On December 6, 2016, the U.S. Supreme Court issued its opinion in Salman v. United States (here), a case in which the court was asked to consider what is sufficient to establish a “personal benefit” in order to support an insider trading conviction, as I discussed here. In the following guest post, attorneys from the Paul Weiss law firm take a look at the Court’s Salman decision. I would like to thank the attorneys from Paul Weiss for their willingness to allow me to publish their article here. 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 Paul Weiss attorneys’ guest post.
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Thinking About the Duty to Cooperate
Most liability insurance policies have provisions stating that the insured has a duty to cooperate with the insurer in the investigation and defense of a claim. In most claims situation, this requirement is not an issue. From time to time, however, questions arise whether or not the insured has fulfilled its duty to cooperate. Questions also arise whether or not the insurer’s conduct (or lack thereof) excuses the insured from the duty to cooperate. Two recent decisions from the Eleventh Circuit, one applying Florida law and one applying Georgia law, involved cases in which the insurer contended that it was relieved of its obligations under the relevant policy because the insured had breached its duty to cooperate. In both cases, the appellate court held that the insureds had breached their duties. The cases provide something of a roadmap for insureds to follow in avoiding challenges based on alleged breaches of the duty to cooperate.
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Vivendi: A Victory for Plaintiffs on the Price Maintenance Theory and on Loss Causation
In the following guest post, David Topol and Jennifer Williams of the Wiley Rein law firm take a look at the Second Circuit’s September 27, 2016 decision in the Vivendi case and in particular at the appellate court’s analysis of two critical issues affecting damages in securities litigation – the price maintenance theory and loss causation. I would like to thank David and Jen for their willingness 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 David and Jen’s guest post.
Continue Reading Vivendi: A Victory for Plaintiffs on the Price Maintenance Theory and on Loss Causation
The SEC Wants You to Know that It Intends to Protect Whistleblowers’ Rights
The SEC has long made it clear that it intends to protect whistleblowers and to suppress activities it believes will have the effect of discouraging whistleblower activity. The agency recently launched enforcement actions against companies that had incorporated various waivers in employee severance agreements that discouraged employees from reporting possible securities law violations to the SEC. The agency’s actions shows that the agency is prepared to actively target corporate actions the agency believe may suppress the whistleblowing process.
Continue Reading The SEC Wants You to Know that It Intends to Protect Whistleblowers’ Rights
FTC Holds Private Information Disclosure In and Of Itself Sufficient Injury to Support Unfair Practices Claim
One of the recurring issues that has arisen as claimants and regulators have pursued cybersecurity-related claims against companies that have experienced a data breach is the question of what type or quantum of claimed injury is sufficient to sustain a claim. This issue has recurred in consumer cybersecurity-related damages actions and it has also arisen in regulatory enforcement actions as well. These issues were presented in a very interesting July 29, 2016 Opinion from the Federal Trade Commission (here). The Commission overturned a prior ruling by one of its own Administrative Law Judges, and held, contrary to the ALJ, that the release of private and sensitive information in and of itself was sufficient – even in the absence of alleged economic or physical injury — to support a claim against LabMD that its failure to prevent the information’s release constitutes an “unfair” practice. The FTC’s July 29, 2016 press release about the agency’s ruling can be found here. As the WSJ Law Blog noted in a July 29, 2016 post (here), the FTC’s ruling sets the stage for a “high stakes federal court battle” on the issue of what kind of alleged injury is sufficient to support cybersecurity-related unfair practices claim.
Continue Reading FTC Holds Private Information Disclosure In and Of Itself Sufficient Injury to Support Unfair Practices Claim
Eighth Circuit Split Spotlights Tensions with the Responsible Corporate Officer Doctrine
One of the bedrock principles of our legal system is that criminal liability attaches only to those who act with intent or knowledge – that is, as the legal scholars say, with mens rea (or a guilty mind). The “responsible corporate officer doctrine” sits uneasily with these notions, imposing liability as it does on corporate officers not for their involvement in or even awareness of wrongdoing, but simply for their status as persons responsible for the company involved. A recent decision from the Eighth Circuit, in which each judge on the three-judge panel that heard the case wrote a separate opinion, underscores the tensions the responsible corporate officer doctrine presents within our system of justice, and potentially sets the stage for further consideration of these issues. The Eighth Circuit’s July 6, 2016 opinion in U.S. v. DeCoster can be found here.
Continue Reading Eighth Circuit Split Spotlights Tensions with the Responsible Corporate Officer Doctrine
Professional Services Exclusion Not Triggered Where Allegations Did Not Involve Specialized Knowledge
Regular readers know that one of my hobby-horse issues is the way that some D&O insurers try to deny coverage for claims in reliance on an overbroad assertion of the professional services exclusion typically found in most private company D&O insurance policies. A D&O insurer’s sweeping assertion of exclusion’s preclusive affect can be a particular challenging for companies in services industries, because just about everything a services company does involves its services. When applied this way, the professional services exclusion exerts a preclusive reach that potentially could operate to swallow up the coverage available under the policy.
A recent decision from the Northern District of Georgia addressed these issues in a coverage dispute in which a private company D&O insurer had relied on the professional services exclusion to deny coverage for an underlying claim against a real estate listing Service Company. The Court concluded in its opinion granting the policyholder’s motion for summary judgment that because the underlying claim did not claims relate to the real estate listing service company’s “specialized knowledge,” the professional services exclusion did not apply. A copy of the March 22, 2016 opinion in the case can be found here. A May 26, 2016 memo from the Phelps Dunbar law firm about the decision can be found here.
Continue Reading Professional Services Exclusion Not Triggered Where Allegations Did Not Involve Specialized Knowledge
The Commemorative Edition Tenth Anniversary Frisbee
As I hope readers know, The D&O Diary is celebrating its tenth anniversary this week. Because I want everyone to be able to join the celebration, the anniversary activities include a special offer. As along as supplies last, any reader who wants a commemorative edition D&O Diary Tenth Anniversary Frisbee can have one, for free. Free, as in no charges. Nada, rien, zilch.
There is, however, one little catch.
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Fourth Circuit: Guilty Pleas Trigger D&O Policy Exclusion and Insurer’s Right to Seek Recoupment of Previously Paid Defense Expenses
It sometimes comes as a surprise to some policyholders that D&O carriers contend that they have the right to try to recover amounts they have paid as defense expenses if it turns out that coverage for a claim is precluded by a policy exclusion. However, an insurer’s right of defense expense recoupment is by now
Should There Be More Litigation Against Corporate Officers? (Uh, No.)
Over the past fifteen years, there has been a steady progression of corporate scandals, from Enron to options backdating to the excesses that led to the global financial crisis. These debacles were followed by waves of shareholder litigation. However, according to one legal scholar, the shareholder lawsuits all too often concentrate on enforcing legal duties