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

Amidst the fallout following the latest high-profile set of revelations of sexual misconduct at the highest levels of business, the media, and politics, Steve Wynn has resigned his position as Chairman and CEO of Wynn Resorts. However, as we have seen with in other instances of this type of high profile sexual misconduct, the accountability process at Wynn Resorts will not be limited to attempting to hold Wynn himself to account, but may include other senior company officials as well. According to a lawsuit filed today in Nevada state court,  officials at Wynn’s company allegedly knew for years of his sexual misconduct and failed to investigate.
Continue Reading Investor Files Sexual Misconduct-Related D&O Claim Against Wynn Resorts Board

At the start of the New Year, it has been interesting finding out more about the massive tax legislation that Congress enacted in December. It has been interesting to see the various impacts that the legislation is having on a variety of companies. It has also been interesting to learn more of the details about what Congress actually enacted. For example, here’s a detail about the tax bill that I didn’t previously know about – apparently the tax legislation includes a provision specifying that employers can no longer include as a deduction on their tax returns amounts the employers pay in settlement and defense of sexual misconduct claims, if the settlement is subject to a nondisclosure agreement.
Continue Reading New Tax Bill Bans Tax Deductibility of Confidential Sexual Misconduct Claims Settlements

The news headlines have been dominated in recent days by appalling revelations that leading politicians, entertainers, political candidates and others have engaged in sexual harassment, assault, and even worse behavior. As these stories have emerged, a dynamic has evolved in which the victims come forward with their stories and seek to hold the wrongdoers accountable for their misconduct. Now, a blockbuster settlement entered on Monday suggests that this dynamic may not be limited just to attempting to hold individuals to account but may also involve efforts to hold the wrongdoers’ companies’ executives accountable for allowing the misconduct or for turning a blind eye.

In what is one of the largest shareholder derivative settlements ever, senior officials of 21st Century Fox have agreed to a $90 million settlement (to be funded by insurance) of allegations the company’s management permitted a culture of sexual and racial harassment to permeate the company, ultimately resulting in financial and reputational harm to the company. The settlement includes provisions for interesting governance and compliance enhancements, including the creation of a Workplace Professionalism and Inclusion Council. As discussed below, the procedural circumstances of the settlement are interesting as well, as the settlement arises out of a lawsuit that had been threatened but not filed until the same day as the settlement agreement was submitted to the court.
Continue Reading Massive Derivative Suit Settlement for Alleged Management Failure to Prevent Sexual Misconduct