Earlier this year when I questioned whether or not privacy-related issues might represent an important emerging area of corporate liability, I was thinking we might see privacy claims emerge over time. I was thinking a longer time frame, over the course of years. What has happened is that the privacy-related claims are materializing now. As I previously noted, in July investors filed a securities suit against Facebook following the company’s quarterly earnings release that disappointed investors in part because company’s growth rate was affected by allegedly unanticipated expenses and difficulties in complying with the EU’s update privacy requirements in the General Data Protection Regulation (GDPR), which went into effect in May.

 

Investors have now filed an additional lawsuit against a company reporting GDPR-related difficulties. As discussed further below, on August 8, 2018, investors filed a lawsuit against Nielsen Holdings plc after the media performance ratings company disclosed in its quarterly earnings release that GDPR-related changes affected the company’s growth rate, pressured the company’s partners and clients, and disrupted the company’s advertising “ecosystem.”  The Nielsen lawsuit underscores the suggestion that privacy-related concerns could be a significant source of corporate liability. Continue Reading Investors Filed GDPR-Related Securities Suit Against Nielsen Holdings

On August 24, 2018, Northern District of California Judge Charles Breyer dismissed the securities class action lawsuit pending against Tesla. Wait. What? Wasn’t that Tesla lawsuit just filed? O.K. turns out, it wasn’t that lawsuit against Tesla that was dismissed, it was a prior lawsuit. The dismissal order was entered in the lawsuit filed against the company in October 2017 alleging misrepresentations in connection with the company’s production of its Model 3 sedan, not the recent lawsuit filed against the company just a few days ago in connection with Elon Musk’s now-infamous take-private tweets. Judge Breyer, in recognition of the possible confusion about which case his order related to, said at the outset of his opinion that his ruling was in the “non-Twitter related securities action against Tesla (emphasis in the original).”  Despite the absence of a relation to Musk’s recent Twitter storm, the opinion still makes for some interesting reading. Judge Breyer’s opinion can be found here. Continue Reading Tesla Securities Suit Dismissed – Not THAT One, the Prior One

I spend the better part of most days – both in my day job and in writing this blog – thinking about the liabilities of directors and officers. Most of the time I am focused on their civil liabilities. However, even though it is not something I think about all the time, the fact is that the potential liabilities of corporate executives also include criminal liabilities as well. I thought about this recently in reviewing a July 3, 2018 Bloomberg article entitled “From Executive Suit to Jail: One German CEO’s Tales of Prison” (here). The article tells the story of Thomas Middlehoff, a German executive who was convicted criminally and who served time in prison. Continue Reading Potential Liabilities for Corporate Executives Includes Criminal Liability

Eric Scheiner
Jennifer Broda

As I have extensively noted on this blog, one of the most important recent developments in the management liability and insurance arena has been the emergence of the #MeToo movement, along with its revelations of sexual misconduct and accompanying claims. In the following post, Eric Scheiner and Jennifer Quinn Broda, partners at Kennedys CMK’s Chicago office, take a look at the evolving #MeToo movement and the implications of the movement’s  evolution both with respect to claims and with respect to insurance coverage. I would like to thank Eric and Jennifer for their willingness to allow 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 an article. Here is Eric and Jennifer’s article. Continue Reading Guest Post: EPL Claims: Changing Norms and New Legislation in the #MeToo Era

As I have previously noted, the dramatic recent rise in Initial Coin Offerings (ICOs) and in transactions involving cryptocurrencies generally has been accompanied by a number of securities class action lawsuits alleging, among other things, that the digital currencies’ issuers or sponsors failed to register the coins or tokens as securities with the SEC as required by the federal securities laws. These lawsuits raise a number of novel and interesting issues, including jurisdictional issues and other concerns arising from the cross-border nature of many of these transactions. On August 7, 2018, in a detailed decision in the securities class action relating to the 2017 Tezos ICO, Northern District of California Judge Richard Seeborg ruled on a number of these threshold issues. Among other things, Judge Seeborg’s decision contains an interesting analysis of the place of the ICO transactions took place in order to determine whether or not the U.S. securities laws apply. Judge Seeborg’s order can be found here. Continue Reading Tezos ICO Securities Suit Dismissal Motion Denial Addresses Key Threshold Issues

Marc Casarino
Doug Greene

In the following guest post, Marc Casarino, a partner in the White & Williams law firm, and Doug Greene, the National Practice Leader of BakerHostetler’s Securities and Governance Litigation Team, take a look at the special litigation committee process and examine the ways in which the SLC process can be “robust, successful and efficient.” I would like to thank Marc and Doug for their willingness to allow me to publish their article as a guest post on my 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 Marc and Doug’s article. Continue Reading Guest Post: Back to Basics: Board and Special Litigation Committee Investigations in Shareholder Derivative Litigation

In yet another one of his early morning messages, late last week President Donald Trump stirred up a squall by suggesting in a tweet that the SEC should study doing away with quarterly reporting requirements in favor of a system of semi-annual reports. The suggestion fits within the larger debate about whether or not reporting companies have an excessively short-term focus and the related but separate debate about whether regulatory requirements impose excessive costs on businesses. The idea of eliminating quarterly reporting raises a number of important issues, and may raise some important questions for the D&O insurance industry as well. Continue Reading Is it Time to End Quarterly Reporting?

As I noted when it was filed in 2016, the securities class action lawsuit investors filed against ExxonMobil and certain of its executives represented something of a milestone as it was the first securities class action lawsuit of which I am aware based on climate change-related allegations. In an August 14, 2018 opinion, Northern District of Texas Judge Ed Kinkeade largely denied the defendants motion to dismiss. The opinion contains a number of interesting features, including in particular in its discussion of the plaintiff’s climate change related allegations. Judge Kindeade’s opinion can be found here. Continue Reading Dismissal Motion Denied in ExxonMobil Climate Change-Related Securities Suit

The motion to dismiss phase is a critical stage in the life cycle of a securities class action lawsuit. If a case survives the dismissal motion, it likely will move toward settlement, as so few cases actually go to trial. The motion to dismiss in intended to test the sufficiency of the allegations in the plaintiff’s complaint. According to the rules, the court’s inquiry should be limited to the matter within the complaint. However, over time, rules have developed permitting courts to consider matter from outside the complaint, pursuant to the doctrines of judicial notice and incorporation by reference.

 

In a detailed August 13, 2018 opinion in which it largely reversed the dismissal of securities class action lawsuit involving the developmental stage pharmaceutical company Orexigen Therapeutics, the Ninth Circuit noted a “concerning pattern in securities cases” in which “overuse” of the doctrines has resulted in improper dismissal of securities suits at the pleading stage based on extraneous matter. The Ninth Circuit’s analysis of the judicial notice and incorporation by reference doctrines is interesting and could have a significant impact on courts’ consideration of matter outside of the complaint in future cases. The Ninth Circuit’s opinion in the Khoja v. Orexigen Therpeutics case can be found here. Continue Reading Ninth Circuit Decries Consideration of Extraneous Matter, Reverses Securities Suit Dismissal

There was a time only a few short years ago when the U.S. courts were the preferred forum for the litigation of securities class actions claims, arguably even claims whose relationship to the U.S. and to U.S. laws was slight. The U.S. courts role as preferred forum for securities suits was undermined by the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank, which underscored the fact that the U.S. securities laws apply only to domestic U.S. securities transactions. Since Morrison, a free-ranging inquiry has emerged to determine whether another country’s courts might emerge as the preferred forum for cross-border securities suits.

Among other countries, Canada has emerged as a candidate. However, a recent decision by Court of Appeal of Ontario examining the jurisdictional reach of Ontario’s securities laws expressly rejects the possibility that Ontario (where the bulk of Canadian securities suits are filed) “would become the default jurisdiction for issuers around the world.”  The Court of Appeal’s July 11, 2018 decision in Yip v. HSBC Holdings can be found here. An August 9, 2018 memo from the Toronto-based Blake, Cassels & Graydon law firm can be found here. Continue Reading Ontario Court Rejects “Jurisdictional Overreach” for Canadian Securities Suits