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The Northern California wildfire known as the Camp Fire – reportedly the deadliest and most destructive wildfire in California history – has finally been fully contained. But while the fire has been doused, the fight about the fire has only just begun. Investigators will now undertake to determine the fire’s cause. And the inevitable lawsuits will now get rolling as well.

As I noted last week, investors already filed a wildfire-related securities class action lawsuit while the fires were still burning. And now a shareholder has filed a shareholder derivative lawsuit in federal court against the board and certain officers of PG&E Corp., and its regulated utility operating company, Pacific Gas and Electric Company, relating to the companies’ alleged role in causing the Camp Fire. As discussed below, this recent lawsuits may represent examples of the kinds of lawsuits we may expect to see in increasing numbers as a result of climate change-related effects. The derivative lawsuit complaint, filed in the Northern District of California on November 21, 2018, can be found in two parts here and here.
Continue Reading Further Wildfire-Related Management Liability Litigation: Harbinger of Things to Come?

The recent massive wildfires in California have caused the loss of dozens of lives, and many more people are missing. Thousands have been displaced and many millions more have been affected. The property damage has been devastating. The Camp Fire in Northern California alone has destroyed tens of thousands of 10,000 homes and businesses. Even as the fires raged, questions surrounding the fires’ causes were raised. Media stories have circulated raising the possibility that the electric utilities may be to blame for starting the fires. There undoubtedly will be substantial inquiries and perhaps even liability proceedings. Now it appears that the accountability process may not only include efforts by property owners and survivor and loved ones to recoup their losses, but it may also include securities lawsuits by utility company investors who claim they were misled about the company’s fire safety readiness and potential liability exposure.
Continue Reading First, Wildfires. Then What? Securities Litigation, Of Course

In June 2017 when the U.S. Supreme Court entered its opinion in California Public Employees Retirement System v. ANZ Securities, in which the Court affirmed the Second Circuit and held that Securities Act of 1933’s three-year statute of repose is not subject to equitable tolling, one question that was asked was whether the Court’s ruling would encourage more securities suit class members to file protective actions before the statutory period expired in order to preserve their right to opt-out of the class action.

Recent developments in a securities class action involving VEREIT, a real estate investment trust and successor-in-interest to the troubled American Realty Capital Properties, in which VEREIT has entered three opt-out settlements with large institutional investors totaling a whopping $217.5 million, suggest that the concerns raised following the ANZ Securities decision may be coming to pass. These developments may also portend a very complicated future for U.S. securities class action litigation, at least in the most serious cases. Alison Frankel’s October 29, 2018 post on her On the Case blog about the VEREIT opt-out settlements can be found here.
Continue Reading Do Opt-Out Settlements of $217.5 Million Foreshadow the Future of Securities Litigation?  

As I have noted in prior posts (most recently here), in recent months, allegations of price fixing have given rise to follow-on securities class action lawsuit filings against generic drug companies alleged to have participated in the price-fixing. All of these kinds of cases are examples of a securities litigation trend in which securities suit filings following in the wake of underlying antitrust allegations. In the latest example of this type of lawsuit, a plaintiff shareholder has now filed a securities class action lawsuit against McKesson Corporation, asserting securities claims based on the company’s alleged involvement in a scheme to fix prices for generic drugs. As discussed below, this new lawsuit has a number of interesting features.
Continue Reading Securities Lawsuit Filing Follows Generic Drug Price Fixing Allegations

In the latest example of a D&O lawsuit following in the wake of allegations of sexual misconduct, three shareholders have filed a state court derivative lawsuit in Oregon against Nike’s Board of Directors alleging that the defendants failed in their oversight duties and allowing a toxic “boys club” culture of sexual harassment and bullying to take hold. The Nike complaint shows yet again that the accountability process that has emerged as part of the #MeToo movement in many cases has involved efforts to hold company’s boards accountable for permitting misconduct or turning a blind eye. The Nike derivative complaint can be found here.
Continue Reading Nike Board Hit with Sexual Misconduct-Related Derivative Suit

Alleged deficiencies in climate change-related disclosures have been a target of advocacy groups, shareholders, and regulators. The latest example of this phenomenon is the civil lawsuit the New York Attorney General filed on Wednesday against Exxon Mobil Corporation. The NYAG alleges that the company sought to “systematically and repeatedly deceive investors” about the future impacts climate change regulation could have on the company’s assets and value. The lawsuit underscores the fact that climate change disclosures are and will remain under scrutiny and that the claims alleging insufficient or deceptive climate change-related disclosures remain a significant area of corporate liability exposure. The October 24, 2018 complaint can be found here. The NYAG’s October 24, 2018 press release about the lawsuit can be found here.
Continue Reading NYAG Files Climate Change Disclosure Lawsuit Against Exxon Mobil

In 1995, Congress passed the Private Securities Class Action Reform Act (PLSRA) over President Clinton’s veto in order to try to address perceived securities class action litigation abuses. According to a new report from the U.S. Chamber Institute for Legal Reform entitled “A Rising Threat: The New Class Actions Racket That Harms Investors and the Economy,” despite the PSLRA’s reforms, many of the same abuses that led to the PSLRA’s enactment have returned, and as a result the securities class action system is “spinning out of control.” According to the report, the time has come for Congress to intervene again to curb “abusive practices that enable the filing of unjustified actions.” The Institute’s October 23, 2018 report can be found here. 
Continue Reading Time for Another Round of Securities Class Action Litigation Reform?

Richard Zelichov

One phenomenon I have noted on this blog is the rise of event-driven securities class action lawsuits. Rather than being based on alleged or financial misrepresentations, as has traditionally and historically been the case in securities suits, these suits follow in the wake of and are based on adverse events in the company’s operations. A recent high-profile example of an event-driven suit is the securities class action lawsuit that was filed against Arconic in the wake of the Grenfell Tower fire last year.  In the following guest post, Richard H. Zelichov, a partner at Katten Muchin Rosenman LLP specializing in defending issuers and their directors and officers in securities class actions and stockholder derivative litigation, takes a look at the event-driven litigation phenomenon and the larger rise of securities suits based on mismanagement allegations. I would like to thank Richard for his willingness to allow 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 Richard’s article.
Continue Reading Guest Post: Corporate Mismanagement Becomes Event-Driven Securities Litigation

Last week, the Wall Street Journal reported that this past spring Google had exposed thousands of the Google+ social network users’ private data and then opted to withhold disclosure of the incident because of concerns that doing so would attract regulatory scrutiny and harm the company’s reputation. Following the news reports, questions immediately were asked about a possible SEC investigation of the incident. And now, these developments have drawn two new securities class action lawsuits in which shareholders of Alphabet, Google’s parent company, allege that the company misled investors about the adequacy of the company’s security measures to protect user data from theft and security breaches. As discussed below, the new lawsuits bring together several securities litigation filing trends involving data and privacy-related issues.
Continue Reading Google+ User Data Securities Lawsuits Filed Against Alphabet

For some time now, some observers had been predicting that we would be seeing a bunch of data breach-related securities class action lawsuits, but the predicted wave never seemed to materialize. However, with a recent uptick in these kinds of cases, that could be changing. On October 8, 2018, in the latest of these kinds of lawsuits to be filed, a plaintiff shareholder filed a securities class action lawsuit against China-based Huazhu Group. As discussed below, there are a number of interesting features of this latest data breach-related securities suit.
Continue Reading Chinese Hotel Company Hit With Data Breach-Related Securities Suit