Articles Posted in US Court of Appeals for the Third Circuit

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McGann, who is blind and deaf, requested from Cinemark an American Sign Language (ASL) tactile interpreter so that he could experience a movie in his local Cinemark theater during one of its regular showings. Cinemark denied his request. McGann filed suit under the Americans with Disabilities Act (ADA), 42 U.S.C. 12101 ADA. After a bench trial in which the parties stipulated to all relevant facts, the district court entered Judgment in favor of Cinemark. It reasoned that McGann’s requested tactile interpreter was not an auxiliary aid or service under the ADA and that the ADA did not require movie theaters to change the content of their services or offer “special” services for disabled patrons. The Third Circuit vacated. The tactile interpreter McGann requested is an “auxiliary aid or service.” A a public accommodation may avoid ADA liability for failure to provide an auxiliary aid or service only if it shows that the aid or service in question “fundamentally alter[s] the nature” of its goods or services, or “would result in an undue burden, i.e., significant difficulty or expense.” The court remanded for consideration of CInemark’s possible defense. View "McGann v. Cinemark USA Inc" on Justia Law

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Titanium dioxide is a commodity-like product with no substitutes, the market is dominated by a few firms, and there are substantial barriers to entry. Valspar, a large-scale titanium dioxide purchaser, alleges that suppliers conspired to increase prices, beginning when DuPont—the largest American supplier—joined the Titanium Dioxide Manufacturers Association (TDMA) in 2002. DuPont then announced a price increase. Within two weeks, DuPont’s price increase was matched by other suppliers. During the next 12 years, the alleged conspirators announced price increases 31 times. Because Valspar claims it was overcharged by $176 million. In 2010, a class of titanium dioxide purchasers filed a price-fixing action. Valspar opted out of that class action, which settled. Valspar then filed its own claim and settled except against DuPont. The Third Circuit affirmed the summary judgment in favor of DuPont. Valspar’s characterization of the suppliers’ price announcements “neglects the theory of conscious parallelism” and is contrary to the doctrine that in an oligopoly “any rational decision must take into account the anticipated reaction of the other . . . firms.” Price movement in an oligopoly is interdependent and frequently will lead to successive price increases, because oligopolists may “conclude that the industry as a whole would be better off by raising prices.” Valspar did not show that the suppliers’ parallel pricing went “beyond mere interdependence [and was] so unusual that in the absence of advance agreement, no reasonable firm would have engaged in it.” View "Valspar Corp v. E I Du Pont De Nemours & Co" on Justia Law

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When Eclipse, a jet aircraft manufacturer, declared bankruptcy in November 2008, it reached an agreement to sell the company to its largest shareholder, ETIRC, which would have allowed Eclipse to continue its operations. The sale required significant funding from VEB, a state-owned Russian Bank. The funding never materialized. For a month, Eclipse waited for the deal to go through with almost daily assurances that the funding was imminent. Delays were attributed to Prime Minister Putin needing “to think about it.” Eventually, Eclipse was forced to cease operations and notify its workers that a prior furlough had been converted into a layoff. Eclipse’s employees filed a class action complaint as an adversary proceeding in the Bankruptcy Court alleging that Eclipse’s failure to give them 60 days’ notice before the layoff violated the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. 2101-2109, and asserting that Eclipse could invoke neither the Act’s “faltering company” exception nor its “unforeseeable business circumstances” exception. The Bankruptcy Court rejected the employees’ claims on summary judgment, holding that the “unforeseeable business circumstances” exception barred WARN Act liability. The district court and Third Circuit affirmed. Eclipse demonstrated that its closing was not probable until the day that it occurred. View "In re: AE Liquidation, Inc." on Justia Law

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SemGroup purchased oil from producers and resold it to downstream purchasers. It also traded financial options contracts for the right to buy or sell oil at a fixed price on a future date. At the end of the fiscal year preceding bankruptcy, SemGroup’s revenues were $13.2 billion. SemGroup’s operating companies purchased oil from thousands of wells in several states and from thousands of oil producers, including from Appellants, producers in Texas, Kansas, and Oklahoma. The producers took no actions to protect themselves in case 11 of SemGroup’s insolvency. The downstream purchasers did; in the case of default, they could set off the amount they owed SemGroup for oil by the amount SemGroup would owe them for the value of the outstanding futures trades. When SemGroup filed for bankruptcy, the downstream purchasers were paid in full while the oil producers were paid only in part. The producers argued that local laws gave them automatically perfected security interests or trust rights in the oil that ended up in the hands of the downstream purchasers. The Third Circuit affirmed summary judgment in favor of the downstream purchasers; parties who took precautions against insolvency do not act as insurers to those who took none. View "In re: SemCrude LP" on Justia Law

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The creditors shipped goods via common carrier from China to World Imports in the U.S. “free on board” at the port of origin. One shipment left Shanghai on May 26, 2013; World took physical possession of the goods in the U.S. on June 21. Other goods were shipped from Xiamen on May 17, May 31, and June 7, 2013, and were accepted in the U.S. within 20 days of the day on which World filed its Chapter 11 petition. The creditors filed Allowance and Payment of Administrative Expense Claims, 11 U.S.C. 503(b)(9), allowable if: the vendor sold ‘goods’ to the debtor; the goods were "received" by the debtor within 20 days before the bankruptcy filing; and the goods were sold in the ordinary course of business. Section 503(b)(9) does not define "received." The Bankruptcy Court rejected an argument that the UCC should govern and looked to the Convention on Contracts for the International Sale of Goods (CISG). The CISG does not define “received,” so the court looked to international commercial terms (Incoterms) incorporated into the CISG. Although no Incoterm defines “received,” the incoterm governing FOB contracts indicates that the risk transfers to the buyer when the seller delivers the goods to the common carrier. The Bankruptcy Court and the district court found that the goods were “constructively received” when shipped and denied the creditors’ motions. The Third Circuit reversed; the word “received” in 11 U.S.C. 503(b)(9) requires physical possession. View "In re: World Imports Ltd" on Justia Law

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Norman and Elkin were the only shareholders of USM, a company that acquired and sold rights to radio frequencies. Norman held a minority interest and sought legal relief after he discovered that Elkin had transferred to another company the ownership of several frequencies purchased by USM, that Elkin had treated capital contributions as loans, and that Elkin had paid himself from USM funds without giving Norman any return on his minority investment. Despite two juries agreeing with Norman, verdicts in his favor were overturned. Most of his claims were held to be time-barred after the district court rejected his argument that a state court case he had brought to inspect USM’s books and records under the Delaware Code tolled the statute of limitations. Other claims were eliminated for insufficient evidence. The Third Circuit vacated in part. The district court erred in concluding that tolling of the statute of limitations is categorically inappropriate when a plaintiff has inquiry notice before initiating a books and records action in the Delaware courts and erred in vacating the jury’s award of nominal damages for one of Norman’s breach of contract claims. Norman’s fraud claim was not supported by sufficient proof of damages. View "Norman v. Elkin" on Justia Law