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Kevin LaCroix

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

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One of the hot topics in the world of corporate and securities litigation in recent years has been the use of forum selection bylaws as a way for companies to try to manage their litigation risk by steering corporate and securities litigation to a specified forum. Courts have largely upheld these provisions. For example, as noted in a recent post, an en banc ruling of the Ninth Circuit dismissed a plaintiff’s claim against the board of The Gap in reliance on a forum selection clause in the company’s bylaws, even though the dismissal effectively deprived the plaintiff of a forum for its derivative Section 14(a) claims.

Now in a further development, a federal district court judge, again in a reliance on a forum selection clause, has granted the defendants’ motion to dismiss in a SolarWinds cyber incident-related derivative suit, even though the dismissal means that the plaintiff has no forum in which to assert his derivative Exchange Act claims – most notably including the plaintiff’s derivative claims under Section 10(b). At a minimum, the ruling expands the reach of what a forum selection clause may achieve, and it possibly could increase the chances that these issues ultimately wind up before the U.S. Supreme Court. A copy of the court’s July 12, 2023, order in the federal court derivative lawsuit can be found here. A July 14, 2023, post on CorporateCounsel.net about the ruling can be found here.Continue Reading Federal Court Derivative Suit Dismissed Based on Forum Selection Clause, Despite Exchange Act Claims

In my 2022 year-end wrap up of D&O insurance developments, I identified macroeconomic factors as among the sources of D&O claims during the past year including, among other things, interest rate increases, economic inflation, labor supply and supply chain disruption, and the Ukraine War. In various posts this year, I have noted that these factors continue to affect companies and to contribute to the number of securities class action lawsuit filings. In the latest example of the way in which these macroeconomic factors can translate into securities litigation, the drug and healthcare company Baxter International was sued last week due to the decline in the company’s share price after the company’s announcement that continuing supply chain woes were setting back its operations and financial results more significantly than the company had anticipated. The new lawsuit shows that macroeconomic factors such as supply chain constraints are continuing to contribute to securities lawsuit filings. A copy of the July 12, 2023, complaint against Baxter can be found here.Continue Reading Baxter Hit with Supply Chain-Related Securities Class Action Lawsuit

Nessim Mezrahi

In a recent post, I reviewed the number of first half 2023 securities class action lawsuit filings. In the following guest post, Nessim Mezrahi, co-founder and CEO at SAR LLC, analyses the potential financial exposure associated with the securities suit filings from the year’s first six months, as well as the implications of the filings for the D&O insurance industry. Nessim’s article first was published in the form of an SAR press release (here). I would like to thank Nessim for allowing me to publish his article 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 Nessim’s article.Continue Reading Guest Post: 2023 Market Dynamics Testing D&O Rate Adequacy and Coverage Sufficiency

As I have previously noted on this site, several international trade regulatory regimes have become increasingly important for companies and their executives. These regulatory regimes include U.S. sanctions, export controls, anti-money laundering (AML), and anti-bribery and corruption laws. Recent developments, such as the War in Ukraine, trade tensions with China, and issues involving digital assets have heightened these concerns. Violations of these regimes can result in regulatory enforcement actions as well as in related civil litigation.

The latest example of a civil action following in the wake of a trade regulation enforcement action is the lawsuit filed earlier this week against data storage company Seagate Technology Holdings plc, after the company was hit with a U.S. Department of Commerce administrative penalty for violation of Export Administration Regulations (EAR) pertaining to the Chinese technology company, Huawei Technologies Co. Ltd. The recently filed securities suit shows how international trade regulation and enforcement can translate into corporate and securities litigation. A copy of the July 10, 2023, Seagate complaint can be found here.Continue Reading Trade and Export Control Enforcement Leads to Securities Class Action Suit

In numerous recent posts, I have detailed how activist investors have been trying to use the courts to advance their ESG-related agenda, whether the groups’ goals are to advance or oppose ESG initiatives. For example, earlier this week I discussed the recent Delaware case in which activist investors sought to hold the Disney board liable for the company’s actions regarding Florida’s “Don’t Say Gay” legislation. A high-profile example of litigation from the other direction, in which activists seek to hold board accountable for the company’s alleged insufficient actions on ESG issues, is the claim brought in English courts earlier this year against the Board of Shell, alleging that the company’s actions to address climate change were insufficient.

As detailed in an excellent June 1, 2023, memo from the Shearman & Sterling law firm (here), earlier this year the High Court ruled that the plaintiff in the case against the Shell board had failed to state a prima facie case. Just like the Disney case I discussed earlier this week, the Court’s reasoning has significant implications for those who would seek to use the courts to advance ESG-related agendas.Continue Reading English Court Rejects Climate Change Case Against Shell Board

In my recent mid-year review of the year-to-date securities lawsuit filings, I noted that certain factors that had contributed significantly to the number of securities suits filed in 2022 were less of a factor in the first six months of 2023. Among these diminished factors was the number of SPAC-related lawsuit filings. But while the number of SPAC-related suit filings has been down so far this year, SPAC-related suits are nonetheless still being filed. The latest example of a SPAC-related filing this year is the suit filed on July 6, 2023, against the Israeli company, Hub Cyber Security, Ltd., which became a Nasdaq-listed company following the February 2022 merger of its predecessor operating company with a SPAC.  The new lawsuit illustrates the ways in which litigation can arise against companies that are the product of completed SPAC mergers.Continue Reading Israeli Firm Hit with SPAC-Related Securities Suit

As I have noted in prior posts, conflicting political views about ESG-related issues have put corporate executives in the crosshairs, a dilemma that has caused some companies to try to avoid ESG issues altogether – a phenomenon that has been described as “greenhushing.” Among other concerns troubling corporate officials about the entire ESG debate is that some politicians have publicly raised the possibility that the act of taking ESG considerations into account in decision-making could itself constitute a breach of fiduciary duty.Continue Reading Disney, Fiduciary Duties, Business Judgment, and Corporate ESG-Related Actions

In a long-standing tradition, I have each July reprised on this site an essay I wrote several years ago about summertime at our lake house in Pentwater, Michigan. Actually, the tradition was that I re-posted the article over the July 4th weekend. This year, I was completely preoccupied during the July 4th holiday…

On June 30, 2023, the U.S. Supreme Court agreed to take up a case to consider the legality of the SEC’s use of in-house administrative tribunals, which the agency uses to enforce the federal securities laws. The agency sought Supreme Court consideration of a federal appellate court ruling that held the administrative courts to be unconstitutional. The case could significantly impact the way in which the agency enforces the federal securities laws. The court’s June 30, 2023 order in which the SEC’s petition for a writ of certiorari was granted can be found here.Continue Reading U.S. Supreme Court Takes Up Case Concerning the SEC’s Use of In-House Court

The number of securities class action lawsuit filings in the year’s first half was up slightly compared to the number of filings in the first half of 2022, though roughly in line with the long-term average number of half-year securities suit filings. As discussed below, several factors contributed to the number of filings in the first six months of 2023, including the number of crypto and digital currency-related filings and the number of filings related to macroeconomic factors (such as interest rates, labor supply, and inflation). Concerns that drove securities suit filings in recent periods, including COVID-related suits and SPAC-related suits, were less of a factor in the year’s first half.Continue Reading Securities Suit Filings Up Slightly in Year’s First Half