In the latest example of a post-SPAC-merger company getting hit with a securities class action lawsuit, the online sports gaming and betting company DraftKings has been sued in a securities suit involving alleged pre- and post-SPAC-merger activity of one of the merged companies. As discussed below, the new lawsuit is the latest SPAC-related securities suit based supposed revelations in a short-seller’s report. A copy of the plaintiff’s complaint can be found here. Continue Reading DraftKings Hit with SPAC-Related Securities Suit

In March 2018, when the U.S. Supreme Court held in the Cyan case that state courts retain jurisdiction for securities class action litigation under the ’33 Act, it set up the state courts and state court securities class action litigants for a host of practical problems. The first is that Cyan allowed the possibility of competing sets of plaintiffs’ lawyers to sue the same defendants in parallel state and federal lawsuits, in what can only be called inefficient and wasteful duplicative litigation. The second is that Cyan left unanswered many questions about the procedures applicable in the state court securities litigation, including questions having to do with the applicability of the procedural safeguards under the PSLRA. Among the many procedural questions that state courts now have to wrestle with is whether the PSLRA’s stay of discovery pending a ruling on the defendants’ motion to dismiss applies to state court proceedings. Continue Reading Supreme Court Takes Up Discovery Stay Question in State Court Securities Class Action Litigation

In recognition of the Independence Day holiday in the U.S., and in what is now an annual tradition, I reprise my 2012 essay about Time and Summer, which can be found here. Amidst all the disruption we have all experienced in both our work lives and personal lives in recent months, life’s timeless lessons seem more important than ever. Thank you to all of my loyal readers. I hope that all of you and your families are able to enjoy a healthy and safe Fourth of July holiday.

The shareholder derivative lawsuit filed against the directors of Danaher Corporation is the latest board diversity lawsuit to fail to survive initial pleading hurdles. In a June 28, 2021 order (here), District of Columbia District Court Judge Trevor N. McFadden granted the defendants’ motion to dismiss the shareholders’ claims, based on his determination that the plaintiffs had failed to establish that pre-suit demand on the board would have been futile. In making his rulings on the motion, Judge McFadden made several interesting and noteworthy observations about the plaintiffs’ board diversity allegations. Continue Reading Board Diversity Lawsuit Against Danaher Directors Dismissed

Federal court securities class action lawsuit filings declined in the first half of 2021 to the lowest semiannual levels in several years. Several factors contributed to this relative decline, most significantly the shift by plaintiffs’ lawyers toward filing federal court merger objection lawsuits as individual actions rather than as class actions. In addition, as discussed further below, other factors contributed to the relative decline. The filing levels in the year’s first six months puts the filing for the full year 2021 on pace for the lowest annual filing levels since 2015, after several intervening years in which filings were at historically high levels. Continue Reading Federal Court Securities Lawsuit Filings Decline in Year’s First Half

Bruce Vanyo
Jonathan Rotenberg

As I discussed in a recent post (here), the Ninth Circuit recently reversed in part the district court’s dismissal of the Google+ user data-related securities class action lawsuit. One feature of the decision that perhaps did not attract as much attention is the appellate court’s reversal of district court’s dismissal of the plaintiff’s scheme liability claims. In the following guest post, Bruce Vanyo and Jonathan Rotenberg discuss the significance of the scheme liability portion of the Ninth Circuit’s opinion. Bruce and Jonathan are partners in the Securities Litigation practice at Katten Muchin Rosenman LLP, resident in the New York office. I would like to thank Bruce and Jonathan 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. Continue Reading Guest Post: Ninth Circuit Invokes Lorenzo to Revive Scheme Liability Claims

Securities class action litigation activity involving IPO companies recently has been a significant concern, for the companies themselves as well as for their insurers. In the following guest post, Stanford Law School Professor Michael Klausner and Jason Hegland, Stone Kalisa, and Sam Curry of Stanford Securities Litigation Analytics take a look at the data surrounding IPO-related securities litigation. 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. Continue Reading Guest Post: IPO Litigation Risk

In a June 23, 2021 opinion (here), a Delaware Superior Court Judge held that a subsequent opt-out action is interrelated with the prior securities class action lawsuit; that the opt-out action claim is deemed made at the time of class action suit’s filing; and therefore that the D&O insurers whose policies were in force at the time the opt-out action was filed do not have coverage for the opt-out action. The court’s conclusion that an opt-out action is interrelated with the underlying class action lawsuit arguably is unremarkable, but, as discussed below, there are features of this dispute and of the court’s ruling that make the court’s decision noteworthy. Continue Reading Opt-Out Action Held Interrelated with Underlying Securities Class Action Suit

John Cheffers

One of the key considerations related securities class action litigation risk is company size as measured by market capitalization. In the following guest post, John Cheffers details this relation between company size and securities class action litigation risk. John is Associate Counsel and Director of Research for Watchdog Research. I would like to thank John for allowing me to publish his 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 John’s article. Continue Reading Guest Post: Analyzing Securities Class Actions by Size

On April 12, 2021, when John Coates, the acting director of the SEC Division of Corporate Finance, and Paul Munter, the SEC’s acting chief accountant, issued a statement noting their concerns about the way that SPACs were accounting for warrants issued in connection with SPAC IPOs, they also noted that some entities may need to reclassify the warrants from equity to liabilities, and that the change in accounting treatment might require some entities to restate prior financial statements. As it has turned out, many SPACs have in fact reclassified their warrants and many have in fact restated their financials, as discussed below. In at least one case, discussed in earlier post on this site (here), a SPAC-acquired company that restated its financial based on the warrant accounting issue has been hit with a securities class action lawsuit – which raises the question whether other restatements by other SPACs and de-SPACs will trigger further securities class action litigation.

 

That is the question asked in a June 22, 2021 Law360 article by Elaine Harwood, Steven McBridge and Laura Simmons of Cornerstone Research entitled “Will SPAC Restatement Wave Trigger Shareholder Litigation?” (here). As discussed below, the authors’ article addresses several interesting and important questions about the warrant accounting issue and the possibility for further litigation. Continue Reading Will SPAC Warrant Accounting Restatements Result in Further Securities Class Action Litigation?