September is here. Labor Day has come and gone. Time to put away the swim trunks, parasols, flip flops, bungee cords, ukuleles, sun screen, boomerangs, bongos, snorkels, vorpal blades, and unicycles, and get back to work. Yes, it is time to answer all those emails and return all of those phone messages. And most importantly of all, it is time to catch up on what has been happening in the world of directors’ and officers’ liability and insurance. Here is what happened while you were out.
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Yet Another D&O Claim Arising out of Revelations of Sexual Misconduct
As I have noted in recent posts, the #MeToo movement has led to a number of D&O lawsuits as the accountability process has led not only to claims against the wrongdoers but also against the wrongdoers’ company and other company executives for turning a blind eye or failing to disclose the problems. On August 30, 2018, in the latest of these D&O claims arising out of revelations of sexual misconduct, investors filed a securities class action lawsuit against Papa John’s International, following news reports of sexual harassment at the company involving the company’s founder and former CEO and Chairman, John H. Schantter, as well as other executives at the company.
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Guest Post: Second Circuit Rejects FCPA Liability for Foreign Persons
In an August 24, 2018 opinion in United States v. Hoskins (here), the Second Circuit held that a foreign national cannot be held liable under the FCPA, rejecting the U.S. Department of Justice’s accomplice liability theories. In the following guest post, attorneys from the Paul Weiss law firm take a look at the opinion and review its implications. A version of this article previously was published as a Paul Weiss client memo. I would like to thank the authors for allowing me 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 the authors’ article.
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Is Litigation Financing “The New Black”?
Litigation financing is one of the most important recent developments in the global claims arena. There is a very simple reason why it has become an increasingly important phenomenon, and that is because it is so highly remunerative. An August 27, 2018 Bloomberg article entitled “For the World’s Super Rich, Litigation Funding is the New Black” (here) takes an interesting look at the recent growth in litigation funding, as well as the reasons for and consequences of the growth. According to the article, for many institutional investors and other sources of investment capital, litigation funding is now viewed as just another asset class, albeit one with superior returns (for now, at least). The question is whether all of the current litigation financing fund raising is shrinking the opportunities and possible future returns.
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Investor Files Sexual Misconduct-Related Securities Suit Against CBS
As I have noted in prior posts, one of the noteworthy aspects of the whole #MeToo movement has been that the accountability efforts have included not only claims against the wrongdoers themselves, but also against the wrongdoers’ companies and company executives for enabling the misconduct or turning a blind eye. In the latest of these kinds of sexual misconduct-related lawsuit, a CBS shareholder has filed a securities class action lawsuit against CBS Corporation based on revelations that the company’s CEO, Leslie Moonves, allegedly engaged in sexual harassment at the company. The lawsuit underscores the fact that revelations of sexual misconduct represent an emerging area of corporate liability.
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Investors Filed GDPR-Related Securities Suit Against Nielsen Holdings
Earlier this year when I questioned whether or not privacy-related issues might represent an important emerging area of corporate liability, I was thinking we might see privacy claims emerge over time. I was thinking a longer time frame, over the course of years. What has happened is that the privacy-related claims are materializing now. As I previously noted, in July investors filed a securities suit against Facebook following the company’s quarterly earnings release that disappointed investors in part because company’s growth rate was affected by allegedly unanticipated expenses and difficulties in complying with the EU’s update privacy requirements in the General Data Protection Regulation (GDPR), which went into effect in May.
Investors have now filed an additional lawsuit against a company reporting GDPR-related difficulties. As discussed further below, on August 8, 2018, investors filed a lawsuit against Nielsen Holdings plc after the media performance ratings company disclosed in its quarterly earnings release that GDPR-related changes affected the company’s growth rate, pressured the company’s partners and clients, and disrupted the company’s advertising “ecosystem.” The Nielsen lawsuit underscores the suggestion that privacy-related concerns could be a significant source of corporate liability.
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Tesla Securities Suit Dismissed – Not THAT One, the Prior One
On August 24, 2018, Northern District of California Judge Charles Breyer dismissed the securities class action lawsuit pending against Tesla. Wait. What? Wasn’t that Tesla lawsuit just filed? O.K. turns out, it wasn’t that lawsuit against Tesla that was dismissed, it was a prior lawsuit. The dismissal order was entered in the lawsuit filed against the company in October 2017 alleging misrepresentations in connection with the company’s production of its Model 3 sedan, not the recent lawsuit filed against the company just a few days ago in connection with Elon Musk’s now-infamous take-private tweets. Judge Breyer, in recognition of the possible confusion about which case his order related to, said at the outset of his opinion that his ruling was in the “non-Twitter related securities action against Tesla (emphasis in the original).” Despite the absence of a relation to Musk’s recent Twitter storm, the opinion still makes for some interesting reading. Judge Breyer’s opinion can be found here.
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Potential Liabilities for Corporate Executives Includes Criminal Liability
I spend the better part of most days – both in my day job and in writing this blog – thinking about the liabilities of directors and officers. Most of the time I am focused on their civil liabilities. However, even though it is not something I think about all the time, the fact is that the potential liabilities of corporate executives also include criminal liabilities as well. I thought about this recently in reviewing a July 3, 2018 Bloomberg article entitled “From Executive Suit to Jail: One German CEO’s Tales of Prison” (here). The article tells the story of Thomas Middlehoff, a German executive who was convicted criminally and who served time in prison.
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Guest Post: EPL Claims: Changing Norms and New Legislation in the #MeToo Era
As I have extensively noted on this blog, one of the most important recent developments in the management liability and insurance arena has been the emergence of the #MeToo movement, along with its revelations of sexual misconduct and accompanying claims. In the following post, Eric Scheiner and Jennifer Quinn Broda, partners at Kennedys CMK’s Chicago office, take a look at the evolving #MeToo movement and the implications of the movement’s evolution both with respect to claims and with respect to insurance coverage. I would like to thank Eric and Jennifer for their willingness to allow me 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 an article. Here is Eric and Jennifer’s article.
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Tezos ICO Securities Suit Dismissal Motion Denial Addresses Key Threshold Issues
As I have previously noted, the dramatic recent rise in Initial Coin Offerings (ICOs) and in transactions involving cryptocurrencies generally has been accompanied by a number of securities class action lawsuits alleging, among other things, that the digital currencies’ issuers or sponsors failed to register the coins or tokens as securities with the SEC as required by the federal securities laws. These lawsuits raise a number of novel and interesting issues, including jurisdictional issues and other concerns arising from the cross-border nature of many of these transactions. On August 7, 2018, in a detailed decision in the securities class action relating to the 2017 Tezos ICO, Northern District of California Judge Richard Seeborg ruled on a number of these threshold issues. Among other things, Judge Seeborg’s decision contains an interesting analysis of the place of the ICO transactions took place in order to determine whether or not the U.S. securities laws apply. Judge Seeborg’s order can be found here.
Continue Reading Tezos ICO Securities Suit Dismissal Motion Denial Addresses Key Threshold Issues