Securities Litigation

Subscribe to Securities Litigation via RSS

For those of us involved in day to day D&O insurance transactions, it is a recognized fact that cannabis-related companies represent a tough class of insurance business. Different insurers take different approaches to the business, but at best it is a risk class that most carriers approach warily. There are reasons for the caution, mostly having to do with questions relating to legality across and between jurisdictions. The question of potential claims is a little less certain, as there arguably are relatively few claims examples. However, a recent securities class action lawsuit involving a Canadian-based cannabis business may provide some insight into the kinds of claims in which these kinds of companies may become involved – at least those that are publicly traded.
Continue Reading Plaintiffs Files Cannabis-Related Securities Class Action Lawsuits

As I have noted in recent posts, the #MeToo movement has led to a number of D&O lawsuits as the accountability process has led not only to claims against the wrongdoers but also against the wrongdoers’ company and other company executives for turning a blind eye or failing to disclose the problems. On August 30, 2018, in the latest of these D&O claims arising out of revelations of sexual misconduct, investors filed a securities class action lawsuit against Papa John’s International, following news reports of sexual harassment at the company involving the company’s founder and former CEO and Chairman, John H. Schantter, as well as other executives at the company.
Continue Reading Yet Another D&O Claim Arising out of Revelations of Sexual Misconduct

As I have noted in prior posts, one of the noteworthy aspects of the whole #MeToo movement has been that the accountability efforts have included not only claims against the wrongdoers themselves, but also against the wrongdoers’ companies and company executives for enabling the misconduct or turning a blind eye. In the latest of these kinds of sexual misconduct-related lawsuit, a CBS shareholder has filed a securities class action lawsuit against CBS Corporation based on revelations that the company’s CEO, Leslie Moonves, allegedly engaged in sexual harassment at the company. The lawsuit underscores the fact that revelations of sexual misconduct represent an emerging area of corporate liability.
Continue Reading Investor Files Sexual Misconduct-Related Securities Suit Against CBS

Earlier this year when I questioned whether or not privacy-related issues might represent an important emerging area of corporate liability, I was thinking we might see privacy claims emerge over time. I was thinking a longer time frame, over the course of years. What has happened is that the privacy-related claims are materializing now. As I previously noted, in July investors filed a securities suit against Facebook following the company’s quarterly earnings release that disappointed investors in part because company’s growth rate was affected by allegedly unanticipated expenses and difficulties in complying with the EU’s update privacy requirements in the General Data Protection Regulation (GDPR), which went into effect in May.

Investors have now filed an additional lawsuit against a company reporting GDPR-related difficulties. As discussed further below, on August 8, 2018, investors filed a lawsuit against Nielsen Holdings plc after the media performance ratings company disclosed in its quarterly earnings release that GDPR-related changes affected the company’s growth rate, pressured the company’s partners and clients, and disrupted the company’s advertising “ecosystem.”  The Nielsen lawsuit underscores the suggestion that privacy-related concerns could be a significant source of corporate liability.
Continue Reading Investors Filed GDPR-Related Securities Suit Against Nielsen Holdings

On August 24, 2018, Northern District of California Judge Charles Breyer dismissed the securities class action lawsuit pending against Tesla. Wait. What? Wasn’t that Tesla lawsuit just filed? O.K. turns out, it wasn’t that lawsuit against Tesla that was dismissed, it was a prior lawsuit. The dismissal order was entered in the lawsuit filed against the company in October 2017 alleging misrepresentations in connection with the company’s production of its Model 3 sedan, not the recent lawsuit filed against the company just a few days ago in connection with Elon Musk’s now-infamous take-private tweets. Judge Breyer, in recognition of the possible confusion about which case his order related to, said at the outset of his opinion that his ruling was in the “non-Twitter related securities action against Tesla (emphasis in the original).”  Despite the absence of a relation to Musk’s recent Twitter storm, the opinion still makes for some interesting reading. Judge Breyer’s opinion can be found here.
Continue Reading Tesla Securities Suit Dismissed – Not THAT One, the Prior One

As I have previously noted, the dramatic recent rise in Initial Coin Offerings (ICOs) and in transactions involving cryptocurrencies generally has been accompanied by a number of securities class action lawsuits alleging, among other things, that the digital currencies’ issuers or sponsors failed to register the coins or tokens as securities with the SEC as required by the federal securities laws. These lawsuits raise a number of novel and interesting issues, including jurisdictional issues and other concerns arising from the cross-border nature of many of these transactions. On August 7, 2018, in a detailed decision in the securities class action relating to the 2017 Tezos ICO, Northern District of California Judge Richard Seeborg ruled on a number of these threshold issues. Among other things, Judge Seeborg’s decision contains an interesting analysis of the place of the ICO transactions took place in order to determine whether or not the U.S. securities laws apply. Judge Seeborg’s order can be found here.
Continue Reading Tezos ICO Securities Suit Dismissal Motion Denial Addresses Key Threshold Issues

As I noted when it was filed in 2016, the securities class action lawsuit investors filed against ExxonMobil and certain of its executives represented something of a milestone as it was the first securities class action lawsuit of which I am aware based on climate change-related allegations. In an August 14, 2018 opinion, Northern District of Texas Judge Ed Kinkeade largely denied the defendants motion to dismiss. The opinion contains a number of interesting features, including in particular in its discussion of the plaintiff’s climate change related allegations. Judge Kindeade’s opinion can be found here.
Continue Reading Dismissal Motion Denied in ExxonMobil Climate Change-Related Securities Suit

The motion to dismiss phase is a critical stage in the life cycle of a securities class action lawsuit. If a case survives the dismissal motion, it likely will move toward settlement, as so few cases actually go to trial. The motion to dismiss in intended to test the sufficiency of the allegations in the plaintiff’s complaint. According to the rules, the court’s inquiry should be limited to the matter within the complaint. However, over time, rules have developed permitting courts to consider matter from outside the complaint, pursuant to the doctrines of judicial notice and incorporation by reference.

In a detailed August 13, 2018 opinion in which it largely reversed the dismissal of securities class action lawsuit involving the developmental stage pharmaceutical company Orexigen Therapeutics, the Ninth Circuit noted a “concerning pattern in securities cases” in which “overuse” of the doctrines has resulted in improper dismissal of securities suits at the pleading stage based on extraneous matter. The Ninth Circuit’s analysis of the judicial notice and incorporation by reference doctrines is interesting and could have a significant impact on courts’ consideration of matter outside of the complaint in future cases. The Ninth Circuit’s opinion in the Khoja v. Orexigen Therpeutics case can be found here.
Continue Reading Ninth Circuit Decries Consideration of Extraneous Matter, Reverses Securities Suit Dismissal

I have long thought that it was only a matter of time before somebody filed a securities class action lawsuit based on disclosures made through social media. I knew we were going to see that lawsuit someday or other. Well, the day has arrived. On Friday, August 10, 2018, two Tesla investors each filed separate securities class action lawsuits against Tesla, Inc. and its Chairman, CEO, and largest shareholder, Elon Musk, based on Musk’s tweets last Tuesday that he was considering a take-private deal for which he had “secured” funding and that only shareholder approval was required for completion of the deal. As discussed below, there are a host of interesting things about the lawsuit and about the surrounding circumstances.
Continue Reading Tesla Investors File Securities Suits Over Elon Musk’s Take-Private Tweets

It was perhaps inevitable after Facebook’s disappointing quarterly earnings announcement last week triggered what reportedly is the largest single day share price drop ever that securities class action lawsuits against the company would follow. And indeed on Friday at least two securities class action lawsuits were filed against the company. While the lawsuit filings may have been predictable, at least one of the lawsuits contains an interesting and unexpected variant on the standard pattern –  one of the two lawsuits contains allegations that the company made misrepresentations about its readiness for the May 2018 effective date of General Data Protection Regulation (GDPR) and about the impact of GDPR compliance on the company’s business and operations. As discussed below, these allegations reflect the growing liability exposures arising from growing privacy-related concerns and regulation.  
Continue Reading Massive Facebook Stock Drop Draws GDPR-Related Securities Suit