cornerstone reserach pdfOne of the most distinctive recent developments in the litigation environment has been the rise of merger objection litigation, in which nearly every merger attracted at least one lawsuit challenging the transaction. Many of these cases settled quickly based on the defendants’ agreement to make additional transaction-related disclosures and to pay the plaintiffs’ attorneys’ fees. However, in a series of rulings culminating in the January 2016 ruling in the Trulia case, the Delaware Court of Chancery has shown its disapproval of the disclosure-only settlement model. It now appears that as a result of the Chancery Court developments that fewer mergers are attracting lawsuits and fewer lawsuits overall are being filed.

 

As detailed in an August 2, 2016 report from Cornerstone Research entitled “Shareholder Litigation Involving Acquisition of Public Companies: Review of 2015 and 1H 2016 M&A Litigation” (here), the percentage of merger transactions attracting litigation began to fall to the lowest levels in years during the second half of 2015, and the litigation dropped even further in the first half of 2016, as detailed further below. Cornerstone Research’s August 2, 2016 press release about the report can be found here. Continue Reading Cornerstone Research: Since Trulia, Merger Objection Lawsuit Filings Have Plunged

ftc1One of the recurring issues that has arisen as claimants and regulators have pursued cybersecurity-related claims against companies that have experienced a data breach is the question of what type or quantum of claimed injury is sufficient to sustain a claim. This issue has recurred in consumer cybersecurity-related damages actions and it has also arisen in regulatory enforcement actions as well. These issues were presented in a very interesting July 29, 2016 Opinion from the Federal Trade Commission (here). The Commission overturned a prior ruling by one of its own Administrative Law Judges, and held, contrary to the ALJ, that the release of private and sensitive information in and of itself was sufficient – even in the absence of alleged economic or physical injury — to support a claim against LabMD that its failure to prevent the information’s release constitutes an “unfair” practice. The FTC’s July 29, 2016 press release about the agency’s ruling can be found here.  As the WSJ Law Blog noted in a July 29, 2016 post (here), the FTC’s ruling sets the stage for a “high stakes federal court battle” on the issue of what kind of alleged injury is sufficient to support cybersecurity-related unfair practices claim. Continue Reading FTC Holds Private Information Disclosure In and Of Itself Sufficient Injury to Support Unfair Practices Claim

marylandRegular readers know that one of my recurring  private company D&O insurance coverage concerns has to do with the professional services exclusion and the way many carriers seek to phrase, interpret, and apply the exclusion, particularly with respect to insured companies engaged in service businesses. My concern is that all too often the exclusion is written over-broadly and applied over-broadly in a way that threatens to entirely swallow up coverage under the policy. A July 28, 2016 coverage decision by District of Maryland Judge J. Frederick Motz expressly addresses several of my recurring concerns about the professional services exclusion, as I discuss further below. A copy of the July 28, 2016 opinion can be found here. Continue Reading D&O Insurance: More About the Professional Services Exclusion Problem

frisbeeThe collectors’ edition D&O Diary Frisbees we have sent to interested readers have proven to be both ornamental and functional, as reflected in the latest round of readers’ pictures. And the Frisbees have once again proven to be well-travelled, to say the least.  Readers will recall that in connection with The D&O Diary’s recent tenth anniversary, I offered to send out a D&O Diary Tenth Anniversary Frisbee to anyone who requested one – for free — but only if the Frisbee recipient agreed to send me back a picture of the Frisbee and a description of the circumstances in which the picture was taken. I have already published two rounds of Frisbee Photos (here and here), and now it is time for the third round. Continue Reading Third Round of Frisbee Photos

paul weiss largeOne of the important and recurring issues under the federal securities laws is the question of whether or not American Pipe tolling applies to the statute of repose in the securities laws’ liability provisions. Specifically, the question is whether or not the three-year limitations period in Section 13 of the ’33 Act may be tolled (under a legal theory known as the American Pipe tolling doctrine) by the filing of a putative securities class action, or rather that the three-year provision cannot be tolled. As discussed here, the U.S. Supreme Court recently dismissed the cert petition in  the Indy Mac case, leaving standing a Second Circuit ruling in that case that the filing of a securities class action lawsuit does not toll the ’33 Act’s statute of repose.

 

In the following guest post, the attorneys from the Paul Weiss law firm take a look at two recent Second Circuit decisions that raised these questions of tolling under the ’33 Act’s statute of repose. As discussed below, the authors conclude that the Second Circuit’s most recent decisions suggest that statutes of repose generally—and not simply statutes of repose established under the federal securities laws—are immune to tolling.

 

I would like to thank the attorneys at the Paul Weiss firm for allowing me to publish their 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 the Paul Weiss attorneys’ guest post. Continue Reading Guest Post: Second Circuit Expands the IndyMac Rule

nystate1In the latest development in the long-running battle of J.P. Morgan Chase, as successor in interest to Bear Stearns, to try to obtain insurance coverage for amounts Bear Stearns paid to resolve an SEC investigation of alleged deceptive market timing and late trading activities, a New York state court judge has held that because its D&O insurers had “effectively disclaimed coverage,” Bear Stearns was excused from its policy obligation to obtain the insurers’ consent prior to its settlement with the SEC. However, the court declined to resolve the question of whether or not the settlements were “reasonable.” The now years-long insurance coverage battle will continue to go forward on the remaining issues. A copy of July 7, 2016 of New York (New York County) Supreme Court Charles E. Ramos can be found here. Continue Reading Insurer’s Coverage Denial Relieves Policyholder’s Obligation to Obtain Consent to Settlement

cornerstone reserach pdfSecurities class action lawsuit filings in the first half of 2016 leapt to their highest level in years, according to a recent report from Cornerstone Research. According to the report, which is entitled “Securities Class Action Filings: 2016 Midyear Assessment,” both the number of lawsuit filings and the rate of litigation were well above long-term historical semiannual averages in the first six months of 2016. The increases are attributable in part to the increase in federal court M&A-related securities litigation, as discussed below. The report can be found here. Cornerstone Research’s July 26, 2016 press release about the report can be found here. Cornerstone Research’s analysis is largely consistent with my own review of the first half securities suit filings, which can be found here. Continue Reading Cornerstone Research: First Half Securities Suit Filings at Highest Level in Years

floridaIn a June 6, 2016 opinion (here), Middle District of Florida Judge Sheri Polster Chappell, applying Florida law, held that subsequent claims filed in 2011 and 2012 were interrelated with claims first made in 2008, and therefore deemed made at the time of the initial claim. Because the initial claim was filed before the relevant policy incepted, there is, Judge Chappell concluded, no coverage for the claims under the relevant policy.

 

In reaching these conclusions, Judge Chappell rejected the policyholder’s argument that the policy’s related claim provision conflicted with the policy’s prior and pending litigation provision (which had a May 2003 date), and therefore should be construed against the insurer and disregarded in light of the prior and pending litigation date. Judge Chappell’s opinion quite sensibly and correctly rejects arguments that other courts (applying different jurisdiction’s law) have accepted, as discussed below. A July 22, 2016 post on the Wiley Rein law firm’s Executive Summary Blog about Judge Chappell’s opinion can be found here. Continue Reading D&O Insurance: Prior and Pending Litigation Provisions Do Not Undercut Interrelated Claims Provision

globe blueOne of the Dodd-Frank Act’s signature features was its creation of potentially massive bounties for whistleblowers that reported financial fraud to the SEC. During the time that the Dodd-Frank whistleblower program has been in place, the agency has made a number of significant bounty awards. Mary Jo White, the SEC chairwoman, has said that the program “has rapidly become a tremendously effective force-multiplier, generating high quality tips and, in some cases, virtual blueprints laying out an entire enterprise, directing us to the heart of an alleged fraud.” The SEC’s whistleblower program has also attracted the attention of other countries’ securities regulators, with the various countries reaching a variety of conclusions about the program, particularly its bounty award feature. In the past several days, securities regulators in Ontario and in Germany have each adopted their own whistleblower programs. The different approach the regulators have taken is interesting, as discussed below. Continue Reading Securities Regulators Around the World Adopt Whistleblower Reporting Programs

cleveland
Cleveland, Ohio

As most of you undoubtedly are aware, the Republican Party held its National Convention last week in Cleveland, Ohio, The D&O Diary’s home town. In light of this special event right in our own backyard, we deputized a special events reporter to attend and report back for the benefit of this blog’s readers. Our special events reporter’s account follows below. Our reporter, Rob LaCroix, a May 2016 graduate of Middlebury College, will be attending Stanford Law School in the Fall. I should add that the Convention took place in Cleveland at a particularly good time in the life of the city. We just brought home the NBA championship a few weeks ago, and the Indians are in first place in the American League Central Division. The fact that the Convention went smoothly and without incident (at least outside of the convention hall) is a point of great pride for the city. Here is our special reporter’s account. Continue Reading A Local Perspective on the Republican National Convention