I was struck by the recent statements of Chubb CEO Evan Greenberg quoted an insurance industry publication that a colleague circulated to me last week. In the article, Greenberg said that when it comes to ESG commitments, many companies – particularly insurance companies – may be over-promising. What made Greenberg’s remarks particularly interesting to me was his suggestion that companies’ commitment to net-zero goals and other lofty-sounding climate aspirations could lead to shareholder lawsuits. It is worth thinking about this litigation possibility in the context of current regulatory action focused on so-called “greenwashing” in the investment fund industry. In both cases, the concern is that companies may tried to take on an ESG aura that the actual facts may not support.
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Dismissal Denied in SPAC-Related Securities Suit Alleging Supply Chain Misrepresentations
As I have noted in recent posts (here, for example), SPAC-related securities suit filings continue to accumulate and represent a significant current securities litigation phenomenon. But while the number of suits continues to mount, relatively few of these cases have yet reached the dismissal stage. In a recent ruling, however, the defendant company’s motion to dismiss in a SPAC-related securities suit was substantially denied as to the company itself and its top executives. In particular, the claims based on allegations that the company, Romeo Power, and its senior officials made supply chain misrepresentations were sustained, though the related claims against three former executives of the SPAC with which Romeo had merged were dismissed. A copy of the June 2, 2022 opinion in the case can be found here.
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Quantum Computing Company Hit with SPAC-Related Securities Suit After Short-Seller Report
In the latest SPAC-related securities class action lawsuit filing, a plaintiff shareholder has filed a securities suit against IonQ, a quantum computing company that became a publicly traded company in September 2021 through a merger with a publicly traded SPAC. As is the case with many of the SPAC-related securities suits, the new lawsuit against IonQ follows the publication of a critical short-seller report about the company and its technology. A copy of the complaint, filed on May 31, 2022, can be found here.
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Cardinal Health Opioid-Related Derivative Suit Settled for $124 Million
In what is one of the largest ever shareholder derivative settlements, the parties to the Cardinal Health opioid-related shareholder derivative litigation have agreed to settle the suit for $124 million. The Cardinal Health settlement, which is subject to court approval, is the latest massive settlement of opioid-related derivative litigation. It also represents another example of a massive settlement of a breach of the duty of oversight claim. The settlement is to be funded entirely by Cardinal Health’s D&O insurers. A copy of the plaintiffs’ May 25, 2022 unopposed motion for preliminary approval of the settlement can be found here.
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Cybersecurity Firm Hit with Data Breach-Related Securities Suit
Regular readers of this site know that one of the continuing D&O litigation trends over the last several years has been the incidence of securities class action lawsuits and other litigation arising out of cybersecurity incidents at the defendant company. While in many instances these suits have not fared particularly well, plaintiffs’ lawyers have nevertheless continued to file the suits. In the latest suit filing of this type, on May 20, 2022, a plaintiff shareholder filed a securities suit against the cybersecurity firm Octa, Inc., relating to the decline in the company’s share price following revelations of a data breach at the firm. Although in many ways this latest suit is similar to previously filed cybersecurity-related securities suits, there are certain distinct aspect of the suit that make it noteworthy, as discussed below. A copy of the May 20, 2022 complaint in the new lawsuit can be found here.
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Nielsen Holdings Settles GDPR-Related Securities Suit
Regular readers of this blog know that one of the important emerging D&O liability exposures involves issues arising from privacy concerns. There have, in fact, been a number of important privacy-related D&O claims filed, including lawsuits relating to the EU’s General Data Protection Regulation (GDPR). Among the highest profile of these GDPR-related lawsuits is the securities class action lawsuit filed against U.K. based media rating firm Nielsen Holdings. The Nielsen securities suit survived a dismissal motion. Now, in the latest development, the Nielsen suit recently settled for $73 million. The settlement is subject to court approval. A copy of the parties’ stipulation of settlement can be found here.
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U.K-Based Cybersecurity Firm Hit with SPAC-Related Securities Suit
As I have noted in prior posts (most recently here), one of the most significant recent securities litigation trends has been the number of filings against post-SPAC-merger publicly traded companies. In the latest of these SPAC-related suit filings, last week a plaintiff shareholder filed a securities class action lawsuit against Arquit Quantum, a U.K.-based cybersecurity firm that merged with a SPAC in September 2021. Though this latest lawsuit is in many ways representative of the emerging SPAC-related securities litigation, it also has some distinct features as well, as discussed further below. A copy of the May 6, 2022 complaint in the case can be found here.
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Fourth Circuit Affirms Dismissal of Marriott Data Breach-Related Securities Suit
One of the reasons there have not been as many cybersecurity-related securities lawsuits as some commentators (including me) expected is that the plaintiffs’ track record in the cases that have been filed has been decidedly mixed. To be sure, there have been some very noteworthy successes for the plaintiffs, including the Equifax cybersecurity-related securities suit, which settled for $149 million. But though there have been some noteworthy successes, many of the other cybersecurity related securities suits have ended in dismissal.
Among the more significant recent cybersecurity-related securities suit dismissals was the ruling in the securities lawsuit relating to the massive Marriott data breach. Now, on appeal, the Fourth Circuit has affirmed the district court’s dismissal in the Marriott case, the latest in a series of high-profile setbacks plaintiffs have experienced in cybersecurity-related securities suits. A copy of the Fourth Circuit’s April 21, 2022 opinion can be found here.
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Two More SPAC-Related Securities Suits Launched
Consistent with what is already a well-established current securities class action litigation filing trend, plaintiff shareholders last week filed two more SPAC-related securities suits. Although the two new suits are somewhat different from each other, they share the common feature that they both involve corporate defendants that recently became publicly traded through merger with a SPAC. The SPAC-related lawsuits, including the two most recently filed examples, represent a significant securities litigation phenomenon this year. The two new lawsuits are discussed below.
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Court Dismisses Activision Blizzard Sexual Harassment-Related Securities Suit
Over the last several years and In the wake of the #MeToo movement, plaintiff shareholders have filed D&O claims against many companies, as well as against the companies’ executives, involving underlying allegations of sexual misconduct or sexual harassment. The highest profile of these cases to be filed within the last year was the securities class action lawsuit filed against Activision Blizzard and several of its officers based on allegations that the company knew about and failed to disclose governmental investigations of employees’ sexual harassment allegations. In a recent order, the court overseeing the securities suit granted the defendants’ motion to dismiss the complaint, holding that the plaintiffs had failed to sufficiently allege both falsity and scienter. The dismissal was granted without prejudice. The court’s ruling illustrates the difficulty plaintiffs sometimes face in trying to bootstrap underlying sexual misconduct allegations into D&O claims. The Court’s April 18, 2022 order in the case can be found here.
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