In the wake of credit monitoring and reporting firm Equifax’s announcement last week that it had sustained a data breach involving 143 million U.S. customers, a wave of consumer class action lawsuits has followed. In addition, the litigation wave now also includes at least one securities class action lawsuit; more securities suits are likely to follow. Although data breach-related D&O claims have not fared particularly well in the past, there are features of the Equifax situation that may put the securities suits against Equifax in a different category. An even more interesting question is the extent to which the new lawsuit portends further data breach-related securities litigation going forward.
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Securities Suits Hit Opioid Drug Companies
As has been well-documented, the United States in the middle of an “epidemic” involving the abuse of prescription and non-prescription opioids. The companies that manufacture and distribute these drugs have been hit with a “barrage” of lawsuits, filed by states, counties, and cities. Just last week, the state of Arizona filed a lawsuit against a drug company alleging that the company had fraudulently marketed a powerful opioid painkiller. As this lawsuit wave has grown, shareholders and others have also climbed on the litigation bandwagon. In recent days, shareholders have filed a series of lawsuits against opioid manufacturers and distributors and their directors and officers. Just as the number of lawsuits filed by governmental entities seems likely to continue to grow, the number of investor suits against opioid drug companies seems likely to grow as well.
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What to Watch Now in the World of D&O
Every year just after Labor Day, I take a step back and survey the most important current trends and developments in the world of Directors’ and Officers’ liability and D&O insurance. This year’s survey is set out below. Once again, there are a host of things worth watching in the world of D&O.
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Shareholders File Climate Change Disclosure Lawsuit in Australian Court
In the wake of President Donald Trump’s June 1, 2017 announcement that the United States will withdraw from the Paris Climate Accord, one of the things I predicted was that the administration’s action likely would trigger a host of reactions on the state, national and international stage. Among other things, I conjectured that activists facing setbacks on the political stage might try to use judicial processes to advance their agenda. Though it lacks a direct connection to the U.S.’s actions on the Paris Climate Accords, a recent Australian lawsuit confirms my suggestion that activists are increasingly likely to try to use the courts as a way to promote their objectives.
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Cornerstone Research: First Half Securities Suit Filings at Record Pace
Securities class action lawsuits were filed at a record pace in the first half of 2017, according to the latest report from Cornerstone Research. While the surge in securities suit filings is due in part to the rise of federal court merger objection lawsuit filings, both traditional securities suit filings and M&A filings were “at historic levels.” The Report, jointly prepared by Cornerstone Research in conjunction with the Stanford Securities Class Action Clearinghouse and entitled “Securities Class Action Filings – 2017 Mid-Year Assessment,” can be found here. Cornerstone Research’s July 25, 2017 press release about the report can be found here. My own analysis of the first half securities suit filings can be found here.
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Turning Events into Securities Suits
It may come as little surprise that litigation has emerged in the wake of the tragic Grenfell Tower fire in London last month. Some may find it surprising, however, that among the lawsuits arising from the London building fire is a securities class action suit filed in the United States. The lawsuit is just the latest example of the follow-on securities suit, a phenomenon that, as discussed below, is one of several factors that helps explain the current elevated pace of securities class action lawsuit filings in the U.S.
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First Half 2017 Securities Suit Filings Continue at Exceptional Levels
Largely as a result of the continuing upsurge in the number of federal court merger objection lawsuits, securities class action lawsuits were filed at historic levels during the first half of 2017 and well above last year’s elevated pace. Though the number of filings in this year’s second quarter were slightly lower than in the first quarter, the total number of filings in the first six months of the year overall were on pace for the highest annual number of securities class action lawsuits since 2001.
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Record Number of Settlements Added to Top 100 Securities Suits Settlement List in 2016
Thirteen of the 100 all-time largest securities class action lawsuit settlements were finalized in 2016, the highest number of settlements during any one year period, according to a recent report from Institutional Shareholder Services (ISS). Two of the 2016 settlements among the top 100 were among the eleven largest of all times. The report, which also ranks the plaintiffs’ law firms by the number of top 100 settlements in which they were involve, entitled “The Top 100 U.S. Settlements of All Time,” can be found here.
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Guest Post: SEC Enforcement Data: Midyear Review
In the following guest post, Tammy Yuen and Ted Carleton of the Skarzynski Black law firm review and analyze the May 9, 2017 Cornerstone Research report entitled “SEC Enforcement Activity: Public Companies and Subsidiaries, Midyear FY 2017 Update” (here), which details the SEC’s enforcement activity during the first half of the current fiscal year. I would like to thank Tammy and Ted for their willingness to allow me to publish their 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 Tammy and Ted’s guest post.
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PwC Annual Study Reports Record Number of Securities Suits
Largely driven by a “dramatic” increase in the number of federal court merger objection lawsuits, securities class action litigation filings rose to the highest level ever in 2016, according to PwC’s most recent annual securities litigation report. The report also noted that for the first time securities litigation rose though the stock market performance during the year did not, contrary to prior patterns. The April 2017 report, entitled “A Rising Tide or a Rogue Wave? 2016 Securities Litigation Study,” can be found here.
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