Policyholders and their representatives have long pushed to have the definition of “claim” in professional and management liability insurance policies expanded, to bring an increasingly larger kinds of circumstances within the policies’ coverage. However, there are consequences when more kinds of circumstances constitute a “claim,” such as, for example, with respect to the claims-made date and notice obligations. A recent insurance coverage ruling by a New York state court interpreting a lawyers’ professional liability insurance policy underscores how an expanded definition of the term “claim” — in this case, pertaining to a request to toll the statute – can affect the availability of coverage. The court, applying New York law, determined that a tolling request prior to the policy period met the applicable policy’s definition of claim, and therefore, because the claim was first made before the policy incepted, the subsequent claim during the policy period was not covered.Continue Reading Tolling Agreement Prior to the Policy Period Precludes Coverage for Later Claim
The D&O Diary was on assignment this week at the PLUS D&O Symposium. As reflected the accompanying picture of Times Square, the weather in New York was uncharacteristically sunny and warm for this time of year. The Symposium itself was also superlative; the event was surprisingly well-attended and the sessions were great. My congratulations to the event co-chairs, and to the PLUS staff and volunteer leadership for another successful event. Continue Reading PLUS D&O Symposium in New York
Most D&O insurance policies preclude loss resulting from fraudulent or criminal misconduct. However, most policies specify that the exclusion applies only if there has been a judicial determination that the precluded misconduct has taken place. What specific judicial determination is required in order to trigger the exclusion is a matter of policy wording. In an interesting recent ruling, Southern District of New York Judge Denise Cote reaffirmed her prior conclusion that a credit union executive’s criminal conviction precluded coverage for the executive’s cost of appeal – even though his appeal remains pending and even though the applicable policy had the “final adjudication” language. A copy of Judge Cote’s October 18, 2022 opinion can be found here.
Continue Reading Court Holds Fraud Exclusion with “Final Adjudication” Language Precludes Coverage for Post-Conviction Appeal
In the latest development in the long-running saga involving the efforts by J.P. Morgan to obtain D&O insurance coverage for the $140 million “disgorgement” that its predecessor-in-interest, Bear Stearns, paid to settle SEC market-timing allegations, the New York Court of Appeals (the state’s highest court) has reversed the intermediate appellate court’s ruling that the payment represented a “penalty” for which coverage is precluded. The Court of Appeals rejected the intermediate appellate court’s conclusion, made in reliance on the U.S. Supreme Court’s 2017 Kokesh decision, that a “disgorgement” payment to the SEC is a “penalty.” The Court of Appeals held that Kokesh did not control, and that because the payment was compensatory in nature, it did not represent a “penalty” for which coverage is precluded under the policies. The Court’s November 24, 2021 opinion can be found here.
Continue Reading New York’s Highest Court Holds SEC “Disgorgement” Payment Not a “Penalty”
In one of the largest shareholder derivative lawsuit settlements ever, involving a very unusual derivative claim under Cayman Island law prosecuted in a U.S. court on behalf of a China-based Cayman Islands company, the parties to the Renren derivative litigation have agreed to settle the case for at least $300 million. The settlement is subject to a “true up” process that could increase the ultimate amount of the settlement payments. The settlement is also subject to court approval. The parties’ October 7, 2021 settlement stipulation can be found here. Renren’s October 8, 2021 press release about the settlement can be found here. An October 8, 2021 press release from the lead plaintiff’s counsel about the settlement can be found here.
Continue Reading N.Y. Derivative Suit Against China-Based Cayman Islands Company Settles for $300 Million
In an important development affirming the use of federal forum provisions (FFP) to avoid duplicative parallel state court securities lawsuits, a New York state court judge has granted the securities suit defendants’ motion to dismiss based on the FFP in the corporate defendant’s charter. The ruling appears to be the first in New York – indeed, the first outside of California – to enforce an FFP. The New York court’s enforcement of the FFP is a significant step in companies’ efforts to try to avoid the duplicative litigation problems caused by the U.S. Supreme Court’s March 2018 decision in Cyan. A copy of the August 31, 2021 opinion of the New York state court in the Casa Systems case can be found here.
Continue Reading New York State Court Enforces Federal Forum Provision
In reporting in prior posts on SPAC-related litigation, I have primarily focused on federal court securities class action litigation (for example, here). In addition to the federal court litigation, there has also recently been state-court SPAC-related litigation filed, as I have also briefly noted (here, for example). In early April 2021, the Akin Gump law firm published a client alert memo noting that, at the time, over thirty SPACs has been sued in merger objection lawsuits filed in New York state court. In a May 5, 2021 post on her On the Case blog (here), Alison Frankel updated the Akin Gump filing data and reported that there have now been over 60 New York state court SPAC-related lawsuits filed. As Frankel’s article notes, the litigation itself is only part of the picture, as the plaintiffs’ lawyers involved have also been active in presenting SPACs with pre-lawsuit demand letters as well.
Continue Reading SPAC-Related State Court Merger Objection Litigation
As has been extensively noted on this site and elsewhere, the sheer level of SPAC-related action has been the one of the top business stories of the last few months. However, as I noted earlier this week, there have already been some distant early warning signs of possible problems on the SPAC horizon. Further developments this week suggest there could be growing trouble in SPAC-land. As discussed below, a newly released statement by the SEC about SPAC accounting potentially could cool off the hot market for SPACs, and a statement of intent by a leading plaintiffs’ firm raises the possibility of further SPAC-related litigation.
Continue Reading Trouble Brewing in SPAC-Land?
In my recent roundup of top D&O stories, I identified privacy as among the top issues for concern in the corporate liability environment. In identifying privacy as a top concern, one specific thing I had in mind was the threat of class action litigation under the Illinois Biometric Privacy Act (BIPA). As if to underscore the significance of corporate exposure from privacy issues, on January 6, 2021, a bipartisan group of New York legislators introduced biometric privacy legislation that, notably, would include remedies along the lines of the Illinois statute. Although there may be reasons to question whether the proposed New York legislation will be enacted, even just its proposal is a concern and underscores the growing importance of privacy issues generally.
Continue Reading New York Legislators Introduce Proposed Biometric Privacy Act with Private Right of Action
A recent guest post on this site opined that because of the volume of Section 11 litigation being filed in New York state court, New York’s courts “will have a major role in shaping the standards applied in Securities Act litigation going forward.” If that is the case, then the recent New York appellate court ruling reversing a trial court’s dismissal motion denial in a state court Section 11 action could be significant. According to a December 4, 2020 Law360 article (here), the ruling represents the first time the New York appellate division has addressed the merits of a federal ’33 Act claim since the U.S. Supreme Court’s decision in Cyan. The New York appellate court’s December 3, 2020 ruling can be found here.
Continue Reading NY Appellate Court Reverses Trial Court’s Dismissal Denial in State Court Securities Suit