Here we are, well into the fifth year since the initial outbreak of COVID-19 in the U.S., and yet coronavirus-related securities lawsuits are still being filed. In the latest example, earlier this week plaintiffs’ lawyers filed a securities class action lawsuit against the electronics manufacturing firm Methode Electronics based in part on allegations concerning problems allegedly caused by the company’s loss of key personnel during the pandemic. A copy of the August 26, 2024, complaint can be found here.Continue Reading COVID-Related Securities Suit Filed Against Electronic Components Company

The number of federal court securities class action filings in the year’s first half project to a year-end total roughly level with year-end total number of suit filings last year, while case resolutions (dismissals and settlements) are on track to exceed 2023 levels, according to a recent report from NERA. The August 6, 2024, report, entitled “Recent Trends in Securities Class Action Litigation: 2024 H1 Update,” can be found here.Continue Reading NERA: First Half Securities Suit Filings Roughly Level with Last Year’s Pace

When SEC Chair Gary Gensler expressed concerns last December about the possibility of reporting companies engaging in “AI-washing,” he was referring company disclosures that overstate or mislead investors as to their true AI capabilities or the extent to which the company has incorporated AI into their operations or products. Since the time of those remarks, there have in fact been several AI-washing based SEC enforcement actions (as discussed, for example, here), and even several securities class action lawsuits based on AI washing allegations (for example, here). Late last week, In the latest example of an AI- washing-based securities class action lawsuit, a plaintiff shareholder filed a securities class action lawsuit against Israeli-based cosmetics internet platform Oddity Tech Ltd., based on allegations that the company overstated the extent to which AI processes and tools enhanced its delivery of consumer services. A copy of the July 19, 2024, complaint can be found here.Continue Reading Cosmetics Platform Hit with AI-Washing-Related Securities Suit

The pandemic officially ended well over a year ago, but the pandemic’s effects continue to ripple through the economy and affect company’s operations and financial results. Moreover, these effects continue to translate into securities class action litigation. The latest example is the lawsuit filed earlier this week against the Canadian defense software company CAE, Inc., which was sued after the disruptive effects of the pandemic caused certain of its fixed-price long-term contracts to be more costly and less profitable, notwithstanding the company’s assurances that it was managing the “ongoing challenges posed by the pandemic.” A copy of the July 16, 2024, complaint in the lawsuit can be found here.Continue Reading Defense Firm Hit with COVID and Supply Chain Disruption-Related Securities Suit

Just weeks before trial in the case was scheduled to being, the parties to the Under Armor securities class action lawsuit have agreed to settle the case for $434 million, according a company SEC filing. The case had recently survived the defendants’ motion for summary judgment. According to the lead plaintiffs’ counsel, the settlement represents the second-largest securities suit settlement in the Fourth Circuit. The settlement is subject to court approval. A copy of the company’s June 21, 2023, filing on Form 8-K can be found here. Plaintiffs’ counsel’s June 21, 2024, press release about the settlement can be found here.Continue Reading Under Armour Securities Suit Settles for $434 Million

As AI becomes an ever-more present component of many companies’ strategies and operations, one concern is the extent to which this technological shift could affect companies’ litigation risk exposures. One risk companies may face is that in seeking to promote their adoption of AI strategies, companies may be susceptible to allegations that they overstated their AI capabilities or the extent to which the strategies will actually improve results.Continue Reading Robotic Automation Company Hit With AI-Related Securities Suit

Here at The D&O Diary, our job is to watch for emerging trends in corporate and securities litigation. There is plenty to watch. Because we are always so attentive to what is new, it sometimes surprises us when a development appears that reflects an old or even seemingly played-out trend. That was our reaction to seeing the new COVID-related complaint filed this week against the health Insurer Humana, in which the plaintiff alleges that the company misled investors about the company’s rising costs associated with increased patient utilization rates due to post-pandemic pent-up demand. It is, in fact, a little surprising that even now, more than four years after the coronavirus first emerged in the U.S., COVID-related lawsuits are still being filed. A copy of the Humana complaint can be found here.Continue Reading Health Insurer Hit with COVID-Related Securities Suit

One of the more distinctive developments in the capital markets in recent years has been the rise in the number of very large private companies. These companies are sometimes referred to as “unicorns,” as if they are very rare creatures — but the reality is that worldwide there over 1,230 of them.  Because the rise of so many large private companies is relatively recent, many of the legal principles and procedures relevant to these companies are just forming – giving rise to what University of Illinois Law Professor Verity Winship describes as the “gaps between private-market reality and legal structures that were designed for public companies.”

Among the “uncharted areas” is shareholder litigation; in a new paper, Professor Winship considers what shareholder litigation has meant in the context of these unicorn companies. What she found is that shareholder litigation involving these companies is rare, and that the procedural mechanisms available to investors are limited, at least by comparison to the mechanisms available to public company investors. Professor Winship describes her paper in an April 25, 2024,  Harvard Law School Forum on Corporate Governance post entitled “Unicorn Shareholder Suits” (here). The paper itself can be found here.  Continue Reading Unicorn Companies and Securities Litigation

The COVID-19 pandemic was a disruptive event with the consequences continuing to reverberate through the economy and the business environment, in ways that not only affect companies’ operations and financial performance, but, for at least some companies, in ways that lead to securities class action litigation. So even though the initial COVID-19 outbreak in the U.S. was over four years ago, businesses continue to experience operational consequences from the pandemic, in some cases resulting in securities suits. The latest example is the lawsuit filed late last week against medical testing and diagnostic company QuidelOrtho Corporation, whose testing services revenue declined as the coronavirus transition to endemic status. A copy of the April 12, 2024, complaint against QuidelOrtho can be found here.Continue Reading Diagnostic Testing Company Hit With COVID-Related Securities Suit