Articles Posted in U.S. 3rd Circuit Court of Appeals

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Plaintiffs are among 24,000 New Jersey merchants who entered into contracts for credit or debit point of sales terminals with Defendants and filed a class action, alleging that Defendants charged small business owners unconscionable and exorbitant fees for leasing terminals and added extra costs not included in the contracts. On July 31, 2013, the district court denied class certification. On August 19, 2013, Plaintiffs sought permission to appeal the denial pursuant to Fed. R. Civ. P. 23(f), conceding that the Rule 23(f) petition was filed beyond the 14 day deadline. The Third Circuit dismissed, stating that the time to file a Rule 23(f) petition runs from entry of the order, not service of a document. Counsel’s mistake or ignorance of the rules does not constitute excusable neglect; Fed. R. App. P. 26(b)(1) states that a court cannot extend the time for filing a petition for permission to appeal. The court also noted that no motion for reconsideration was filed in the district court. View "Eastman v. First Data Corp." on Justia Law

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Rahman filed a securities class action against KB, an importer of infant furniture and products, and individuals, alleging violation of Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 and (2) and Section 20(a) of the Exchange Act. The complaint alleged that defendants misled investors by artificially inflating KB’s stock price by issuing deceptive public financial reports and press releases dealing with compliance with customs laws and overall financial performance. A second amended complaint specified failure to disclose product recalls, safety violations, and illegal staffing practices. The district court dismissed for failure to satisfy the heightened scienter pleading standard required by the Private Securities Litigation Reform Act, 15 U.S.C. 78u-4(b)(2). The Third Circuit affirmed. View "Rahman v. Kid Brands, Inc." on Justia Law

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Mortgage-backed securities, known as the MASTR Pass-Through Certificates, Series 2007-3, were offered to the public in 2007. UBS, the sponsor of the Certificates, purchased the underlying loans from originators, including Countrywide Home Loans and IndyMac Bank, then sold the loans to MASTR, which placed the loans into the MASTR Adjustable Rate Mortgages Trust, the issuer of the Certificates. UBS Securities, the underwriter, sold the Certificates to investors. The Certificates were issued pursuant to a Securities and Exchange Commission (SEC) Form S-3 Registration Statement filed in 2005 and an SEC Form 424B5 Prospectus Supplement filed in 2007. Those documents assured investors that the underlying loans were originated pursuant to particular underwriting policies and in compliance with federal and state laws and regulations. The district court dismissed a purported class action by investors, alleging violations of the Securities Act of 1933, 15 U.S.C. 77, for failure to plead compliance with the one-year statute of limitations and dismissed an amended complaint as untimely under an inquiry notice standard. The Third Circuit affirmed, holding that a Securities Act plaintiff need not plead compliance with Section 13 and that Section 13 establishes a discovery standard for evaluating the timeliness of Securities Act claims, but the claims were, nonetheless, untimely. View "Pension Trust Fund for Operating Eng'rs v. Mortg. Asset Securitization Transactions, Inc." on Justia Law

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Plaintiffs sued their employer on behalf of themselves and “similarly situated” individuals, alleging that the employer violated the Fair Labor Standards Act, 29 U.S.C. 201, by failing to ensure that they were paid for time worked during meal breaks. Notice was directed to potential collective-action members, and individuals opted into the lawsuit. FLSA collective actions are subject to “opt-ins,” unlike class actions under FRCP 23, under which those not wishing to be included must “opt out” after the class is certified. After preliminary discovery, the district court dismissed the claims of the opt-in plaintiffs without prejudice; at the request of the remaining plaintiffs, the court dismissed remaining claims with prejudice to enable appellate review. The Third Circuit dismissed an appeal for lack of jurisdiction, finding that the named plaintiffs lack final orders appealable under 28 U.S.C. 1291. Plaintiffs attempted to short-circuit the procedure for appealing an interlocutory order that is separate from, and unrelated to, the merits of the case. They could have obtained review of the decertification order by proceeding to final judgment on the merits of their individual or could have asked the trial court to certify their interlocutory orders for appeal. View "Camesi v. Univ. of Pittsburgh Medical Ctr." on Justia Law

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Grace has manufactured and sold specialty chemicals and construction materials for more than 100 years. The company began facing asbestos-related lawsuits in the 1970s, based on several products and activities, including operation of a Montana vermiculite mine that released asbestos-containing dust into the atmosphere and sale of Zonolite Attic Insulation (ZAI). Montana and the Crown (Canada) have been sued for alleged failure to warn citizens of the risks posed by Grace’s products and activities. Montana settled its cases for $43 million in 2011. The Crown is a defendant in lawsuits arising from the use of ZAI. Montana and the Crown sought indemnification from Grace. Grace sought protection under the Bankruptcy Code, 11 U.S.C. 524(g), which allows a company to establish a trust to handle such liabilities. Montana and the Crown objected to confirmation of a Plan of Reorganization that will send all asbestos claims to two trusts, allowing protected parties to be “unconditionally, irrevocably and fully released.” The personal injury trust is funded by $ 1.5 billion from settlements with Grace’s insurers and former affiliates, an initial payment from Grace of $ 450 million, a warrant to acquire 10 million shares of Grace common stock at $ 17 per share, and annual cash payments from Grace of $100-110 million through 2033. The property damage trust is funded by an initial payment of 180 million dollars, and a subsequent payment of 30 million dollars. The two trusts have separate mechanisms for resolving claims. The bankruptcy court, the district court, and the Third Circuit confirmed the plan. View "In re: W.R. Grace & Co." on Justia Law

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Carrera sued Bayer, claiming that Bayer falsely advertised its product One-A-Day WeightSmart as a multivitamin and dietary supplement that had metabolism-enhancing effects due to its ingredient, epigallocatechin gallate, a green tea extract. The daily dose was one tablet and the price was about $8.99 for 50 tablets. Bayer sold WeightSmart through retail stores until 2007 and did not sell directly to consumers. Carrera initially sought to certify a nationwide class under Fed. R. Civ. P. 23(b)(3), bringing a claim under the New Jersey Consumer Fraud Act. The court denied certification because New Jersey law did not apply to out-of-state customers. Carrera then moved to certify a Rule 23(b)(3) class of Florida consumers under the Florida Deceptive and Unfair Trade Practices Act. Bayer challenged certification, reasoning that class members are unlikely to have documentary proof of purchase and Bayer has no list of purchasers. The Third Circuit vacated class certification. If class members are impossible to identify without extensive and individualized fact-finding or mini-trials, a class action is inappropriate. If class members cannot be ascertained from a defendant’s records, there must be “a reliable, administratively feasible alternative,” not a method that would amount to no more than ascertaining by potential class members‟ say so.” View "Carrera v. Bayer Corp." on Justia Law

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Plaintiffs filed suit against GenOn, on behalf of a putative class of at least 1,500 individuals who own or inhabit residential property within one mile of GenOn’s 570-megawatt coal-fired electrical generation facility in Springdale, Pennsylvania. The complaint asserted state tort law claims, based on ash and contaminants settling on plaintiffs’ property. The district court dismissed, finding that because the plant was subject to comprehensive regulation under the Clean Air Act, 42 U.S.C. 7401, it owed no extra duty to the members of the class under state tort law. The Third Circuit reversed, holding that the plain language of the Clean Air Act and controlling Supreme Court precedent indicate that state common law actions are not preempted. View "Bell v. Cheswick Generating Station, Genon Power Midwest, L.P." on Justia Law

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Plaintiffs filed suit on behalf of themselves and other similarly situated landowners who used agents in an effort to lease oil and gas rights in Mercer County. When the transactions did not go as planned, plaintiffs sued an oil and gas company, Halcon, alleging breach of agreement and the duty of fair dealing. After Halcon claimed that the agents were “necessary parties,” plaintiffs decided to file direct claims against the agents, which destroyed diversity jurisdiction. Plaintiffs intended to pursue all of their claims in state court. Halcon argued that it did not oppose joining agents, agreed that the all claims would benefit from being heard in a single proceeding, but asserted that the case should proceed in federal court under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2), (d)(2)(A), (d)(5)(B), because discovery had begun and there were ongoing ADR activities. The district court dismissed without prejudice. Plaintiffs filed in state court, with some changes. Halcon then removed the state court action to the same federal district court, which again remanded, citing the “home state” exception to subject matter jurisdiction under CAFA. The Third Circuit affirmed, citing CAFA’s “local controversy” exception because the case relates to Pennsylvania owners and their land. View "Vodenichar v. Halcon Energy Props., Inc." on Justia Law

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African-American and Hispanic borrowers under National City Bank mortgages, 2006-2007, sued, alleging violation of the Fair Housing Act, 42 U.S.C. 3605, and the Equal Credit Opportunity Act, 15 U.S.C. 1691, by an established pattern or practice of racial discrimination in the financing of home purchases. They cited National’s “Discretionary Pricing Policy,” under which brokers and loan officers could add a subjective surcharge of points, fees, and credit costs to an otherwise objective, risk-based rate, so that minority applicants were “charged a disproportionately greater amount in non-risk-related charges than similarly-situated Caucasian persons.” During discovery, National provided data on more than two million loans issued from 2001 to 2008. After mediation, the parties reached a proposed settlement: National did not concede wrongdoing, but would pay $7,500 to each named plaintiff, $200 to each class payee, $75,000 to two organizations for counseling and other services for the class, and $2,100,000 in attorneys’ fees. After granting preliminary approval and certification of the proposed class, the district court considered the Supreme Court’s 2011 decision, Wal-Mart Stores, Inc. v. Dukes, and held that the class failed to meet Rule 23(a)’s commonality and typicality requirements and denied certification. The Third Circuit affirmed, noting that the proposed class is national, with 153,000 plaintiffs who obtained loans at more than 1,400 branches; significant disparity in one branch or region could skew the average, producing results indicating national disparity, when the problem may be more localized. View "Rodriguez v. Nat'l City Bank" on Justia Law

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Sam’s Club is a members-only retail warehouse that features a section for clearance items, called “as-is” items. Items may be designated “as-is” for various reasons and may be damaged or undamaged. Every as-is item is marked with an orange sticker; when a cashier scans the item, the original price appears and the cashier must perform a manual override. The software records the fact that a price override was performed, but does not include the reason. Overrides can occur for reasons other than “as-is” designation. Sam’s contracted with NEW to sell extended warranties for items sold in the store. NEW will not cover some “as is” products, including some purchased by Hayes. On each occasion, Sam’s employees offered and Hayes purchased a NEW warranty. The store provided Hayes with a manual and remote missing from a television he purchased and offered to refund the warranty price. Hayes declined. Hayes sued, on behalf of himself and all other persons who purchased a warranty for an as-is product from Clubs in New Jersey since 2004, asserting violation of the state Consumer Fraud Act, breach of contract, and unjust enrichment. The trial court certified a Rule 23(b)(3) class. The Third Circuit vacated and remanded for consideration of Rule 23’s class definition, ascertainability, and numerosity requirements in light of a recent decision. View "Hayes v. WalMart Stores Inc" on Justia Law