Jeff Lubitz
Jarett Sena

Computer technology company Dell Technologies, Inc. recently announced that it had entered a $1 billion settlement in shareholder litigation relating to the company’s disputed 2018 stock swap transaction. 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 closer look at the Dell settlement and also put the massive settlement into context with other shareholder lawsuit settlements. A version of this article previously was published as an ISS Securities Class Action Services client alert. 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: Dell Agrees to $1 Billion Shareholder Suit Settlement

In the latest development a long-running D&O insurance coverage dispute, a Delaware Court has held that Verizon’s D&O insurance program covers the company’s $95 million settlement of a bankruptcy Trustee’s fraudulent transfer claim. In reaching this conclusion, the Court held, among other things, that the fraudulent transfer claim was a “Securities Claim” within the meaning of Verizon’s primary D&O insurance policy. The specifics of the court’s analysis of this issue underscores how complicated the question of what constitutes a “Securities Claim” can be. A copy of Delaware Superior Court Judge Eric Davis’s October 20, 2022 opinion can be found here.
Continue Reading Delaware Court Holds D&O Insurance Covers Fraudulent Transfer Claim Settlement

Yet another Delaware court has issued a noteworthy management liability insurance coverage opinion. In a detailed September 12, 2022 opinion in a dispute between Godiva Chocolatier and its management liability insurers over coverage for underlying consumer protection claims against the company, Delaware Superior Court Judge Mary M. Johnston rejected many – but not all — of the insurers’ coverage defenses. A copy of Judge Johnston’s opinion can be found here.
Continue Reading Del. Court Narrows Godiva’s Insurers’ Defenses in Dispute Over Coverage for Consumer Protection Claims

A claim alleging a board’s breach of duty of oversight has long been regarded as one of the most difficult for a plaintiff to sustain. But after the Delaware Supreme Court’s 2019 opinion in Marchand v. Barnhill, breach of the duty of oversight claims (or Caremark claims, as they are sometimes called) have in recent years, as Vice Chancellor Sam Glasscock put in in his recent opinion in the SolarWinds case, “bloomed like dandelions after a warm spring rain.” Some commentators questioned whether oversight breach claims were in fact as difficult to sustain as is so often said. However, in his recent opinion, the Vice Chancellor emphasized the oversight breach claims remain “one of the most difficult claims” to sustain and granted the defendants’ motion to dismiss the cybersecurity-related oversight breach claims asserted against the board of Solar Winds.  A copy of Vice Chancellor Glasscock’s September 6, 2022 opinion in the SolarWinds case can be found here.
Continue Reading Del. Court Dismisses Cybersecurity-Related Oversight Claim Against SolarWinds Board

In the latest SPAC-related federal court securities class action lawsuit to be filed, a plaintiff shareholder has filed a securities suit against a building management technology company – which merged with a SPAC in 2021 — that recently restated its financial statements for the reporting periods after the company became publicly traded. The complaint in the new lawsuit filed against Latch, Inc. can be found here. As also noted below, in a separate development, a different plaintiff shareholder has filed a separate SPAC-related Delaware Chancery Court action against former directors and officers of a SPAC and the SPAC’s sponsor.
Continue Reading SPAC-Related Securities Suit Filed Against Building Technology Company

The financial press is already reporting that many of the nearly 600 SPACs currently searching for merger targets may be unable to find suitable merger targets. Indeed, famous investor Bill Ackerman, unable to find a suitable merger target for his largest-ever SPAC, Pershing Square Tontine Holdings, has already thrown in the towel and liquidated the $4 billion SPAC. With hundreds of SPACs facing the end of their search period in this and the next two quarters, there are likely to be many other SPACs that choose to liquidate in the coming months.

One question I have had about this likelihood is whether or not there is a risk of litigation as SPACs redeem investors’ shares. On the one hand, litigation seemingly should be unlikely as investors are getting their money back. Where’s the harm? On the other hand, in our litigious society, the possibility of litigation always seems to be lurking whenever things don’t work out as planned. While the circumstances involved are very case-specific, a lawsuit filed last week in the Delaware Chancery Court, provides of an example of the kind of end-game squabble that could arise as more SPACs liquidate in the coming months.
Continue Reading SPAC Unable to Find Merger Target Caught Up in Pre-Liquidation Litigation

According to the latest statistics from SPACInsider, there are currently over 580 SPACs seeking merger partners. Financial media reports have already speculated that many of the searching SPACs may not find a suitable merger partner within the applicable search period. One concern from this combination of circumstances is that some SPACs may feel pressure to do whatever they have to do to complete a deal, any deal. As I have noted in prior posts, deals completed under these kinds of circumstances can later subject the SPAC managers to scrutiny and perhaps even litigation.

In a Delaware Chancery Court lawsuit brought by former public shareholders of a SPAC against the former directors and officers of the SPAC and others alleging that the SPAC officials, in their push to complete a deal, misrepresented the target company as a U.S.-based manufacturer of electric vehicles, when, the plaintiff shareholders allege, the company was in fact just a vehicle dealer that buys Chinese electric vehicles that the company rebrands as its own. As discussed below, this new lawsuit may illustrate one of the kinds of circumstances in which many of the currently searching SPACs could fall.
Continue Reading SPAC Execs Allegedly Misrepresented Target Company’s Business to Complete Deal

As I have noted before, Elon Musk is a reliable source of interesting blog fodder. His hyperkinetic fracases are so numerous that at times it is easy to lose track of the many controversies in which he is involved. Amidst all of the hoopla about his current bid to acquire Twitter, it was easy to overlook the fact that he remained mired in ongoing litigation relating Tesla’s 2016 acquisition of SolarCity. As the heart of the dispute was the fact that Musk served both as Chairman of SolarCity and as an executive of and as the largest shareholder of Tesla at the time.

The dispute went to a ten-day bench trial in 2021, and on April 27, 2022, Delaware Vice Chancellor Joseph R. Slights III issued a lengthy opinion ruling in Musk’s favor on all issues. A copy of the opinion can be found here. As discussed below, the sprawling, 132-page opinion contains a number of interesting observations and insights and also has important implications.
Continue Reading Elon Musk Prevails in Trial Over Tesla’s Acquisition of SolarCity

Bryan W. Petrilla

On March 16, 2022, the Delaware Supreme Court issued an important decision on the “relatedness” issue in the First Solar case, as I discussed in a prior post on this site, here. In the following guest post, Bryan W. Petrilla, Esq., a partner in the Stewart Smith law firm in Philadelphia, takes a look at the First Solar decision and considers its implication. I would like to thank Bryan for allowing me to publish his 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. Here is Bryan’s article.
Continue Reading Guest Post: Must Claims be “Fundamentally Identical” to be “Related”? The Delaware Supreme Court Weighs In  

In January of this year, when the Delaware Chancery Court sustained the Delaware state court direct action filed against the directors and officers of the SPAC that had acquired MultiPlan Corp., I speculated that the Court’s ruling would encourage other disgruntled SPAC investors to bring similar Delaware direct actions against SPAC management.

Consistent with my speculation, on March 18, 2022, a plaintiff shareholder filed a direct action for breach of fiduciary duty against certain former directors of officers of Decarbonization Plus Acquisition Corporation, a special purpose acquisition company (SPAC), that in July 2021 merged with Hyzon Motors USA to form Hyzon Motors Inc. The claim is brought on behalf of SPAC investors who were entitled to redeem their shares at the time of the merger.  The plaintiff claims that the defendants’ misrepresentations about the merger deprived the plaintiff class of their right to make an informed redemption decision. The claims asserted on behalf of the investors are not only very similar to the allegations previously raised in the MultiPlan litigation, but the new complaint expressly quotes the dismissal motion denial ruling in the MultiPlan ruling. As discussed below, this latest lawsuit may indicate a likely future direction for SPAC related litigation. A copy of the complaint in the new Delaware state court direct action can be found here.
Continue Reading Investors Bring SPAC-Related Direct Fiduciary Breach Action Relating to Hyzon Motors Merger