California-based high technology firm Cisco Systems is the latest company to be hit with a racial diversity lawsuit, based on allegations that its directors breached their fiduciary duties to the company by failing to include an African-American on the company’s board, despite the company’s numerous statements about its commitment to diversity. Though this latest lawsuit is in many respects similar to the previously filed board diversity lawsuits, it does differ in that it was not filed by the plaintiffs’ firm that has filed most of these lawsuits and also because the lawsuit follows a pre-suit demand on Cisco’s board, by contrast to most of the prior suits where the plaintiffs had made no demand and instead argued demand futility. A copy of the complaint in the Cisco Systems action can be found here.
Continue Reading Cisco Systems Hit With Board Diversity Lawsuit
Vaccine Company Hit with COVID-19-Related Derivative Lawsuit
In the latest D&O lawsuit based on allegations related to the COVID-19 outbreak, a plaintiff shareholder has filed derivative lawsuit against the board of a vaccine developer, Vaxart, claiming that corporate insiders and the company’s largest investor profited when the company falsely claimed that it was part of the federal government’s accelerated program for the development of a COVID-19 vaccine. The complaint in the lawsuit, which alleges that the defendants violated their fiduciary duties and federal securities laws regarding proxy disclosures, can be found here.
Continue Reading Vaccine Company Hit with COVID-19-Related Derivative Lawsuit
Monster Beverage Hit With Latest Board Diversity Lawsuit
One of the focal points in the scrutiny that has followed in the wake of the current social justice movement has been the question of diversity at America’s companies, including the lack of diversity on corporate boards. Among other things, a number of boards of public companies lacking Black directors have been sued in a series of shareholders derivative lawsuits alleging that the board members violated their fiduciary duties by failing to live up to state diversity objectives, as discussed most recently. Now, in the latest example of this type of litigation, a plaintiff shareholder has filed a derivative lawsuit against the board of Monster Beverage Corporation, alleging that the directors breached their fiduciary duties and deceived investors by claiming to have diversity and inclusion programs while have no Black directors on the board. A copy of the complaint can be found here.
Continue Reading Monster Beverage Hit With Latest Board Diversity Lawsuit
First Half 2020 Securities Suits Against Foreign Issuers Outpaced Overall Filing Levels
As prior reports have noted (for example, here), securities suits filings against companies based outside outpaced the filing activity levels overall in the year’s first half. A new report from AIG takes a closer look at the first half 2020 U.S. securities suit filings against non-U.S. companies, and concludes among other things that the first half filings could result in the highest annual total of lawsuits against foreign filers in years. The AIG report, entitled “US Securities Class Actions: International US-Listed Companies/H1 2020” can be found here.
Continue Reading First Half 2020 Securities Suits Against Foreign Issuers Outpaced Overall Filing Levels
Growing Number of Companies Pledge to Address Board Diversity Issues
The current racial justice movement has created an environment in which corporations and other organizations are under pressure to reconsider and address their diversity and inclusion practices. Organizations that lack racial diversity in their corporate leadership – particularly on their boards of directors – have come in for increasing criticism and, as I have noted on this blog (most recently here), the possibility of board diversity litigation. In addition, beyond the scrutiny and litigation, the California legislature has passed a bill that would require publicly traded companies in the state to have at least one director from a minority community by the close of 2021.
It now appears that as a result of both the scrutiny, the legislation, and perhaps even because of the litigation threat, a number of companies have proactively taken steps to address these issues by pleading to add a Black director to their boards within a year.
Continue Reading Growing Number of Companies Pledge to Address Board Diversity Issues
What to Watch Now in the World of D&O
Every year after Labor Day, I take a step back and 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
Yet Another Board Diversity Derivative Lawsuit, This Time Against Danaher’s Board
In yesterday’s post, I noted that earlier this week, a plaintiff shareholder had filed a board diversity lawsuit against the Gap. Turns out, that the same day yet another company was also hit with a board diversity shareholder derivative lawsuit, this time involving the board of directors and Chief Executive Officer of the medical and industrial product company Danaher Corporation. The Danaher lawsuit is in many ways substantially similar to the prior lawsuits that have been filed against companies that have no African-Americans on their boards of directors; however, the Danaher lawsuit is the first filed against a company outside California (Danaher is based in the District of Columbia), and it was filed by a different law firm than the one that had filed all of the prior board diversity suits. The complaint in the Danaher action can be found here.
Continue Reading Yet Another Board Diversity Derivative Lawsuit, This Time Against Danaher’s Board
The Gap Hit with Board Diversity Derivative Lawsuit
In the latest in a series of lawsuits against high-profile companies alleging that the companies’ boards lack African-American directors, a plaintiff shareholder has filed a shareholder derivative lawsuit against the board of directors of the clothing retailer, The Gap. The lawsuit is substantially similar to the lawsuits filed by the same plaintiffs’ law firm against Oracle (here), Facebook (here), Qualcomm (here), and NortonLifeLock (here). A copy of the lawsuit against The Gap’s board can be found here.
Continue Reading The Gap Hit with Board Diversity Derivative Lawsuit
Guest Post: Funder, Short-Seller Use Undermines Securities Class Actions
In the following guest post, Nessim Mezrahi discusses the need for transparency in third-party litigation funding arrangements and judicial scrutiny on short-seller reports relied on by plaintiff securities class action attorneys. Nessim is cofounder and CEO of SAR, a securities class action data analytics and software company. A version of this article previously was published on Law360. I would like to thank Nessim 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 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: Funder, Short-Seller Use Undermines Securities Class Actions
Securities Suit Filings Against Tech Companies at Record High Levels in 2019
Securities class action lawsuits involving tech companies increased for the fourth consecutive year in 2019, according to the latest report from Cornerstone Research. The report, examining securities litigation activity against tech companies, supplements Cornerstone Research’s previously released report on 2019 securities litigation filing activity generally. The most recent report, which is entitled “Tech Company Securities Class Action Lawsuit Filings and Settlements: 2015 – Q1 2020 Review and Analysis,” and which examines securities filings and settlements related to tech companies between 2015 and Q1 2020, can be found here. Cornerstone Research’s August 20, 2020 press release about the report can be found here.
Continue Reading Securities Suit Filings Against Tech Companies at Record High Levels in 2019