As I detailed in blog posts at the time, the parties to two separate shareholder derivative lawsuits in recent months announced what were among the largest derivative suit settlements – the massive $300 settlement in the Renren derivative lawsuit and the $180 million settlement in the FirstEnergy derivative lawsuit. Though the settlements in each of these two cases were announced to great fanfare, both settlements, for separate reasons, ran into procedural roadblocks. There have now been further developments in each of these cases – the Renren settlement appears to be back on track, while the federal district judge presiding over one of the unconsolidated FirstEnergy derivative suits continues to throw up roadblocks, as discussed below. Continue Reading Further Developments in Two Recent Jumbo Derivative Lawsuit Settlements

I was struck by the recent statements of Chubb CEO Evan Greenberg quoted an insurance industry publication that a colleague circulated to me last week. In the article, Greenberg said that when it comes to ESG commitments, many companies – particularly insurance companies – may be over-promising. What made Greenberg’s remarks particularly interesting to me was his suggestion that companies’ commitment to net-zero goals and other lofty-sounding climate aspirations could lead to shareholder lawsuits. It is worth thinking about this litigation possibility in the context of current regulatory action focused on so-called “greenwashing” in the investment fund industry. In both cases, the concern is that companies may tried to take on an ESG aura that the actual facts may not support. Continue Reading Will Companies’ ESG Goals Lead to Shareholder Litigation?

In a series of opinions beginning with the Delaware Supreme Court’s 2019 decision in Marchand v. Barnhill, Delaware courts have sustained a number of so-called “Caremark” claims based on the defendant board members’ breach of their duty of oversight. The courts have denied motions to dismiss in cases where the boards failed to act despite “red flags” alerting them to problems. But what happens if the “red flag” that alerts the board to a problem is a litigation demand letter submitted by a prospective claimant seeking to have the board take up litigation because of problems identified in the letter? In an interesting and troubling May 24, 2022 decision, Vice Chancellor Travis Laster sustained a claim based on these kinds of allegations, accepting what he called a “novel theory” with “admitted trepidation.” Though Laster sought in his opinion to contain some the more “disquieting” implications of this ruling, there is now at least a theoretical basis on which future prospective claimants could argue that a board’s rejection of a litigation demand letter could itself give rise to a separate breach of fiduciary duty claim. Continue Reading Del. Court Sustains Breach of Fiduciary Duty Claim for Board’s Rejection of Demand Letter

In a milestone in the development of collective investor actions in Germany, a plaintiff in a proceeding against Hypo Real Estate Holding and arising out of the global financial crisis had reached an agreement to settle the action for €190 million. The case against Hypo Real Estate Holding was brought under the German Capital Markets Model Case Act, known as KapMuG. As discussed below, this settlement has very important implications for the development of collective investor actions in Germany, and, indeed, worldwide. A copy of the plaintiff law firm’s June 1, 2022 press release describing the settlement can be found here. Continue Reading German Collective Investor Action Against Hypo Real Estate Holding Settled for 190 Million Euros

As I have noted in recent posts (here, for example), SPAC-related securities suit filings continue to accumulate and represent a significant current securities litigation phenomenon. But while the number of suits continues to mount, relatively few of these cases have yet reached the dismissal stage. In a recent ruling, however, the defendant company’s motion to dismiss in a SPAC-related securities suit was substantially denied as to the company itself and its top executives. In particular, the claims based on allegations that the company, Romeo Power, and its senior officials made supply chain misrepresentations were sustained, though the related claims against three former executives of the SPAC with which Romeo had merged were dismissed. A copy of the June 2, 2022 opinion in the case can be found here. Continue Reading Dismissal Denied in SPAC-Related Securities Suit Alleging Supply Chain Misrepresentations

In the latest SPAC-related securities class action lawsuit filing, a plaintiff shareholder has filed a securities suit against IonQ, a quantum computing company that became a publicly traded company in September 2021 through a merger with a publicly traded SPAC. As is the case with many of the SPAC-related securities suits, the new lawsuit against IonQ follows the publication of a critical short-seller report about the company and its technology. A copy of the complaint, filed on May 31, 2022, can be found here. Continue Reading Quantum Computing Company Hit with SPAC-Related Securities Suit After Short-Seller Report

Ralph Waldo Emerson

Ralph Waldo Emerson is not often read these days. His image has suffered with the passage of time, and he is too often ignored as one more stuffed- shirt dead white male. Perhaps it is his earnestness, or his lofty tone, which sounds dissonant to ears accustomed to the cynical or ironic tones of our more earth-bound era. Perhaps it is his antiquated vocabulary, or his even more antiquated choice of topics. No pundits and no bloggers (well, few bloggers) are focusing on topics such as “Manners,” “Character,” or “Prudence.” Perhaps it is simply because his writings were force-fed on too many unwilling high school sophomores. But for those who take the time to go back and listen to his voice, his words remain full of surprise and wisdom. Continue Reading Sunday Arts: Emerson

Almost from the very outset of COVID-19 in early 2020, investors and others have filed pandemic-related securities suits and other claims against companies and their executives. Even though the initial outbreak is now nearly 27 months in the past, claims activity continues. In the latest development, a grand jury has returned an indictment against a  health care company’s former CEO concerning statements the CEO made in April 2020 about the company’s ability to profit from sales of COVID-19 rapid tests. The SEC filed a parallel enforcement action against the company and the CEO as well. Continue Reading DOJ, SEC Press COVID 19-Related Charges Against Health Care Company, CEO

Virginia Milstead

In the following guest post, Virginia Milstead, a partner at the Skadden, Arps, Slate, Meagher & Flom LLP law firm, reviews and considers the implications of the May 13, 2022 verdict in Crest v. Padilla, in which the Los Angeles County Superior Court held that California’s statute requiring women on corporate boards violates the state constitution’s equal protection clause. A version of this article previously was published as a Skadden client alert; this version is updated to reflect the fact that the California secretary of state has indicated that she will appeal the court’s verdict. I would like to than the author for allowing me to publish her 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 the author’s article. Continue Reading Guest Post: California Trial Court Strikes Down Women on Boards Law

On May 18, 2022, the Fifth Circuit held in Jarkesy v. SEC (here), that the agency’s use its in-house Administrative Law Judges, as opposed to its filing of an enforcement action in federal court, is unconstitutional. In the following guest post, Gregory A. Markel, Vincent A. Sama, Daphne Morduchowitz, Giovanna A. Ferrari, and Matthew C. Catalano of the Seyfarth Shaw law firm review the Fifth Circuit’s opinion, and discuss its implications. 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 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: SEC’s In-House Adjudication Deemed Unconstitutional by Fifth Circuit