Third Circuit Case Summaries

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Amica Mutual Insurance Company v. Fogel: Applicable Choice-of-Law Rules for a Sua Sponte Transfer of a Case

Amica Mutual Insurance Company v. Fogel, No. 10-3611 (3d Cir. September 8, 2011)

While living in New Jersey, the Fogels purchased car insurance from Amica Mutual Insurance Company. The Fogels moved to Pennsylvania and notified Amica of their permanent relocation, but before Amica issued a new policy, the Fogels were involved in a fatal car accident.

In a New Jersey state court, Amica sought a declaration that New Jersey substantive law, which would limit the amount owed to the Fogels, applied to the insurance policy. The case was removed to the federal court in New Jersey, which on its own motion transferred the case to the District Court for the Middle District of Pennsylvania.

The district court granted Amica’s motion for summary judgment after using Pennsylvania’s choice-of-law rules to conclude that New Jersey substantive law applied. The Fogels appealed to the Third Circuit.

The Third Circuit exercised a de novo standard of review over the grant of summary judgment and the choice-of-law issue.

Initially, the Court found an actual conflict between the two states — only Pennsylvania allows stacking (combining the policy limits of all covered vehicles even though a collision involved just one), and unlike New Jersey, it does not permit insurers to offset underinsured motorist benefits.

The Court explained that in diversity of citizenship cases, a federal court generally applies choice-of-law rules from the state in which it sits. But when a case is transferred, either on motion from a defendant or plaintiff, the choice-of-law rules from the transferor state are used instead. Having found that the 1990 United States Supreme Court case of Ferens v. John Deere also requires that choice-of-law rules from the prior state be used in sua sponte transfers, the Court concluded that New Jersey’s choice-of-law rules should be applied in this case.

The Court then proceeded to its analysis based on New Jersey’s choice-of-law rules focusing on the principal location of the insured risk and governmental interest. The Court determined that Pennsylvania substantive law should be applied to the Fogels’ insurance policy because once Amica was notified of the Fogels’ move, the parties’ justified expectations were that the insured risk was located in Pennsylania, and Pennsylania’s underlying policy interest outweighs that of New Jersey.

The Court reversed and remanded the case for the district court to enter summary judgment on behalf of the Fogels on the choice-of-law issue.

Pittsburgh League of Young Voters Education Fund v. Port Authority of Allegheny County: Viewpoint Discrimination

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Pittsburgh League of Young Voters Education Fund v. Port Authority of Allegheny County, No. 09-3352 & 09-3563 (3d Cir. August 5, 2011)

A coalition of public interest organizations sought to place an advertisement on Port Authority of Allegheny County buses to inform Pennsylvania ex-prisoners that they are eligible to vote immediately upon release. The advertisement would have also encouraged voting and included a telephone number to assist or answer questions. Port Authority rejected their advertisement stating that it did not comply with its written policy of accepting only commercial advertisements.

The coalition brought a Section 1983 action in the District Court for the Western District of Pennsylvania alleging that their right to free speech was violated. After a bench trial, the district court found that Port Authority’s rejection of the advertisement constituted viewpoint discrimination. Port Authority appealed to the Third Circuit.

Because of the bench trial, the Third Circuit applied a clear error standard of review to the district court’s factual determination of viewpoint discrimination.

The Court explained that viewpoint discrimination occurs when the government suppresses speech based on the particular views or ideology of the speakers.

The Court noted that Port Authority’s explanation that it rejected the advertisement because of its noncommercial character is viewpoint neutral. But the Court added that the government rarely admits to engaging in viewpoint discrimination, so the explanation alone was not sufficient because it may be a cover-up.

Comparing the coalition’s advertisement with noncommercial, rights-education advertisements that Port Authority had previously accepted despite its written policy, the Court found that the suspicion of viewpoint discrimination was reinforced.

Although Port Authority pointed to an instance in which it rejected a similar noncommercial advertisement from the League of Women Voters, the Court concluded:

As between evidence that a decisionmaker acted at odds with a nondiscriminatory rationale and evidence that the decisionmaker acted consistently with the rationale, the former is often stronger proof of discrimination than the latter is of nondiscrimination.

Finding no error in the district court’s determination that viewpoint discrimination was present, the Third Circuit affirmed and explained the implications of its decision:

[W]e do not suggest that the Port Authority must accept all noncommercial, rights-education advertisements going forward. We hold only that the facts of this case indicate viewpoint discrimination, and that the coalition is therefore entitled to relief. If the Port Authority were to develop more precisely phrased written guidance on the ads for which it will sell advertising space and apply the guidance in a neutral and consistent manner, it may, in the future, be able to reject ads like the one at issue in this appeal.

Doe v. Megless: Third Circuit Endorses Provident Life Test to Determine If Litigants Can Proceed Under a Pseudonym

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Doe v. Megless, No. 10-4110 (3d Cir. August 1, 2011)

A school security officer and police chief sent an email with an attached flyer to public officials and private citizens instructing them, “if you see this person in or around the district schools, please contact the police.” Using John Doe’s real name, they stated, “[Doe] has been known to hang around schools in Upper Merion and other townships. He has not approached any kids at this point. [Doe]‘s mental status is unknown. If seen stop and investigate.” They included his picture, home address, driver’s license number, and the make, model, and license plate number of his vehicle.

John Doe sued for Section 1983 violations in the District Court for the Eastern District of Pennsylvania alleging that the communications were intended to portray him as a “dangerous and potentially mentally unstable pedophile” and to authorize all recipients to stop, detain, and investigate him.

Doe filed a motion to proceed anonymously, which the court denied. When Doe failed to file a new complaint using his real name as the court directed, it dismissed his claims with prejudice. Doe appealed the district court’s decision to the Third Circuit.

The Third Circuit exercised an abuse of discretion standard of review to the district court’s decisions to not permit Doe to proceed anonymously and to dismiss his claims.

Noting that courts in this circuit have been balancing the competing interests of litigants and the public without guidance, the Third Circuit endorsed the Provident Life Test*, a non-exhaustive list of nine factors to consider before permitting a litigant to proceed under a pseudonym:

1. Has the identity of the litigant been kept confidential?

2. What harm is the litigant seeking to avoid, and is the litigant’s fear reasonable?

3. If this litigant is forced to reveal his or her name, will other similarly situated litigants be deterred from litigating claims that the public would like to have litigated?

4. Are the facts not relevant to the outcome of the claim?

5. Will the claim be resolved on its merits if the litigant is denied the opportunity to proceed using a pseudonym, or will the litigant potentially sacrifice a potentially valid claim simply to preserve their anonymity?

6. Is the litigant seeking to use a pseudonym for nefarious reasons?

7. There is universal public interest in access to the identities of litigants.

8. Does the subject of the litigation heighten the public’s interest?

9. Is the party opposing the use of a pseudonym doing so based on nefarious reasons?

In affirming the district court, the Third Circuit found that Doe did not demonstrate that disclosing his identity would cause substantial harm that would outweigh the public interest in an open trial because the communications did not accuse Doe of criminal behavior or mental illness and did not release highly sensitive personal information.

*Doe v. Provident Life and Acc. Ins. Co., 176 F.R.D. 464, 467 (E.D. Pa. 1997).

National City Mortgage Company v. Stephen: Federal Courts Cannot Refuse Jurisdiction Over Related Matters Merely Because They Involve State Law

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National City Mortgage Company v. Stephen, No. 09-1731 (3d Cir. July 22, 2011)

National City Mortgage Company (NCM) brought a foreclosure action against the Stephens in the District Court for the Middle District of Pennsylvania. The district court entered a default judgment and ordered a foreclosure sale. NCM obtained the property through the bidding process. Upon realizing that it had failed to provide notice of the upcoming sale to a junior lien-holder, The Chase Manhattan Bank, NCM moved to divest Chase of its lien, which the court denied stating that the notice issue involved an independent question of state law and was not properly before it. NCM then moved to set aside the sale, which the district court court granted without an opinion.

The district court later vacated the set-aside order at Chase’s request. After the district court denied NCM’s motion to reconsider, NCM appealed to the Third Circuit.

The Third Circuit explained that although the district court did not explicitly state that it was refusing to exercise its jurisdiction, it was in fact the result. The district court stated in its opinion:

[The motion to set aside the sale] appears merely to be another attempt to address problems with the title created by the plaintiff’s actions in prosecuting this case. Such problems with title are an issue of state law, and a federal court has no interest in such issues. As the court previously informed the plaintiff, this case concerns a mortgage foreclosure. Plaintiff obtained the remedy it sought in this case—foreclosure of the mortgage on the property. The court closed the case after providing that remedy. Plaintiff then purchased that property in a marshal’s sale. Plaintiff now seeks to have the court determine its rights vis-a-vis another party claiming an interest in the property. That question is an independent question of state law and not properly before the court.

Because the district court decided to abstain from exercising jurisdiction, the Third Circuit exercised an abuse of discretion standard of review.

The Court examined four abstention doctrines and found that none of them supported the district court’s decision. It determined that the Pullman and Younger abstentions did not apply because federal jurisdiction was not invoked to stop state court proceedings and no constitutional issues were involved. The Court noted that the Burford abstention was not appropriate because there were no difficult questions of state law concerning a matter of substantial public importance. Lastly, the Court considered the “even more rare” Colorado River abstention and concluded that it was inapplicable because this case took place almost exclusively in federal court, the state proceeding was stayed pending this appeal, and no complicating factors existed.

The Court found that the district court’s ancillary jurisdiction extended until the completion of the foreclosure sale process, and since NCM’s notice error occurred during the process, the district court was obligated to address it.

The Third Circuit Court of Appeals vacated the district court’s order and remanded the case.

Roth v. Norfalco: State Common Law Claims Preempted by Hazardous Materials Transportation Act

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Roth v. Norfalco, No. 10-2524 (3d Cir. June 28, 2011)

While unloading a Norfalco railway tank car, Roth, a paper mill employee, was severely burned by a sulfuric acid explosion.

Invoking diversity jurisdiction, Roth sued Norfalco for negligence, strict liability, products liability, and breach of warranty in the District Court for the Middle District of Pennsylvania.

Finding that Roth’s strict liability claim failed because unloading sulfuric acid from a tank car is not an “abnormally dangerous activity,” and that his other claims were expressly preempted by the Hazardous Materials Transportation Act, the district court granted summary judgment for Norfalco. Roth appealed this decision to the Third Circuit.

Because a grant of summary judgment and statutory interpretation are questions of law, the Third Circuit exercised a de novo standard of review.

The Court pointed out that the basis of Roth’s claims was that Norfalco had a common law duty to design a safer tank car, and design requirements on hazardous materials containers are within the exclusive domain of the Hazardous Materials Transportation Act.

The Court looked to the preemption provision of the Hazardous Materials Transportation Act and specifically to 49 U.S.C. § 5125 (b)(1)(E), the last of the five listed subject areas:

[U]nless authorized by another law of the United States, a law, regulation, order, or other requirement of a State, political subdivision of a State, or Indian tribe about any of the following subjects, that is not substantively the same as a provision of this chapter, a regulation prescribed under this chapter, or a hazardous materials transportation security regulation or directive issued by the Secretary of Homeland Security, is preempted.

[T]he designing, manufacturing, fabricating, inspecting, marking, maintaining, reconditioning, repairing, or testing a package, container, or packaging component that is represented, marked, certified, or sold as qualified for use in transporting hazardous material in commerce.

It concluded that if Roth were successful in his claims, then he essentially would be imposing a non-federal design requirement on Norfalco to install additional safety features on its tank cars, which is “not substantively the same” as conditions imposed by federal regulations.

In affirming the district court’s order, the Third Circuit expanded the district court’s conclusion and found that all of Roth’s state common law claims were expressly preempted by the Hazardous Materials Transportation Act.