The D&O Diary continued its European sojourn with a visit last week to the sun-drenched and, even though it was still just April, summerlike, country of Portugal. I have to say that writing this blog post about our visit to Portugal was as much fun as I have ever had in writing for this site. Portugal, my friends, is a wonderful place, as I believe the pictures below will show. Continue Reading Portugal
The COVID-19 pandemic was a disruptive event with the consequences continuing to reverberate through the economy and the business environment, in ways that not only affect companies’ operations and financial performance, but, for at least some companies, in ways that lead to securities class action litigation. So even though the initial COVID-19 outbreak in the U.S. was over four years ago, businesses continue to experience operational consequences from the pandemic, in some cases resulting in securities suits. The latest example is the lawsuit filed late last week against medical testing and diagnostic company QuidelOrtho Corporation, whose testing services revenue declined as the coronavirus transition to endemic status. A copy of the April 12, 2024, complaint against QuidelOrtho can be found here.Continue Reading Diagnostic Testing Company Hit With COVID-Related Securities Suit
As readers of this blog well know, life sciences companies are frequent targets of securities class action lawsuits. Interestingly, at least according to the latest annual report from the Sidley law firm, in recent years the number of lawsuits filed against life sciences companies has declined, although the lawsuit frequency against life sciences companies still remains elevated by comparison to the frequency of litigation against the universe of public companies. Perhaps even more importantly, motions to dismiss in securities lawsuits filed against life sciences companies are granted more than half of the time. A copy of the law firm’s April 2024 memo, entitled “Securities Class Actions in the Life Sciences Sector: 2023 Annual Survey,” can be found here. A two-page summary of the report can be found here.Continue Reading A Detailed Look at the 2023 Securities Litigation Against Life Sciences Companies
On April 12, 2023, in a short, unanimous opinion written by Justice Sonja Sotomayor, the U.S. Supreme Court held that a failure to disclose information required under Item 303 of Regulation S-K is, standing alone, not an actionable omission under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Supreme Court said that in the absence of affirmative statement that is rendered misleading by the omission, an Item 303 violation alone is not sufficient to state a claim under Rule 10b-5. As the Supreme Court opinion put it in summarizing its decision, “pure omissions are not actionable under Rule 10b–5.” The Court’s opinion in Macquarie Infrastructure Corp. v. Moab Partners L.P. can be found here.Continue Reading U.S. Supreme Court: Item 303 Omissions Alone Not Actionable
The D&O Diary is on assignment in Europe this week, with the first stop in Frankfurt, the German financial capital. The spring weather in Frankfurt was mild and pleasant while I was there, though I was in Frankfurt all too briefly.
The purpose of my visit to Frankfurt was to participate in the DRRT
Financially distressed companies often can only obtain D&O insurance coverage on a policy with a bankruptcy or insolvency exclusion precluding coverage for bankruptcy-related claims. The enforcement of these exclusions in the wake of a subsequent bankruptcy can produce harsh results, and insureds often argue that the exclusion does not apply or even that the exclusion
From time to time, I am asked to speak directly to corporate boards of directors. I find these opportunities endlessly fascinating. Among other things, I learn so much from the directors’ questions. One frequently recurring question I get is: what can directors do to avoid litigation or to be in a position better defend themselves if they are sued. The first thing I always talk about when asked these kinds of question is the importance of board minutes. Because this is one of my go-to talking points when I meet with boards, I was particularly pleased to see the recent post on the Harvard Law School Forum on Corporate Governance blog written by Leo E. Strine, Jr., the former Delaware Supreme Court Chief Justice and Chancellor, in which Strine highlights the importance of board minutes in corporate litigation. Strine’s comments are essential reading for anyone concerned with the liabilities of corporate directors. Strine’s April 4, 2024 article can be found here.Continue Reading The Importance of Board Minutes
It is frequently the case that lawsuits are preceded by a letter in which a prospective litigant identifies a grievance and makes various kinds of threats or demands. A perennial question is whether this type of pre-suit demand letter constitutes a “claim” within the meaning of a claims-made liability insurance policy. The Second Circuit, applying New York law, recently affirmed a district court ruling holding that a pre-suit demand letter, received before the applicable policy’s coverage inception date, was a claim within the meaning of the policy. Because the claim was first made prior to the inception of coverage, the court held that there was no coverage for the subsequently filed lawsuit. The Court’s ruling provides an interesting take on this frequently recurring issue.Continue Reading When Is a Pre-Suit Demand Letter a Claim?
The number of securities class action lawsuit filings involving accounting allegations increased in 2023 compared to 2022, but the 2023 accounting-related filings remained below the long-term annual average number of such filings, according to the latest annual report from Cornerstone Research. The number of accounting-related settlements decreased during 2023, as did the median settlement value, though the aggregate and average value of accounting related settlements increased. The Cornerstone Research Report, which is entitled “Accounting Class Action Filings and Settlements: 2023 Review and Analysis,” can be found here. Cornerstone Research’s April 3, 2024, press release about the report can be found here.Continue Reading Cornerstone Research: Accounting-Related Securities Suit Filings Increased in 2023
Readers know that since the initial coronavirus-related outbreak in the U.S. in March 2020, I have been tracking the COVID-related securities suit filings. Even though the four-year mark since the initial outbreak recently passed, and even though it has now been a considerable amount of time since businesses fully reopened from government shutdowns, COVID-related securities suits continue to be filed. Earlier this week, a plaintiff shareholder filed a securities lawsuit against health services management company Agilon Health, in which the plaintiff alleged that the company had understated the impact of the COVID-19 on patient utilization rates, thereby overstating key financial metrics. A copy of the April 2, 2024, complaint can be found here.Continue Reading Health Services Management Company Hit with COVID-19 Related Securities Suit