Gregory A. Markel
Sarah A. Fedner

As this blog’s readers know, a recurring recent topic on this blog has been the need for another round of securities class action litigation reform. In the following guest post, Gregory A. Markel and Sarah A. Fedner of the Seyfarth Shaw law firm explore the possible opportunities for reform with respect two specific areas of concern: duplicative state and federal court litigation in the wake of Cyan and the payment of mootness fees in merger cases. The authors outline the policy objections to these practices and suggest that Congress should intervene to end them. My thanks to Greg and Sarah 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 Greg and Sarah’s article. Continue Reading Guest Post: Two Areas for Reform in Securities Litigation

As I noted in yesterday’s post, there could be a significant number of bankruptcies in coming months, and D&O claims in the bankruptcy context could give rise to insurance coverage disputes. In addition to the possible coverage issues I noted in yesterday’s post (pertaining bankruptcy exclusions, in particular), another issue that could arise is whether or not coverage for claims brought on behalf of the bankrupt debtor’s estate or on behalf of unsecured creditors is precluded by the insured vs. insured exclusion found in most policies.

 

Most insured vs. insured exclusions include a carve-back preserving coverage for claims brought by trustees and other estate representatives. In a recent ruling that broadly considered the scope and purpose of the insured vs. insured exclusion’s bankruptcy claim coverage carve-back, a New York intermediate appellate court concluded that the carve-back applied to preserve coverage for a claim brought by a Creditor Trust formed to pursue post-confirmation legal actions on behalf of unsecured creditors. The May 14, 2020 opinion in Westchester Fire Insurance Company v. Schorsch can be found here. Continue Reading The Insured vs. Insured Exclusion’s Bankruptcy Claim Coverage Carve-Back

As a result of the economic fallout from the coronavirus outbreak, a number of businesses will struggle to survive. Some may wind up in bankruptcy. Indeed, a May 28, 2020 Harvard Business Review article (here), suggests that there could even be a “bankruptcy pandemic” – an “explosion” of bankruptcy proceedings that could “overwhelm” the bankruptcy courts. A number of companies have already filed for bankruptcy, and there undoubtedly will be more to come.

 

D&O insurance underwriters are well aware of these concerns, and are taking these possibilities into account, both with respect to the financial underwriting they are requiring, and with respect to the terms and conditions they are offering. In some instances, the D&O underwriters are including bankruptcy exclusions or creditors’ claims exclusions among the terms offered. These exclusionary provisions potentially represent a significant diminution of coverage. However, a recent law firm memo raises the question whether or not the type of bankruptcy exclusion that some carriers are offering are, in fact, even enforceable. Continue Reading A Current Hot D&O Insurance Question: Are Bankruptcy Exclusions Enforceable?

In a June 4, 2020 press release (here), the SEC announced that it had granted an individual a $50 million whistleblower award, the largest ever award to a single individual. While there had been a prior $50 million award that two individuals shared, the largest prior award to a single individual was a 2018 award of $39 million. Continue Reading SEC Grants Largest Ever Individual Whistleblower Award

In prior posts on this site (most recently here), I have suggested that D&O claims could arise in connection with the Paycheck Protection Program (PPP), a fiscal stimulus program Congress enacted as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). In what is as far as I know the first PPP-related securities class action lawsuit, a plaintiff shareholder has filed a securities class action lawsuit against Wells Fargo & Company, alleging that the company made misrepresentations to investors in connection with the company’s participation in the PPP. A copy of the plaintiff’s June 4, 2020 complaint can be found here. Continue Reading Wells Fargo Hit with First PPP-Related Securities Class Action

Brent Ashley

In a recent post (here), I reviewed the steps that well-advised companies can take in light of the current coronavirus outbreak to try to mitigate their risk of management liability claims arising out of the pandemic. In the following guest post, Brent Ashley of the Hirschler law firm takes a look at the steps corporate boards can take in light of the COVID-19 pandemic to try to insulate themselves against claims based on alleged breaches of the duty of oversight. I would like to thank Brent 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 Brent’s article. Continue Reading Guest Post: 7 Steps for Ensuring Director Oversight During COVID-19

Peter M. Gillon

In a recent post (here), I discussed the possibility investigative, regulatory, and enforcement actions in connection with funds disbursement under the Paycheck Protection Program. In the following guest post, Peter M. Gillon of the Pillsbury Winthrop Shaw Pittman LLP law firm takes a closer look at the kinds of claims that may arise in connection with the PPP, as well as the D&O insurance issues that the claims may present. A version of this article previously was published as a Pillsbury Client Alert. The author wishes to acknowledge the assistance of Daniel Gillon (Duke Law 2021). I would like to thank Peter 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 Peter’s article. Continue Reading Guest Post: Implications of PPP Certifications for D&O Coverage

On May 27, 2020, in the latest #MeToo-related securities class action lawsuit to fail to survive initial pleading hurdles, Judge Gloria M. Navarro granted the defendants’ motion to dismiss the securities suit filed against Wynn Resorts based on allegations that the company had failed to disclose sexual misconduct of its former CEO, Stephen Wynn. The ruling joins several other recent dismissal rulings in #MeToo-related securities suits – although, as noted below, there have also been several noteworthy settlements in #MeToo suits as well. A copy of Judge Navarro’s opinion can be found here. Continue Reading Dismissal Motion Granted in Wynn Resorts #MeToo-Related Securities Suit

As I have documented in prior posts (for example, here), publicly traded life sciences companies are frequent targets of securities class action lawsuits. But life sciences companies’ securities litigation exposure may be well-known, it is not always as appreciated that the securities suits against life sciences companies are often dismissed. Two recent rulings in securities suits against life sciences companies – Antares Pharma and Nabriva Therapeutics – provide recent examples of securities suits in which the courts have granted the companies’ dismissal motions. The rulings illustrate the extent to which life sciences companies often are able to successfully defend themselves against securities suits. Continue Reading Life Sciences Companies: Frequent Securities Suits Frequently Dismissed

A recent guest post on this site expressed the view that because of the volume of Section 11 litigation being filed in New York state court, New York’s courts “will have a major role in shaping the standards applied in Securities Act litigation going forward.” If that is the case, then the recent ruling by a New York trial court judge granting the defendants’ motion to dismiss in a state court Section 11 action could be significant. New York (New York County) Supreme Court Judge Barry Ostrager’s May 15, 2020 ruling in the consolidated Sundial Growers Securities Litigation can be found here. Continue Reading Dismissal Granted in New York State Court Securities Class Action