Latest 3 Cases: Wheeling & Lake Erie Railway Co. v. Keach (Bankruptcy), United States v. Garcia-Mojica (Criminal Law), In re Ocular Therapeutix ...

How Allen v. Cooper Breaks Important New (if Dubious) Ground on Stare Decisis

VIKRAM DAVID AMAR

Illinois Law dean and professor Vikram David Amar comments on language in a recent U.S. Supreme Court decision, Allen v. Cooperdiscussing constitutional stare decisis in the context of state sovereign immunity. Amar points out some of the problems with the Court’s jurisprudence on state sovereign immunity and Congress’s Section 5 power, and he questions the Allen majority’s embrace of a “special justification” requirement for constitutional stare decisis.

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Wheeling & Lake Erie Railway Co. v. Keach

Docket: 19-1894

Opinion Date: April 9, 2020

Judge: Selya

Areas of Law: Bankruptcy, Commercial Law, Securities Law

In this case, a byproduct of litigation stemming from the derailment of a Montreal, Maine & Atlantic Railway, Ltd. (MMA) freight train carrying crude oil in Lac-Megantic, Quebec, the First Circuit affirmed the district court's entry of judgment in favor of Robert Keath, the estate representative of MMA, and against creditor Wheeling & Lake Erie Railway Company, holding that, giving due deference to the fact-finder's resolution of the burden of proof, the judgment must be affirmed. One month after the derailment, MMA filed a voluntary petition for protection under Chapter 11 of the Bankruptcy Code. Wheeling instituted an adversary proceeding in the bankruptcy court against MMA and the estate representative, seeking a declaratory judgment regarding the existence and priority of its security interest in certain property of the MMA estate. The case involved intricate questions concerning secured transactions, carriage of goods, and corporate reorganization. After a settlement, the bankruptcy court ruled in favor of the estate representative. The First Circuit affirmed, holding (1) ultimately, this case turned on principals relating to the allocation of the burden of proof and the deference due to the finder of fact; and (2) giving due deference to the fact-finder's resolution of the burden of proof issue, the district court's judgment must be affirmed.

United States v. Garcia-Mojica

Docket: 18-1265

Opinion Date: April 9, 2020

Judge: Torruella

Areas of Law: Criminal Law

The First Circuit affirmed Defendant's sentence of 100 months of imprisonment imposed for his convictions of possession of a firearm by a prohibited person and illegal possession of a machine gun, holding that the sentence was neither procedurally nor substantively unreasonable. A probation officer recommended a sentence of forty-one to fifty-one months for Defendant's offenses under the U.S. Sentencing Guidelines. At sentencing, the Government requested a sentence of at least sixty-three months' imprisonment or, in the alternative, an upward variance. The district court adopted the Guidelines' calculation and then imposed an upward variance of forty-nine months' imprisonment for a total of 100 months' imprisonment. The First Circuit affirmed, holding that the sentence was procedurally sound and substantively reasonable.

In re Ocular Therapeutix Inc.

Docket: 19-1557

Opinion Date: April 9, 2020

Judge: Stahl

Areas of Law: Drugs & Biotech, Securities Law

In this complaint alleging that Defendants intentionally or recklessly misled investors about Ocular Therapeutix, Inc.'s manufacturing problems the First Circuit affirmed the judgment of the district court dismissing Plaintiffs' complaint for failure to state a claim, holding that Plaintiffs failed to allege facts giving rise to a strong inference of scienter as required by the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. 78u-4, 78u-5. In 2015, Ocular submitted a new drug application to the FDA for approval of Dextenza. In 2017, the FDA published its observations of issues at Ocular's manufacturing facility, which resulted in a drop in the company's stock price. Plaintiffs, several shareholders, brought this securities fraud action on behalf of themselves and a putative class of investors alleging violations of section 10(b) of the Securities Exchange Act, 15 U.S.C. 78j(b) and section 20(a) of the Exchange Act, 15 U.S.C. 78t(a). The district court dismissed the complaint pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6), the Exchange Act, and the PSLRA. The district court granted the motion and dismissed the complaint with prejudice. The First Circuit affirmed, holding that Plaintiffs did not allege facts giving rise to a strong inference of scienter as required by the PSLRA.