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Posts Tagged ‘Third Circuit’

U.S. Supreme Court Finds General Discovery Rule Inapplicable to the SOL for FDCPA Violations

Posted on: January 16th, 2020

By: Nicole L. Graham

In Klemm v. Rotkiske, No. 18-328, 589 U.S. ____ (2019), the United State Supreme Court unanimously agreed there is no blanket discovery rule that, as a matter of statutory interpretation, applies to all cases arising under the Fair Debt Collection Practices Act (“FDCPA”).  The majority held that the plain text of 15 U.S.C. §1692k(d) unambiguously states the date of the violation starts the clock on the one-year limitations period.  The Court declined Rotkiske’s request to read into the statute a provision that limitations period begins to run on the date on which the violation occurs or the date of discovery of such violation.  Justice Thomas, writing for the majority, found it clear from the face of the text that “[t]he FDCPA limitations period begins to run from the date the alleged FDCPA violation actually happened.”  Accordingly, the limitations period for an FDCPA claim arising from the filing of a collection action complaint begins to run from the date the action is filed and not from the date the debtor is served the complaint.  Similarly, the limitations period for an FDCPA claim based on a debt collection notice begins to run from the date of the notice and not from the date the notice is received.

The Court did, however, leave the door open to the possible application of an equitable “fraud-specific discovery rule.”  The Court declined to decide whether the text of 15 U.S.C. §1692k(d) permits the application of equitable doctrines because Rotkiske failed to preserve the issue before the Third Circuit and failed to raise the issue in his petition for certiorari.

Justice Sotomayor issued a concurring opinion to note that the Court’s decision does not prevent parties from invoking an equitable “fraud-specific discovery rule.”  Justice Ginsburg, the lone dissenter, felt Rotkiske preserved the equitable “fraud-specific discovery rule” argument in his petition for certiorari, and found the allegations of the complaint should suffice under the equitable “fraud-specific discovery rule” to permit adjudication of Rotkiske’s claim on the merits.

Because the question of the applicability of equitable exceptions to the FDCPA’s statute of limitations remains unresolved, it would not be surprising to see the issue before the Supreme Court again soon.

If you have any questions or would like more information, please contact Nicole Graham at [email protected].

The Third Circuit Upholds District Court Ruling That Trucking Company Employees Not Entitled to 1 Million in UIM Benefits

Posted on: May 22nd, 2019

By: Erin Lamb

In Farmland Mutual Insurance v. Sechrist, the Third Circuit upheld a district court’s decision rejecting the claims of employees involved in a serious accident while driving a vehicle for Clouse Trucking that they were entitled to $1,000,000 in underinsured (UIM) benefits instead of the $35,000 paid to them by Farmland Mutual Insurance Co.

Farmland had determined that Clouse Trucking had selected to waive UIM coverage equal to the bodily injury liability coverage ($1,000,000), and selected UIM coverage of $35,000. The employees had argued that Clouse Trucking’s waiver was invalid and unenforceable as it was contrary to what is required by the Pennsylvania Motor Vehicle Financial Responsibility Law (PMVFL).

Farmland proceeded with a declaratory judgment action in the U.S. District Court for the Middle District of Pennsylvania, seeking determination of its obligations under that law, related to the UIM coverage. The district court granted summary judgment, adopting the argument that the policy application was a valid written request by Clouse Trucking for lower UIM coverage, as allowed under the (PMVFL). The employees appealed to the Third Circuit claiming the purported selection of the lowered UIM coverage was not a valid written request under the PMVFL. They argued that the requirements had not been met because the selection form contained a box that listed the UIM limit offered as $35,000 when it should have read $1,000,000.

Notably, in the application for the Farmland policy, the owner of Clouse Trucking checked a box that stated, “I want Underinsured Motor Coverage with limits lower than my bodily injury liability limits, as indicated below…” However, a sticky note obscured several of the boxes that were options for the amounts he could select. There was a handwritten note that stated near the selection, “35,000”. The Important Policyholder Notice, signed by Clouse, indicated that he understood that Farmland provided such coverage up to at least $100,000.

The Third Circuit found that, while the PMVFL required specific written waivers with statutorily-provided forms if an insured declined uninsured or UIM benefits entirely, that was not the case for simply selecting an amount less than the bodily liability coverage. In such a case, the election could take any form, so long as the request was signed by the insured, and contained a designation of the amount of coverage selected. Those requirements were met. The court found no significance in the fact that the Underinsured Motorist Coverage Limit Offered portion of the Selection form had stated that amount as $35,000 when it should have read $1,000,000.

If you have any questions or would like more information, please contact Erin Lamb at [email protected].

ERISA Plaintiffs Continue Their Assault on Major Universities, but Every ERISA Fiduciary is Vulnerable

Posted on: May 15th, 2019

By: John H. Goselin II

Beginning in August 2016, the ERISA Plaintiffs’ Bar launched a concerted attack on more than 20 major universities across the country filing class action lawsuits for alleged violations of ERISA fiduciary duties under ERISA Section 404 and alleged participation in ERISA prohibited transactions under Section 406.

Each side has won significant victories. Duke University, the University of Chicago and Vanderbilt University have capitulated and are paying six and seven-figure class action settlements. The University of Rochester and Long Island University fought until the plaintiffs simply walked away earlier this year. Northwestern University, New York University, Washington University and the University of Pennsylvania won impressive victories at the motion to dismiss stage.

But the battle is never over at the district court level. The United States Court of Appeals for the Third Circuit has provided new life to the plaintiffs bringing suit against the University of Pennsylvania, albeit only for 2 of the 7 counts that were originally alleged. Sweda v University of Pennsylvania, 2019 U.S. App. LEXIS 13284 (No. 17-3244, May 2, 2019). Not only does this reversal present new risks for the University of Pennsylvania, but it may put a damper on lower courts willing to dismiss these class action lawsuits.

The Third Circuit rejected a per se rule that would protect plan fiduciaries who provide a “mix and range of investment options” to plan participants. Instead, the Third Circuit held that Plaintiff Sweda had plausibly alleged that the defendants had “failed to conform to the high standard required of plan fiduciaries [under ERISA Section 404(a)(1)]” by alleging that (i) the recordkeeping fees were 6-7 times greater than the fees paid by similar plans, (ii) defendants failed to solicit competitive bids for recordkeeping and other plan services or (iii) defendants failed to hire an independent consultant to assess the plan’s administrative costs. Furthermore, the University of Pennsylvania Plan maintained high-cost investment options with historically poor performance compared to available alternatives, particularly the ongoing use of retail mutual fund shares when lower-cost institutional shares were available, but never adopted by the plan.

It is important to note that the claims being asserted against the universities apply to every business that maintains a 401(k) plan, or other ERISA investment plan, for their employees. The employer as a plan sponsor and the named and functional fiduciaries administering the plan will be held to the “prudent man” standard of care which requires all plan fiduciaries to exercise “the skill, care, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.”

In short, the structure and administration of an ERISA plan must be continually reviewed, evaluated and modified to reflect the prevailing better/best practices. Plan sponsors and individual fiduciaries should develop a process of continuing and ongoing education regarding (i) what is expected of ERISA fiduciaries and (ii) the available options in the market place. Furthermore, plan fiduciaries must have a documented process pursuant to which they periodically evaluate the ERISA plan(s) for which they are responsible and make changes when necessary and appropriate.

Once the ERISA Plaintiffs’ Bar is done with the universities, they will be looking for their next targets.

If you have any questions or would like more information, please contact John Goselin at [email protected].

“You Can’t Always Get What You Want, But . . . You Get What You Need”: Determining What is “Necessary” Under the Fair Housing Act

Posted on: December 12th, 2018

By: Jake Loken & Bill Buechner

In a case citing The Rolling Stones, Henry Thoreau, and Abraham Lincoln, and listing the ingredients needed to make lemonade, the Third Circuit rejected an elderly woman’s disability discrimination claim under the Fair Housing Act.

In Vorchheimer v. Philadelphian Owners Association, 903 F.3d 100 (3d Cir. 2018), Carol Vorchheimer, an elderly woman, wanted to leave her rolling walker in her condo building’s lobby. Vorchheimer needed the walker to get around her condo and the building, but did not need it when going from the lobby to her car. Vorchheimer wanted to leave the walker in the lobby when she left to go to her car, but was provided four alternatives by the property manager for storing her walker instead of leaving the walker out in the lobby. The alternatives, however, did not satisfy Vorchheimer’s desire to simply leave the walker in the lobby.

After a year of continually leaving the walker in the lobby, without using any of the alternative options, and having staff move the walker into storage, Vorchheimer filed a lawsuit against the owner’s association, the association’s president at the time, and the property manager. The lawsuit alleged the defendants violated the Fair Housing Act, specifically, 42 U.S.C. 3604(f)(3)(B), by discriminating against Vorchheimer in refusing to allow her to leave the walker out in the lobby. Freeman Mathis & Gary, LLP attorney Christopher Curci argued on behalf of the defendants at oral argument before the Third Circuit.

The Court examined section 3605(f)(3)(B), which states: “Discrimination includes [1] a refusal to make [2] reasonable accommodations in rules, policies, practices, or services, [3] when such accommodations may be [a] necessary to afford such person [b] equal opportunity to use and enjoy a dwelling[.]” 903 F.3d at 105. The Court focused in on what is meant by “necessary” in this section.

Typically, a suit alleging discrimination under this section focuses on the “reasonable accommodation” factor. In Vorchheimer, the court focused on the “necessary” factor, and held that what is “necessary” is a question of law to be determined by the court, along with holding the “necessity element requires that an accommodation be essential, not just preferable.” 903 F.3d at 107. The Court further held that a particular tenant’s needs must first be identified, then after doing so, a court “can gauge what is necessary to afford that tenant equal hosing opportunity.” Id. at 108.

In determining what a tenant’s needs are, the Court thoroughly discussed what the word “necessary” means, and then examined doctors’ letters detailing Vorchheimer’s disabilities and medical needs, which were exhibits to her complaint. The Court determined that Vorchheimer’s needs were “use of a rolling walker” and minimal “period[s] of unsupported standing.”

Next, the Court turned to whether the alternatives proposed by the property manager satisfied these needs. The Court found that leaving the walker out in the lobby was Vorchheimer’s want, and not a need, and that the four alternatives posed by the manager satisfied Vorchheimer’s needs of minimal unsupported standing and use of the walker when moving around the building.

For HOAs, this holding means that if a HOA offers reasonable alternatives that meet a tenant’s needs, even though they may not be the tenant’s preferred accommodations, then the existence of these alternatives will make the tenant’s preferred accommodation not “necessary.” The Sixth, Seventh, Tenth, and Eleventh Circuits have all likewise held that a plaintiff is not entitled to his or her preferred accommodation if it is not essential to having equal housing opportunities.

After Vorchheimer, the Third Circuit makes it clear that the term “necessary” as used in the Fair Housing Act does not include wants, and helps make The Rolling Stones lyrics ring truer than ever, as “[y]ou can’t always get what you want, but if you try sometime you find, you get what you need.”

If you have any questions or would like more information, please contact Jake Loken at [email protected] or Bill Buechner at [email protected].

Discrimination Suit Over Service Dog Revived By Third Circuit

Posted on: August 23rd, 2018

By: Barry Brownstein

The Third Circuit has revived a lawsuit by the parents of an epileptic girl who claim a Pennsylvania school discriminated against her by barring her service dog.

In 2014, Traci and Joseph Berardelli sued the Allied Services Institute of Rehabilitation Medicine, which operates a school with a specialized program for dyslexic students, after it barred their daughter from bringing her service dog to school to help alert staff to her epileptic seizures. The school claimed the dog would be a distraction, and the Berardelli’s daughter missed many school days when her seizures were bad. When the school finally permitted the service dog to accompany her, the reprieve did not last long, as school officials required that it wear a “special therapeutic shirt designed to decrease allergens” that caused the dog to overheat. The parents’ lawsuit alleged that the school violated the ADA, the Rehabilitation Act, and a Pennsylvania discrimination law.

The United States District Court for the Middle District of Pennsylvania dismissed the ADA and state discrimination claims, ruling that they improperly sought damages.

On appeal, Traci and Joseph Berardelli argued that “reasonable modifications” required under the ADA are substantively the same as “reasonable accommodations” provided for in the Rehabilitation Act, and thus, service animal requirements in the ADA apply to both laws.

The Third Circuit ruled that the district court erred in its instructions to the jury about the Rehabilitation Act claim and improperly disallowed testimony about ADA service animal regulations because that was not the law being considered.  In its enforcement of the ADA, the Department of Justice has ruled that service animals are reasonably permitted to be used by disabled persons in public places as long as they are housebroken, not out of control, and pose no risk to the public.

The Third Circuit ruled that the Rehabilitation Act of 1973 and its progeny the Americans With Disabilities Act of 1990 must be interpreted the same way with respect to reasonable accommodations that must be provided to those with disabilities, including the use of service animals. Thus, under the Rehabilitation Act just as under the ADA, a covered actor ordinarily must accommodate the use of service animals by individuals with disabilities. The Third Circuit also overturned dismissal of the claim made under Pennsylvania discrimination law, ruling that the district court erred because that law does permit damages as a remedy.

If you have any questions or would like more information, please contact Barry Brownstein at [email protected].