Eric C. Scheiner
Jennifer Quinn Broda

The long-standing and traditional view is that corporations’ objectives should be to maximize shareholder value. More recently, a variety of commentators and observers have argued that corporations have larger social responsibilities. However, as discussed in the following guest post from Eric C. Scheiner and Jennifer Quinn Broda, efforts by companies to fulfil corporate social responsibilities may involve their own risks and even result in D&O claims. By the same token, failing to take action could result in claims as well. These trends have important implications for insurers and for policyholders alike. Eric is a Partner and Jennifer is Of Counsel in the Chicago office of Kennedys. I would like to thank Eric and Jennifer 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 Eric’s and Jennifer’s article.
Continue Reading Guest Post: Potential D&O Risks Arising from Corporate Social Responsibility

In a lengthy and detailed post-trial opinion, New York (New York County) Supreme Court Justice Barry Ostrager has ruled that the New York Attorney General failed to establish that ExxonMobil Corporation made material misrepresentations in its public disclosures concerning how the company accounted for climate change risk.  As discussed below, there are a number of interesting features to Justice Ostrager’s ruling. A copy of Justice Ostrager’s December 10, 2019 opinion can be found here.
Continue Reading Court Rules Against NYAG in ExxonMobil Climate Change Disclosure Trial

The Northern California wildfire known as the Camp Fire – reportedly the deadliest and most destructive wildfire in California history – has finally been fully contained. But while the fire has been doused, the fight about the fire has only just begun. Investigators will now undertake to determine the fire’s cause. And the inevitable lawsuits will now get rolling as well.

As I noted last week, investors already filed a wildfire-related securities class action lawsuit while the fires were still burning. And now a shareholder has filed a shareholder derivative lawsuit in federal court against the board and certain officers of PG&E Corp., and its regulated utility operating company, Pacific Gas and Electric Company, relating to the companies’ alleged role in causing the Camp Fire. As discussed below, this recent lawsuits may represent examples of the kinds of lawsuits we may expect to see in increasing numbers as a result of climate change-related effects. The derivative lawsuit complaint, filed in the Northern District of California on November 21, 2018, can be found in two parts here and here.
Continue Reading Further Wildfire-Related Management Liability Litigation: Harbinger of Things to Come?

As I noted when it was filed in 2016, the securities class action lawsuit investors filed against ExxonMobil and certain of its executives represented something of a milestone as it was the first securities class action lawsuit of which I am aware based on climate change-related allegations. In an August 14, 2018 opinion, Northern District of Texas Judge Ed Kinkeade largely denied the defendants motion to dismiss. The opinion contains a number of interesting features, including in particular in its discussion of the plaintiff’s climate change related allegations. Judge Kindeade’s opinion can be found here.
Continue Reading Dismissal Motion Denied in ExxonMobil Climate Change-Related Securities Suit

In the wake of President Donald Trump’s June 1, 2017 announcement that the United States will withdraw from the Paris Climate Accord, one of the things I predicted was that the administration’s action likely would trigger a host of reactions on the state, national and international stage. Among other things, I conjectured that activists facing setbacks on the political stage might try to use judicial processes to advance their agenda. Though it lacks a direct connection to the U.S.’s actions on the Paris Climate Accords, a recent Australian lawsuit confirms my suggestion that activists are increasingly likely to try to use the courts as a way to promote their objectives.
Continue Reading Shareholders File Climate Change Disclosure Lawsuit in Australian Court

One of the fundamental principles on which our system of securities regulation is based is the importance of disclosure. The system is built on the notion that companies must disclose certain basic information about their operations and performance so that investors can make informed investment decisions. While the disclosures required are a matter of regulation and statute, investors’ and regulators’ expectations about what must be disclosed changes over time. Signs are that disclosure expectations  — and as a result disclosure practices — are changing rapidly in two particular areas: cybersecurity and climate change.
Continue Reading Now Trending: Cybersecurity and Climate Change Disclosure Practices

earthOn June 1, 2017, President Donald Trump announced the withdrawal of the United States from the Paris Climate Accord.  Under the terms of the Paris pact, withdrawal could take up to four years, but the President’s recent action signals his administration’s intent to step away from the agreements and commitments detailed in agreement. The President’s action has already set in motion a host of political reactions, including a variety of pronouncements at the state and local level in the U.S. in response to the President’s move.

Amidst these actions on the political stage, a host of other actors, including shareholders, activists, and non-governmental organizations (NGOs) have continued to press climate change-related disclosure issues. These developments ensure that notwithstanding the President’s actions on the Paris accord, climate change will remain a high profile issue for many corporate boards, and potentially could be a source of future corporate claim activity.
Continue Reading Climate Change Disclosure Remains an Issue Despite U.S. Withdrawal from Paris Accord

exxonFor many years, I have been raising the possibility of climate change-related corporate and securities litigation. However, despite my best prognostication, the climate change-related  corporate and securities lawsuits have basically failed to materialize – that is, until now. On November 7, 2016, investors filed a purported securities class action lawsuit in the Northern District of Texas against Exxon Mobil Corporation and certain of its directors and officers. The lawsuit specifically references the company’s climate change-related disclosures, as well as the company’s valuation of its existing oil and gas reserves. One lawsuit doesn’t make a trend, and many of the lawsuit’s allegations relates specifically to Exxon Mobil and its particular disclosures. Nevertheless, the filing of the lawsuit raises the question whether there may be other climate change-related disclosure cases ahead. A copy of the November 7, 2016 lawsuit can be found here.
Continue Reading Investors File Climate Change Related Securities Suit Against Exxon Mobil

SEC logoCybersecurity has been and remains one of the hot topics in corporate governance. Several federal regulatory agencies, including the SEC, have made it clear that cybersecurity is a high priority item and at the top of their agenda. The SEC’s particular cybersecurity focus has been on consumer privacy and on corporate disclosure. But though the SEC has made cybersecurity issues, including disclosure, a top priority, it appears to be the case that very few public companies are actually disclosing cybersecurity and data breach incidents in their SEC filings. The current disclosure practices could be a concern for investors – and for D&O underwriters.
Continue Reading Cybersecurity Disclosure Practices: What’s Up With That?