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Maurice Pesso
Greg Steinberg

As I have frequently noted on this blog (for example, here), problems involving relatedness between claims present recurring coverage issues under D&O insurance policies. In the following guest post, Maurice Pesso and Greg M. Steinberg of the White and Williams LLP law firm take a look at a recent decision out of the Northern District of Illinois applying New York law to a D&O insurance dispute involving related claims issues. I would like to thank Maurice and Greg 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Maurice and Greg’s guest post.
Continue Reading Guest Post: Another Court Applies New York’s “Sufficient Factual Nexus” Test to Related Claims

new yorkIn a series of decision culminating in Chancellor Bouchard’s January 2016 ruling in the Trulia case (about which refer here), Delaware’s courts have shown their hostility to disclosure-only settlements in merger objection lawsuits. These Delaware developments led some observers to speculate that we might have seen the end of the litigation trend in which nearly every M&A transaction attracted at least one merger objection lawsuit.

However, a February 2017 New York court ruling in the Gordon v. Verizon Communications, Inc. (discussed here), in which an intermediate appellate court reversed the lower court’s rejection of a disclosure-only merger objection lawsuit settlement and remanded the case for an award of plaintiffs’ fees, raised the question of whether or not there might yet be life ahead for disclosure-only settlement in merger objection lawsuits.

In a provocative March 20, 2017 post on the CLS Blue Sky Blog (here), Columbia Law School Professor John Coffee takes a look at the New York court’s Verizon decision, concluding that the decision ensures that “the nuisance suit remains alive and well in New York and should bring the worst of the plaintiff’s bar streaming back to New York.”
Continue Reading Are New York Courts Keeping the World Safe for Nuisance Value Merger Objection Lawsuits?

new yorkAfter the Delaware courts in a series of decisions culminating in the January 2016 ruling in the Trulia case showed their hostility to disclosure-only settlements of merger objection lawsuits, commentators asked whether this development might mean the end of the merger objection lawsuit curse. Since that Delaware court’s decision in the Trulia case, plaintiffs’ lawyers increasingly are filing merger objection lawsuits outside Delaware, primarily in federal court. This shift in turn raises the question of the extent to which the courts in other jurisdictions will follow the principles the Delaware court set out in the Trulia case. The jurisdictional shift also raises larger cases about the future direction of merger objection litigation. A recent decision from a New York intermediate appellate court provides important perspective on many of these questions.

A February 2, 2017 opinion from the New York Appellate Divisions, First Department, applying New York law, reversed a lower court’s rejection of the disclosure-only settlement of a suit that had been filed in connection with Verizon’s proposed acquisition of Vodafone subsidiaries holding ownership interests in Verizon Wireless. The decision expressly considered the Delaware courts’ concerns in Trulia and other cases about disclosure-only settlements, but nevertheless not only reversed the lower court’s rejection of the settlement, but remanded the case for the lower court to consider a fee award for the plaintiffs’ counsel. The New York court’s decision in the Verizon case presents a number of interesting and important suggestions the future direction of merger objection lawsuits.  The New York appellate court’s opinion can be found here.
Continue Reading Latest Twist in the Merger Objection Lawsuit Saga: New York Appellate Court Approves Disclosure-Only Settlement

new yorkOne of the important factors behind the recent rise of third-party litigation financing has been the view in many jurisdictions that litigation finance does not violate ancient prohibitions against “champerty” – that is, the investment by an uninvolved third-party in a lawsuit with the intent of sharing in any recovery. As I discussed in a recent post, the general view is that litigation funding arrangements are not champertous as long as the plaintiff continues to control the litigation.

However, in a recent decision, the New York Court of Appeals (the state’s highest court) held that a financial transaction in which the plaintiff had purchased securities for the purpose of filing suit violated New York’s champerty statute. The Court also ruled that the transaction did not come within the statutory safe harbor for larger financial transactions. The appellate court’s ruling on the champerty issue is interesting, but its discussion of the safe harbor provisions – which likely would protect most conventional litigation finance arrangements – may be the more significant part of the court’s decision.
Continue Reading N.Y. Top Court Rules Litigation Finance Transaction Violates Champerty Doctrine

nystate1In the latest development in the long-running battle of J.P. Morgan Chase, as successor in interest to Bear Stearns, to try to obtain insurance coverage for amounts Bear Stearns paid to resolve an SEC investigation of alleged deceptive market timing and late trading activities, a New York state court judge has held that because its D&O insurers had “effectively disclaimed coverage,” Bear Stearns was excused from its policy obligation to obtain the insurers’ consent prior to its settlement with the SEC. However, the court declined to resolve the question of whether or not the settlements were “reasonable.” The now years-long insurance coverage battle will continue to go forward on the remaining issues. A copy of July 7, 2016 of New York (New York County) Supreme Court Charles E. Ramos can be found here.
Continue Reading Insurer’s Coverage Denial Relieves Policyholder’s Obligation to Obtain Consent to Settlement

nystateDelaware’s courts have recently made it clear that the days where they would routinely approve disclosure-only settlements in merger objection lawsuits may be over (as discussed here). It now appears that other states also are no longer willing to approve these kinds of settlements. In a blistering October 23, 2015 opinion (here), New York (New York County) Supreme Court Judge Charles E. Ramos refused to approve the disclosure-only settlement proposed in the Allied Healthcare merger objection lawsuit, saying that courts’ willingness to approve these kinds of settlements “reflects poorly on the profession and on those courts that, from time to time, have approved these settlements.”
Continue Reading New York Court Pans Merger Objection Lawsuit Disclosure-Only Settlement