Earlier this year, when Vice Chancellor Lori Will sustained the plaintiff’s SPAC-related Delaware State Court direct breach of fiduciary duty action against the motion to dismiss of the former directors of Gig Capital3 (Gig3), there was some speculation that the court’s ruling would lead to a “deluge” of similar lawsuits. While no onslaught of new lawsuits has yet materialized, there was (as I noted in a recent post, here) a SPAC-related Delaware state court direct breach of fiduciary duty action filed late last week against the board of Adara Acquisition Corp. Now, a shareholder plaintiff has filed an additional SPAC-related Delaware State Court direct breach of fiduciary duty action, against the board of Trident Acquisition Corp. in connection with the SPAC’s merger with AutoLotto, to form Lottery.com. As discussed below, the allegations against Trident’s board (as well as its sponsor and its financial underwriting advisor) more closely resemble those alleged in the Gig3 case, underscoring the possibility that plaintiffs’ attorneys may well seek to pursue the state court breach of fiduciary duty claim on similar theories. A copy of the April 3, 2023 complaint against the Trident board can be found here.

Continue Reading Shareholders Sue Former SPAC Execs in Delaware Direct Fiduciary Duty Breach Action

Since the initial outbreak of COVID-19 in the U.S. in March 2020, there have been scores of COVID-related securities suit filed. However, as the pandemic itself progressed, the nature of the lawsuits being filed also changed. Over time, the plaintiffs’ lawyers began targeting companies that had initially prospered at the outset of the pandemic, but whose fortunes flagged as circumstances changed. The prototypical example of a COVID-19-related securities suit involving a company that experienced this particular sequence of events is the lawsuit filed against exercise equipment company Peloton, whose equipment sold briskly at the outset of the pandemic but whose sales slackened as government shutdown orders lapsed and people began returning to work. However, in a March 30, 2023 order (here), the court granted the defendants’ motion to dismiss in the Peloton case, albeit without prejudice, in a decision that does not bode well in these kinds of change-of-fortune pandemic-related securities suits.

Continue Reading Dismissal Granted in Peloton COVID-Related Securities Suit

Though SPAC-related lawsuits were among the most important factors contributing to securities class action litigation filing volume in 2022, SPAC-related litigation has not yet been as significant of a factor so far in 2023. But while there have been relatively few SPAC related securities suits filed this year, there has been SPAC-related Delaware state court breach of fiduciary duty litigation. In the latest example of this Delaware state court litigation activity, plaintiff shareholders recently filed a Delaware Chancery Court lawsuit against the directors of a SPAC; the post-merger de-SPAC company, as successor in interest in the SPAC; and the SPAC’s sponsor, alleging that the defendants breached their fiduciary duties in connection with the merger. A copy of the plaintiff’s March 31, 2023, complaint can be found here.

Continue Reading SPAC Board and Sponsor Hit with Delaware State Court Breach of Fiduciary Duty Direct Action

As the authors put it in the title of their recent guest post on this site, crypto is the new frontier of securities litigation. The title is reference to a statement by Stanford Law Professor Joseph Grundfest, made in conjunction with Cornerstone Research’s release of its annual survey of securities class action lawsuit filings. The Cornerstone Research report showed that crypto-related securities lawsuit filings surged in 2022. In a March 27, 2023, memo from the Dechert law firm, entitled “Cryptocurrency Securities Class Action Litigation 2022 Year Review,” (here), the law firm memo’s authors take a detailed look at the 2022 crypto-related securities suit filings, including a review of the defendants and the allegations involved.

Continue Reading A Detailed Look at the 2022 Crypto-Related Securities Suit Filings

As I have noted in prior posts (most recently here), a recurring type of pandemic-related securities suit involves companies whose fortunes prospered at the outset of the pandemic but whose performance sagged as the coronavirus outbreak evolved. The latest lawsuit of this type is the securities suit filed earlier this week against the retailer Target Corp., in which the plaintiffs allege that the surge in consumer demand at the outset of the pandemic led the company to overstock inventory, causing an inventory overhang that later undercut the company’s financial performance. A copy of the March 29, 2023, complaint against Target can be found here.

Continue Reading Target Hit with Securities Suit Over Pandemic-Related Inventory Overhang

Greg Markel
Sarah Fedner

In the following guest post, Greg Markel and Sarah Fedner take a look at the characteristics of securities class action lawsuits that made securities suit mediations different from mediations in other types of litigated matters, as well as the practical implications of those differences. Markel is Securities Litigation co-Chair and Partner at Seyfarth Shaw LLP and Fedner is a Senior Managing Associate at Seyfarth Shaw LLP. A version of this article previously was published in the New York Law Journal. I would like to thank Greg and Sarah 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Greg and Sarah’s article.

Continue Reading Guest Post: Why are Securities Class Action Mediations Different from Other Mediations?

Even though the COVID-19 pandemic is now into its fourth year, plaintiffs’ lawyers continue to file pandemic-related securities class action lawsuits, increasingly in conjunction with allegations involving other macroeconomic factors, such as rising interest rates, economic inflation, supply chain disruption, and labor supply shortages. In the latest example of litigation of this type, last week plaintiffs’ lawyers filed a securities class action lawsuit against tool maker Stanley Black & Decker, alleging that the company misled investors that the pandemic-fueled surge in demand for the company’s product would continue even as conditions changed. A copy of the March 24, 2023, complaint against the company can be found here.

Continue Reading Stanley Black & Decker Hit with COVID-Related Securities Suit

For several years now, one of the perennial questions in the corporate and securities arena has been the extent to which cybersecurity-related issues will contribute to D&O claims. There has never really been the volume of securities and derivative lawsuits that some observers expected, but there has been a small scattering of occasional suits filed from time to time. Now, in what is the latest cybersecurity-related D&O suit, a plaintiff shareholder has filed securities class action lawsuit against pay-TV services provider, Dish Networks, related to a network service disruption at the company caused by a cyber-security incident. A copy of the March 23, 2023, complaint can be found here.

Continue Reading Dish Networks Hit with Cybersecurity-Related Securities Suit

In a recent short opinion, the Ninth Circuit held that the California statute precluding insurance coverage for loss caused by a willful act bars coverage for the underlying malicious prosecution claim even though the claim settled and there was no adjudication that the alleged willful act took place. For reasons set out below, I believe the court’s interpretation of the statute –-even though apparently well-grounded in established authority — goes beyond the statute’s purpose and plain language and produces a result that undermines the very purposes of the insurance policy. The Ninth Circuit’s March 15, 2023, opinion can be found here. A March 22, 2023 post on the Wiley Law Firm’s Executive Summary Blog about the decision can be found here.

Continue Reading Adjudication Not Required for California’s Statutory Willful Act Coverage Preclusion

The collapse of Silicon Valley Bank is one of those singular events, charged with implications and fraught with dangerous possibilities, but that is also still so recent that it is difficult to discern what it ultimately will mean. Earlier this week, in an excellent webinar presented by the Rock Center for Corporate Governance at the Stanford Law School and entitled “Silicon Valley Brawl: Litigation, Accounting, and Regulatory Implications of SVB’s Collapse,” Stanford Law Professors Joseph Grundfest and Colleen Honigsberg and University of California Berkeley Law Professor Robert Bartlett took a detailed look at the causes and potential consequences SVB’s failure. This presentation, a video recording of which may be found here, is excellent, and the accompanying slides, which may be found here, make for indispensable reading for anyone who wants to try to understand what happened at SVB and what it might mean from a legal, financial, and regulatory standpoint. My thanks to the Rock Center and Stanford Law School for permission to link here to the webinar recording and to the slides.