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In a lawsuit that captures two of the top current securities class action lawsuit trends, a plaintiff shareholder has filed a securities class action lawsuit against health technology company Butterfly Network. The new lawsuit is both SPAC-related and COVID-related. Butterfly merged with Longview Acquisition Corp., a special purpose acquisition company (SPAC), in February 2021. The allegations included, among other things, a contention that the defendant company failed to take into account pandemic’s “broad consequences” in its operations and reporting. A copy of the plaintiff’s February 16, 2022 complaint can be found here.
Continue Reading Post-SPAC-Merger Company Hit with COVID-Related Securities Suit

As I have noted elsewhere on this site (for example here), the number of federal court merger objection class action lawsuits declined significantly during 2021. But as I and others have also noted, the decline in class actions had not necessarily meant less merger objection litigation overall. The merger objection suits are still being filed; they are just being filed as individual actions rather than as class actions. In the following article, Gregory Markel, Vincent Sama, Daphne Morduchowitz, Andrew Escobar, and Matthew Catalano of the Seyfarth Shaw law firm take a closer look at these changing merger objection lawsuit patterns and discuss the implications. I would like to thank the authors for allowing me to publish their article as a guest post 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 the authors’ article.
Continue Reading Guest Post: Plaintiffs’ Abusive Tax on M&A Deals Changed Form But Continued in 2021

As I have noted in prior posts on this site, the surge in special purpose acquisition corporation (SPAC) IPO transactions over the last two years has also meant a wave of SPAC-related lawsuits. In the following guest post, Peter Evans, Complex Claims Director – Executive & Professional Lines, Berkshire Hathaway Specialty Insurance, Elan Kandel, Member, Bailey Cavalieri LLC and James Talbert, Associate, Bailey Cavalieri LLC, take a look at SPACs and the litigation risks that SPAC sponsors can face, as well as the insurance issues that can arise in claims involving SPAC sponsors. I would like to thank the authors for allowing me to publish their article as a guest post 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 the authors’ article.
Continue Reading Guest Post: Litigation Risks and Insurance Issues for SPAC Sponsors

In what is one of the largest shareholder derivative lawsuit settlements ever, the parties to the various FirstEnergy bribery-related derivative lawsuits have reached an agreement to settle the actions for a payment of $180 million and the company’s agreement to adopt a number of corporate governance reforms. The settlement amount is to be funded by D&O insurance. The settlement agreement is subject to court approval. First Energy’s February 10, 2022 announcement of the settlement can be found here. The parties’ February 10, 2022 settlement term sheet can be found here.
Continue Reading FirstEnergy Bribery-Related Derivate Lawsuit Settled for $180 Million

In the latest SPAC-related securities class action lawsuit to be filed, a plaintiff shareholder has filed a post-merger lawsuit against a commercial space launch company that merged with a SPAC in June 2021. As is the case with many of the SPAC-related securities lawsuits, the defendant company was sued after its share price declined following the publication of a short-seller report. A copy of the complaint filed against Astra Space, Inc. on February 9, 2022 can be found here.
Continue Reading Post-Merger Commercial Space Launch Company Hit with SPAC-Related Securities Suit

Readers of this blog know that two important current litigation trends involve the filing of claims relating to cybersecurity incidents and the filing of COVID-19-related claims.  A new securities class action lawsuit filed this week touched on both of these securities suit filing trends. Secure technology company Telos Corporation was hit with a securities suit following a decline in the price of its shares after the company experienced revenue delays owing to cybersecurity and coronavirus related “headwinds” that postponed the company’s performance of two key contracts. A copy of the plaintiffs’ complaint filed on February 7, 2022 against Telos can be found here.
Continue Reading New Lawsuit Reflects Cybersecurity and Coronavirus-Related Litigation Trends

Last summer, I noted on this blog the filing of what turned out to be a total of four separate securities class action lawsuits that were filed against Chinese internet-business firms following a crackdown on their activities by the Chinese cybersecurity regulator. I noted at the time that though these four cases involved circumstances arguably unique to China the cases nevertheless represented examples of the ways in which regulatory risk could translate into securities class action litigation risk.

Last week, two more securities suits were filed against Chinese companies – both involved in the business of providing private educational and tutoring services, a sector that during the past year has been the target of a governmental crackdown – underscoring the extent to which regulatory exposures can lead to securities litigation risk. As discussed below, these latest cases, along with the four prior cases filed last summer, also arguably demonstrate the ways in which securities litigation risk can arise out of political risk.
Continue Reading Political Risk as Securities Litigation Risk

In the latest example of a SPAC-related securities class action lawsuit against a post-SPAC-merger company in the electric vehicle industry, a plaintiff shareholder has filed a securities suit against Electric Last Mile Solutions, Inc. an EV company that merged with a SPAC in June 2021. The lawsuit comes after the company announced the departure of its CEO and its Chairman and the need for the company to restate prior financial statements. A copy of the plaintiff’s February 3, 2022 complaint can be found here.
Continue Reading SPAC-Related Securities Suit Filed Against Electric Vehicle Company

Securities class action lawsuit filings “plummeted” in 2021 compared to recent prior years, largely as a result of declines in M&A litigation and in the number of “core” Rule 10b-5 lawsuits, according to the latest annual report from Cornerstone Research. According to the report, entitled “Securities Class Action Filings: 2021 Year in Review,” the number of new federal and state securities class action lawsuit filings decline 35% compared to 2020, but nevertheless remained “in line” with the 2012-2016 average. The report can be found here. Cornerstone Research’s February 2, 2022 press release about the report can be found here. My summary of the 2021 federal court securities class action lawsuit filings can be found here.
Continue Reading Cornerstone Research: Securities Suit Filings “Plummet” in 2021

There were fewer than 300 total securities class action lawsuit filings in 2021 for the first time since 2016, according to the latest report from NERA Economic Consulting. While the report, entitled “Recent Trends in Securities Class Action Litigation: 2021 Full-Year Review,” notes that securities suit filings declined in 2021 compared to recent years, largely due to a decline in merger objection lawsuit filings, the number of 2021 securities suit filings is “well within pre-2017 historical range.” Aggregate, average, and media settlements also declined in 2021 relative to prior years, according to the report. The report can be found here. NERA’s January 25, 2022 press release about the report can be found here. My own report on the 2021 securities suit filings can be found here.
Continue Reading NERA Economic Consulting Report Shows Decreased Securities Suit Filings in 2021