As I previously noted (here), late last week a CrowdStrike shareholder initiated a securities class action lawsuit against the company and certain of its executives based on allegations relating to the company’s alleged role in the recent global IT outage. As I think we all fully understood at the time, the company’s legal woes would hardly be contained to that single lawsuit. As might be expected, additional lawsuits have also started to arise, including an action filed against the company on Monday on behalf of all airline passengers whose air travel was disrupted by the IT outage. A copy of the new complaint against CrowdStrike can be found here.

Continue Reading CrowdStrike Hit with Class Action Suit Filed on Behalf of Airline Passengers

One of the more notable fiduciary liability trends in recent years has been the wave of employer-sponsored retirement account excess fee litigation. In the following guest post, Neil R. Morrison, Lars Golumbic, and Kara Petteway Wheatley take a look at a possible new fiduciary liability trend – health plan fee litigation. Neil is an Associate Vice President and Claims Counsel at Sompo, North America in Morristown, N.J., and Lars Golumbic and Kara Petteway Wheatley are Principals at Groom Law Group, Chartered in Washington, D.C. This article was originally published by Mealey’s Litigation Report: ERISA.  I would like to thank the authors for allowing 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.

Continue Reading Guest Post: Health Plan Fee Litigation: The Next Wave of ERISA Litigation?
Burkhard Fassbach

We live in an era of complex geopolitical risks. The current geopolitical environment presents significant challenges for companies and their boards of directors. In the following guest post, Burkhard Fassbach, a D&O lawyer in private practice in Germany, reviews the important risk management approaches and insurance solutions available for companies to try to address these complex geopolitical risks. I would like to thank Burkhard for allowing me to publish his article as a guest post on this site. 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 Burkhard’s article.

Continue Reading Guest Post: Risk Management and Insurability of Geopolitical Risks

The number of securities class action lawsuits filed in the first six months of 2024 increased relative to the number of securities suits filed in the second half of 2023, according to a new report from Cornerstone Research. The number of suits filed in the first half of 2024 is roughly level with the historical semiannual average number of filings. The July 31, 2024, report, which is entitled “Securities Class Action Filings:2024 Midyear Assessment,” can be found here. Cornerstone Research’s July 31, 2024, press release regarding the report can be found here.

Continue Reading Cornerstone Research: 1H24 Securities Suit Filings Increased Compared to 2H23

The July 19, 2024 CrowdStrike Outage, which has been called the “largest outage in the history of information technology,” disrupted airlines, hospital, hotels, banks, retail businesses, and many other critical cogs in the wheels of commerce. The disruption and adverse publicity surrounding the incident also caused CrowdStrike’s share price to decline as well – over the course of several days following the incident, its shares declined about 30%, representing a market capitalization drop of nearly $12.5 billion. In a world where “everything, everywhere is securities fraud,” this surely seemed like a situation that would produce a securities class action lawsuit. Yet, surprisingly, no securities suit was filed. That is, until now.  

Continue Reading CrowdStrike Hit with Outage-Related Securities Suit
Francis Kean

On October 26, 2023, the Economic Crime and Corporate Transparency Act 2023 (the Act) became law in the UK. The Act is part of the UK government’s effort to tackle economic crime. In the following guest post, Francis Kean, Partner in the Financial Lines Team at McGill and Partners, takes a look at the SFO’s new investigative powers under the Act and considers their implications for corporate executives. A version of this article previously was published in the Governance and Compliance Magazine. I would like to thank Francis for allowing me to publish his article as a guest post on this site. 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 Francis’s article.

Continue Reading Guest Post: The Personal Liability Implications for Directors of the SFO’s New Investigatory Powers

The rise of artificial intelligence (AI) presents just about every enterprise with both opportunities and risks. AI also represents a challenge for companies and their boards as the companies seek to incorporate AI Into operations, functions, and processes. Because of AI’s potentially disruptive impact in many industries and for individual companies, many boards may find themselves under scrutiny for the way they address the risks associated with AI. All of which raises the question of the appropriate ways for boards to address and manage the AI-associated risks, a topic discussed in a July 22, 2024, Harvard Law School Forum on Corporate Governance post by attorneys from Debevoise & Plimpton law firm entitled “AI: Are Boards Paying Attention?” (here).  

Continue Reading Artificial Intelligence and Corporate Boards
Lorena Kern
Katja Bullemer-Wülfert

The German Bundestag, or Federal Parliament, passed a reform of the Capital Markets Model Case Act (KapMuG) on June 13, 2024, and Germany’s Federal Council (Bundesrat) passed it on July 5, 2024. The reform is expected to take effect before the previous version expires on August 31, 2024. In the following guest post, Lorena Kern and Katja S. Bullemer-Wülfert of the DRRT law firm take a look at the reformed KapMuG and consider the possible implication of the reformed Act’s new provisions. A version of this article previously was published as a DRRT law firm client alert. I would like to thank Lorena and Katja for allowing me to publish their article on this site. 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 Lorena and Katja’s article.

Continue Reading Guest Post: “Class Actions” in Germany – KapMuG 2.0

As readers of this blog know, one of the vestiges of the SPAC frenzy that peaked in 2021 is a large volume of SPAC-related securities class action litigation; indeed, as I have recently noted, SPAC-related securities class action lawsuits continue to be filed. In addition to these federal court securities suits, prospective claimants with SPAC-related grievances have also filed Delaware state court breach of fiduciary duty actions, a form of litigation often referred to as “MultiPlan actions,” in reference to the MultiPlan lawsuit, which, as discussed here, was the first of these Delaware court actions to survive a motion to dismiss. Since the ruling in the MultiPlan case, plaintiffs have largely been successful in surviving dismissal motions in these kinds of cases.

However, as discussed in a June 2024 memo from the Skadden law firm (here), in May 2024, the Delaware Court of Chancery granted the motion to dismiss in the SPAC-related direct action breach of fiduciary duty suit relating to Canoo Inc., a company that was the result of a 2020 merger with a publicly traded SPAC, Hennessy Capital Acquisition Corp. IV. According to the law firm memo, the Court’s ruling was the first opinion granting a motion to dismiss in a MultiPlan claim. As discussed below, the Court’s opinion reflects a number of interesting observations about the lawsuit and claims of this type. A copy of the Court’s May 31, 2024 opinion can be found here.

Continue Reading Delaware Court Grants Dismissal Motion in SPAC Transaction Proxy Disclosure Case

For many years, Delaware’s courts emphasized that duty of oversight claims (often known as Caremark claims) are “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.” However, in a line of cases beginning with the Delaware Supreme Court’s 2019 decision in Marchand v. Barnhill, Delaware courts have sustained various plaintiffs’ assertion of breaches of the duty of oversight. This in turn encouraged more claimants to file duty of oversight claims, a development that clearly has alarmed the Delaware courts. The more recent result has been a series of cases in which the Delaware Chancery Court has emphatically shot down would-be duty of oversight claims.

The latest of these decisions is a ruling in a case involving the directors of Centene Corporation, in which Vice Chancellor Morgan Zurn granted the defendants’ motion to dismiss the plaintiff’s breach of the duty of oversight claims against the Centene board, in an opinion that emphasizes the high bar for Caremark liability. A copy of the July 12, 2024, opinion in Bricklayers Pension Fund of Western Pennsylvania v. Brinkley can be found here. A July 15, 2024, Memo from the Fried Frank law firm about the court’s ruling can be found here.  

Continue Reading Del. Chancery Court Rejects Oversight Breach Claims Against Centene’s Board