After Justice Antonin Scalia’s recent death, one aspect of the deceased Justice’s long record on the Supreme Court that occasioned significant commentary was the extent to which he often dissented from the Court’s majority, sometimes employing sharp and even provocative language. While Scalia was a more frequent dissenter than many of his fellow justices, at least during the time he served on the Court, there was nothing particularly unusual about the fact that he was dissenting (or, for that matter, that he dissented so frequently). Dissenting opinions have been a part of the Court’s activities for many decades now; however, it was not always so. In the country’s earliest days, dissents were rare, becoming frequent only late in the 19th century, and becoming common only early in the 20th century. As well-documented in Melvin I. Urofky’s interesting and well-written book, Dissent and the Supreme Court (here), dissenting opinions at the U.S. Supreme Court have come to play an important role in our constitutional dialogue. Indeed, as Urshofsky argues, the leading dissents have played an important role in how the country thinks of itself. Continue Reading Book Review: “Dissent and the Supreme Court”
Guest Post: D&O What to Know: A Guide to the Evolution of Directors and Officers Insurance from 1933 to the Present
After attending the PLUS D&O Symposium some years ago, several colleagues at Partner Re thought it might be worthwhile to provide D&O insurance professionals with historical overview of the evolution of Directors and Officers insurance (D&O) in the US marketplace. As a result, Brian Sabia, SVP Senior Underwriter Specialty lines; Catherine Rudow, SVP Senior Underwriter Specialty Lines; and Nicholas DeMartini, AVP Senior Underwriter Specialty Lines, all of Partner Reinsurance Company, drafted the following article, which starts with the Securities Act of 1933 and progresses through the relevant Acts, key court rulings, and the ups and downs that have driven the D&O insurance market and the evolving features of the D&O insurance policy. Their complete paper can be found here.
I would like to thank Brian, Catherine and Nicholas for their willingness to publish their 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 the authors’ guest post.
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This paper provides an historical overview of the evolution of Directors and Officers insurance (D&O) in the U.S. market since 1933, taking you through the relevant acts, key court rulings, ups and downs of the market, as well as the evolving coverage features of D&O insurance. This paper is intended for the insurance professional as an additional introduction to this increasingly relevant and ever evolving management liability product. Continue Reading Guest Post: D&O What to Know: A Guide to the Evolution of Directors and Officers Insurance from 1933 to the Present
Answering Bank Directors’ D&O Insurance Questions
Bank directors often have many questions about their D&O insurance coverage, and rightly so. If significant reversals at the bank result in liability claims against the company’s senior officials, the bank’s D&O insurance could be the directors’ last line of defense. In this post, I address two issues that bank directors often ask about: first, does the bank’s D&O insurance cover civil money penalties? And, second, as the credit crisis retreats further into the past, when is the D&O insurance marketplace for banks going to “return to normal”? Continue Reading Answering Bank Directors’ D&O Insurance Questions
Omissions Regarding Bribery Investigation Held Actionable
Regular readers of this blog know that the filing of a shareholder lawsuit following the disclosure of a bribery investigation is a well-established phenomenon (as discussed, for example, here). Readers will also recall that in March 2015 when the U.S. Supreme Court issued its Omnicare decision (about which refer here), there was significant discussion whether the Court’s ruling that omitted facts could make a statement of opinion misleading and support liability under the securities laws could prove helpful to plaintiffs and even lead to more securities lawsuits premised on alleged omissions.
The trend lines for both of these issues came together in a recent dismissal motion ruling in the Southern District of New York in the securities class action lawsuit involving Och-Ziff Capital Management Group. In a February 17, 2016 opinion (here), Southern District of New York Judge J. Paul Oetken ruled that the defendants’ alleged failure to disclosure alleged but uncharged violations of the FCPA and sanctions laws was not actionable. However, he also held that the defendants’ failure to disclose the existence of the DoJ and SEC investigations was actionable, in light of the statements the company did make about its exposure to regulatory investigations. As discussed below, the Court’s conclusion that these alleged omissions were actionable was made with express reference to and reliance on the Supreme Court’s Omnicare decision. Continue Reading Omissions Regarding Bribery Investigation Held Actionable
Dutch Shareholder Foundation Seeks to Represent Global Class of VW Investors
Several years ago, when investors’ representatives used class claims settlement procedures available under Netherlands law to reach securities claim settlements involving Royal Dutch Shell (about which refer here) and Converium (about which refer here), there was a great deal of speculation whether the Dutch procedures could become an important vehicle for aggrieved investors to recover damages for alleged securities law violations.
This speculation was particularly magnified after the Amsterdam Court of Appeal, in connection with the Converium settlement, held that the Dutch settlement procedures could be used to resolve securities claims of non-Dutch investors against a non-Dutch company, in the form of judgment that is enforceable throughout the EU and among other European countries. Though many of these kinds of investor settlements were anticipated, the onslaught of securities settlements using the Dutch procedures never really did materialize.
However, a new initiative being organized in The Netherlands on behalf of Volkswagen securities holders whose investment interests were harmed as a result of the automobile company’s emissions-related scandal may represent the most significant effort since the Converium case to try to use the Netherlands procedures on behalf of an aggrieved class of investors. This initiative on behalf of Volkswagen’s securityholders has a number of interesting features. It also raises a number of potentially complicated questions about jurisdiction, priority, potential preemption, and international comity. Continue Reading Dutch Shareholder Foundation Seeks to Represent Global Class of VW Investors
D.C. Appellate Court Reverses Ruling that Professional Services Exclusion Bars Coverage for Failed Investment Firm’s Claims
The problems that can arise from the wording of the professional services exclusion in a service company’s D&O insurance policy are perennial issues and a recurring topic on this blog (see for example here). When the exclusion in a service company’s management liability policy is interpreted broadly the exclusion can sweep so extensively that it can preclude coverage for the very types of claims the management liability policy was intended to insure. A recent decision from the District of Columbia’s highest court highlights these concerns.
In a February 11, 2016 District of Columbia Court of Appeals decision (here), the appellate court, applying District of Columbia law, reversed a lower court ruling that the professional services exclusion in the management liability insurance policy of defunct Carlyle Management LLC precluded coverage for the various claims that had been asserted against Carlyle, related entities, and its senior officials. The Court of Appeals did not affirmatively conclude that the underlying claims were covered; rather, it held only that the broadly worded professional liability exclusion was ambiguous, and that the question of coverage is properly a question for a factfinder. While the appellate court did not affirmatively find coverage, the court’s opinion underscores the concerns with interpreting and applying the professional liability exclusion in a service firm’s management liability insurance policy too broadly. Continue Reading D.C. Appellate Court Reverses Ruling that Professional Services Exclusion Bars Coverage for Failed Investment Firm’s Claims
Justice Scalia’s Business Law Legacy
U.S. Supreme Court Justice Antonin Scalia’s death on Saturday has already triggered concerns about the possible outcome of the numerous important cases now pending before the Court, and has further agitated an already tumultuous Presidential election campaign. The furious debate that is already well underway about the nomination of Justice Scalia’s successor could be one of the key issues in the current campaign, and perhaps beyond. While these controversies are likely to continue and to dominate the headlines for some time to come, a different process will also be taking place, and also will likely continue for some time – that is, the debate over Justice Scalia’s legacy. Continue Reading Justice Scalia’s Business Law Legacy
N.J. Sup. Ct.: Notice Prejudice Rule Does Not Apply to “Sophisticated” Insured’s Claims Made Policy
As anyone involved in D&O insurance knows, policyholders’ late provision of notice of claim is a recurring problem. All too often, delays in providing notice result in a preclusion of coverage, an outcome that I find in many cases to be troubling. Because of concerns about policyholders’ loss of coverage, some courts have held that an insurer must show that the late provision of notice prejudiced its interests in order to disclaim coverage. However, a number of other courts have also held that the “notice prejudice rule” does not apply to claims made policies.
Along these lines, on February 11, 2016, the New Jersey Supreme Court held that, at least where a “sophisticated” insured is involved, an insurer that contends that it was not provided with timely notice of claim under a claims made insurance policy does not have to show that it was prejudiced by the delayed provision of notice in order to disclaim coverage. The New Jersey Supreme Court’s opinion can be found here.
As I commented at the time when the intermediate appellate court reached the same conclusion in this case, I have some issues with this case and the way it all played out. Continue Reading N.J. Sup. Ct.: Notice Prejudice Rule Does Not Apply to “Sophisticated” Insured’s Claims Made Policy
NERA: Canadian Securities Class Action Filings in 2015 at Lowest Level in Years
In the United States, securities class action lawsuit filings were at their highest level in years in 2015. The situation in Canada during 2015 was completely the opposite. According to a February 11, 2016 report from NERA Economic Consulting, securities class action lawsuit filings in Canada during 2015 were at their lowest levels since 2003. According to the report, which is entitled “Trends in Canadian Securities Class Actions: 2015,” and subtitled “Are We in Bear Territory?” (here), there were only four securities class action lawsuits filed in Canada in 2015, well below the levels seen in recent years and well below historical averages. Indeed, according to the report, case resolutions far outpaced new filings in 2015. NERA’s February 11, 2016 press release about the report can be found here. Continue Reading NERA: Canadian Securities Class Action Filings in 2015 at Lowest Level in Years
Can Workforce Changes Made in Response to Obamacare Mandates Lead to Employer Liability Claims? Yes, They Can
The Affordable Care Act – better known as Obamacare – contains numerous provisions that define the relationships between employers and their employees with respect to health care benefits. Among the most critical are the statute’s employer mandates requiring employers with more than 50 employees to offer health insurance coverage to its employees who work 30 hours or more a week or face statutory penalties. As I have previously noted in discussing possible Obamacare-related employer liability issues, the ACA’s mandate creates incentives for employers to try to restructure their workforce to avoid the statute’s requirements. However, as I have also noted, employer actions to restructure their workforces to avoid providing health plan benefits could lead to liability claims under ERISA.
A recent decision from the Southern District of New York shows how an employer’s actions to reduce full-time staff to part-time status — allegedly undertaken in an effort to avoid the health care law’s impact — can lead to ERISA class action claims. The decision also underscores how the affected employees may be able to assert viable ERISA claims. Continue Reading Can Workforce Changes Made in Response to Obamacare Mandates Lead to Employer Liability Claims? Yes, They Can