Yet another Delaware court has issued a noteworthy management liability insurance coverage opinion. In a detailed September 12, 2022 opinion in a dispute between Godiva Chocolatier and its management liability insurers over coverage for underlying consumer protection claims against the company, Delaware Superior Court Judge Mary M. Johnston rejected many – but not all — of the insurers’ coverage defenses. A copy of Judge Johnston’s opinion can be found here. Continue Reading Del. Court Narrows Godiva’s Insurers’ Defenses in Dispute Over Coverage for Consumer Protection Claims

A claim alleging a board’s breach of duty of oversight has long been regarded as one of the most difficult for a plaintiff to sustain. But after the Delaware Supreme Court’s 2019 opinion in Marchand v. Barnhill, breach of the duty of oversight claims (or Caremark claims, as they are sometimes called) have in recent years, as Vice Chancellor Sam Glasscock put in in his recent opinion in the SolarWinds case, “bloomed like dandelions after a warm spring rain.” Some commentators questioned whether oversight breach claims were in fact as difficult to sustain as is so often said. However, in his recent opinion, the Vice Chancellor emphasized the oversight breach claims remain “one of the most difficult claims” to sustain and granted the defendants’ motion to dismiss the cybersecurity-related oversight breach claims asserted against the board of Solar Winds.  A copy of Vice Chancellor Glasscock’s September 6, 2022 opinion in the SolarWinds case can be found here. Continue Reading Del. Court Dismisses Cybersecurity-Related Oversight Claim Against SolarWinds Board

In my recently published survey of the top topics in the world of directors’ and officers’ liability and insurance, and in connection with my discussion of ESG issues, I briefly mentioned the lawsuit that was filed last week against directors and officers of Starbucks in connection with the company’s “Diversity, Equity, and Inclusion” (DEI) policies. Because there are a number of notable aspects of this lawsuit, it is worth taking a closer look at the suit. As discussed below, the lawsuit represents yet another instance of anti-ESG backlash and illustrates how companies taking the initiative on ESG issues could incur scrutiny and litigation risk. A copy of the recent complaint can be found here and a copy of the plaintiff’s August 31, 2022 press release can be found here. Continue Reading Starbucks Execs Hit With Suit Alleging the Company’s DEI Policies Violate Civil Rights Laws

Every year after Labor Day, I take a step back to survey the most important current trends and developments in the world of Directors’ and Officers’ liability and insurance. This year’s review is set out below. As the following discussion shows, this is a particularly eventful time in the world of D&O. Continue Reading What to Watch Now in the World of D&O

In the latest SPAC-related federal court securities class action lawsuit to be filed, a plaintiff shareholder has filed a securities suit against a building management technology company – which merged with a SPAC in 2021 — that recently restated its financial statements for the reporting periods after the company became publicly traded. The complaint in the new lawsuit filed against Latch, Inc. can be found here. As also noted below, in a separate development, a different plaintiff shareholder has filed a separate SPAC-related Delaware Chancery Court action against former directors and officers of a SPAC and the SPAC’s sponsor. Continue Reading SPAC-Related Securities Suit Filed Against Building Technology Company

When a management liability insurance policyholder seeks to increase the limits of liability of their insurance program, the insurers will typically require a statement warranting that the policyholder is not aware of any facts or circumstances that could give rise to a claim. This warranty statement typically specifies that if there is a subsequent claim based on facts or circumstances of which the applicant has knowledge, the subsequent claim is precluded from coverage. This warranty exclusion is often referred to as the prior knowledge exclusion. In an interesting August 15, 2022 opinion in an insurance coverage dispute, Delaware Superior Court Judge Eric Davis held that as a result of the insured’s failure to disclose a pending SEC inquiry in a warranty letter, the prior knowledge exclusion in the letter precluded coverage for the underlying matters. Continue Reading Del. Court Holds Warranty Letter Non-Disclosure of SEC Inquiry Precludes Coverage for Subsequent Claims

Readers of this blog are well aware that “ESG” (whatever that term may mean) is one of the hot topics in the financial and business sectors. Companies face scrutiny and pressure to show that they are making progress on ESG goals. The SEC has established an ESG task force and proposed climate change disclosure rules. Now, as if all of that were not enough, political reaction is giving rise to an ESG backlash. As detailed in two recent memos from the Morgan Lewis law firm (here and here), as many as 17 states have now adopted “anti-ESG” state legislation that would limit the ability of state governments, including public retirement plans, to do business with entities “boycotting” industries based on ESG criteria or considering ESG factors in their investment processes. Continue Reading And Now, The ESG Backlash

Just as the COVID-19 virus continues to represent a threat to human populations, companies continue to explore possible alternatives for the treatment of the disease and its symptoms. As in any initiative built around developing and testing unproven products or processes, a number of these efforts to develop coronavirus treatments and therapies are unsuccessful. In some instances, litigation ensues after these unsuccessful efforts. A lawsuit filed last week against a biopharmaceutical company exemplifies the way this sequence of events can lead to litigation, in turn sustaining the ongoing phenomenon of coronavirus-related securities litigation filings that began at the time of the initial COVID-19 outbreak in the U.S. in March 2020. Continue Reading Biopharma Company Latest to Get Hit With COVID-19-Related Securities Suit

Among the topics of principal focus on this site are U.S. securities class action lawsuits, although from time to time I do write about collective investor actions outside the U.S (here, for example). The fact is that in recent years there have been a number of important and interesting developments in collective investor actions outside of the U.S. In a recent paper, “Five Current Class Actions Outside of North American Investors Should Be Aware Of,” Jeff Lubitz, Managing Director, ISS Securities Class Action Services, takes a look at some key cases outside of the U.S. to watch in coming months. A copy of the paper can be found here. Continue Reading Key Collective Investor Actions Outside the U.S. to Watch

In the latest development in the long-running FirstEnergy bribery-related derivative lawsuit settlement saga, a federal judge has granted final approval to the proposed settlement in the consolidated action pending in the Southern District of Ohio, albeit while reducing the amount of the plaintiffs’ fee award. The parties will now, with the benefit of the final settlement approval, turn to the Northern District of Ohio, where an unconsolidated parallel action remains pending, and where the presiding judge has recently appointed new counsel to prosecute the separate action. In a rational and orderly world, the separate proceeding in the Northern District of Ohio would be dismissed. However, under the actual conditions, anything could happen. Continue Reading FirstEnergy Bribery-Related Derivative Suit Settlement Receives Final Approval; What Happens Next?