The Marriott Marquis San Diego

It was my pleasure last week to attend the annual PLUS Conference, this year held in San Diego. It was great to be back at a live PLUS event again and to see so many colleagues from around the industry. As always, the PLUS staff did an amazing job organizing the event, and the turnout was great as well. It was also great to be back in San Diego. It was a little bit cool and it rained on Tuesday but despite that San Diego was still beautiful. It was great to see many old friends and to make new friends as well.
Continue Reading PLUS Conference in San Diego

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

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

In the wake of the U.S. Supreme Court’s Cyan decision, corporate defendants faced the risk of wasteful and duplicative federal and state court securities litigation. In order to address this concern, corporate reformers suggested that companies should adopt provisions in their corporate charters designating an exclusive federal forum for securities litigation. The Delaware Supreme Court upheld the facial validity under Delaware law of federal forum provisions in the Sciabacucchi decision, but the question remained whether the courts in other jurisdictions would enforce the provisions. A number of courts in California and New York did subsequently uphold the provisions, but these were all trial court rulings.

Now, in an important legal development, a California intermediate appellate court has upheld the enforcement of the provisions, the first appellate decision on the issue outside Delaware. The California appellate court’s ruling in the Restoration Robotics case could represent a significant milestone in the development of post-Cyan litigation. A copy of the California appellate court’s April 28, 2022 decision can be found here. An April 29, 2022 memo from the Latham & Watkins law firm about the appellate court’s decision can be found here.
Continue Reading California Appellate Court Upholds and Enforces Federal Forum Provision

Many fledgling companies aspire toward completing an IPO. Some succeed, but many others do not. Occasionally when a company falls short of its IPO plan, litigation results, in the form of a “failure to launch” claim. A recent example involving a California-based cannabis company illustrates how these kinds of claims can arise. As discussed below, these possibility for these kinds of claims has insurance implications.
Continue Reading Cannabis Company Hit with “Failure to Launch” Claim

Last summer, when California adopted a new law requiring corporations based in the state to add board members from “underrepresented communities,” it modeled the statute on the board gender diversity statute the state had enacted two years before. The constitutionality of the board gender diversity law itself had been challenged in a federal court lawsuit, but the court hearing the suit had dismissed it based on the named plaintiff’s lack of standing. However, in a June 21, 2021 opinion (here), the Ninth Circuit reversed the district court, finding that the claimant had sufficient standing to pursue the claim. The appellate court’s action has implications both for the board gender diversity statute and the more recently adopted board racial diversity statute, which has also been challenged in court.
Continue Reading 9th Circ. Revives Legal Challenge to California Board Gender Diversity Statute

In 2018, California passed a law mandating gender diversity on the boards of directors of companies headquartered in California. The legislation known as SB 826 served as the model for the separate board racial diversity legislation that California Governor Gavin Newsom signed into law at the end of September. The California Partners Project, a group co-founded by California First Lady Jennifer Siebel Newsom, recently published its first progress report on the growth in women’s representation on corporate boards for publicly traded companies headquartered in California since the enactment of SB 826. As the report shows, there has been a significant increase in the number of women on the boards of California headquartered companies. A copy of the report can be found here. An October 15, 2020 post on the Cooley law firm’s PubCo blog about the report can be found here.
Continue Reading Progress Report on California Public Company Board Gender Diversity Requirements

As I have noted in prior posts, one of the follow-on effects of the recent racial justice movement has been increased scrutiny of racial diversity within corporate management, and in particular on corporate boards. The boards of several publicly traded companies have been hit with shareholder derivative lawsuits alleging that the directors breached their fiduciary duties by failing to include African-American individuals on the boards, while at the same time the companies were touting their diversity and inclusion efforts.

In addition to the recent litigation, efforts to advance board racial diversity have included legislation. Earlier this year, the California legislature passed a bill mandating the inclusion on boards of California headquartered companies of representatives of “underrepresented communities.” On September 30, 2020, California Governor Gavin Newsom signed the bill into law. As discussed below, even though the law has only been in place for a few days, a lawsuit challenging the bill has already been filed.
Continue Reading California Board of Directors Diversity Bill Signed Into Law, Challenged by Lawsuit

After the Delaware Supreme Court’s March 2020 decision in Salzberg v. Sciabacucchi upholding the facial validity of corporate charter provisions designating federal court as the forum for Securities Act liability claims, several questions remained. Among the questions is whether others’ states courts will recognize and enforce federal forum provisions in Delaware corporations’ charters. This issue has been teed up for decision in a Section 11 lawsuit pending in San Mateo County court in California, in a case involving Dropbox. Dropbox has filed a motion urging the California state court to dismiss the action, in reliance on the federal forum provision in its corporate charter.

As discussed Alison Frankel’s July 13 post on her On the Case blog (here), a group of six ex-judges from Delaware has now entered an amicus brief on the issue in the case, urging the California court to recognize Delaware legal authority and enforce the federal forum provision in Dropbox’s charter. The Dropbox case, according to Frankel, is “shaping up as an early test of the application of the [Sciabacucchi decision] that forum selection clauses requiring shareholders to litigate Securities Act claims in federal court are facially valid because they concern the corporation’s internal affairs.”
Continue Reading California Court to Address Enforceability of Delaware Corporation’s Federal Forum Provision

Regular readers know that among the recurring themes on this site are concerns about problems with the application of notice rules to preclude insurance for claims that would otherwise be covered under the policy. These problems are, in my view, particularly abrupt where a claims is made during one policy period and the notice is provided during the policy period of a subsequent renewal policy issued by the same insurer. I have argued that continuity of coverage between the two policies and with the same insurer ought to be taken into consideration and that coverage should be denied only if the insurer can show that the late notice of claim during the renewal period prejudiced the insurer’s interests. In a recent appeal, the Ninth Circuit rejected this continuity of coverage argument. The appellate court’s opinion, though brief, raises a number of interesting points, as discussed below.
Continue Reading Ninth Circuit Rejects Continuity of Coverage as Response to Late Notice of Claim