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Kevin M. LaCroix is an attorney and Executive Vice President, RT ProExec, a division of R-T Specialty, LLC. RT ProExec is an insurance intermediary focused exclusively on management liability issues.

In the wake of the U.S. Supreme Court’s Cyan decision, corporate defendants faced the risk of wasteful and duplicative federal and state court securities litigation. In order to address this concern, corporate reformers suggested that companies should adopt provisions in their corporate charters designating an exclusive federal forum for securities litigation. The Delaware Supreme Court upheld the facial validity under Delaware law of federal forum provisions in the Sciabacucchi decision, but the question remained whether the courts in other jurisdictions would enforce the provisions. A number of courts in California and New York did subsequently uphold the provisions, but these were all trial court rulings.

Now, in an important legal development, a California intermediate appellate court has upheld the enforcement of the provisions, the first appellate decision on the issue outside Delaware. The California appellate court’s ruling in the Restoration Robotics case could represent a significant milestone in the development of post-Cyan litigation. A copy of the California appellate court’s April 28, 2022 decision can be found here. An April 29, 2022 memo from the Latham & Watkins law firm about the appellate court’s decision can be found here.
Continue Reading California Appellate Court Upholds and Enforces Federal Forum Provision

If there is one current topic that commands the attention of investors and other corporate stakeholders these days, it is ESG. ESG-related issues have of course previously led to securities suits and other types of D&O claims. However, amidst the current heightened focus on ESG, there is still a great deal of uncertainty about what ESG-related D&O claims might look like.

For that reason, the enforcement action that the SEC filed last week against the Brazilian mining company Vale, S.A. in connection with alleged misrepresentations the company allegedly made before the January 2019 collapse of its Brumadinho dam is noteworthy. Of particular interest to observers focused on ESG concerns is the fact that the SEC specifically alleged that the company “regularly misled local governments, communities, and investors about the safety of the Brumadinho dam through its environmental, social, and governance (ESG) disclosures.” The SEC’s April 28, 2022 press release about the Vale action can be found here. The SEC’s complaint in the action can be found here.
Continue Reading SEC Action Against Brazilian Mining Company Alleges ESG Misrepresentations

While it may or may not be true, as some have said, that “everything is securities fraud,” it certainly does seem to be the case that there is not an event or development that occurs that does not eventually draw a securities lawsuit. For that reason, I was pretty sure that eventually we would see securities litigation relating to the Russian invasion of Ukraine. Well, as it has turned out, at least one securities lawsuit has now been filed based on circumstances relating to the war in Ukraine. Late last week, a plaintiff shareholder filed a securities class action lawsuit against Credit Suisse Group based on allegations concerning the enforcement of economic sanctions imposed on Russian oligarchs in the wake of the Russian invasion. A copy of the plaintiff’s April 29, 2022 complaint can be found here.
Continue Reading First Ukrainian War-Related Securities Suit Filed

As I have noted before, Elon Musk is a reliable source of interesting blog fodder. His hyperkinetic fracases are so numerous that at times it is easy to lose track of the many controversies in which he is involved. Amidst all of the hoopla about his current bid to acquire Twitter, it was easy to overlook the fact that he remained mired in ongoing litigation relating Tesla’s 2016 acquisition of SolarCity. As the heart of the dispute was the fact that Musk served both as Chairman of SolarCity and as an executive of and as the largest shareholder of Tesla at the time.

The dispute went to a ten-day bench trial in 2021, and on April 27, 2022, Delaware Vice Chancellor Joseph R. Slights III issued a lengthy opinion ruling in Musk’s favor on all issues. A copy of the opinion can be found here. As discussed below, the sprawling, 132-page opinion contains a number of interesting observations and insights and also has important implications.
Continue Reading Elon Musk Prevails in Trial Over Tesla’s Acquisition of SolarCity

One of the reasons there have not been as many cybersecurity-related securities lawsuits as some commentators (including me) expected is that the plaintiffs’ track record in the cases that have been filed has been decidedly mixed. To be sure, there have been some very noteworthy successes for the plaintiffs, including the Equifax cybersecurity-related securities suit, which settled for $149 million. But though there have been some noteworthy successes, many of the other cybersecurity related securities suits have ended in dismissal.

Among the more significant recent cybersecurity-related securities suit dismissals was the ruling  in the securities lawsuit relating to the massive Marriott data breach. Now, on appeal, the Fourth Circuit has affirmed the district court’s dismissal in the Marriott case, the latest in a series of high-profile setbacks plaintiffs have experienced in cybersecurity-related securities suits. A copy of the Fourth Circuit’s April 21, 2022 opinion can be found here.
Continue Reading Fourth Circuit Affirms Dismissal of Marriott Data Breach-Related Securities Suit

Consistent with what is already a well-established current securities class action litigation filing trend, plaintiff shareholders last week filed two more SPAC-related securities suits. Although the two new suits are somewhat different from each other, they share the common feature that they both involve corporate defendants that recently became publicly traded through merger with a SPAC. The SPAC-related lawsuits, including the two most recently filed examples, represent a significant securities litigation phenomenon this year. The two new lawsuits are discussed below.
Continue Reading Two More SPAC-Related Securities Suits Launched

When Congress enacted the Private Securities Litigation Reform Act (PSLRA) in 1995, it aimed to address perceived abuses in securities class action litigation. Among the ills Congress sought to address was the prevalence in securities litigation at the time of “professional plaintiffs” — that is, repeat players who lent their names to lawyer-driven lawsuits without performing any oversight or monitoring of the litigation or of the lawyers. In the PSLRA, Congress put limits in place to try to curb these frequent filers. The reality is that these limits have not worked. As is well documented in a new paper from the U.S. Chamber of Commerce’s Institute for Legal Reform entitled “Frequent Filers Revisited: Professional Plaintiffs in Securities Class Actions,” repeat plaintiffs remain an unfortunate feature of securities litigation today, with many of the same ill effects Congress intended to remedy.

The paper, which was written by New York University Law School Professor Stephen Choi, University of Richmond Law School Professor Jessica Erikson, and University of Michigan Law School Professor Adam Pritchard, details the extent of the frequent filer problem in current securities litigation, and proposes a number of reforms to address the issue. The April 21, 2022 paper can be found here.
Continue Reading The Continuing Problem of Frequent Filers in Securities Litigation

Jorge Luis Borges

At one level, all of life is the accumulation of memories, a building toward the inevitable moment when we can bore a younger generation (just as we were bored when younger) by stories that have grown threadbare in the retelling. But at another level, all of life is a process of forgetting, a building toward the inevitable moment when the joke about “early Alzheimer’s” isn’t really funny anymore. Or more simply, when the names and faces from our youth can no longer be recalled simply because too much time has passed.
Continue Reading Speak Not, Memory

Over the last several years and In the wake of the #MeToo movement, plaintiff shareholders have filed D&O claims against many companies, as well as against the companies’ executives, involving underlying allegations of sexual misconduct or sexual harassment. The highest profile of these cases to be filed within the last year was the securities class action lawsuit filed against Activision Blizzard and several of its officers based on allegations that the company knew about and failed to disclose governmental investigations of employees’ sexual harassment allegations. In a recent order, the court overseeing the securities suit granted the defendants’ motion to dismiss the complaint, holding that the plaintiffs had failed to sufficiently allege both falsity and scienter. The dismissal was granted without prejudice. The court’s ruling illustrates the difficulty plaintiffs sometimes face in trying to bootstrap underlying sexual misconduct allegations into D&O claims. The Court’s April 18, 2022 order in the case can be found here.
Continue Reading Court Dismisses Activision Blizzard Sexual Harassment-Related Securities Suit

In a new lawsuit that closely mirrors the features of many recent SPAC-related securities lawsuits, and that indeed almost entirely replicates the most recent suits, a plaintiff shareholder has initiated a securities class action against Canadian-based lithium battery recycler, Li-Cycle Holdings Corp. Li-Cycle completed a merger with a publicly traded SPAC in August 2021 and was the subject of a short-seller report in March 2022. The lawsuit against Li-Cycle is the latest in the development of what is becoming an increasingly significant securities litigation phenomenon this year. A copy of the April 19, 2022 lawsuit against Li-Cycle can be found here.
Continue Reading After Short Seller Report, Lithium Battery Recycler Hit with SPAC-Related Securities Suit