In a recent post (here), I discussed the shareholder derivative suit filed against the board of directors of Oracle Corporation based on the alleged lack of racial diversity on the company’s board. Turns out that in addition to the lawsuit against Oracle’s board, the law firms that filed the Oracle lawsuit also have  filed a shareholder derivative lawsuit against Facebook’s board alleging that the directors had violated their fiduciary duties by their inaction on diversity and inclusion issues; their tolerance of racially discriminatory practices both in its workforce and on its platform; and their failure to take action on hate speech on its platform. Along with the Oracle lawsuit, the new lawsuit against Facebook provides another example of how the current heightened focus on diversity and inclusion issues can translate into D&O claims. A copy of the complaint in the Facebook action can be found here.
Continue Reading Facebook Board Hit with Derivative Lawsuit on Board Diversity and Other Race-Related Issues

In the early stages of the coronavirus-related close-down, most colleges and universities terminated live classes, switched to online lessons, and sent their students home. In some cases, affected students have filed lawsuits against their schools, seeking to recover tuition and fees paid for classes, housing, and food. The following posts discuss the extent of the exposure that these kinds of claims represent for these institutions’ boards of directors or boards of trustees.
Continue Reading Coronavirus-Related Suits Hit Higher Ed Institutions

In a very interesting development and one that will definitely be worth watching, a plaintiff shareholder has launched a shareholder derivative lawsuit in New York state court on behalf of Bayer AG against members of its supervisory board, certain managers, and other defendants, seeking damages from the defendants for alleged violations of their duties under the German Stock Corporations Act. The lawsuit basically alleges that the defendants violated their duties to the company for pursuing and completing Bayer’s disastrous acquisition of Monsanto. The lawsuit raises the question of whether shareholders of a company organized under the laws of and based in Germany can pursue German law claims in New York courts using New York court procedures.  As discussed below, the plaintiff’s attempt to pursue her claims in New York rather than Germany could face significant threshold hurdles. However, if her claims are permitted to go forward, this case could have very significant implications for the potential exposures of other non-U.S. companies to litigation in the U.S.  A copy of the plaintiff’s March 6, 2020 complaint can be found here.
Continue Reading Derivative Suit Against Bayer Board Alleging German Law Violations Filed in NY Court

Stories of alleged sexual misconduct have dominated recent headlines.  Allegations of sexual assault raised against Supreme Court Brett Kavanagh have been the lead story all week, and there has also been extensive coverage of the criminal sentencing of Bill Cosby for sexual assault. These stories arise as part of a broader series of revelations of sexual misconduct involving media figures, politicians, and corporate executives.

In the midst of this depressing litany one of the most disturbing sets of disclosures has been the revelations of the sexual misconduct involving former Michigan State University and U.S. Olympic gymnastics team physician Larry Nassar. Allegations relating to Nassar are back in the news again because of a new lawsuit a former MSU athlete has filed. The plaintiff’s allegations raise a number of issues. As discussed below, the new complaint contains extensive allegations against MSU’s Board of Trustees, underscoring how the allegations raised in the current wave of sexual misconduct allegations can lead to claims against organization’s directors and officers.
Continue Reading Plaintiff’s Sexual Assault Complaint Asserts Claims Against Michigan State’s Board of Trustees

More recent data breach-related D&O lawsuits have been filed in the form of securities class actions, one of which, the Yahoo securities class action lawsuit, recently resulted in a sizable settlement. Before that though, during the period 2014 to 2016, there was a series of data breach related suits filed in the form of shareholder derivative actions. By and large, these cases did not fare particularly well, largely resulting in dismissals. The last of these data breach-related derivative lawsuits that remained pending is the one filed against fast-food company Wendy’s. Now the Wendy’s case has also settled, albeit for a combination of cybersecurity and governance therapeutics and agreement to pay the plaintiffs’ attorneys fees. The resolution of this last remaining shareholder derivative suit again raises a question that has been much discussed, of the extent to which data breach-related issues will lead to more D&O litigation.
Continue Reading Wendy’s Settles Data Breach-Related Derivative Lawsuit

Mark Sutton
Karen Boto

Among other things, the media clamor about claims of sexual misconduct involving high profile politicians and business executives has in some instances led to D&O claims, as I recently noted. In the following guest post, Mark Sutton and Karen Boto of the Clyde & Co. law firm take a look at this phenomenon, with particular attention to the specific circumstances at two prominent U.K. charities. I would like to thank Mark and Karen 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 Mark and Karen’s guest post.
Continue Reading Guest Post: Sexual Misconduct Claims: How Charitable is Your D&O Policy?

Amidst the fallout following the latest high-profile set of revelations of sexual misconduct at the highest levels of business, the media, and politics, Steve Wynn has resigned his position as Chairman and CEO of Wynn Resorts. However, as we have seen with in other instances of this type of high profile sexual misconduct, the accountability process at Wynn Resorts will not be limited to attempting to hold Wynn himself to account, but may include other senior company officials as well. According to a lawsuit filed today in Nevada state court,  officials at Wynn’s company allegedly knew for years of his sexual misconduct and failed to investigate.
Continue Reading Investor Files Sexual Misconduct-Related D&O Claim Against Wynn Resorts Board