In my recent roundup of key concerns in the world of directors’ and officers’ liability, I discussed the COVID-19-related litigation phenomenon, commenting that notwithstanding the lapse of time since the coronavirus’s initial outbreak there would likely be further pandemic-related lawsuits yet to come. As if to confirm the suggestion, last week a shareholder plaintiff filed
Two More Board Diversity Lawsuits Dismissed
Starting last summer and through the early part of this year, plaintiffs’ lawyers filed several shareholder derivative lawsuits against the boards of a number of companies alleging that the directors had breached their fiduciary duties by failing to include African American individuals on their boards. As I have detailed in previous posts (most recently here), these suits have not fared well, as courts have granted the motions to dismiss each of the cases in which courts have ruled on dismissal motions. In the past week, the courts in two more of these cases – involving the boards of NortonLifeLock and OPKO Health – granted the defendants’ motions to dismiss. The August 30, 2021 order in the NortonLifeLock case can be found here and the September 1, 2021 order in the OPKO Health case can be found here.
Continue Reading Two More Board Diversity Lawsuits Dismissed
eCommerce Firm Hit with SPAC-Related Securities Suit
In the latest SPAC-related securities class action lawsuit filing, a plaintiff shareholder has filed a class action lawsuit against Katapult Holdings, an ecommerce firm providing online financing and product purchase options for non-prime consumers. The defendants named in the complaint include two former officers of the SPAC with which Katapult merged in June 2021. A copy of the August 27, 2021 complaint can be found here.
Continue Reading eCommerce Firm Hit with SPAC-Related Securities Suit
49 Corporate Law Firms Trash SPACs-Are-Investment-Companies Lawsuits
As I noted in prior posts (here and here), in the last few days a group of plaintiffs’ lawyers that includes former SEC Commissioner Robert Jackson and Yale Law Professor John Morley filed shareholder derivative suits against the boards of three SPACs alleging that the SPACs had improperly failed to register as investment companies under the Investment Company Act of 1940. In response, a group of 49 corporate law firms has now issued a joint statement decrying the lawsuits and trashing the plaintiffs’ arguments that SPACs are investment companies merely because the SPACs invest their IPO proceeds in trust accounts while seeking a merger partner. The corporate law firms’ joint statement sheds interesting light on the legal theories asserted in the new lawsuits. A copy of the August 27, 2021 joint statement can be found here.
Continue Reading 49 Corporate Law Firms Trash SPACs-Are-Investment-Companies Lawsuits
More SPACs-Are-Really-Investment-Companies Derivative Suits Filed
Last week, when a group of plaintiffs’ attorneys filed a shareholder’s derivative suit against Bill Ackman’s SPAC seeking damages and alleging the company was really an Investment Company that should be registered under the Investment Company Act, I assumed the attorneys filed the suit because it was Ackman’s firm; because of the size and prominence of the SPAC; and because of Ackman’s unusual plan to invest the SPAC’s IPO proceeds in a minority interest. Well, it turns out, the plaintiffs’ lawyers involved were just getting started. They have now filed two more shareholders derivative suits against two other SPACs’ boards and sponsors, based on the same theory as in the Ackman SPAC suit that the SPACs involved are really Investment Companies that should be registered under the Investment Company Act. Looks like these SPACs-are-Investment-Companies suits are a thing now, and this could all get very interesting.
Continue Reading More SPACs-Are-Really-Investment-Companies Derivative Suits Filed
SEC Files COVID-19-Related Enforcement Suit Against Biotech Firm
As the pandemic has progressed and as time has passed, one question I am regularly asked is whether we will continue to see COVID-19 related legal actions being filed. If the latest SEC action is any indication, we have not yet seen the last of new COVID-19-related suit filings. On August 17, 2021, the agency filed a civil enforcement action against an Ohio biotech firm claiming that the firm made false claims about one of its products, as a way to suggest that the firm was positioned to profit from the coronavirus outbreak. A copy of the agency’s complaint can be found here.
Continue Reading SEC Files COVID-19-Related Enforcement Suit Against Biotech Firm
SPAC-Related Securities Suit Hits Smart Building Products Tech Company
In my previous blog post, I noted that plaintiffs’ attorneys’ have been and are continuing to file SPAC-related securities class action suits, and I also noted that the latest filings are targeting SPAC and SPAC merger entities that completed their IPOs in the early stages of the SPAC IPO frenzy in late 2020 and early 2021. As if to underscore this point, yesterday a plaintiff shareholder filed a securities class action lawsuit against a post-SPAC-merger smart home products technology company, based on alleged misrepresentations in the company’s warranty accruals. The new lawsuit represents the latest example of the SPAC-related securities litigation trend. A copy of the complaint in the new lawsuit can be found here.
Continue Reading SPAC-Related Securities Suit Hits Smart Building Products Tech Company
SPAC-Related Class Action Breach of Fiduciary Duty Lawsuit Filed in Delaware Chancery Court
As I have noted in prior posts (most recently here),over the last several months plaintiff shareholders have filed numerous SPAC-related securities class action lawsuits. In an interesting variant of SPAC-related litigation, a claimant has filed a post-merger SPAC-related class action lawsuit in the Delaware Court of Chancery against the former directors of a SPAC and against the SPAC’s sponsor, in which the claimant alleges the defendants breached their fiduciary duties to the pre-merger SPAC shareholders. The lawsuit has a number of interesting features, as discussed below. A copy of the plaintiffs’ August 4, 2021 complaint in the action can be found here.
Continue Reading SPAC-Related Class Action Breach of Fiduciary Duty Lawsuit Filed in Delaware Chancery Court
Sexual Discrimination and Harassment Allegations Lead to Securities Suit
Over the last few years, I have posted numerous items citing examples were sexual misconduct allegations or a hostile workplace environment have led to D&O claims. Many of these kinds of suits followed in the wake of the #MeToo movement. The fact that these kinds of allegations can lead to D&O claims is well understood in the D&O insurance industry. However, I know from recent conversations that some in the industry believe that the risk of these kinds of D&O claims has diminished as the #MeToo movement has evolved. However, recent events at the gaming company Activision Blizzard shows that unfortunately the kinds of underlying allegations that have led to claims are not a thing of the past; as discussed below, Activision Blizzard has now been hit with a securities suit based on underlying sexual misconduct and discrimination allegations.
Continue Reading Sexual Discrimination and Harassment Allegations Lead to Securities Suit
Home Health Equipment Company Hit with SPAC-Related Securities Suit
In its recent report on securities suit filings in the year’s first half, Cornerstone Research noted that while securities suit filings generally in the first six months of the year were down, SPAC-related securities suit filings were up, with first half suit filings involving SPACs double the number of SPAC-related suits during the full prior year. As further evidence that this first half 2021 securities suit filing trend will continue as the year progresses, last week a plaintiff shareholder filed a securities class action lawsuit against a home healthcare equipment company that merged with a publicly traded SPAC in November 2019. As discussed below, this latest suit has much in common with many of the prior SPAC-related lawsuits, but it also has certain distinctive features as well.
Continue Reading Home Health Equipment Company Hit with SPAC-Related Securities Suit