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In a significant number of the many SPAC-related lawsuits that have been filed in recent years, SPAC investors allege that executives at the previously private target company into which the SPAC merged made pre-merger misrepresentations about the target company’s operations or prospects. In an interesting decision in a securities suit involving Lucid Motors and that has a great deal of potential significance for many of these SPAC-related suits, the Ninth Circuit has held that the SPAC investors, who were neither purchasers nor sellers of the stock of the target company, lack standing to pursue their claims against Lucid Motors for alleged pre-merger misrepresentations. The Ninth Circuit’s August 8, 2024, opinion in the Lucid Motors case can be found here.Continue Reading 9th Circ.: SPAC Investors Lack Standing to Sue Over Merger Target Company’s Misrepresentations

I have long thought that privacy-related issues represent one of the important emerging areas of D&O liability exposure. One case that I thought represented an example of this emerging risk was the securities class action lawsuit brought against Facebook related to the Cambridge Analytica user data privacy scandal. However, when the court granted the motion to dismiss in the case, the relevance of the Cambridge Analytica case to the discussion of privacy-related issues seemed diminished. But the appellate court has now reversed in part the lower court’s dismissal, restoring the relevance of the case to the privacy-related discussion and highlighting the importance of privacy concerns as an area of emerging D&O liability risk. The Ninth Circuit’s October 18, 2023, opinion in the case can be found here.Continue Reading Ninth Circuit Revives in Part Facebook Privacy-Related Securities Suit

On June 1, 2023, in a much-anticipated decision, the Ninth Circuit held, in a split en banc decision in the long-running board diversity lawsuit filed against the board of The Gap, that the provision in the company’s bylaws designating a Delaware state court forum for derivative actions was enforceable, even as to claims asserted derivatively under Section 14(a), and, accordingly, the appellate court affirmed the district court’s dismissal of the action. The decision, which validates company’s use of these kinds of forum selection clauses, also creates a split in the federal judicial circuits which could mean that the issue could be headed to the U.S. Supreme Court. A copy of the Ninth Circuit’s decision can be found here.Continue Reading Ninth Circuit En Banc Ruling Upholds Forum Selection Clause

Sarah Voutyras and Melanie Saponara

Readers of this blog know that one of the litigation risk management steps well-advised companies are taking in the current litigation environment is the adoption of forum selection bylaws, including, in particular, bylaws specifying a particular forum for the consideration of shareholders’ derivative suits. In a series of recent decisions, federal courts have reviewed these bylaws. In the following guest post, Melanie Saponara, Claims Manager – Executive Risk, Beazley, and Sarah Voutyras, Partner, Skarzynski Marick & Black LLP, take a look at recent federal appellate court developments on this issue and consider the implications. I would like to thank Melanie and Sarah 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 the authors’ article.
Continue Reading Guest Post: Can Exclusive Derivative Forum Selection Provisions Survive Ninth Circuit’s En Banc Review?

Bruce Vanyo

Jonathan Rotenberg

As I discussed in a recent post (here), the Ninth Circuit recently reversed in part the district court’s dismissal of the Google+ user data-related securities class action lawsuit. One feature of the decision that perhaps did not attract as much attention is the appellate court’s reversal of district court’s dismissal of the plaintiff’s scheme liability claims. In the following guest post, Bruce Vanyo and Jonathan Rotenberg discuss the significance of the scheme liability portion of the Ninth Circuit’s opinion. Bruce and Jonathan are partners in the Securities Litigation practice at Katten Muchin Rosenman LLP, resident in the New York office. I would like to thank Bruce and Jonathan 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 the authors’ article.
Continue Reading Guest Post: Ninth Circuit Invokes Lorenzo to Revive Scheme Liability Claims

The motion to dismiss phase is a critical stage in the life cycle of a securities class action lawsuit. If a case survives the dismissal motion, it likely will move toward settlement, as so few cases actually go to trial. The motion to dismiss in intended to test the sufficiency of the allegations in the plaintiff’s complaint. According to the rules, the court’s inquiry should be limited to the matter within the complaint. However, over time, rules have developed permitting courts to consider matter from outside the complaint, pursuant to the doctrines of judicial notice and incorporation by reference.

In a detailed August 13, 2018 opinion in which it largely reversed the dismissal of securities class action lawsuit involving the developmental stage pharmaceutical company Orexigen Therapeutics, the Ninth Circuit noted a “concerning pattern in securities cases” in which “overuse” of the doctrines has resulted in improper dismissal of securities suits at the pleading stage based on extraneous matter. The Ninth Circuit’s analysis of the judicial notice and incorporation by reference doctrines is interesting and could have a significant impact on courts’ consideration of matter outside of the complaint in future cases. The Ninth Circuit’s opinion in the Khoja v. Orexigen Therpeutics case can be found here.
Continue Reading Ninth Circuit Decries Consideration of Extraneous Matter, Reverses Securities Suit Dismissal

As courts have wrestled with standing issues in a variety of kinds of cases, the central question has been whether or not under the standard the U.S. Supreme Court enunciated in the Spokeo case the plaintiff alleged an injury that is sufficiently “concrete.” The Supreme Court remanded the Spokeo case itself to the Ninth Circuit for further proceedings to determine whether the plaintiff’s allegations met the high court’s standard. On August 15, 2017, the Ninth Circuit issued its ruling in the remanded case that the injury the plaintiff alleged was sufficiently concrete to meet the Supreme Court’s test. This ruling could boost plaintiffs as they seek to resist defendants’ efforts for an early dismissal in cases in which plaintiffs are alleging a statutory violation, such as Fair Credit Reporting Act (FCRA) cases, Telephone Consumer Protection Act cases, and Truth in Lending Act cases. The Ninth Circuit’s opinion can be found here.   
Continue Reading Ninth Circuit’s Standing Ruling in Remanded Spokeo Case Could Boost Plaintiffs