News & Views: Issue 1, 2020April 3rd, 2020
Welcome to CAC Specialty’s latest edition of News & Views, a publication covering legal news, developments, and trends in executive, employment, crime, and cyber liability.
As this document “goes to print,” the United States and the entire world are feeling both the physical and financial impacts of COVID-19. CAC Specialty is closely monitoring the virus and the impacts it will continue to have on our clients’ businesses, as well as the management and professional insurance marketplace as a whole. As our readers are no doubt aware, the personal and economic well-being of individuals and organizations across the globe is changing moment by moment. To that end, CAC Specialty is temporarily blogging updates regarding the virus’ impact within the management and professional liability insurance marketplace. Please feel free to visit that blog often and leave any questions/comments you may have.
From a directors and officers liability perspective, we have already witnessed securities class actions related to the virus. On March 12, 2020, two separate securities class actions were filed.
The first claim is Patrick McDermid, et al. v. Inovio Pharmaceuticals, Inc., et al. This case was filed in the Eastern District of Pennsylvania and alleges the company and its CEO “….made false and misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934…” Specifically, the plaintiffs allege that defendants claimed “…unequivocally that the Company had successfully developed a vaccine against the spread of COVID-19 and that it anticipated rapidly bringing that vaccine to market. Given the heightened anxiety surrounding this pandemic and the desperate demand for an effective COVID-19 vaccine, [d]efendants knew and were deliberately reckless as to the falsity of their claims…”
Citron Research published a message on March 9 stating that the “SEC should immediately HALT [Inovio’s] stock and investigate the ludicrous and dangerous claim that they designed a vaccine in 3 hours…” The message led to a sell-off of Inovio stock and the securities class action at issue.
The second claim is Eric Douglas, et al. v. Norwegian Cruise Lines, et al. This case was filed in the Southern District of Florida and alleges that the company, its CEO and its CFO “…made false and/or misleading statements and/or failed to disclose that (1) the Company was employing sales tactics of providing customers with unproven and/or blatantly false statements about COVID-19 to entice customers to purchase cruises, thus endangering the lives of both their customers and crew members; and (2) as a result, Defendants’ statements regarding the Company’s business and operations were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
Beginning March 11, the Miami New Times (followed by the Washington Post) published articles quoting leaked emails indicating that Norwegian had pressured its sales personnel “…to lie to customers regarding COVID-19” to encourage company bookings.
We expect additional virus-related claims to be filed, and we will continue to keep you updated.
Additional News In This Issue:
- Delaware Supreme Court Decision on Federal Forum Provisions
- 2019 In Review: Securities Class Actions & 33 Act Claims
- Wage and Hour Exclusion Inapplicable to Business Expenses
- Record $149M Settlement in Equifax shareholder Action