]ommission may prescribe.” View "NY Shipping Ass'n, Inc. v. Waterfront Comm'n of NY Harbor" on Justia Law

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The Goldmans, proceeding before an arbitration panel operating under the auspices of the Financial Industry Regulatory Authority (FINRA), alleged that their financial advisor and Citigroup had violated federal securities law in their management of the Goldmans’ brokerage accounts. The district court dismissed their motion to vacate an adverse award for lack of subject-matter jurisdiction, stating the Goldmans’ motion failed to raise a substantial federal question. The Third Circuit affirmed. Nothing about the Goldmans’ case is likely to affect the securities markets broadly. That the allegedly-misbehaving arbitration panel happened to be affiliated with a self-regulatory organization does not meaningfully distinguish this case from any other suit alleging arbitrator partiality in a securities dispute. The court noted “the flood of cases that would enter federal courts if the involvement of a self-regulatory organization were itself sufficient to support jurisdiction.” View "Goldman v. Citigroup Global Mkts., Inc" on Justia Law

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Transco, which operates the 10,000-mile Transcontinental pipeline, extending from South Texas to New York City, sought federal approval to expand a portion of the pipeline, called the Leidy Line, which connects gas wells in Central Pennsylvania with the main pipeline. Pursuant to the Clean Water Act, the Pennsylvania and New Jersey Departments of Environmental Protection (PADEP; NJDEP) reviewed the proposal for potential water quality impacts and issued permits. Environmental groups challenged the approvals. The Third Circuit concluded that it had jurisdiction to hear the petitions and that NJDEP and PADEP did not act arbitrarily in issuing the permits. To bar review of PADEP’s actions in permitting an interstate natural gas facility pursuant to the Natural Gas Act and the Clean Water Act would frustrate the purpose of Congress’s grant of jurisdiction and render superfluous the explicit exception from federal judicial review of the Coastal Zone Management Act. The court also rejected NJDEP’s arguments that the court had no jurisdiction over the Freshwater Wetlands Individual Permits or the Water Quality Certifications, and even if it had jurisdiction over those authorizations, it could not reach issues regarding aspects of Freshwater Wetlands Individual Permits that concern transition areas and threatened and endangered species, Letters of Interpretation, or Flood Hazard Area Individual Permits. View "Dela. Riverkeeper Network v. Sec'y Pa. Dep't of Envtl. Prot." on Justia Law