Securities Litigation

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seadrillIn a prior post, I noted that among the implications of the international trade sanctions is the possibility that companies affected by sanctions could face D&O claims. Among the risks the sanctions program presents is the possibility that a company dealing with sanctions-related issues could face a follow-on securities lawsuit, as investors seek to hold the company and its senior officials liable for share prices declines following disclosure of sanctions-related issues.

In the Seadrill Limited Securities Litigation, a securities class action lawsuit pending in the Southern District of New York, investors sued the company, a subsidiary, and certain of its directors and officers, for the company’s elimination of its dividend and loss of significant business with a Russian oil company subject to international sanctions following Russia’s invasion and annexation of Crimea. On June 20, 2016, in an interesting opinion (here), Southern District of New York Lorna Schofield granted the defendants’ motion to dismiss the Seadrill case. Due to the case’s factual circumstances, the opinion makes for some interesting reading. In any event, the case represents an important example of the possibilities for D&O claims arising from sanctions-related issues.
Continue Reading Russian Trade Sanctions-Related Securities Lawsuit Dismissed

Klausner
Michael Klausner
Hegland
Jason Hegland

There have been a number of important developments in class action securities litigation case filings in the recent years. In the following guest post, Michael Klausner, Professor of Law, Stanford Law School, and Jason Hegland, Executive Director, Stanford Securities Litigation Analytics, using the Stanford Securities Litigation Analytics database, identify and review several of these developments. As their guest post explains, there have been a number of interesting changes with respect to the kinds of cases that are being filed, as well as with respect to who is filing them. I would like to thank Mike and Jason for their willingness to publish their guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of this site. Please contact me directly if you would like to submit a guest post. Here is Mike and Jason’s guest post.
Continue Reading Guest Post: Deeper Trends in Securities Class Actions 2006-2015

lifesciencesLife sciences companies are among the most frequent targets of securities class action litigation as I noted in a recent post. However, according to a recent law firm report, life sciences company defendants fared well in securities litigation in 2015. The recently released report, written by the Sidley Austin law firm and entitled “Securities Class Actions in the Life Sciences Sector: 2015 Annual Survey,” can be found here. This comprehensive report reviews all of the district court and appellate court decisions in 2015 in securities class action lawsuits pending against life sciences companies, and also reviews the new securities suits that were filed in 2015 against life sciences companies. The report provides a broad overview of the important issues involved with securities class against litigation against life sciences companies.
Continue Reading Securities Litigation and Life Sciences Companies: An Update

hsbcOn June 16, 2016, HSBC, as successor in interest to Household Finance, announced that the parties to the long-running Household International securities class action litigation had agreed to settle the case for $1.575 billion. Subject to court approval, the settlement will bring to a close an epic case that has been pending for fourteen years. The case is one of the few securities class action lawsuits ever to go to trial; the post-trial judgment of $2.46 billion in the case, which was the largest judgement ever in a securities fraud trial, was later set aside by the Seventh Circuit. The case was poised to go to trial again when the parties reached the recently announced settlement. HSBC’s June 16, 2016 press release about the settlement can be found here. The plaintiffs’ law firm’s June 16, 2016 press release about the settlement can be found here.
Continue Reading Long-Running Household International Securities Suit Settles for $1.575 Billion

brazilAs a result of scandals, investigations, and even an environmental catastrophe, there has been a wave of securities lawsuit filings in the U.S. against Brazilian-domiciled companies whose securities are listed in the U.S. This filing trend began in late 2014 with the first lawsuit filing against Petrobras and certain of its directors and officers, which was in turn followed by lawsuits against other companies caught up in the corruption scandal. In recent weeks lawsuits related to a separate regulatory investigation in Brazil have emerged, bringing the total number of securities lawsuits pending in the U.S. against Brazilian companies to six. These developments, along with events in Brazil itself, have roiled the D&O insurance marketplace in Brazil, particularly for Brazilian companies with securities listed in the U.S.
Continue Reading Onslaught of Securities Suits Against Brazilian Companies Continues

paul weiss largeOn May 23, 2016, in an interesting development in one of the more high profile lawsuits to arise out of the financial crisis, the Second Circuit reversed the $1.27 billion civil penalty that Southern District of New York Judge Jed Rakoff  imposed on Countrywide and several related defendants in a case involving the company’s sale of mortgages to government sponsored entities. A copy of the Second Circuit’s opinion can be found here.

In the following guest post, attorneys from the Paul Weiss law firm take a look at the Second Circuit’s decision and discusses its implications, particularly with respect to the government’s use of the the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to prosecute financial institutions’ alleged to have committed financial misconduct.
Continue Reading Guest Post: Second Circuit Strikes Down Imposition of $1.27 Billion FIRREA Penalty

priya
Priya Cherian Huskins

One of the more interesting current issues in the securities litigation arena is the question of whether or not the concurrent jurisdiction provisions in the ’33 Act continue to afford state court jurisdiction for Section 11 securities class action lawsuits, or whether the Securities Litigation Uniform Standards Act of 1998 (SLUSA) superseded these provisions. As I noted in a recent post, a corporate defendant recently filed a petition for writ of certiorari with the U.S. Supreme Court to try to get the Court to take up this question. In the following guest post, Priya Cherian Huskins, of Woodruff-Sawyer & Co. examines three different “solutions” that have been proposed to address the ongoing question regarding concurrent state court jurisdiction for Section 11 class action lawsuits. One of the three proposed solutions in the cert petition recently filed with the U.S. Supreme Court, while the other two suggested solutions involve different alternative approaches, including one suggested by Stanford Law Professor Joseph Grundfest.
Continue Reading Guest Post: The State Court Section 11 Problem: Three Solutions

alaAny time a civil lawsuit settles for a combined total of $310 million, it is noteworthy, if for no other reason than the sheer size of the deal. But a $310 class action settlement recently preliminarily approved in Jefferson County (Alabama) Circuit Court is noteworthy not just for its size, but also for the nature of the allegations involved.

In the recently settled case, the plaintiffs alleged that in connection with the 1999 settlement of the MedPartners Securities Litigation, the defendant company and its primary D&O insurer had misrepresented the amount of insurance available in connection with the litigation, and more particularly, failed to disclose that the company had obtained a post-litigation “unlimited” excess insurance policy (known as an “LMU”) from the primary D&O insurer. After the details of the LMU came to light in subsequent unrelated litigation, a plaintiff from the prior securities lawsuit class filed a new lawsuit alleging misrepresentation in connection with the securities lawsuit settlement. The details of the plaintiffs’ allegations in the misrepresentation lawsuit — most of which the defendants dispute — make for some interesting reading.

The plaintiffs’ class motion for preliminary approval of the settlement of the misrepresentation lawsuit, to which the parties’ stipulation of settlement is attached, can be found here. The Alabama Court’s June 1, 2016 order preliminarily approving the settlement can be found here. The settlement is subject to the Court’s final approval.
Continue Reading The Interesting Story Behind a Recent $310 Million Class Action Settlement

paul weiss largeAmong the important legal issues that arise in connection with securities class action litigation is the question of impact of the filing of a complaint on the running of the statutes of limitation and the statutes of repose. In analyzing statute of limitations issues, one of the tools that the courts have used is the so-called American Pipe tolling doctrine, named after the U.S. Supreme Court’s 1974 decision in American Pipe and Construction Co. v. Utah. A recurring question has been whether or not American Pipe Tolling applies to statutes of repose. In the following guest post, attorneys from the Paul Weiss law firm take a look a recent Sixth Circuit decision holding that American Pipe tolling doctrine does not apply to the federal securities laws’ statutes of repose.
Continue Reading Sixth Circuit, in Agreement with Second Circuit, Holds American Pipe Tolling Doesn’t Apply to Statutes of Repose

sup ct 5As a consequence of increased IPO activity during the period 2013-15, IPO-related securities class action litigation has picked up as well, as I noted in my year-end review of 2015 securities class action litigation. An interesting aspect of this IPO-related litigation has been that much of it has been filed in state court, particularly in California state court, as detailed in a recent guest post on this site. Defendants in these suits can attempt to remove the state court lawsuits to federal court, but because of ongoing questions about whether or not SLUSA eliminated state court jurisdiction for class action lawsuits under the ’33 Act, some federal courts have remanded the federal actions back to state court. Because remand rulings are not appealable, defendants may find themselves consigned to litigating the plaintiffs’ federal securities class action lawsuit in state court, a jurisdiction in which plaintiffs potentially enjoy a number of advantages.

As the numbers of these state court class action lawsuits under federal law has mounted in recent months, defendants (particularly those sued in California state court) have continued to try to extricate themselves from the state court forum and transfer their cases to federal court. In some instances, defendants find themselves obliged to defend these state court lawsuits while also defending parallel or even identical federal court lawsuits raising essentially the same allegations.

A recent petition for writ of certiorari filed with the U.S. Supreme Court by Cyan,Inc. seeks to have the Court address these recurring questions and to specifically address the question of whether or not the Securities Litigation Uniform Standards Act of 1998 (SLUSA) eliminated concurrent state court jurisdiction for class action lawsuits filed under the ’33 Act. While it remains to be seen whether or not the Supreme Court will take up the case, Cyan’s petition at least potentially offers the prospect for a resolution that could eliminate the continuing phenomenon of state court class action lawsuits alleging claims under the ’33 Act. A copy of Cyan’s May 25, 2016 petition for writ of certiorari can be found here.
Continue Reading U.S. Supreme Court Review of Concurrent State Court Jurisdiction for IPO-Related Securities Class Suits Sought