Securities Litigation

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With the news about the coronavirus outbreak dominating the headlines, other important stories have faded into the background — though they definitely have not gone away. Among these important continuing stories is the U.S. trade war with China. The frontlines of this trade war are on the battlefield of economic competition, which these days includes, among other things, export and import controls and other coercive measures. As one commentator has put it, the “highest-profile example of the United States’ use of targeted coercive measures against China is its yearlong campaign against Huawei, China’s national-champion telecommunications company.” And as a recently filed lawsuit demonstrates, among the implications of the two countries’ competition – and specifically, the U.S. measures targeting Huawei – is a risk that affected companies can be exposed to government investigations and also to D&O claims.
Continue Reading Semiconductor Company Hit with China Trade War-Related Securities Suit

Among the numerous companies hit with #MeToo-related management liability lawsuits in the late 2017 to early 2019 time frame was the national pizza restaurant company Papa John’s International Inc. The plaintiffs in the securities class action lawsuit alleged that company founder and former CEO John Schnatter and other executives sexually harassed company employees and cultivated a hostile workplace culture while the company misleadingly touted the Company’s culture and failed to divulge the true conditions to investors. The defendants’ moved to dismiss. In a March 16, 2020 order, Southern District of New York Judge Kimba Wood granted motion to dismiss, with leave to amend. Judge Wood’s order can be found here.
Continue Reading Papa John’s #MeToo-Related Securities Suit Dismissed, For Now

The Delaware Supreme Court unanimously held that corporate charter provisions requiring claims under the Securities Act of 1933 to be litigated in federal court are facially valid. These kinds of provisions were proposed after the U.S. Supreme Court’s March 2018 decision in Cyan affirming that state court’s retain concurrent jurisdiction for ’33 Act liability actions. However, in December 2018, the Delaware Chancery Court ruled that federal forum provisions are invalid and unenforceable. In its March 18, 2020 decision (here), the Delaware Supreme Court reversed the Chancery Court, holding that federal forum provisions are a valid form of “private ordering.” The ruling has important implications, which are discussed below. And as also discussed below, there is a very interesting backstory – involving key D&O insurance industry players – to this successful appeal.
Continue Reading Delaware Supreme Court Holds Federal Forum Provisions Facially Valid

In the following guest post, Dan Gold, Thad Behrens, Kit Addleman, Emily Westridge Black, Carrie L. Huff, Timothy Newman, Matt McGee, and Odean L. Volker of the Haynes and Boone, LLP law firm review the key developments during 2019 in securities litigation and enforcement, including significant securities related decisions by the Supreme Court and federal appellate courts, key developments in SEC enforcement, and significant rulings in state law fiduciary litigation against directors and officers of public companies. A version of this article previously was published as a Haynes and Boone client alert. I would like to thank the authors for their willingness to allow me to publish their article as a guest post 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 the authors’ article.
Continue Reading Guest Post: 2019 Securities Litigation: Key Takeaways and Trends

In a post late last week I noted the filing of the first coronavirus-related securities class action lawsuit, commenting at the time that though the lawsuit was the first, it was unlikely to be the last. I did not suspect that the next coronavirus-related securities suit would come quite so quickly – in fact, it appears that the second coronavirus-related suit might actually already been filed then. On March 12, 2020, an Inovio Pharmaceuticals shareholder filed a securities class action lawsuit against the company and its CEO based upon the CEO’s statements about the company’s development of a COVID-19 vaccine. A copy of the Inovio Pharmaceuticals complaint can be found here.
Continue Reading Pharma Company Hit with Securities Suit over COVID-19 Vaccine Claims

After I published a post last week suggesting that there could be D&O claims arising out of the COVID-19 coronavirus outbreak, several people suggested to me that I was being alarmist and expressed deep skepticism about the possibility of coronavirus-related claims. After all, they said, there were no D&O claims filed in connection with the SARS, MERS or Ebola outbreaks. Well, there may well have been no D&O claims related to those prior outbreaks. However, it looks like in this context as in many others, the COVID-19 outbreak is going to be different. On March 12, 2020, a plaintiff shareholder filed a securities class action lawsuit against Norwegian Cruise Line Holdings, Ltd. alleging that the company was employing misleading sales tactics related to the outbreak. A copy of the plaintiff shareholder’s complaint can be found here.
Continue Reading Cruise Line Shareholder Files First Coronavirus-Related Securities Suit

As I have detailed in prior posts, U.S. securities class action lawsuit filings remained at historically high levels in 2019. Among the 2019 securities suit filings were significant number of lawsuits filed against non-U.S. companies with U.S. listings. As detailed in a new report from the Dechert law firm, there was an uptick in 2019 the number of U.S. securities lawsuits filed against non-U.S. companies compared with the year prior. The Dechert report also details a number of trends with respect to filings against non-U.S. companies, as well as the trends with respects to dispositive motions in these cases. The March 11, 2020 report can be found here.
Continue Reading Non-U.S. Companies with U.S Listings Continue to Face Significant U.S. Securities Suit Exposure

As previously reported (here), 2019 was a relatively slow year for securities class action lawsuit settlements compared to 2018. However, there were a number of significant securities lawsuit recoveries and the total recoveries in the aggregate were for at least some law firms quite substantial. In a March 11, 2020 report entitled “The Top 50 of 2019,” ISS Securities Class Action Services sets out a list of the top 50 law firms  — ranked by total cash amount and by number of cash settlements – with respect to final securities class action lawsuit settlements in 2019 in North America (inclusive of both the U.S. and Canada). ISS’s report can be found here.
Continue Reading ISS Ranks 2019 Top Plaintiffs’ Securities Class Action Firms

Tiago Duarte-Silva
Assen Koev

In order to obtain class certification, the 10b-5 action plaintiff must show that the defendant company’s shares trade in an efficient market. In order for a court to determine whether the company’s shares trade in an efficient market, it must consider the five “Cammer factors,” of which one is whether the company has a sufficient number of analysts following its stock. In the following guest post,  Tiago Duarte-Silva, Vice President, Charles River Associates, and Assen Koev, Principal, Charles River Associates, take a look at this Cammer analyst factor and what it may tell us about 10b-5 actions. A version of this article previously was published by Charles River Associates as a newsletter. I would like to thank Tiago and Assen for allowing me to publish their article as a guest post 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 Tiago’s and Assen’s article.
Continue Reading Guest Post: The Cammer Analyst Factor in Securities Class Actions

There were slightly fewer securities class action lawsuits and for fewer total dollars in 2019 compared to 2018, but the median settlement amount was unchanged in 2019 from the year prior, according to the annual securities suit settlement report from Cornerstone Research. The report, which is entitled “Securities Class Action Settlements: 2019 Review and Analysis,” states that the $11.5 million median securities class action settlement in 2019 was 34 percent higher than the 2010-2018 median. The report can be found here. Cornerstone Research’s February 26, 2020 press release about the report can be found here.
Continue Reading Total and Average Securities Settlements Down, Median Settlements Unchanged