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Articles Tagged with Third Circuit

In Clipper Pipe & Serv., Inc. v. Ohio Casualty Insurance Co., the Pennsylvania Supreme Court held that the Contractor and Subcontractor Payment Act, 73 P.S. §§ 501-506 (“CASPA”), does not apply to construction projects where the owner is a government entity.

The United States Department of the Navy had entered into an agreement with Contracting Systems, Inc. II (“CSI”) for the construction of an addition to, and renovations of, a training center in Lehigh Valley. CSI, in turn, subcontracted with Clipper Pipe & Service, Inc. (“Clipper”) to perform heating, ventilation, and air conditioning work. When CSI failed to pay Clipper per the terms of their agreement, Clipper filed suit against CSI and its surety, the Ohio Casualty Insurance Company (“OCIC”) in the United States District Court for the Eastern District of Pennsylvania.

OCIC and CSI moved for summary judgment contending that CASPA does not apply to public works projects because a government entity does not qualify as an “owner” under CASPA. CASPA defines an “owner” as “[a] person who has an interest in real property that is improved and who ordered the improvement to be made.” “Person” is defined as “[a] corporation, partnership, business trust, other association, estate, trust foundation or a natural individual.” According to CSI and OCIC, government bodies cannot be “owners” under CASPA because the word “government” does not appear in the definition – i.e., a government body is not an “association” and therefore not a “person” or “owner.” Further, OCIC and CSI argued that the Prompt Payment Act (“PPA”), not CASPA, addresses public works projects. OCIC and CSI argued that given the substantial differences between CASPA and PPA, it would be untenable if both applied simultaneously.

Refusing to adopt the heightened pleading standard under Rule 9(b), the US Court of Appeals for the Third Circuit reversed the U.S. District Court for New Jersey’s order, which held that Plaintiff Foglia failed to meet the pleading requirements under Rule 9(b) for pleading a false claims act case. U.S. ex rel. Foglia v. Renal Ventures Mgmt., LLC, 2014 WL 2535339 (3d Cir. June 6, 2014).  In contrast to the District Court, the Third Circuit agreed to a more liberal standard for pleading cases under the federal False Claims Act and concluded that Foglia’s factually false claim against Renal proved sufficient to satisfy Rule 9(b).  The circuits are split over whether a whistleblower must allege specific examples of false claims to survive a Rule 12(b)(6) motion, and the Third Circuit held that the whistleblower need not provide such specific examples.

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On February 10, 2014, the Third Circuit Court of Appeals affirmed a lower federal court’s jury verdict of insider trading against Alfred Teo and a trust he controlled.  Alfred Teo Sr., a former shareholder in Musicland Stores Corp…..

SEC Insider Trading Alert: Teo’s Musicland Insider Trading Appeal Unsuccessful

On February 10, 2014, the Third Circuit Court of Appeals affirmed a lower federal court’s jury verdict of insider trading against Alfred Teo and a trust he controlled.  Alfred Teo Sr., a former shareholder in Musicland Stores Corp, a conglomerate company that oversaw numerous music endeavors including Sam Goody music stores and Suncoast Motion Picture Co. video shops, was found guilty of insider trading.  Teo and his trust were ordered to disgorge gains of $17,000,000 and to pay prejudgment interest of an additional $14,000,000.  Teo received and traded on confidential information from insiders of Musicland about an impending all cash tender offer by Best Buy for all the shares of Musicland. The decision in SEC v. Teo is another stark illustration of the painful economic consequences of insider trading. Continue reading ›

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