Summary
The United States District Court for the District of Arizona denied remaining defendants Mark A. Russell and Michael Lohscheller’s motion to stay a securities class action arising from Nikola Corporation’s bankruptcy. The court held that the automatic stay under 11 U.S.C. § 362(a) did not extend to the individual defendants and that neither the unusual-circumstances exception nor the court’s inherent authority justified a stay. The court reset the Rule 16 scheduling conference for May 21, 2026.
Court
United States District Court for the District of Arizona
Jurisdiction
United States District Court for the District of Arizona
Decision date
March 24, 2026
Docket number
CV-23-02131-PHX-DJH
Disposition
other
Questions Presented
- Whether the automatic stay under 11 U.S.C. § 362(a) should be extended to non-debtor individual defendants whose alleged securities-law liability is based on statements separately attributable to them.
- Whether the court should stay the proceedings against the individual defendants under its inherent authority using the Landis factors.
- Whether the individual defendants established sufficient hardship or inequity, or other circumstances, to warrant a discretionary stay.
Holdings
- The automatic stay under 11 U.S.C. § 362(a) generally protects only the debtor, property of the debtor, and property of the bankruptcy estate, and the unusual-circumstances exception did not justify extending the stay to Russell and Lohscheller because plaintiffs separately identified statements attributable to each individual defendant.
- The court denied a stay under its inherent authority because the Landis factors did not establish sufficient hardship or inequity, and the possible prejudice to plaintiffs from delay outweighed the asserted benefits of a stay.
Court Document
Open PDFLoading document…