D&O insurance policies typically specify that the insurer’s written consent is required for a policyholder to settle a claim, such consent not to be unreasonably withheld. This consent-to-settlement clause is the not infrequent source of coverage disputes, usually involving circumstances where the policyholder has gone ahead and settled a claim without seeking the requisite consent. A less frequent but no less troublesome circumstance involves the situation where the policyholder sought consent but the insurer declined to consent. The question then becomes whether the insurer’s withholding of consent was (or was not) reasonable.

 

In an interesting recent ruling, an Arizona district court judge held that Apollo Education Group’s D&O insurer’s withholding of consent to the company’s $13.125 million settlement of an options backdating-related securities class action lawsuit was reasonable. There are a number of interesting aspects to this ruling, as discussed below. Judge Stephen Logan’s October 26, 2017 decision in the Apollo Education Group coverage lawsuit can be found here. Continue Reading D&O Insurer’s Withholding of Settlement Consent Held Reasonable

As I have previously noted on this blog (most recently here), one of the most significant recent developments in the D&O claims arena has been the global rise of collective investor actions. One factor in this development in Europe has been the non-binding 2013 Collective Redress Recommendation, in which the European Commission recommended that each of the EU’s 28 member states adopt collective redress mechanisms. Many of the member states have now adopted some form of collective redress but the approaches the various states have taken are not uniform.

 

In an October 24, 2017 publication entitled “Collective Redress Tourism: Preventing Forum Shopping in the EU” (here), the U.S. Chamber of Commerce Institute for Legal Forum asks whether the diversity of procedures adopted, and in particular the diversity of safeguards the member states have put in place, along with litigants’ relative freedom to choose between jurisdictions, has led to potentially detrimental forum shopping. The publication raises a number of interesting questions, which I discuss below. Continue Reading Has the Rise of Collective Investor Actions in Europe Led to Forum Shopping?

As I noted at the beginning of the U.S. Supreme Court’s current term in my summary of securities cases on the Court’s docket, one of the three key securities cases the court was to consider this term was Leidos, Inc. v. Indiana Public Retirement Systems. As discussed in greater detail here, this case, which was to be argued on November 6, 2017, was to address the recurring question of whether the failure to make disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. However, as a result of developments in the case, the case is now in “abeyance,” oral argument in the case has taken off the calendar, and the case ultimately may be removed from the court’s docket altogether. Continue Reading Item 303 Disclosure Duty Case Off Supreme Court’s Docket Due to Reported Settlement

As I have frequently noted on this blog (most recently here), a recurring D&O insurance issue is the question of coverage for costs incurredin responding to SEC investigations. This question can be complicated both by the features of the specific SEC investigation involved as well as by the specific wording of key policy provisions. These complications were definitely involved in a recent case before the Tenth Circuit, in which the appellate court concluded that policy coverage did not extend to the costs MusclePharm incurred in responding to SEC subpoenas issued pursuant to a formal order of investigation. The decision raises a number of important issues, as discussed below. The Tenth Circuit’s October 17, 2017 opinion can be found here. Continue Reading Tenth Circuit: SEC Subpoenas Issued After Formal Investigative Order Not Covered

Andrew G. Lipton
Laura Schmidt

Although a number of high-profile data breaches have led to D&O claims, so far the plaintiffs’ track record in these kinds of cases has been poor. However, as a result of a number of recent developments, there may be good reason for corporate directors and officers to be concerned about these kinds of claims going forward, as discussed in the following guest post by Andrew G. Lipton and Laura Schmidt, both associates at the White & Williams law firm. I would like to thank Andrew and Laura for submitting their article for publication as a guest post. 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 Andrew and Laura’s guest post.   Continue Reading Guest Post: Breaching the Firewall: D&O Exposure from Cybersecurity Incidents

Imperial Palace and Nijubashi Bridge

The D&O Diary is on assignment in Asia this week, with the first stop for meetings in Tokyo, Japan’s capital city. Tokyo is such an amazing place. With a population of 13.8 million in the city itself and a total of 37.8 million in the Tokyo prefecture, it is by some measures the most populous city in the world.  It is also a fascinating place. It is such a study in contrast, between the traditional and the modern, and between incredible organization and the disorder of its massive crowds. Continue Reading Tokyo

Jay Knight
Will Lay

In March 2015, the SEC released its final rules implementing the provision of the JOBS Act to try to facilitate small companies’ access to capital and to provide new investors with new investment choices, in the form of Regulation A+. In the following guest post, Jay Knight and Will Lay of the Bass, Berry & Sims law firm provide an overview of Regulation A+, as well as the specifics of the kind of offerings that the regulation authorizes. I would like to thank Jay and Will 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 a guest post. Here is Jay and Will’s guest post. Continue Reading Guest Post: FAQs about Regulation A+ Securities Offerings

Many insurance policies contain a war exclusion precluding coverage for loss caused by war. But in world where violent conflicts involve a wide variety of different groups and parties, what exactly constitutes “war”? In a recent coverage dispute presenting this issue, a federal judge concluded that the 2014 armed conflict between Israel and Hamas disrupted its film production activities involved both “war” and  “warlike action,” and therefore that coverage for the Universal Cable Production for the costs it incurred as a result of the conflict was precluded under the company’s insurance policy. The case raises a number of interesting issues that are likely to recur in our current unstable and violent world. Northern District of California Judge Percy Anderson’s October 6, 2017 decision in the Universal Cable case can be found here. Continue Reading On the Meaning of “War”

As I have detailed on this blog (most recently here), due to two Delaware court decisions — the Delaware Supreme Court’s 2015 decision in Corwin v. KKR Financial Holdings LLC  (here) and the Delaware Chancery Court’s January 2016 court decision in the In re Trulia Shareholder litigation (here)—deal litigation that in the past would have been filed in Delaware is now being filed elsewhere. But while the deal litigation in Delaware generally may be declining, in recent years there has been a significant uptick in Delaware appraisal litigation. As these cases have become more common in recent years, the question of whether or not D&O insurance covers the costs companies incur in defending appraisal actions has become increasingly common as well. Indeed, in the October 11, 2017 Advisen Quarterly D&O Claims Trends Webinar (refer here), the question of D&O insurance coverage for appraisal claim-related defense expenses was a key topic of conversation. In the following post, I review the issues involved in the question of whether or not a D&O insurance covers the costs defendants incur in defending appraisal claims. Continue Reading D&O Insurance Coverage and the Rise of Appraisal Litigation