Over the last several days, Doug Greene of the Lane Powell law firm has been running a series of articles on his D&O Discourse blog asking the question “Who is Winning the Class Action War?” In the aggregate, the multi-part series provides an interesting commentary on the current state of securities class action litigation in the United States. The articles in the series are thought-provoking and provocative — apparently deliberately so — and I commend them to readers for the perspective they provide on the current state of play in securities litigation, from the outlook of an experienced defense-side securities class action litigator.
Based on my own varied experiences, I have my own perspective on some of the topics Greene discusses in his articles, which I have set out below. I want to emphasize at the outset that I am neither entirely disagreeing with nor entirely agreeing with Greene’s analysis and conclusions. I offer my thoughts here for whatever they may be worth, as part of the dialogue that Greene’s articles undoubtedly will provoke.
Continue Reading Commentary on “Winning the Securities Class Action War”
Here at The D&O Diary we generally review securities class action lawsuit complaints as they come in. The complaints pretty reliably make for interesting reading but every now and there are specific complaints that particularly catch our eye. Among the host of new securities class action lawsuit filings this past week, there were two that were of particular interest.
Largely driven by a “dramatic” increase in the number of federal court merger objection lawsuits, securities class action litigation filings rose to the highest level ever in 2016, according to PwC’s most recent annual securities litigation report. The report also noted that for the first time securities litigation rose though the stock market performance during the year did not, contrary to prior patterns. The April 2017 report, entitled “A Rising Tide or a Rogue Wave? 2016 Securities Litigation Study,” can be found 
According to Cornerstone Research’s latest annual survey of accounting-related securities suits, the number of accounting-related securities suit filings rose to the highest level in years in 2016, largely as a result of the number of federal court merger objection lawsuit filings involving accounting-related allegations during the year. The total value of accounting settlements during the year was also at the highest level in years. The Report, entitled “Accounting Class Action Filings and Settlements: 2016 Review and Analysis,” can be found 
Most securities class action lawsuits that are not dismissed outright ultimately settle. One of the starting points for securities suit settlement negotiations is what is referred to as “plaintiffs’ style” damages estimate. The plaintiffs’ damages estimate is usually adjusted to reflect the composition of the class, the duration of the class period, trading patterns in the defendant company’s stock, and so on. Even with these adjustments, the dollar amount under discussion, at least on the plaintiffs’ side of the equation, is still some form of the plaintiffs’ damages estimate.
Securities class action lawsuit filings have been going crazy. Securities suit filings during the first quarter 2017 set a pace that if continued would mean an unprecedented number of securities lawsuit by year end. But even more significant than the sheer number of lawsuits is the rate of litigation. The percentage of listed companies sued in the first quarter, if annualized, would mean that U.S. public companies are being sued at four times the long-term historical rate. As discussed below, three factors account for much of the upsurge in securities suit filings.
As I have frequently noted (most recently 
The U.S. Supreme Court has agreed to take up a case that will address a recurring issue that has arisen in the securities class action litigation arena – that is, whether or not the alleged failure to make a disclosure required by 
The massive Brazilian corruption scandal that began with 
As has been documented