Special to the National Law Journal
The 3d U.S. Circuit Court of Appeals has long been recognized as one of the nation’s leading appellate courts. The 3d Circuit gained this reputation not just because of the quality of its judges and decisions, but more importantly because the judges of the 3d Circuit overall have taken a nondoctrinaire approach to judicial decision-making. In 2004 and 2005, the 3d Circuit handed down a number of decisions with important economic, social and political implications. As discussed below, these decisions show that the court continues its centrist tradition.
The 3d Circuit issued several important business decisions. In the area of class actions, the 3d Circuit handed down a long-awaited decision. In Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004), the court held that a Fed. R. Civ. P. 68 offer of judgment to a putative class member for the maximum amount of damages sought does not render a class action moot. The court noted that allowing defendants to moot class actions by eliminating class representatives under the offer of judgment rule “contravenes one of the primary purposes of class actions – the aggregation of numerous similar (especially small) claims in a single action.” Id at 345.
In In re Cendant Corp. Securities Litigation, nos. 03-3603, 03-3604, 03-3648, 2005 WL 82220592 (3d Cir. April 11, 2005), the 3d Circuit limited the ability of lawyers to interpose themselves on behalf of plaintiffs in securities class actions and seek compensation for their work. In Cendant, the court held that the Private Securities Litigation Reform Act of 1995 created a presumption of correctness in a lead counsel’s decision not to compensate non-lead counsel for work allegedly performed on behalf of a class. The court noted that to overcome this presumption, non-lead counsel would need to demonstrate that their work helped to create, discover, increase or preserve the class’s ultimate recovery.
The 3d Circuit’s decision in In re: Diet Drugs Prods. Liab. Lit., 369 F.3d 293 (3d Cir. 2004), affects class action settlement notices and settlement agreements. In Diet Drugs, the court vacated portions of a district court’s order that placed restrictions on intermediate opt-out class members’ abilities to present certain types of evidence during the trials of their state law claims. The court found that the district court erred in imposing evidentiary restrictions on opt-out plaintiffs because the restrictions imposed were overbroad, impinged on rights under the settlement, and unduly entangled the court in the management of separate state court proceedings.
The 3d Circuit also handed down important Employee Retirement Income Security Act (ERISA) decisions. In McLeod v. Hartford Life and Accident Insurance Co., 372 F.3d 618 (3d Cir. 2004), the court held that a long-term disability insurer could not withhold benefits from an insured under a “pre-existing condition exclusion clause” on the grounds that the insured’s condition had not been formally diagnosed at the time she received treatment for symptoms relating to multiple sclerosis. The court found that seeking “medical care for a symptom of a pre-existing condition can only serve as a basis for exclusion from receiving benefits in a situation where there is some intention on the part of the physician or of the patient to treat or uncover the underlying condition which was causing the symptom.” Id. at 628
In Levine v. United Healthcare Corp., nos. 04-1224, 04-1225, 2005 WL 602436 (3 rd Cir. March 16, 2005), the circuit broke ranks with the 4th and 6th circuits and held that ERISA pre-empts a state’s anti-subrogation statute. Applying the pre-emption test outlined in Kentucky Ass’n. of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003), the 3d Circuit found that New Jersey’s anti-subrogation statute applied to both insurance and non-insurance entities, so it did not regulate the business of insurance.
In the area of labor and employment, the 3d Circuit held, in Conoshenti v. Public Service Electric & Gas Co., 364 F.3d 135 (3d Cir. 2004), that an electrical employee’s Family and Medical Leave Act (FMLA) claim could proceed on the basis that his employer interfered with his FMLA rights by failing to explain his entitlement to 12 weeks leave. The court held that an employee can “show an interference with his right to leave under the FMLA, . . . if he is able to establish that this failure to advise rendered him unable to exercise that right in a meaningful way, thereby causing injury.” Id. at 143
In Gordon v. Wawa, Inc., 388 F.3d 78 (3d Cir. 2004), the 3d Circuit addressed the timely issue of whether the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERR) entitles an army reservist with a “right to eight-hours rest” between the time when the reservist returns home from military exercises and the time the reservist must report back to work. In dismissing a wrongful death action brought by the estate of a reservist, the court found no way to construe the USERR statutory language in a way to confer any substantive right to eight hours of rest for a reservist before returning to work.
In Gary v. Air Group, Inc., 388 F.3d 78 (3d Cir. 2004), the ruled that the Airline Deregulation Act (ADA) does not preempt an employee’s state law claims under the New Jersey's Conscientious Employee Protection Act. Although the Circuit recognized that the ADA preempts state laws relating to airline prices, routes, or services, it refused to extend the preemption to the employee’s claim under the New Jersey Act, because the actions underlying the claim had no effect on those matters.
Social And Political Decisions
One of the most high-profile cases the circuit decided in 2004-2005, Forum for Academic and Institutional Rights v. Rumsfeld, 390 F.3d 219 (3d Cir. 2004), addressed a First Amendment challenge to a federal statutory provision (known as the Solomon Amendment), that authorized the federal government to deny funding to colleges and universities that prohibit military recruiters from access to students and assistance for recruiting purposes. Congress passed the law in response to decisions by a number of institutions to deny access and assistance to military recruiters because the military discriminates based on sexual orientation. The district court had ruled that the plaintiffs were not entitled to a preliminary injunction enjoining enforcement of the Solomon Amendment. The 3d Circuit reversed, finding that entry of a preliminary injunction was appropriate because the law required colleges and universities to express a message that they believed to be incompatible with their educational objectives. Following its decision, the court entered a stay to allow the government to appeal to the U.S. Supreme Court, and on May 2, 2005, the Supreme Court granted the government's petition for writ of certiorari.
In United States v. Fulani, 368 F.3d 351 (3d Cir. 2004), the 3d Circuit addressed whether Fourth Amendment rights extend to abandoned property. The court ruled that a bus passenger had no reasonable expectation of privacy in a piece of luggage with a nametag bearing his name after the passenger refused to claim the luggage as his own when asked about its ownership by federal agents on three occasions. The court held that while “the presence of a nametag on one’s luggage may be an indicia of an expectation of privacy, the Fourth Amendment protects only a reasonable expectation of privacy, and after a passenger refuses to claim luggage with the nametag on three separate occasions after he cooperates at least in part with the agents . . . he no longer has a reasonable expectation of privacy in his luggage.” Id. at 355
Finally, in Afran v. McGreevey, No. 04-3791, 2004 WL 2309897 (3d Cir. 2004), the 3d Circuit addressed one of the most publicized political events in 2004. The court affirmed a district court order dismissing an action filed after former New Jersey Gov. James McGreevey announced on August 12, 2004 that he intended to resign from office effective November 15, 2004 as a result of “an adult consensual affair with another man.” The action sought a declaration that the announcement of the planned future resignation created an immediate vacancy that required a special election under the New Jersey Constitution.
If the governor had “vacated” his office before September 3, 2004, the state constitution would have required that his successor be elected at the next general election on November 2, 2004. If the governor “vacated” the office after September 3, 2004, the President of the New Jersey Senate (like McGreevey, a Democrat) would serve as acting governor until January 2006. The 3d Circuit held that the state constitution did not require a special election, because the governor did not officially leave office until November 15, 2004, allowing the Senate president to serve as acting governor until January 2006.
High Level of Professionalism
The 3d Circuit also handed down several decisions that addressed the high standard of professionalism expected of attorneys. In Grine v. Coombs, No. 03-3028, 2004 WL 2361485 (3d Cir. Oct. 21, 2004), the 3d Circuit ordered an attorney to pay $45,000 in damages under Appellate Rule 38, after it found that the attorney “repeatedly used improper litigation techniques and filed improper appeals,” to unnecessarily extend a case for more than eight years. The court reasoned that the attorney should be responsible for payment of the damages because “[a] party is entitled to rely upon his or her attorney for sound legal advice” and parties “are not expected to understand procedure or law to the same extent as their counsel, particularly in the courts of appeal.” Id. at *3.
In In re Mushroom Transportation, 382 F. 3d 325 (3d Cir. 2004), the 3d Circuit reversed a district court order that dismissed an embezzlement claim against a bankruptcy trustee on statute of limitations grounds. In reversing, the court found that the limitations period for an embezzlement claim against a lawyer could not be strictly enforced since the trust placed in the lawyer may have prevented discovery of the embezzlement.
In United States v. D'Angelico, 376 F.3d 141 (3d Cir. 2004), the 3d Circuit chastised both a prosecutor and a defendant’s counsel for failing to point out a trial court’s failure to outline the basis for refusing a downward departure of a sentence during a sentencing hearing. The court noted that when the trial court erred in failing to clarify its basis for refusing to grant a downward departure at a sentencing hearing, both attorneys had a duty to remind the court of the obligation to set forth the basis. The court stated: “this is counsel's responsibility for it is a matter of preserving the record for appeal (or, from the government's point of view, insulating the judgment from appeal)."
The 3d Circuit also addressed the high standard of professionalism expected of trial judges. In Bright v. Westmoreland County, 380 F.3d 729 (3d Cir. 2004), the court remanded a civil rights lawsuit after a district court judge adopted a proposed opinion submitted by defendants’ counsel. In rendering its decision, the court explained why it requires trial courts to write their own opinions: "Judicial opinions are the core work-product of judges. They are much more than findings of fact and conclusions of law; they constitute the logical and analytical explanations of why a judge arrived at a specific decision. They are tangible proof to the litigants that the judge actively wrestled with their claims and arguments and made a scholarly decision based on his or her own reason and logic. When a court adopts a party's proposed opinion as its own, the court vitiates the vital purposes served by judicial opinions." Id. at 372
In another case involving the conduct of a trial judge, In Re Kensington, International Ltd., 368 F.3d 289 (3d Cir. 2004), the 3d Circuit granted a writ of mandamus and disqualified a senior district court judge from five asbestos related bankruptcy cases after the judge appointed two attorney advisors, who also served as counsel in an ongoing similar case, to advise him on asbestos litigations. The court stopped short of finding actual bias by the district court judge, but it disqualified him nevertheless, on the grounds that the average layperson could believe that appointment of the attorney advisors affected the court’s ability to make a fair and impartial decision.
These 2004 and 2005 decisions demonstrate that the 3d Circuit continues to defy characterization as pro- business or anti-business, pro-plaintiff or anti-plaintiff, conservative or liberal. Rather, the court’s decisions as a whole exemplify a pragmatic approach to judicial philosophy based on the law and the facts of each case.
Stephen G. Harvey and Angelo A. Stio III
