I am sure many readers were as surprised as I was by the news last week that the New York Court of Appeals had overturned the disgraced former movie producer Harvey Weinstein’s sexual misconduct-related criminal convictions, apparently due to evidentiary decisions the trial court made. With the #MeToo phenomenon as a result back in
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.
Continue Reading Court Dismisses Activision Blizzard Sexual Harassment-Related Securities Suit
The directors’ and officers’ liability environment is always changing, but 2021 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2022 – and possibly for years to come. I have set out below the Top Ten D&O Stories of 2021, with a focus on the future implications. Please note that on Thursday, January 13, 2022 at 11:00 AM EST, my colleague Marissa Streckfus and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2021. Registration for the webinar can be found here. I hope you will please join us for the webinar.
Continue Reading The Top Ten D&O Stories of 2021
Every year 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 insurance. This year’s review is set out below. As the following discussion shows, this is a particularly eventful time in the world of D&O.
Continue Reading What to Watch Now in the World of D&O
Over the last few years, I have posted numerous items citing examples were sexual misconduct allegations or a hostile workplace environment have led to D&O claims. Many of these kinds of suits followed in the wake of the #MeToo movement. The fact that these kinds of allegations can lead to D&O claims is well understood in the D&O insurance industry. However, I know from recent conversations that some in the industry believe that the risk of these kinds of D&O claims has diminished as the #MeToo movement has evolved. However, recent events at the gaming company Activision Blizzard shows that unfortunately the kinds of underlying allegations that have led to claims are not a thing of the past; as discussed below, Activision Blizzard has now been hit with a securities suit based on underlying sexual misconduct and discrimination allegations.
Continue Reading Sexual Discrimination and Harassment Allegations Lead to Securities Suit
Among the companies with D&O litigation in recent years arising from sexual misconduct allegations was the clothing and consumer products company L Brands. The parties to the various legal proceedings arising out of the allegations have reached a settlement in which L Brands has agreed to adopt a number of management and governance measures; in order to fund these initiatives, the company has committed to funding of $90 million over the course of five years. As discussed below, the settlement has several interesting features. The parties’ July 30, 2021 stipulation of settlement can be found here.
Continue Reading L Brands Establishes $90 Million Fund in Sexual Misconduct Derivative Suit Settlement
In a derivative lawsuit settlement with one of the highest nominal dollar values ever – and in what is one of the largest #MeToo-related D&O lawsuit settlement ever – Google parent Alphabet has agreed to establish a $310 million diversity, equity, and inclusion fund as part of the settlement of the consolidated derivative litigation relating to the company’s alleged mishandling of sexual harassment allegations against senior executives and the company’s alleged overall culture of sexual discrimination and harassment. The company also agreed to adopt extensive reforms to its employment policies and to implement a number of governance reform measures as part of the settlement. The settlement is subject to court approval.
Continue Reading Alphabet Establishes $310 Million Fund in Google Sexual Misconduct Lawsuit Settlement
The news that McDonald’s had filed a lawsuit against its former CEO, Stephen Easterbrook, to recoup severance compensation the company had paid Easterbrook, made the front page of the Wall Street Journal. The company contends that Easterbrook had only been terminated last November “without cause” – entitling him to a full severance package – because he had lied to investigators about the nature and extent of his relationship with company employees. The lawsuit contends — based on evidence of three additional sexual relationships Easterbrook had with company employees that only came to light this summer — that Easterbrook should have been terminated for cause. As discussed below, the lawsuit raises a number of interesting issues. A copy of the company’s August 10, 2020 filing on Form 8-K about the lawsuit can be found here, and a copy of the complaint, which was attached to the 8-K, can be found here.
Continue Reading Thinking About McDonald’s Lawsuit Against its Former CEO
On May 27, 2020, in the latest #MeToo-related securities class action lawsuit to fail to survive initial pleading hurdles, Judge Gloria M. Navarro granted the defendants’ motion to dismiss the securities suit filed against Wynn Resorts based on allegations that the company had failed to disclose sexual misconduct of its former CEO, Stephen Wynn. The ruling joins several other recent dismissal rulings in #MeToo-related securities suits – although, as noted below, there have also been several noteworthy settlements in #MeToo suits as well. A copy of Judge Navarro’s opinion can be found here.
Continue Reading Dismissal Motion Granted in Wynn Resorts #MeToo-Related Securities Suit
In yet another significant #MeToo-related development, the parties to the Signet Jewelers securities class action lawsuit have agreed to settle the case for $240 million. There are a number of interesting features to the settlement, as discussed below; among other things, over $200 million of the settlement amount is to be funded by insurance. The settlement is subject to court approval. The plaintiff’s March 26, 2020 letter to the court regarding the settlement can be found here. The parties’ stipulation of settlement can be found here.
Continue Reading Signet Jewelers Settles #MeToo-Related Securities Suit for $240 Million