In most instances, corporate officers cannot be held personally liable for the misconduct of the company they serve. However, there are occasions when corporate officers can be held personally liable in their individual capacities for corporate acts or omissions. A recent decision by a California intermediate appellate court held that an individual who served as a company’s CEO and CFO can be held liable for the claimants’ unpaid wages. As discussed below, the ruling represents an interesting example of the circumstances in which individuals can be held liable for company misconduct. A copy of the California Court of Appeal’s June 28, 2022 decision can be found here. A July 21, 2022 post on The CorporateCounsel.net blog about the decision can be found here. Continue Reading California Appellate Court Holds Corporate Officer Personally Liable for Unpaid Wages

In the following guest post, the authors revisit the question of whether or not securities class action lawsuits against development-stage biotech companies are likelier to survive a motion to dismiss compared to securities suits against other kinds of companies. As the authors report below, they conclude from their research that the suits against biotech companies are not likelier to survive dismissal motions. The authors of this guest post are: Doug Greene, BakerHostetler, Leader, Securities and Governance Litigation Team; Genevieve York-Erwin, BakerHostetler, Partner; Mike Tomasulo, Baldwin Risk Partners, Managing Partner, Management Liability National Practice Leader: Emily Baxter,  BakerHostetler, Associate; and Alex Karambelas, BakerHostetler, Associate. A version of this article previously was published on the PLUS Blog. 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: Analysis of Biotech Securities Class Action Motion to Dismiss Results, 2005 – 2022

Regular readers of this blog know my view that the  rise of collective investor actions outside the United States is one of the most important developments in the world of directors’ and officers’ liability in recent years. The increase in collective investor actions has been particularly noteworthy in Europe. In the following guest post, ISS Securities Class Action Services and the FOX Williams law jointly report on the current state of play in European Class Actions.  The ISS SCAS authors are Jeffrey Lubitz, Managing Director, and Elisa Mendoza, Esq., Associate Director. The Fox Williams authors are Andrew Hill, Partner; Anisha Patel, Senior Associate; and Sam Tarrant and Olwen Mair, Associates. A .pdf version of the report is available here. As the authors note, investors increasingly are finding innovative ways to bring such claims and the courts and legislatures across Europe appear willing to find solutions to ease the burden and costs traditionally associated with these actions, making them more accessible to investors. I would like to thank the authors for allowing me to publish their report 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 the authors’ article. Continue Reading Guest Post: An Investor Roadmap: The Jurisdictional Differences and Impact of ESG in European Shareholder Class Actions

As I have noted in recent posts (most recently here), a few of the many SPAC-related securities lawsuits that have been filed in the last 18 months are so are reaching the dismissal motion stage, and in at least some cases the dismissal motions are being denied, at least in part. In the latest example, the federal judge presiding over the SPAC-related securities class action lawsuit involving commercial space travel firm Momentus and Stable Road Acquisition Corp, its SPAC partner, as well as the SPAC sponsor and certain SPAC executives, has largely denied the defendants’ motion to dismiss. As discussed below, the securities suit may be unusual in that it was only filed after the SEC launched a securities enforcement action against the same entities and individuals and involving the same allegations; however, the court’s rulings nevertheless may have some implications for the many other pending SPAC-related suits. Continue Reading Securities Suit Against SPAC and SPAC Merger Target Largely Survives Dismissal Motion

In what is the largest case dispositions of its type that I have ever seen, a court in Tokyo has ordered four executives of Tokyo Electric Power Holdings (Tepco) to pay the company 13.321 trillion yen – the equivalent of $97 billion — based on the court’s finding that the individuals had negligently failed to take steps that would have prevented the disaster at the Fukushima Daiichi nuclear plant after the March 2011 earthquake and tsunami. This verdict, which is described in a July 13, 2022 Wall Street Journal article (here), is noteworthy on many levels, as discussed below. Continue Reading Massive $97 Billion Verdict Awarded Against Fukushima Utility Executives

It is so interesting to me that, notwithstanding the passage of time since the initial coronavirus outbreak in the U.S. in March 2020, plaintiff shareholders continue to file COVID-19-related securities class action lawsuits — as we saw, for example, in the infrastructure overcapacity lawsuit filed last week against Amazon. In yet another case showing how COVID-related concerns are continuing to roil companies and attract securities suits, earlier this week a plaintiff shareholder filed a securities class action lawsuit against developmental-stage pharmaceutical company Molecular Partners AG in part owing to setbacks the company encountered in its efforts to develop a COVID-19 treatment candidate. A copy of the July 12, 2022 lawsuit filed against Molecular Partners can be found here. Continue Reading Drug Development Company Hit with COVID-19-Related Securities Suit

As readers of this blog well know, over the last 18 months or so there has been an onslaught of SPAC-related securities class action litigation. Most of these cases have only just been filed and therefore have not yet reached the motion to dismiss stage. However, a number of the earlier filed cases are now reaching that dismissal motion stage, and although the results so far are mixed, some of the cases are surviving the initial pleading hurdles, at least in part.

 

On July 1 ,2022, and in the latest example of a SPAC-related securities suit surviving the dismissal motion at least in part, Northern District of California Judge Susan Illston partially denied the motion to dismiss in the SPAC-related securities suit filed against Velodyne Lidar and certain of the executives of the SPAC into which Velodyne merged. As discussed below, there are several interesting features of Judge Illston’s opinion, a copy of which can be found here. Continue Reading SPAC-Related Securities Suit Partially Survives Dismissal Motion

In recent months, the SEC has released a series of proposed rules relating to several different topics, including most significantly its March 2022 release of proposed rules regarding climate change and greenhouse gas emissions disclosure. These various proposed rules are still in the public comment period and it remains to be seen whether the various proposed rules will be adopted and if so in what form. Even assuming some forms of the proposed rules are adopted, the rules almost certainly will be subject to court challenge by business groups and other constituencies. As a result of the U.S. Supreme Court’s landmark decision in the last days of June in the carbon emissions rulemaking case, groups challenging the SEC’s rules have a potentially potent new tool to use to try to block the rules. Continue Reading Will the “Major Questions Principle” Block the SEC’s Proposed Climate Change Disclosure Rules?

St. James’s Park, London

This past week, The D&O Diary was on assignment in London. London has many attractions, but weather is not usually one of them. However, during the recent early July days while we were visiting, the weather was just great. As a result, we spent almost all of our time there exploring London out-of-doors. Continue Reading July in London

It has been well over two years since the initial coronavirus outbreak in the U.S., but the pandemic continues to affect businesses. Many companies that found themselves making business decisions at the outset of the pandemic are still dealing with the consequences of those decisions. In at least some cases, the consequences from those business decisions are leading to securities class action litigation, as the lawsuit filed this week against Amazon shows. Continue Reading Amazon Hit With Securities Suit Over Pandemic-Related Infrastructure Overcapacity