Most observers of the current litigation scene are well aware of the recent rise in litigation funding, both in the U.S. and around the world. Indeed, according to a recent memo from the Skadden law firm (here), in 2016, “the worldwide market for third-party litigation financing was estimated to exceed $1 billion.” The industry is likely to continue to grow. The rise of litigation funding has not been without its concerns, however; with the increasing role of litigation funding have come calls for regulation of various kinds. One recurring issue has been with respect to the requirement of mandatory disclosure of litigation funding.
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Reading the Latest Securities Class Action Lawsuit Complaints
Here at The D&O Diary we generally review securities class action lawsuit complaints as they come in. The complaints pretty reliably make for interesting reading but every now and there are specific complaints that particularly catch our eye. Among the host of new securities class action lawsuit filings this past week, there were two that were of particular interest.
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In Long-Running Bear Stearns Dispute, N.Y. Court Rejects Insurers’ Remaining Coverage Defenses
In what seems like the culminating trial court clash in the long-running effort of J.P. Morgan, as successor in interest to Bear Stearns, to try to obtain insurance coverage for amounts Bear Stearns paid to settle charges that it had facilitated market timing and late trading, New York (New York County) Supreme Court Judge Charles E. Ramos, applying New York law, on April 17, 2017 entered a summary judgment order (here) comprehensively rejecting the insurers’ various remaining coverage defenses. While further appellate proceedings in the case seem likely, Judge Ramos’s order makes for interesting reading.
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Which Whistleblowers Can Claim Dodd-Frank Act Anti-Retaliation Protection?
Within the Dodd-Frank Act’s whistleblower provisions, Congress included some stiff anti-retaliation protections. Since the Act’s passage, however, the lower federal courts have struggled to try to determine whether the anti-retaliation protections apply only to whistleblowers who file reports with the SEC or whether or not the protections extend to individuals who file internal whistleblower reports within their own companies. A split on this issue has developed within the federal circuit courts and now the United States Supreme Court may have the opportunity to address the question.
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Home Depot Settles Data Breach-Related Derivative Lawsuit
During the period 2014-2015, several companies –including Home Depot — that had experienced high-profile data breaches were hit with cybersecurity-related D&O lawsuits. All of these lawsuits, including the one against Home Depot, were dismissed. The plaintiffs in the Home Depot case filed an appeal of the dismissal. Now it appears that while the appeal was pending the parties to the Home Depot data breach-related derivative lawsuit have reached a settlement. The settlement could have interesting implications for the plaintiffs’ bar’s ongoing efforts to pursue data breach related D&O litigation.
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Late Notice Defense Rejected Where Insurer’s Response Undercuts Prejudice Claim
A recurring professional liability insurance coverage issue is whether or not the notice prejudice rule applies to claims made policies. In a recent decision, District of Colorado Judge Richard P. Matsch, applying Colorado law, held that the notice prejudice rule did apply to claims made professional liability insurance policy with an “as soon as practicable” notice requirement, and he also rejected the carrier’s late notice defense on the grounds that the insurer’s failure to involve itself in or even inquire about the underlying claim undermined its assertion that it had been prejudiced by the late provision of notice.
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London Update
The D&O Diary finished up its European stint with a brief stop in London earlier this week before heading home. Because it was only a brief visit with numerous commitments, I had only a little bit of a chance to look around while in London. Just the same, it was still a pleasure to be there. London is such a great place.
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April in Paris
The D&O Diary is on assignment in Europe this week, with a first stop in Paris, for meetings. I have been to Paris many times before, but almost always in the fall or winter. Before this trip, I hadn’t really had the pleasure of seeing Paris in the spring. What I found was that — though warmer temperatures do seem to bring out the crowds — Paris in the spring is delightful.
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PwC Annual Study Reports Record Number of Securities Suits
Largely driven by a “dramatic” increase in the number of federal court merger objection lawsuits, securities class action litigation filings rose to the highest level ever in 2016, according to PwC’s most recent annual securities litigation report. The report also noted that for the first time securities litigation rose though the stock market performance during the year did not, contrary to prior patterns. The April 2017 report, entitled “A Rising Tide or a Rogue Wave? 2016 Securities Litigation Study,” can be found here.
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The Steep Rise of Collective Actions in Europe
In prior posts (for example, here), I have described the rise of collective investor actions outside of the U.S. as one of the most important current developments in the world of directors and officers liability. The rise of these collective investor suits is not happening in a vacuum; the growth in the number and size of these kinds of lawsuits is part of a larger upsurge in collective actions generally. According to a recent Report, collective redress actions represent a “growing business” in Europe, and the “volume and value of the cases being filed is on a steep upward curve.”
The Report, a detailed and interesting March 2017 publication by the U.S. Chamber of Commerce Institute of Legal Reform entitled “The Growth of Collective Redress in the EU: A Survey of Developments in 10 Member States” (here) takes an anxious and uneasy look at the changes in the collective action environment in Europe, and proposes several recommendations as ways for countries to avoid abuses that the report contends have arisen elsewhere. The Institute’s March 21, 2017 press release about the report can be found here.
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