Under the Delaware Chancery Court decision in the Caremark case, directors can be liable for failures in their oversight duties – that is, their duties to monitor the company and its functions. Lawsuits alleging a violation of the duty of oversight are notoriously challenging for plaintiffs. However, in the recent Marchand v. Barnhill case, the Delaware Supreme Court reversed the Chancery Court’s dismissal of a Caremark liability case and allowed the case to proceed against the board of an ice cream manufacturer that experienced a deadly listeria outbreak. Caremark liability cases remain difficult to plead and prove, but the Marchand decision nevertheless has important implications for director liability for breaches of their duty of oversight. Continue Reading Recent Delaware Caremark Duty Decision Underscores Board Cyber and Privacy Liability Risks

As the number of shareholder appraisal lawsuits increased a few years ago, a recurring question has been whether or not a company’s D&O insurance covers the company’s costs incurred in defending an appraisal action. In a recent decision, a Delaware Superior Court judge rejected a number of the recurring coverage defenses on which insurers rely in disputing coverage for appraisal action costs and expenses. The Court’s opinion in the Solera Holdings case contains several very interesting rulings, some of which could be relevant even outside of the appraisal action context. A copy of the Delaware Superior Court’s July 31, 2019 opinion can be found here. Continue Reading D&O Insurance: Del. Court Rejects Insurers’ Appraisal Action Coverage Defenses

Nessim Mezrahi

In numerous prior posts on this site (for example, here), I have written about the problems caused by the U.S. Supreme Court’s March 2018 decision in Cyan, Inc. v. Beaver County Employees Retirement Fund. In the following guest post, Nessim Mezrahi, cofounder and CEO of SAR, a securities class action data analytics and software company, issues a call for reform to address the “confusion” that Cyan has caused. A version of this article previously appeared on Law 360. 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 blog’s readers. Please contact me directly if you would like to publish a guest post. Here is Nessim’s article. Continue Reading Guest Post: Time To Resolve Post-Cyan Securities Class Action Confusion

Plaintiffs filed federal court securities class action lawsuits at  “near-record levels” during the first six months of 2019, according to a new report from Cornerstone Research. The July 31, 2019 report, entitled “Securities Class Action Filings: 2019 Midyear Assessment,” notes that the elevated filing levels continued in the year’s first half despite reduced numbers of merger objection lawsuit filings. In addition to the number of federal court filings, there were a significant number of state court securities suit filings, bringing overall filing levels close to all-time highs. The new report can be found here. Cornerstone Research’s July 31, 2019 press release about the report can be found here. My own analysis of the first half filings can be found here. Continue Reading Federal Court Securities Suit Filings at Near Record Pace in Year’s First Half

Syed Ahmad
Andrea DeField

Regular readers of this blog know that a recurring D&O insurance coverage issue is a question of whether or not the D&O policy provides coverage for various types of regulatory and prosecutorial investigations. In the following guest post, Syed Ahmad and Andrea DeField  take a look at a recent Delaware Superior Court decision in which the court held that the D&O policy at issue provides coverage for costs incurred in responding to a civil investigative demand (CID). Syed is a partner and Andrea is an associate at the Hunton Andrews Kurth LLP law firm. I would like to thank Syed and Andrea for allowing me to publish their 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 Syed and Andrea’s article. Continue Reading Guest Post: Delaware Court Weighs In on the CID Coverage Debate

The directors of companies have roles, responsibilities and potential liabilities. But who can be held liable as a director? That was the question that the Third Circuit recently answered in an interesting ruling in which the appellate court determined that board observers could not be held liable as directors or director equivalents under Section 11 for alleged registration misstatement misrepresentations. The decision raises some interesting considerations when it comes to directors and their roles. The Third Circuit’s July 23, 2019 decision can be found here. Continue Reading Board Observers Not Subject to Section 11 Director Liability

In a recent decision, the Delaware Superior Court, applying Delaware law, held that two of Pfizer’s excess D&O insurers are on the hook for their portion of costs the company incurred in defending and settling a securities class action lawsuit, despite the excess insurers’ arguments that the claim was interrelated with an earlier securities suit and that coverage was therefore precluded under their policies’ Specific Litigation Exclusion. The critical determinant in the court’s ruling may have been its decision that Delaware law governed the coverage dispute, but there are still a number of interesting elements about issue of claims relatedness. The Delaware Superior Court’s July 23, 2019 decision can be found here. Continue Reading D&O Insurance: Specific Litigation Exclusion Does Not Preclude Coverage for Subsequent Securities Suit

Umesh Pratapa

In the following guest post, Umesh Pratapa takes a look at the state of liability insurance in India. Liability insurance apparently is not yet widespread in India, for reasons that Umesh examines below.  Umesh also takes a look at the possible future for liability insurance in India. Umesh’s article was originally published in The Journal of the Insurance Institute of India (April – June 2019 issue).  EDITOR’S NOTE: The symbol “₹” is the sign for Indian Rupees.  A”crore” is a unit count of ten million in the Indian numbering system, abbreviated “cr.” A “lac” or “lakh” is a unit count of one hundred thousand in the Indian numbering system. I would like to thank Umesh for his willingness to allow 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 Umesh’s article. Continue Reading Guest Post: Liability Insurance in India- Challenges and Opportunities- Way Forward

On July 24, 2019, in a development that underscores the heightened significance of privacy-related issues, the Federal Trade Commission (FTC) announced that Facebook will pay a record-breaking $5 billion penalty and submit to new restrictions and a modified corporate structure. In a related development, the Securities and Exchange Commission (SEC) also announced that Facebook had agreed to a $100 million settlement to resolve the agency’s allegations that the company misled investors regarding the risk of misuse of Facebook user data. Both agency actions followed the March 2018 revelations data analytics firm Cambridge Analytica had obtained access to user data of millions of Facebook users.  The FTC’s July 24, 2019 press release about the $5 billion penalty can be found here. The SEC’s July 24, 2019 press release about the $100 million settlement can be found here. Continue Reading Massive Facebook Settlements Underscore Privacy’s Importance as Corporate Risk

John Reed Stark

In the following guest post, John Reed Stark takes a closer look at President Donald Trump’s recent Twitter tirade against cryptocurrency and lays out a roadmap for the President to follow if his administration were to crack down on cryptocurrency. John is President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. A version of this article previously appeared on Securities Docket. 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: A Roadmap for President Trump’s Crypto-Crackdown