Sarah Abrams

In recent years, student athletes in the U.S. have gained the rights to profit from their “name, image, and likeness” (NIL). As these rights have emerged, NIL collectives have formed. The purpose of these collectives is for a school’s athletic supporters to have a way to pool their funds in order to create opportunities for their school’s student athletes. The collectives are in many ways new kinds of organizations, and they are certainly organized for new purposes. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, examines the challenges involved with trying to develop management liability insurance for these kinds of collectives. A version of this article previously was published on Law360. I would like to thank Sarah for allowing me to publish her article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.

Continue Reading Guest Post: Challenges of Insuring an NIL Collective

In what may be the SEC’s first AI-washing enforcement action against a reporting company, on January 14, 2025, the agency brought a settled enforcement action against Presto Automation, a restaurant services technology company, based on the company’s alleged misrepresentations “regarding critical aspects of its flagship artificial intelligence (“AI”) product, Presto Voice.” A copy of the SEC’s January 14, 2025 press release about the action may be found here. The agency’s January 14, 2025 Order in the proceeding can be found here.

Continue Reading SEC Files AI-Washing Enforcement Action Against Restaurant Technology Company

The FDIC as receiver of the failed Silicon Valley Bank has filed a negligence and breach of fiduciary duty action against the bank’s former directors and officers. The complaint alleges that it the FDIC’s lawsuit is “a case of egregious mismanagement of interest-rate and liquidity risks by the Bank’s former officers and directors.” The complaint seeks to recover the “billions of dollars in damages caused by the negligence, gross negligence, and breaches of fiduciary duty.” A copy of the FDIC’s complaint can be found here.

Continue Reading FDIC Files Liability Action Against Former SVB Executives

In what seems is likely to be the last cybersecurity-related enforcement action by the SEC under outgoing chair Gary Gensler, the agency has brought a settled enforcement action against asset management firm Ashford, Inc., alleging that the company made misrepresentations in its periodic reporting documents about a cybersecurity-related incident at the firm. As discussed below, the action raises questions about what may come next as far as SEC cybersecurity-related enforcement under the new administration. A copy of the SEC’s January 13, 2025, complaint in the enforcement action can be found here. The SEC’s January 13, 2025, press release about the action can be found here.

Continue Reading SEC Files Cyber Disclosure Enforcement Action Against Asset Manager

Early in the New Year, McDonald’s announced that as a result of an outside law firm audit it would be  ending some of its diversity practices, citing as the reason the U.S. Supreme Court’s 2023 decision outlawing affirmative action in college admissions. Notwithstanding this corporate action, just a few days later McDonald’s was hit with a civil rights lawsuit filed by a conservative activist alleging that a Hispanic scholarship program the company sponsors is discriminatory based on race. As discussed below, this new lawsuit is just the latest anti-ESG lawsuit conservative activists have filed based on DEI-related and other issues. A copy of the January 12, 2025, complaint in the new McDonald’s lawsuit can be found here.

Continue Reading McDonald’s Sued in ESG-Backlash Lawsuit over Hispanic Scholarships

Whether or not two or more claims are interrelated within the meaning of a D&O insurance policy is a recurring issue. The outcome of interrelatedness disputes often reflects the specific facts involved and the relevant policy language. In addition, the applicable law can also be a factor. A recent decision of the Delaware Superior Court reflects all these factors, and the case outcome at least raises the question whether the applicability of New York law to the dispute was determinative. The Court’s opinion, as updated and reissued on January 6, 2025, can be found here.

Continue Reading Delaware Court, Applying NY Law, Addresses Related Claims Dispute

After the 2021 peak of the SPAC IPO frenzy, many SPACs wound up liquidating, while another significant tranche of the SPACs (or the SPACs post-merger successor companies) wound up in litigation. The post-frenzy glut of SPAC-related lawsuits has since been making its way through the courts ever since, and some have made it to the settlement stage. In recent days, the parties to two of these SPAC-related lawsuits have reached noteworthy settlements. As discussed below, the two settlements – the Alta Mesa SPAC-related lawsuit settled for $126.3 million and the Grab Holdings SPAC-related lawsuit settled for $80 million – are among the largest ever SPAC-related lawsuit settlements and could potentially set standards for future SPAC lawsuit settlements. The two settlements are subject to court approval.

Continue Reading Record-Setting Settlements in Two SPAC-Related Securities Suits

Just a few years ago, ESG was one of the most important themes in the corporate and securities world. Companies were under pressure to demonstrate their sustainability qualifications and otherwise establish their ESG credentials. But then came the ESG backlash, and many companies found (and, indeed, continue to find) themselves attacked for their ESG efforts. The backlash has taken the form both of legislation and litigation. And while the ESG backlash litigation claimants have not always done well, there have also been some notable recent successes.

The most recent ESG backlash litigation success is in the ERISA liability action that an American Airlines pilot filed against American Airlines and its Employee Benefits Committee. In a January 10, 2025, post-trial decision (here), the court ruled, following a four-day evidentiary hearing, that the defendants had violated their duties of loyalty by encouraging employee 401(k) investment in BlackRock ESG funds. The court’s opinion is harsh in its criticism of the airline for advancing its corporate interest in ESG over the interests of the plan participants and for failing to examine and address the company’s conflicted relationship with BlackRock.  

Continue Reading Plan Fiduciaries’ ESG Efforts Breached ERISA Duty of Loyalty, Court Holds

In prior posts, I have noted the phenomenon of securities class action lawsuit filings following in the wake of antitrust enforcement actions (most recently here). A new securities lawsuit filed just before year-end presents an interesting new variation on this sequence. The new lawsuit, filed against both Capri Holdings Limited and Tapestry, Inc., two high-fashion firms, and certain of their executives, relates back to an enforcement action the FTC filed against the firms to block their plans to merge. As discussed below, the lawsuit involves several interesting features. A copy of the plaintiff’s December 23, 2024, complaint can be found here.

Continue Reading Securities Suit Follows After Antitrust Ruling Bars Firms’ Merger Plans

One of the recurring D&O insurance coverage issues is whether or not the so-called “bump-up” exclusion precludes coverage for amounts paid in settlement of post-merger litigation. The outcome of these disputes is often a reflection of several situation-specific factors, including the specific policy language involved, the nature of the underlying transaction, the claims alleged in the underlying litigation, the features of the settlement, and the applicable law. All of these factors came into play in a recent Delaware Superior Court decision in which the court held that the primary policy’s bump-up exclusion does not preclude coverage for the settlement of the lawsuit relating to the 2017 merger of Harman International Industries and Samsung’s American division. The court’s January 3, 2025 opinion, as amended in a January 7, 2025 corrected opinion, can be found here.

Continue Reading Del. Court: Bump Up Exclusion Doesn’t Bar Coverage for Post-Merger Suit Settlement