Doe v. Hesketh, 828 F.3d 159 (3d Cir. 2016). Today, the Third Circuit, in an opinion by Judge Greenaway, ruled in a case of a child victim of federal crimes related to child pornography, under 18 U.S.C. §2255. The government had prosecuted a defendant, Mancuso, under that statute, and Mancuso had entered a guilty plea to one of the charges, sexual exploitation of a child. As part of the plea agreement, Mancuso was required to fund a trust for the plaintiff here, Doe, in the amount of $200,000.
Some years later, Doe brought a civil suit for damages against Mancuso and a defendant class, alleging that each had violated a predicate statute under section 2255. She settled with one defendant, and others were dismissed for lack of personal jurisdiction, leaving only Mancuso in that case. When Mancuso did not respond, plaintiff obtained a default against him. Mancuso thereafter appeared through counsel and sought to vacate the default. He also moved to dismiss the case on the ground that the restitution to Doe in the criminal case barred her civil suit. The District Court granted those applications. Doe appealed and the Third Circuit reversed and remanded to the District Court.
Before addressing the merits, Judge Greenaway first addressed the court’s jurisdiction. The defendants who were dismissed for lack of personal jurisdiction were dismissed without prejudice, and Doe expressed her intent to bring new cases against those defendants in their respective home states, all of which were outside the Third Circuit. Doe appealed as against Mancuso under 28 U.S.C. §1291, but Judge Greenaway noted that “[o]rdinarily, we do not have jurisdiction under §1291 of an appeal in which any defendant was dismissed by the district court without prejudice.” Here, however, an exception applied. Since Doe would not again be filing her case in this District Court, the case was equivalent to one in which “a claim will not be re-filed at all.” Judge Greenaway cited precedents from the Third Circuit and elsewhere that supported this result, which was based on a “practical rather than technical construction” of section 1291.
On the merits issues, the standard of review of the grant of the motion to dismiss was de novo. The standard applicable to the setting aside of the entry of default was abuse of discretion.
Judge Greenaway first concluded that the plain language of section 2255 “in no way limits the availability of the civil right of action to cases in which a victim has not been compensated in the past by a restitution order.” The statute was “unambiguous for our purposes,” and the result was consistent with Congressional intent. For example, a civil action under section 2255 allows for non-pecuniary damages such as emotional distress, which may not be available under restitution statutes.
Judge Greenaway then turned to the question whether collateral estoppel barred the civil suit, since it was unclear whether the District Court’s decision to bar the case might have been based on collateral estoppel. Under applicable federal law principles of collateral estoppel, there are four prongs: “(1) the identical issue was decided in a prior adjudication; (2) there was a final judgment on the merits; (3) the party against whom the bar is asserted was a party or in privity with a party to the prior adjudication; and (4) the party against whom the bar is asserted had a full and fair opportunity to litigate the issue in question.”
Here, Doe was not a party to the prior criminal case or in privity with the government. Her interests and those of the government were not sufficiently congruent to support privity. She was interested in maximizing her own damage recovery, while the government was focused on “represent[ing] the interest of society as a whole.” Additionally, as the court had already ruled, section 2255 did not foreclose the civil suit (on the contrary, it encouraged such an action), and Judge Greenaway would not “jam judicially created doctrines such as res judicata into the gears of Congress’ carefully crafted statutory machinery.” Collateral estoppel is ultimately an equitable doctrine, and the panel declined to apply it here.
Doe also had no opportunity to litigate the issue of her damages. She was not a party to the sentencing hearing and had no ability under the restitution statutes to “influence the sentencing court’s restitution decision.”
The panel thus reversed the dismissal of the case. As to the vacation of the entry of default, Judge Greenaway directed that the District Court consider that anew. The District Court had vacated the default on the ground that the civil suit was barred, a ruling that the Third Circuit undid today. The District Court had not considered completely all the factors that go into a decision whether to vacate a default, the matter was remanded for that purpose.