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

Stories of alleged sexual misconduct have dominated recent headlines.  Allegations of sexual assault raised against Supreme Court Brett Kavanagh have been the lead story all week, and there has also been extensive coverage of the criminal sentencing of Bill Cosby for sexual assault. These stories arise as part of a broader series of revelations of sexual misconduct involving media figures, politicians, and corporate executives.

In the midst of this depressing litany one of the most disturbing sets of disclosures has been the revelations of the sexual misconduct involving former Michigan State University and U.S. Olympic gymnastics team physician Larry Nassar. Allegations relating to Nassar are back in the news again because of a new lawsuit a former MSU athlete has filed. The plaintiff’s allegations raise a number of issues. As discussed below, the new complaint contains extensive allegations against MSU’s Board of Trustees, underscoring how the allegations raised in the current wave of sexual misconduct allegations can lead to claims against organization’s directors and officers.
Continue Reading Plaintiff’s Sexual Assault Complaint Asserts Claims Against Michigan State’s Board of Trustees

September is here. Labor Day has come and gone. Time to put away the swim trunks, parasols, flip flops, bungee cords, ukuleles, sun screen, boomerangs, bongos, snorkels, vorpal blades, and unicycles, and get back to work. Yes, it is time to answer all those emails and return all of those phone messages. And most importantly of all, it is time to catch up on what has been happening in the world of directors’ and officers’ liability and insurance. Here is what happened while you were out.
Continue Reading While You Were Out

As I have noted in recent posts, the #MeToo movement has led to a number of D&O lawsuits as the accountability process has led not only to claims against the wrongdoers but also against the wrongdoers’ company and other company executives for turning a blind eye or failing to disclose the problems. On August 30, 2018, in the latest of these D&O claims arising out of revelations of sexual misconduct, investors filed a securities class action lawsuit against Papa John’s International, following news reports of sexual harassment at the company involving the company’s founder and former CEO and Chairman, John H. Schantter, as well as other executives at the company.
Continue Reading Yet Another D&O Claim Arising out of Revelations of Sexual Misconduct

As I have noted in prior posts, one of the noteworthy aspects of the whole #MeToo movement has been that the accountability efforts have included not only claims against the wrongdoers themselves, but also against the wrongdoers’ companies and company executives for enabling the misconduct or turning a blind eye. In the latest of these kinds of sexual misconduct-related lawsuit, a CBS shareholder has filed a securities class action lawsuit against CBS Corporation based on revelations that the company’s CEO, Leslie Moonves, allegedly engaged in sexual harassment at the company. The lawsuit underscores the fact that revelations of sexual misconduct represent an emerging area of corporate liability.
Continue Reading Investor Files Sexual Misconduct-Related Securities Suit Against CBS

In the latest example of a D&O lawsuit arising in the wake of allegations against a corporate executive of sexual misconduct, a shareholder has filed a securities class action lawsuit against National Beverage Corp. and certain of its executives following news reports that the company’s Chairman and CEO allegedly had inappropriately touched company pilots while traveling on the Chairman’s business jet.  (National Beverage manufactures the ubiquitous LaCroix brand mineral water, with which the author of this blog has absolutely no connection.) The complaint, a copy of which can be found here, also contains separate allegations relating to allegedly misleading financial disclosures. This new lawsuit, like the prior D&O lawsuits filed following revelations of sexual misconduct allegations, underscores the fact as corporate executives are called out for alleged misbehavior, the accountability process may extend not only the alleged wrongdoers themselves, but may also extend to their company and other executives.  
Continue Reading Another D&O Lawsuit Arising from Sexual Misconduct Allegations

In a May 16, 2018 press release (here), Michigan State University announced that its board of trustees has approved a settlement in which the university agreed to pay MSU doctor Larry Nassar’s sexual assault victims a total of $500 million. There are a number of noteworthy features to this settlement agreement, beyond just its sheer size. Among other things, the school does not yet know for sure how it is going to fund the settlement.
Continue Reading Michigan State Agrees to Pay Sexual Assault Victims $500 Million    

Mark Sutton
Karen Boto

Among other things, the media clamor about claims of sexual misconduct involving high profile politicians and business executives has in some instances led to D&O claims, as I recently noted. In the following guest post, Mark Sutton and Karen Boto of the Clyde & Co. law firm take a look at this phenomenon, with particular attention to the specific circumstances at two prominent U.K. charities. I would like to thank Mark and Karen 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 Mark and Karen’s guest post.
Continue Reading Guest Post: Sexual Misconduct Claims: How Charitable is Your D&O Policy?

The fallout from the current wave of revelations sexual misconduct involving media figures, politicians, and corporate executives has included, among other things, a rash of D&O claims – including, for example, claims against the boards of 21st Century Fox and Wynn Resorts. An interesting recent scholarly paper takes a detailed look at D&O claims arising out of allegations of sexual misconduct, examines the potential bases of liability, and considers the relative social utility of this kind of litigation, as well as the practical implications for corporate boards and their organizations. The March 22, 2018 paper by Daniel Hemel and Dorothy Lund of the University of Chicago Law School and entitled “Sexual Harassment and Corporate Law” can be found here. The authors summarize their paper in an April 9, 2018 post on the CLS Blue Sky Law Blog (here).
Continue Reading Sexual Misconduct and D&O Claims