A host of macroeconomic factors continue to weigh on the U.S. economy, including rising interest rates, economic inflation, and supply chain and labor supply disruption. Geopolitical factors such as the War in Ukraine and now the Gaza war in Israel further complicate the picture. These various factors have serious ramifications for the operations of many businesses and for their financial performance. In some cases, the impact of these factors on companies can also translate into securities litigation. In the latest example of this phenomenon, the auto parts company Advance Auto Parts has been hit with a securities class action following a decline the price of the company’s share price after the company announced that its “strategic pricing initiative” was not sufficient to avert the impact of inflation and other macroeconomic factors on the company’s financial performance. A copy of the October 9, 2023, complaint filed against the company can be found here.Continue Reading Inflation Weighs on Company Performance, Leads to Securities Suit
Even though the COVID-19 pandemic is now into its fourth year, plaintiffs’ lawyers continue to file pandemic-related securities class action lawsuits, increasingly in conjunction with allegations involving other macroeconomic factors, such as rising interest rates, economic inflation, supply chain disruption, and labor supply shortages. In the latest example of litigation of this type, last week plaintiffs’ lawyers filed a securities class action lawsuit against tool maker Stanley Black & Decker, alleging that the company misled investors that the pandemic-fueled surge in demand for the company’s product would continue even as conditions changed. A copy of the March 24, 2023, complaint against the company can be found here.Continue Reading Stanley Black & Decker Hit with COVID-Related Securities Suit
At the beginning of the year, when I surveyed the D&O claims landscape and predicted the factors that I thought might drive D&O claims volume in 2023, one set of factors I projected might make significant contributions to the number of claims to be filed during the year were the number of macroeconomic challenges – for example, rising interest rates, economic inflation, labor supply disruption, and the war in Ukraine. The recent failure of Silicon Valley Bank and the ensuing securities litigation provides one illustration of how these macro factors can translate into D&O claims.
Now, in the latest illustration of these forces at work, investors have filed a securities lawsuit against the organic foods company United Natural Foods, following the company’s recent disappointing earnings announcement in which the company disclosed a decline in profitability, despite increasing sales, due to inflationary pressures. A copy of the March 20, 2023, lawsuit against United Natural Foods can be found here.Continue Reading Inflation Hits Organic Food Company’s Quarterly Results, Draws Securities Suit
In my year-end wrap up of the top D&O stories of 2022, I noted the possibilities that various macroeconomic factors could contribute to securities class action lawsuit filings in the months ahead. One of the specific factors I identified was economic inflation. In subsequent conversations, I have been asked how an economy-wide phenomenon such as inflation could lead to a securities suit against any one individual company. A lawsuit filed earlier this week provides an illustration of how the inflationary impacts can translate into securities litigation. A copy of the March 1, 2023 complaint in the lawsuit, filed against coffee retailer and franchisor Dutch Bros Inc., can be found here.Continue Reading Inflation Undercuts Company’s Financial Results, Leads to Securities Suit
In the following guest post, Nessim Mezrahi and Stephen Sigrist take a look at a variety of economic and marketplace factors that they suggest may lead to securities litigation lawsuit filings in 2023, particularly with respect to IPO companies. Mezrahi is co-founder and CEO and Sigrist is Senior Vice President of Data Science at SAR LLC. A version of this article previously was published on Law360. I would like to thank the authors for allowing me to publish their article on my 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: Securities Class Actions May Spur IPO Investigations in 2023
The D&O insurance market is cyclical and is currently going through one of its periodic cycle turns. In the following guest post, Gary Lill, Head of Professional Lines at IQUW, and Elisabeth Groehe, Professional Lines Underwriter at IQUW, examine the current D&O insurance market and discuss the challenges that D&O insurers currently face. A prior version of this article previously was published on the IQUW website. I would like to thank Gary and Elisabeth 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 Gary and Elisabeth’s guest post.
Continue Reading Guest Post: Challenges in the D&O Market – A Sisyphean Task?
Every year after Labor Day, I take a step back to survey the most important current trends and developments in the world of Directors’ and Officers’ liability and insurance. This year’s review is set out below. As the following discussion shows, this is a particularly eventful time in the world of D&O.
Continue Reading What to Watch Now in the World of D&O
Businesses currently face a host of challenging operating circumstances: supply chain issues; labor shortages; economic inflation; the war in Ukraine; and the continuing disruptive effects of the pandemic. As a new securities class action lawsuit filed this week against the consumer product company Tupperware shows, these kinds of operating conditions not only create business and financial risk for many companies, but these conditions can also translate into litigation risk, as well. A copy of the securities lawsuit complaint filed recently against Tupperware can be found here.
Continue Reading Business and Litigation Risk in a Challenging Operating and Economic Environment
In my recent year-end wrap up of D&O issues, I speculated that certain current conditions – supply chain woes, labor supply constraints, and economic inflation – could lead to a rash of D&O claims. I actually had examples in my wrap-up article of D&O claims arising from supply chain issues and labor supply concerns, but I didn’t have any inflation-related D&O claims examples – until now. The securities class action lawsuit filed last week against Vertiv Holdings is directly related to the company’s recent inflation-caused earnings miss and ensuing stock price drop. As discussed below, there could be more inflation-related D&O claims to come. A copy of the March 24, 2022 complaint against Vertiv can be found here.
Continue Reading Can Economic Inflation Really Lead to D&O Claims? Yup. Here’s How.
In the third in a series of podcasts discussing the impact of the Biden Administration on the world of directors’ and officers’ liability and insurance, my good friends Carl Metzger of the Goodwin Procter law firm and Rob Yellen of Willis Towers Watson and I recently recorded a session that is now available in a…