Securities class action lawsuit filings remained at elevated levels in 2019, but the mix of cases changed during the year, according to the recently published annual report from NERA Economic Consulting. According to the report, which is entitled “Recent Trends in Securities Class Action Litigation: 2019 Full-Year Review,” there were relatively fewer merger objection lawsuits during the year, and relatively more standard securities suits. NERA’s January 21, 2020 press release about the report can be found here, and the report itself can be found here. My own analysis of the 2019 securities litigation can be found here.
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As the various stories and revelations came to light during the peak of the #MeToo movement, there were also a number of D&O lawsuits filed against companies whose executives were the target of the stories. Among these lawsuits was the #MeToo-related securities class action lawsuit filed against CBS. On January 15, 2020, in a lengthy and detailed opinion, Southern District of New York Judge Valerie Caproni largely granted the defendants’ motion to dismiss the lawsuit, although the lawsuit did survive as to one set of allegations involved alleged statements by former CBS executive Leslie Moonves. The court’s ruling underscores the difficulty for plaintiffs in trying to translate sexual misconduct allegations into securities claims.
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The liability environment for directors and officers is always in a state of change, but 2019 was a particularly eventful year in the D&O liability arena, with important consequences for the D&O insurance marketplace. The past year’s many developments have significant implications for what may lie ahead in 2020 – and possibly for years to come, as well.  I have set out below the Top Ten D&O Stories of 2019, with a focus on the future implications.
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The number of federal court securities class action lawsuit filings during 2019 was consistent with the heightened number of filings in each of the two prior years. The total number of suits during 2019 was significantly increased by the number of federal court merger objection lawsuit filings, but even just with respect to the traditional suit filings, the number of securities suit filings in 2019 was well above historical levels. The 2019 federal court securities litigation rate (that is, the number of lawsuits relative to the number of listed companies) was at an all-time high.
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Paul Ferrillo

As regular readers of this blog know, one of the many consequences that may follow for a company that experiences a cybersecurity incident is that it could get hit with a D&O claim. In the following guest post, Paul Ferrillo examine whether the increasing move toward cybersecurity-related D&O claims could in turn lead to an increase in prior Delaware Section 220 books and records inspection demands. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. I would like to thank Paul for allowing me to publish his guest post as an article 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 Paul’s article.
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On November 21, 2019, when a plaintiff shareholder filed a securities class action lawsuit against Aurora Cannabis, Inc. and certain of its directors and officers, the company became the latest U.S.-listed Canadian cannabis company to be hit with a U.S. securities class action lawsuit. The lawsuit against Aurora came just one day after a different claimant launched a separate U.S. securities lawsuit against another Canadian-based and U.S.-listed cannabis company, Canopy Growth. These two companies join a growing list of cannabis-related firms that have been hit with securities suits this year. As discussed below, these cannabis-related company lawsuits are one of several factors contributed to the continued elevated level of securities class action lawsuit filings in the U.S.
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Once again, wildfires are raging across the length of California, from San Francisco to Los Angeles. Once again, the electricity transmission facilities of PG&E are thought to have caused or contributed to at least some of the wildfires. And once again, in the wake of the wildfires, shareholders have launched a securities class action lawsuit against company executives. As discussed below, the new lawsuit is the latest example of the way in which transformative changes arising from climate change can lead to directors’ and officers’ liability litigation.
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In the wake of the U.S. Supreme Court’s March 2018 Cyan decision, in which the Court affirmed that state court’s retain concurrent jurisdiction for liability action under the ’33 Act, plaintiffs’ lawyers have initiated a number of Section 11 actions in the courts of a number of states. This new wave of state court Securities Act lawsuits is now making its way through the courts. As the cases have progressed, in some instances the state courts have granted the defendants’ motions to dismiss. The latest example of a state court granting a defendants’ motion has now occurred in the Connecticut state court claim alleging ’33 Act violations in connection with Pitney-Bowes September 2017 debt note IPO. The Connecticut court’s October 24, 2019 order granting the defendants’ motion to strike, a copy of which can be found here, raises a number of interesting issues.
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In the latest example of a securities class action lawsuit arising out of data breach or other cybersecurity incident, on October 24, 2019, a plaintiff shareholder filed a securities class action lawsuit against California-based software company Zendesk. The lawsuit follows after the company announced disappointing second quarter financial results in July and then announced in early October that customer account information had been accessed. The lawsuit is most recent in a series of lawsuits in which companies experiencing cybersecurity incidents get hit with securities lawsuits.
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