Latest 3 Cases: Smart Oil, LLC v. DW Mazel, LLC (Business Law), United States v. UCB, Inc. (Civil Procedure), United States v. Cook ...

#MeToo and What Men and Women Are Willing to Say and Do

SHERRY F. COLB

Cornell Law professor Sherry F. Colb explores why people have such strong feelings about the #MeToo movement (whether they are advocates or opponents) and suggests that both sides rest their positions on contested empirical assumptions about the behavior of men and women. Colb argues that what we believe to be true of men and women generally contributes to our conclusions about the #MeToo movement and our perceptions about how best to handle the accusations of those who come forward.

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Smart Oil, LLC v. DW Mazel, LLC

Docket: 19-2542

Opinion Date: August 17, 2020

Judge: Brennan

Areas of Law: Business Law, Contracts

DWM agreed to purchase 30 gasoline station-convenience stores from Smart for $67 million. It was understood that it was a "flip" because Smart did not yet own the properties. Both parties were represented by counsel. The Agreement requires DWM to deposit $300,000 into an escrow account. At the close of the due diligence period, DWM is to pay a second deposit of $450,000. DWM never paid the initial earnest money deposit but the parties continued their due diligence investigations and negotiations. The Agreement requires DWM to provide Smart with written notice to terminate the Agreement if, after its investigations, DWM disapproved of the purchase. If DWM did not provide that written notice, the Agreement states that Smart is entitled to keep the earnest money if the deal falls through. DWM failed to provide notice of disapproval and did not pay the second deposit. In the meantime, Smart executed contracts to acquire the properties. When the DWM-Smart deal fell through, Smart sued DWM for breach of contract, arguing it was entitled to $750,000 in earnest money as liquidated damages. DWM counterclaimed for breach of contract and fraudulent inducement, for failure to provide adequate due diligence materials. The Seventh Circuit affirmed holdings that DWM breached the contract, that DWM’s obligation to pay the earnest money remained, and that Smart was entitled to the earnest money as liquidated damages under Illinois law.

United States v. UCB, Inc.

Docket: 19-2273

Opinion Date: August 17, 2020

Judge: HAMILTON

Areas of Law: Civil Procedure, Government & Administrative Law, Government Contracts, Health Law

The False Claims Act, 31 U.S.C. 3729–3733, authorizes relators to file qui tam suits on behalf of the U.S. government. If such an action is successful, the relator receives part of the recovery. The Act prohibits presenting to a federal healthcare program a claim for payment that violates the Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b), Venari formed 11 daughter companies, each for the purpose of prosecuting a separate qui tam action, alleging essentially identical violations of the False Claims Act by pharmaceutical companies. CIMZNHCA, a Venari company, filed suit alleging illegal kickbacks to physicians for prescribing Cimzia to treat Crohn’s disease in patients who received federal healthcare benefits. The government did not exercise its right “to intervene and proceed” as the plaintiff but moved to dismiss the action, representing that it had investigated the Venari claims and found them to lack merit. The court denied that motion, finding the government’s general evaluation of the Venari claims insufficient as to CIMZNHCA and that the decision to dismiss was “arbitrary and capricious.” The Seventh Circuit reversed with instructions to dismiss, construing the government’s motion as a motion to both intervene and dismiss. By treating the government as seeking to intervene, a court can apply Federal Rule of Civil Procedure 41, which provides: “The Government may dismiss the action” without the relator’s consent if the relator receives notice and opportunity to be heard.

United States v. Cook

Docket: 18-1343

Opinion Date: August 17, 2020

Judge: ROVNER

Areas of Law: Constitutional Law, Criminal Law

Police conducted a traffic stop, approached Cook’s car and noticed a strong odor of marijuana. Cook was driving on a suspended license and without a license plate. The officers ordered him to step out of the vehicle and removed Cook's loaded pistol from his holster. In purchasing the firearm, Cook completed an ATF form, answering “no” to the question, “Are you an unlawful user of, or addicted to, marijuana or any depressant, stimulant, narcotic drug, or any other controlled substance?” Cook acknowledged that he used marijuana almost daily and had smoked two “blunts” that day. The Seventh Circuit affirmed Cook's conviction for being an unlawful user of a controlled substance in possession of a firearm, 18 U.S.C. 922(g)(3). The Supreme Court subsequently held in “Rehaif,” that the knowledge element of section 924(a)(2) requires the government to show that the defendant knew not only that he possessed a firearm, but that he belonged to the relevant category of persons barred from possessing a firearm. The indictment in Cook’s case did not allege, nor the jury instructions advise the jury that it must find, that Cook knew he was an unlawful user of a controlled substance. On remand, the Seventh Circuit again rejected Cook’s vagueness and Second Amendment challenges and his objection to the jury instruction on who constitutes an unlawful user of a controlled substance but held that, in light of Rehaif, Cook is entitled to a new trial.