Securities Litigation

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lifesciencesIn 2015, as was the case for several years prior, companies in the life sciences sector experienced a disproportionately greater number of securities class action lawsuits than companies in other industries. As I detailed in my analysis of 2015 securities class action lawsuit filings (here), 39 of the 191 securities class action lawsuits filed in 2015 involved companies in the life sciences sector, representing about one in five of all securities suit filings during the year. No other sector experienced anywhere near this number of securities class action lawsuit flings. For example, the sector with the second-most number of filings, software companies, had eleven filings during 2015, representing about 6% of securities suit filings during the year.

There are a number of reasons why there are more securities suit filings involving life sciences companies, as discussed below. The frequency and severity of lawsuits against companies in the life sciences sector have important D&O Insurance implications as well, as also discussed below.
Continue Reading Securities Suit Frequency Means Challenging D&O Insurance Market for Life Sciences Companies

cornerstone reserach pdfNot only were securities class action lawsuit filings in 2015 at their highest levels since 2008, but the likelihood that a U.S.-listed company would get hit with a securities suit was at the highest level at any time since the PSLRA was enacted, according to the latest annual report from Cornerstone Research. Cornerstone Research’s report, issued in conjunction with the Stanford Law School Securities Class Action Clearinghouse and entitled “Securities Class Action Filings: 2015 Year in Review,” can be found here. Cornerstone Research’s January 26, 2016 press release about the report can be found here. My own analysis of the 2015 securities class action lawsuit filings can be found here.
Continue Reading Cornerstone Research: U.S.-Listed Companies’ Securities Suit Susceptibility at Record High Levels in 2015

NERA1Securities class action lawsuit filings in 2015 were at their highest level since 2008, according to the latest annual report from NERA Economic Consulting. The report also states that not only as the number of lawsuits filed increased in 2015, but the rate of lawsuit filings relative to the number of publicly traded companies has also increased compared to historic levels as well. The report entitled “Recent Trends in Securities Class Action Litigation: 2015 Full-Year Review,” can be found here. NERA’s January 25, 2016 press release describing the report can be found here. My own analysis of the 2015 securities class action filings can be found here. 
Continue Reading NERA Report: 2015 Securities Class Action Filings at Highest Level Since 2008

merckIn my recent review of the past year’s top D&O stories, I noted the current trend toward increased numbers of securities class action lawsuits involving smaller companies, and also towards smaller securities suit settlements. In the midst of this era of generally smaller cases and settlements has now come a huge settlement reminiscent of earlier time – perhaps because it involves a lawsuit that is itself a vestige of another era. On January 15, 2016, Merck announced that it had reached an $830 million settlement of the long-running Vioxx-related securities class action lawsuit. This case, whose extended procedural history included a trip all the way to the U.S. Supreme Court to address statute of limitations issues, has been pending since November 2003. The proposed settlement is subject to court approval. Merck’s January 15, 2016 press release about the settlement can be found here.
Continue Reading Merck Agrees to Settle Long-Running Vioxx-Related Securities Class Action Lawsuit for $830 Million

rocketfuelWe are all used to seeing securities class action lawsuit alleging that the defendants made misrepresentations or omissions in SEC filings, press releases, or in public statements. But how about in a corporate blog post? In a very interesting December 23, 2015 opinion in the Rocket Fuel securities class action lawsuit in which she mostly granted the defendants’ motions to dismiss, Northern District of California Judge Phyllis Hamilton held that certain allegedly misleading statements made in a post on the company’s website were actionable under the federal securities laws. Judge Hamilton’s opinion also includes a number of interesting conclusions about individual and corporate scienter, and loss causation. Her opinion also addresses interesting Securities Act pleading issues in light of the U.S. Supreme Court’s 2015 opinion in the Omnicare case. Judge Hamilton’s opinion can be found here.
Continue Reading Blog Post Statements Held Actionable Under the Federal Securities Laws

gavel2The number of securities class action lawsuits filed in 2015 rose to the highest annual level in several years. As detailed below, a number of factors contributed to the increase in securities class action lawsuit filings during the year, including in particular the number of lawsuits filed against IPO companies (owing to the fact that IPO activity has been up in recent years), as well as the elevated number of lawsuits against foreign-domiciled companies.
Continue Reading U.S. Securities Class Action Lawsuit Filings in 2015 at Highest Level in Years

slaterandgordonIn May 2007, Sydney-based plaintiffs’ law firm Slater & Gordon listed its shares on the Australian Stock Exchange, becoming the world’s first publicly traded law firm. On its website, the firm touts its “outstanding record” in class actions and group actions. As the firm’s website also highlights, the firm has been an active in pursuing securities class action lawsuits in Australia. More recently, however, the firm has recently experienced some financial turbulence, as a result of which its share price has plunged.  Now, in a twist that can only be called ironic, the firm may be facing a class action lawsuit of its own.
Continue Reading Publicly Traded Australian Plaintiffs’ Securities Law Firm Slater & Gordon Faces Possible Securities Suit

kalobiosI am sure that many of you, like me, felt a satisfying wave of schadenfreude when you heard the news last week that biotech bad boy Martin Shkreli had been arrested on securities fraud charges. Shkreli became the poster-child for drug company price-gouging after his company, Turing Pharmaceuticals, increased the price of Daraprim, a life-saving drug, by over 5,000 percent. However, his arrest is unrelated to his activities at Turing. Instead, his arrest relates to his previous activities as a hedge fund portfolio manager and involves a different biotech company, Retrophin Pharmaceuticals, which Shkreli founded and took public, and at which Shkreli had served as CEO until September 2014.
Continue Reading Biotech Bad Boy Shkreli Hit With Securities Class Action Lawsuit

globalAs we ease into the final two weeks of the year, it seems likely that just about all of the securities class action lawsuits that are going to be filed this year have already been filed. Sure, one or two more may slip in yet, so it is not quite time for the final analysis of the year’s filings. But with the year just about done, there are some trends that already seem clear. One is the increased numbers of IPO-related securities lawsuits, which I recently noted here. Another securities class action filing trend is the heightened level of securities suit filing activity involving non-U.S. companies. The number of securities suit filings against non-U.S. companies during the year was both above historical levels and disproportionately greater than  the number of foreign companies whose shares are listed on U.S. exchanges.
Continue Reading Securities Litigation Filing Trends: Suits Against Foreign Companies Continue to Accrue

doleThe November 1, 2013 transaction in which David Murdock, Dole Food Company’s Chairman and CEO, acquired the Dole shares he did not already own has already been the subject of extensive litigation. Indeed, in 108-page August 27, 2015 post-trial opinion (here), Delaware Court of Chancery Vice Chancellor Travis Laster found that and Murdock and C. Michael Carter, Dole’s COO and General Counsel, had employed “fraud” to drive down the Dole’s share price to lower the amount Murdock paid in the deal. Laster entered a damages award against Murdock and Carter, jointly and severally, of $148.1 million, as discussed here.  On December 7, 2015, Murdock and Dole reached an agreement to pay the shareholders a total (including interest) of $113.5 million, with the remainder of the judgment amount to be paid to the plaintiffs in a separate appraisal action, as discussed here. As part of the settlement, the defendants gave up their right to appeal the Chancery Court rulings and judgment.

The recent settlement seemingly brought an end to the shareholder litigation over the November 2013 transaction. However, it now appears that there may be another round of litigation  yet to go.

On December 9, 2015, a plaintiff shareholder filed a securities class action lawsuit in the federal court in Delaware, against Dole, Murdock, and Carter. A copy of the plaintiff’s complaint can be found here. The lawsuit was filed on behalf of a class of Dole shareholders who sold their shares between January 2, 2013 and October 31, 2013. As might be expected, the complaint quotes extensively from Laster’s opinion. Notwithstanding the overlap between the Delaware Chancery suit and the new complaint, there are important differences between the cases. As discussed below, the securities class action complaint also presents a number of interesting issues and questions.
Continue Reading Dole Shareholders File Securities Suit Based on Executives’ Share Price Deflating Conduct Prior to Going Private Deal