Insurers frequently contend that their amounts paid as disgorgement are uninsurable as a matter of law. Whether or not this principle is true as a general matter still begs the question of whether or not the amounts for which coverage is sought represent “disgorgement.” In an interesting October 20, 2016 opinion (here), Delaware Superior Court Judge Jan R. Jurden, applying New York law to the issue, held that amounts TIAA-CREF paid in settlement of three underlying class action lawsuits did not represent uninsurable disgorgement. Judge Jurden expressly distinguished a series of decisions in which New York courts had ruled that settlement amounts paid in settlement of regulatory enforcement actions represented uninsurable disgorgement. Continue Reading Del. Court Holds Settlement Amounts Not Uninsurable Disgorgement
Ninth Circuit Holds Applicability of Insured vs. Insured Exclusion to FDIC-R Claims to be Ambiguous
During the course of the wave of failed bank litigation following in the wake of the global financial crisis has been a raft of related coverage litigation addressing the question of whether coverage for claims by the FDIC as receiver of the failed bank against the bank’s former directors and officers is precluded by the D&O insurance policy’s Insured vs. Insured exclusion. A number of courts have found the exclusion to be ambiguous and therefore that the exclusion does not preclude coverage for the FDIC-R’s claims (for example, refer here), while other courts have found the specific exclusions at issue to unambiguously preclude coverage (refer for example here). In the most recent court decision to address these issues, the Ninth Circuit, in a short unpublished October 19, 2016 per curiam opinion (here) affirmed the holding of the district court finding the Insured vs. Insured exclusion applicability to claims brought by the FDIC as receiver is ambiguous, and therefore the exclusion cannot be applied to preclude coverage for the FDIC’s claims against the former directors and officers of the failed Pacific Coast National Bank. Continue Reading Ninth Circuit Holds Applicability of Insured vs. Insured Exclusion to FDIC-R Claims to be Ambiguous
Guest Post: Dutch Collective Actions vs. Collective Settlements
As collective investor actions have become an increasingly global phenomenon, a recurring question has been whether another jurisdiction will emerge as the preferred forum for aggrieved investors to pursue their claims. Among the countries often mentioned in this context it the Netherlands, owing to the country’s collective settlement procedures. In a recent post, I noted a September 2016 decision from the Amsterdam District Court and suggested that the court’s jurisdictional ruling could diminish the usefulness and appeal of the Dutch collective settlement procedures. In the following guest post, Jonathan Richman of the Proskauer Rose law firm clarifies that the Dutch court’s ruling pertained to the country’s collective action procedures, not the separate collective settlement procedures, and that, contrary to my blog post’s suggestion, the court’s jurisdictional ruling arguably does not diminish the collective settlement procedures’ utility. I would like to thank Jonathan for his willingness 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 submit a guest post. Here is Jonathan’s guest post. Continue Reading Guest Post: Dutch Collective Actions vs. Collective Settlements
Guest Post: Jury Applies Georgia’s Business Judgment Rule
As readers will recall, last week I published a post about the split verdict a Northern District of Georgia jury entered in the civil lawsuit the FDIC had filed against certain former directors of the failed Buckhead Community Bank. The verdict arose in one of the rare failed bank cases to actually go all the way to trial. In the following guest post, Robert Long Tod Sawicki, Elizabeth Gingold Clark and Lauren Tapson Macon of the Alston & Bird law firm discuss the Buckhead Community Bank lawsuit trial and verdict. Alston & Bird represents the defendants in the case. I would like to thank Robert and his colleagues for their willingness to allow me to publish their article as a guest post. 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 the Alston & Bird attorneys’ guest post. Continue Reading Guest Post: Jury Applies Georgia’s Business Judgment Rule
Further Frisbee Photos
According to the calendar, we have somehow reached November, and that can only mean one thing: time for another round of readers’ Frisbee photos. Continue Reading Further Frisbee Photos
Poultry Producers Hit with Antitrust Suits, Follow-on Securities Litigation
One of the characteristic securities litigation patterns for many years has been that lawsuit filings tend to come in distinctive waves, in which specific sectors get hit with a series of securities suits or companies engaging in certain types of conduct or business practices attract securities litigation. The lawsuits arising out of the dot-com crash and the options backdating scandal are examples of these kinds of litigation patterns. Over the last several weeks, a different industry sector pattern has emerged. The poultry production industry, which recently has been the target of private antitrust litigation, has now been hit with a string of follow-on securities class action lawsuits as well. These lawsuits represent one of the more distinctive securities litigation filing patterns this year. Continue Reading Poultry Producers Hit with Antitrust Suits, Follow-on Securities Litigation
Investors File U.K. Financial Misrepresentation Claim Against Tesco
A group of 124 institutional investors have joined a claim filed in London’s high court on October 31, 2016 against Tesco seeking damages for the company’s alleged financial misrepresentations. The claim, which seeks over £100 million in alleged damages, was filed on the investors’ behalf by the Stewarts law firm, and is supported by Bentham Europe Limited, an affiliate of Australian group IMF Bentham, a funding litigation firm whose shares are publicly traded on the ASX. Continue Reading Investors File U.K. Financial Misrepresentation Claim Against Tesco
N.Y. Top Court Rules Litigation Finance Transaction Violates Champerty Doctrine
One of the important factors behind the recent rise of third-party litigation financing has been the view in many jurisdictions that litigation finance does not violate ancient prohibitions against “champerty” – that is, the investment by an uninvolved third-party in a lawsuit with the intent of sharing in any recovery. As I discussed in a recent post, the general view is that litigation funding arrangements are not champertous as long as the plaintiff continues to control the litigation.
However, in a recent decision, the New York Court of Appeals (the state’s highest court) held that a financial transaction in which the plaintiff had purchased securities for the purpose of filing suit violated New York’s champerty statute. The Court also ruled that the transaction did not come within the statutory safe harbor for larger financial transactions. The appellate court’s ruling on the champerty issue is interesting, but its discussion of the safe harbor provisions – which likely would protect most conventional litigation finance arrangements – may be the more significant part of the court’s decision. Continue Reading N.Y. Top Court Rules Litigation Finance Transaction Violates Champerty Doctrine
Failed Bank Litigation: Jury Returns $5 Million Verdict Against Failed Bank’s Former Directors
On October 25, 2016, in one of the few failed bank lawsuits remaining from the bank failure litigation wave that followed the global financial crisis, and one of the very few failed bank lawsuits to go all the way to trial, a civil jury returned a verdict of $4.98 million in the Northern District of Georgia against several former directors and officers of the failed Buckhead Community Bank of Buckhead, Georgia. While the jury returned a verdict in favor of the FDIC as receiver of the failed bank on four of the loans at issue in the case, the jury found the defendants not liable for six other loans for which the FDIC sought recovery. Continue Reading Failed Bank Litigation: Jury Returns $5 Million Verdict Against Failed Bank’s Former Directors
Thinking About the Duty to Cooperate
Most liability insurance policies have provisions stating that the insured has a duty to cooperate with the insurer in the investigation and defense of a claim. In most claims situation, this requirement is not an issue. From time to time, however, questions arise whether or not the insured has fulfilled its duty to cooperate. Questions also arise whether or not the insurer’s conduct (or lack thereof) excuses the insured from the duty to cooperate. Two recent decisions from the Eleventh Circuit, one applying Florida law and one applying Georgia law, involved cases in which the insurer contended that it was relieved of its obligations under the relevant policy because the insured had breached its duty to cooperate. In both cases, the appellate court held that the insureds had breached their duties. The cases provide something of a roadmap for insureds to follow in avoiding challenges based on alleged breaches of the duty to cooperate. Continue Reading Thinking About the Duty to Cooperate