Class Action Settlements

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Nessim Mezrahi

In the following guest post, Nessim Mezrahi reviews the ways in which the current surging stock market affects the potential exposures of publicly traded companies and the implications for the D&O insurance industry. Nessim is co-founder and CEO of the data analytics firm SAR LLC. SAR previously published a version of this article as a client alert. I would like to thank Nessim for allowing me to publish this article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to the site’s readers. Please contact me directly if you would like to submit a guest post. Here is Nessim’s article.Continue Reading Guest Post: Securities Litigation Exposure Increases During Bull Stock Market  

We have all seen the various league tables showing which plaintiffs’ firms have had the highest average securities class action settlements. But do these firms wind up at the top of the tables because they produce better outcomes for the plaintiff class, or do they produce these results simply because they are better at winning the race to become lead counsel in the better cases? As three academics put it in their recent paper, “do the plaintiffs’ lawyers matter”?

In their paper, New York Law Professor Stephen J. Choi, University of Richmond Law Professor Jessica M. Erickson, and University of Michigan Law Professor Adam C. Pritchard survey securities class action lawsuit settlements in order to determine whether the “top tier” plaintiffs’ firms actually produce better outcomes for the plaintiff class. Interestingly, the authors conclude that while the top firms produce better outcomes in a narrow subset of cases, in most other cases they do not. The authors suggest these observations have important implications for both claimants and courts. The authors’ paper can be found here. The authors’ March 12, 2024, column in the CLS Blue Sky Blog about their paper can be found here.  Continue Reading Does the Plaintiff Law Firm Matter in Securities Suit Outcomes?

Jeff Lubitz

Jarett Sena

In the following guest post, Jeff Lubitz, Managing Director, ISS Securities Class Action Services, and Jarett Sena, Director of Litigation Analysis, ISS Securities Class Action Services, take a detailed look at the largest securities class action settlements of 2022, and in particular at the largest 10 U.S. securities class action settlements during the year as well as the largest non-U.S. settlements.  I would like to thank Jeff and Jarett 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: The Largest Securities Class Action Settlements of 2022

If you have not been following the drama surrounding the question of the attorneys’ fees to be paid to class counsel in the State Street foreign currency exchange overcharge case, you will want to read the latest order from District of Massachusetts Judge Mark Wolf. Among other things, in his February 27, 2020 order, Judge Wolf cut the fees of the law firms that acted as class counsel, from $75 million to $60 million. Perhaps even more significantly, Judge Wolf concluded that lawyers at two of the lead plaintiff law firms had violated applicable provisions of the professional code of conduct and referred the attorneys to the local state bar professional practices unit. Judge Wolf’s findings also include his own reflection about the indispensable role of judge in supervising class counsel and their fees. A copy of Judge Wolf’s order can be found here.
Continue Reading Court Ratchets Down Fee Award, Refers Class Counsel for Possible Ethics Violation

gavel1Most securities class action lawsuits that are not dismissed outright ultimately settle. One of the starting points for securities suit settlement negotiations is what is referred to as “plaintiffs’ style” damages estimate. The plaintiffs’ damages estimate is usually adjusted to reflect the composition of the class, the duration of the class period, trading patterns in the defendant company’s stock, and so on. Even with these adjustments, the dollar amount under discussion, at least on the plaintiffs’ side of the equation, is still some form of the plaintiffs’ damages estimate.

One specific fact that would be useful in the dialogue would be to know how much the estimated damages exceed the dollar amount of the damages claims that will actually be submitted and approved for payment if the case settles or if the plaintiffs prevail at trial. It is difficult to come up with the data to calculate these amounts because the outcomes of securities class action lawsuit settlement claims processes are not publicly available and because few cases go to trial and reach a verdict.

However, in a recent paper, several researchers from Cornerstone Research examined the claims data following two recent securities suit jury verdicts. Their analysis identifies actual claims rates in these two cases, information that may be useful to securities litigators and to their clients’ D&O insurers.
Continue Reading Securities Litigation: What if the Real Exposure is Less Than Supposed Damages?

delawareInsurers frequently contend that their amounts paid as disgorgement are uninsurable as a matter of law. Whether or not this principle is true as a general matter still begs the question of whether or not the amounts for which coverage is sought represent “disgorgement.” In an interesting October 20, 2016 opinion (here), Delaware Superior Court Judge Jan R. Jurden, applying New York law to the issue, held that amounts TIAA-CREF paid in settlement of three underlying class action lawsuits did not represent uninsurable disgorgement. Judge Jurden expressly distinguished a series of decisions in which New York courts had ruled that settlement amounts paid in settlement of regulatory enforcement actions represented uninsurable disgorgement.
Continue Reading Del. Court Holds Settlement Amounts Not Uninsurable Disgorgement

paul-weiss-large-300x53In the settlement documents prepared in connection with securities class action settlements, the documents typically specify that certain groups are excluded from the settlement class. Among the groups typically excluded are “affiliates” of the class action defendant company. In a recent decision (here), the Second Circuit examined the question whether an ERISA-regulated benefit plan that the defendant company sponsors is an “affiliate” of the company and therefore precluded from sharing in the settlement proceeds. In the following guest post, members of the Paul Weiss law firm take a look at the Second Circuit’s decision and discuss its implications. I would like to thank the Paul Weiss attorneys for their willingness to publish their article on my site. I welcome guest post submissions from responsible parties on topics of interest to this blog’s readers. Please contact me directly if would like to submit a guest post. Here is the Paul Weiss attorney’s guest post.
Continue Reading Guest Post: ERISA-Regulated Benefit Plans Not “Affiliates” for Securities Class Settlement Purposes

alaAny time a civil lawsuit settles for a combined total of $310 million, it is noteworthy, if for no other reason than the sheer size of the deal. But a $310 class action settlement recently preliminarily approved in Jefferson County (Alabama) Circuit Court is noteworthy not just for its size, but also for the nature of the allegations involved.

In the recently settled case, the plaintiffs alleged that in connection with the 1999 settlement of the MedPartners Securities Litigation, the defendant company and its primary D&O insurer had misrepresented the amount of insurance available in connection with the litigation, and more particularly, failed to disclose that the company had obtained a post-litigation “unlimited” excess insurance policy (known as an “LMU”) from the primary D&O insurer. After the details of the LMU came to light in subsequent unrelated litigation, a plaintiff from the prior securities lawsuit class filed a new lawsuit alleging misrepresentation in connection with the securities lawsuit settlement. The details of the plaintiffs’ allegations in the misrepresentation lawsuit — most of which the defendants dispute — make for some interesting reading.

The plaintiffs’ class motion for preliminary approval of the settlement of the misrepresentation lawsuit, to which the parties’ stipulation of settlement is attached, can be found here. The Alabama Court’s June 1, 2016 order preliminarily approving the settlement can be found here. The settlement is subject to the Court’s final approval.
Continue Reading The Interesting Story Behind a Recent $310 Million Class Action Settlement

Of the different contexts within which securities class action lawsuits arise, one of the most significant is the bankruptcy context. As detailed in the following guest post from Michael Klausner and Jason Hegland of Stanford Law School, securities class action lawsuit arising in bankruptcy are different from cases involving solvent companies. Their guest post provides…