In a recent decision, the Delaware Superior Court, applying Delaware law, held that two of Pfizer’s excess D&O insurers are on the hook for their portion of costs the company incurred in defending and settling a securities class action lawsuit, despite the excess insurers’ arguments that the claim was interrelated with an earlier securities suit and that coverage was therefore precluded under their policies’ Specific Litigation Exclusion. The critical determinant in the court’s ruling may have been its decision that Delaware law governed the coverage dispute, but there are still a number of interesting elements about issue of claims relatedness. The Delaware Superior Court’s July 23, 2019 decision can be found here.
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Guest Post: Liability Insurance in India- Challenges and Opportunities- Way Forward
In the following guest post, Umesh Pratapa takes a look at the state of liability insurance in India. Liability insurance apparently is not yet widespread in India, for reasons that Umesh examines below. Umesh also takes a look at the possible future for liability insurance in India. Umesh’s article was originally published in The Journal of the Insurance Institute of India (April – June 2019 issue). EDITOR’S NOTE: The symbol “₹” is the sign for Indian Rupees. A”crore” is a unit count of ten million in the Indian numbering system, abbreviated “cr.” A “lac” or “lakh” is a unit count of one hundred thousand in the Indian numbering system. I would like to thank Umesh for his willingness to allow me to publish his 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 Umesh’s article.
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Massive Facebook Settlements Underscore Privacy’s Importance as Corporate Risk
On July 24, 2019, in a development that underscores the heightened significance of privacy-related issues, the Federal Trade Commission (FTC) announced that Facebook will pay a record-breaking $5 billion penalty and submit to new restrictions and a modified corporate structure. In a related development, the Securities and Exchange Commission (SEC) also announced that Facebook had agreed to a $100 million settlement to resolve the agency’s allegations that the company misled investors regarding the risk of misuse of Facebook user data. Both agency actions followed the March 2018 revelations data analytics firm Cambridge Analytica had obtained access to user data of millions of Facebook users. The FTC’s July 24, 2019 press release about the $5 billion penalty can be found here. The SEC’s July 24, 2019 press release about the $100 million settlement can be found here.
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Guest Post: A Roadmap for President Trump’s Crypto-Crackdown
In the following guest post, John Reed Stark takes a closer look at President Donald Trump’s recent Twitter tirade against cryptocurrency and lays out a roadmap for the President to follow if his administration were to crack down on cryptocurrency. John is President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. A version of this article previously appeared on Securities Docket. I would like to thank John for allowing me to publish his 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 John’s article.
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D&O Insurance: Problems with the Prior Notice Exclusion
Let’s say your client has been served with a new D&O lawsuit. Based on what you know about the events that led up to the lawsuit, you are genuinely unsure whether the claim was first made earlier, or not until the lawsuit was filed. Just to complicate things further, during the last renewal cycle, the client moved its D&O coverage from one carrier to another carrier, and some of the events in the lawsuit lead-up occurred during the prior policy period. Just notice both carriers, right? That would seem to be the prudent thing to do, especially given the uncertainty about the claims made date, right?
Maybe not.
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New York State Court Dismisses Post-Cyan State Court Securities Suit
As a result of the U.S. Supreme Court’s March 2018 Cyan decision, in which the Court ruled that state courts retain concurrent jurisdiction over ’33 Act liability actions, companies issuing shares now face the risk of having to face parallel securities litigation in state and federal court. Among the many problems this risk poses is the possibility that, due to the differing pleading standards between state and federal court, Securities Act liability suits that would be dismissed in federal court might survive a dismissal motion in state court. New York is among the states where many post-Cyan securities suits are being filed and where differences in pleading standards might lead to a fewer state court lawsuit dismissals relative to the dismissal rate in state court. However, notwithstanding these concerns, a New York state court judge recently entered an order dismissing a post-Cyan securities suit, raising the possibility that defendants may be able to dismiss securities suits filed in New York state court after all.
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“Increasingly Likely” Climate Change Liability Risks
As I noted in a prior post, earlier this month I participated in a panel in a climate change liability event sponsored by Clyde & Co in collaboration with Willis Towers Watson as part of the Mayor of London’s Climate Action Week. In connection with the event, on July 11, 2019 the Clyde & Co law firm published an excellent, comprehensive paper on climate change developments and risks, entitled “Climate Change: Liability Risks for Businesses, Directors and Officers – The Coming Wave of Litigation” (here). This paper provides an overview of the challenges that businesses face as a result of climate change-related developments and of the potential areas of liability that may arise as a result of these developments.
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A Closer Look at FCPA-Related Securities Suits
As I have previously noted, even though the Foreign Corrupt Practices Act (FCPA) does not contain a private right of action, plaintiffs’ attorneys have fashioned an FCPA-based claim of sorts in the form of a follow-on shareholder claim alleging either mismanagement or misrepresentation with respect to the alleged bribery or corrupt activity. A July 10, 2019 memo by attorneys from the DLA Piper law firm (here) takes a look at securities class action lawsuits filed based on FCPA allegations. As the authors note, the underlying FCPA allegations “do not necessarily make for a successful securities class action,” as most FCPA-related securities fraud claims “are dismissed.” As discussed below, a July 12, 2019 dismissal ruling in the FCPA-related Cemex securities class action illustrates both the kind of securities claims that can arise in the wake of FCPA-related allegations and also the hurdles that these kinds of claims face.
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Guest Post: Practical Tips When Responding to SEC Comments
In the following guest post, Jay Knight, a member in the Bass, Berry & Sims law firm, provides some recommendations on what do to when responding to filing comments from the SEC. I would like to thank Jay for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Jay’s article.
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More About the Global Rise in Collective Investor Actions
One of the most interesting and significant developments in the corporate and securities litigation arena has been the rise of collective investor litigation outside the United States, as I have discussed in prior posts. This rising tide of litigation has not only included increased numbers of legal actions in a number of different jurisdictions but also has included several substantial settlements, including among others the massive settlements in the Fortis case and in the RBS case. In an updated report July 2019 report entitled “Global Securities Litigation Trends: July 2019 Update” (here), the Dechert law firm takes a detailed look at the “sea change” that has taken place in collective investor litigation in recent years, as a result of which, according to the report, we have entered “a new era of global securities litigation.”
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