In a June 27, 2017 order (here), the United States Supreme Court granted the petition of Cyan, Inc. for a writ of certiorari to consider the question of whether or not state courts retain concurrent jurisdiction for liability lawsuits under the ’33 Act, or whether as a result of changes to the relevant statutes under the Securities Litigation Uniform Standards Act of 1998 (SLUSA), state courts lack subject matter jurisdiction over ’33 Act suits. This case will address what has become a significant issue in IPO-related securities class action litigation, particularly in California, which is whether or not the plaintiffs’ state court securities class lawsuits can be removed to federal court or must be remanded back to state court. Continue Reading Supreme Court Agrees to Hear Whether State Courts Retain Jurisdiction for IPO Securities Suits
Supreme Court: Securities Act’s Three-Year Time Limit is a Statute of Repose that Cannot be Tolled
On June 26, 2017, in a 5-4 decision, the U.S. Supreme Court, in an opinion written for the majority by Justice Anthony Kennedy, ruled that the Securities Act of 1933’s three-year time limit for filing liability lawsuits is a statute of repose and therefore is not subject to equitable tolling. The Court also said that the principles described in its 1974 American Pipe decision providing for equitable tolling of statute of limitations are inapplicable to the 3-year statute of repose. The Court’s ruling could have important practical implications, particularly with respect to the question whether or not class members will need to file protective individual actions to preserve a later option to opt-out of any class settlement. The court’s opinion in California Public Employees’ Retirement System v. ANZ Securities Inc. can be found here. Continue Reading Supreme Court: Securities Act’s Three-Year Time Limit is a Statute of Repose that Cannot be Tolled
First-of-its-Kind Verdict That Inaccessible Website Violates the ADA
As I have previously noted (more recently here), in recent months a small number of plaintiffs’ law firms have launched a host of lawsuits under the Americans with Disabilities Act (ADA) based on allegations of website inaccessibility. In light of a recent development, these lawsuits may become an even bigger concern. On June 13, 2017, a federal judge in the Southern District of Florida, following a bench trial, entered a verdict that the website of Winn-Dixie Stores was inaccessible to a visually impaired individual in violation of Title III of the Americans with Disabilities Act. The trial was the first in the history of the ADA about an allegedly inaccessible website and the verdict arguably has significant implications for other businesses that have been hit with suits alleging that their websites are in accessible. The verdict and order in the Winn-Dixie case can be found here. Continue Reading First-of-its-Kind Verdict That Inaccessible Website Violates the ADA
Second Circuit Rejects First Circuit Test Requiring IPO Company Interim Financial Information Disclosure
We have seen the scenario before – shortly after its debut, an IPO company releases unexpected results, the company’s share price declines, and the lawsuits appear. Usually when this happens, the updated results pertain to reporting periods following the IPO. But what about a situation where the disappointing results pertain to a reporting period that was completed prior to the IPO – in fact, the day before the IPO? That was the situation involving Vivint Solar, where the company released results for the reporting period ending September 30, 2014 – that is, just a day before the company’s October 1, 2014 IPO –several weeks after the company’s debut. Continue Reading Second Circuit Rejects First Circuit Test Requiring IPO Company Interim Financial Information Disclosure
Insured vs. Insured Exclusion Precludes Coverage for Claim Assigned by Debtor in Possession to Liquidation Trustee
The Insured vs. Insured exclusion is a standard provision found in most D&O insurance policies. As its name implies, the exclusion precludes coverage for claims brought by one insured against another insured. The exclusion is a frequent source of coverage disputes, particularly in the bankruptcy context, due to frequent disagreements over the exclusion’s application to claims brought against company management by representatives of the creditors or of the bankrupt estate. One recurring dispute of this type is the question of the exclusion’s applicability to claims brought against company management by the company as debtor-in-possession. A recent appellate question considered a variation of this question – that is, whether the exclusion precluded coverage for claims brought against company management by the trustee of a liquidation trust as an assignee of the company as debtor in possession. In a June 20, 2017 opinion (here), the Sixth Circuit (applying Michigan law) held that the exclusion precluded coverage for the liquidation trustee’s claim. The appellate ruling raises some interesting issues, discussed below. Continue Reading Insured vs. Insured Exclusion Precludes Coverage for Claim Assigned by Debtor in Possession to Liquidation Trustee
Though the Failed Bank Crisis is Over, Bank Failures Are Still Happening
The FDIC updated its website late last week to reflect developments in the professional liability lawsuits the agency filed in the wake of the wave of bank failures that followed the global financial crisis. The unmistakable impression from the agency’s update is that the FDIC’s failed bank litigation is winding down and in its final stages. At the same time, however, a different page on the agency’s website arguably conveys a different message. The agency’s website’s failed bank list shows that though the financial crisis is well in the past, there have been a noticeable number of bank failures this year, many of them involving sizeable banks — a development that is worth considering and keeping an eye on. Continue Reading Though the Failed Bank Crisis is Over, Bank Failures Are Still Happening
FCPA Follow-On Civil Actions: Frequently Filed, Less Frequently Successful
There is no private right of action under the Foreign Corrupt Practices Act. However, a company’s announcement of an FCPA investigation or enforcement action frequently will draw a follow-on civil lawsuit in the form of a shareholders’ derivative lawsuit, in which a shareholder plaintiff alleges that the company’s board failed to prevent the company from committing these violations. But while these kinds of lawsuits arise frequently, they are less frequently successful, as illustrated most recently in a Delaware Chancery Court shareholders’ derivative lawsuit involving the telecommunications equipment company Qualcomm. Continue Reading FCPA Follow-On Civil Actions: Frequently Filed, Less Frequently Successful
Though Fraudulent Transfers Took Place During the Policy Period, Past Acts Exclusion Still Precludes Coverage
A prior acts exclusion in a bank holding company’s D&O insurance policy precludes coverage for claims based on allegedly fraudulent transfers made to a banking subsidiary during the policy period, because the transfers arose out of wrongful acts that occurred prior to the policy’s past acts date, according to a recent decision by the Eleventh Circuit, applying Florida law. The appellate court reasoned that, though the transfers occurred during the policy period, what made the transfers fraudulent was the company’s insolvency, which arose from officer misconduct that took place prior to the policy’s past acts date. The case provides an interesting example to consider past acts coverage in claims made policies. Continue Reading Though Fraudulent Transfers Took Place During the Policy Period, Past Acts Exclusion Still Precludes Coverage
Record Number of Settlements Added to Top 100 Securities Suits Settlement List in 2016
Thirteen of the 100 all-time largest securities class action lawsuit settlements were finalized in 2016, the highest number of settlements during any one year period, according to a recent report from Institutional Shareholder Services (ISS). Two of the 2016 settlements among the top 100 were among the eleven largest of all times. The report, which also ranks the plaintiffs’ law firms by the number of top 100 settlements in which they were involve, entitled “The Top 100 U.S. Settlements of All Time,” can be found here. Continue Reading Record Number of Settlements Added to Top 100 Securities Suits Settlement List in 2016
Financial Restatements Continue to Decline for U.S. Reporting Companies
Financial restatements among U.S public companies hit their lowest level in years in 2016, according to the updated annual report of Audit Analytics. As a result of heightened standards as well as the decreased numbers of listed companies, the share U.S. companies restating their prior financial statements hit their lowest level since 2010 and the number of companies restating their financials is at its lowest level since at least 2002. The findings are summarized in a June 12, 2017 Audit Analytics blog post (here). The full report can be found here (subscription or purchase required). Continue Reading Financial Restatements Continue to Decline for U.S. Reporting Companies