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D&O litigation digest: Lyft, Juul face sexual harassment suits

The number of securities-related lawsuits filed in the U.S. has been rising rapidly in recent years, particularly after M&A transactions and other significant corporate developments are announced.

S&P Global Market Intelligence is now keeping track of such cases filed against companies in our covered industries. The following information is compiled on a best-efforts basis twice monthly.

Apparel, accessories and luxury goods

Under Armour Inc. and certain of its executives are facing a class-action lawsuit related to the company's alleged practice of shifting sales from quarter to quarter to appear healthier and to keep pace with its long-running year-over-year 20% net revenue growth.

Application software

A lawsuit is accusing Lyft Inc. of not doing enough to protect passengers against sexual assault. The suit was filed by 19 women who have been sexually assaulted or raped while using the service, They alleges that the ride-sharing platform is aware of the issue but had an "appallingly inadequate" response to the allegations.

Another lawsuit filed by at least 14 women alleged that the company did not take action on reports of sexual assault that happened during trips through its service.

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Pivotal Software Inc. and certain of its executives and directors are facing a class-action lawsuit alleging violations of the federal securities laws related to its proposed acquisition by Dell Technologies Inc.'s VMware Inc. and Raven Transaction Sub Inc.

Asset management

Horter Investment Management LLC is facing a lawsuit over allegations that it advised clients to invest into the LJM Fund, a highly leveraged mutual fund that used a "short volatility" investment strategy, despite knowing that the fund's historical performance indicated a poor risk/reward trade-off and potentially large losses under certain market conditions.

Bank

Barclays PLC, Royal Bank of Scotland Group PLC, Citigroup Inc., UBS Group AG, JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group Inc. are facing a class action lawsuit alleging that the banks formed cartels to manipulate foreign exchange prices, the Financial Times reported.

Biotechnology

Adamas Pharmaceuticals Inc. and certain of its executives are facing a securities class action lawsuit related to Gocovri, its primary product meant for the treatment of levodopa-induced dyskinesi. Health insurers were allegedly excluding the product from their prescription formularies in favor of inexpensive generic amantadine drugs.

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A class action lawsuit is alleging that The Medicines Co. and its board of directors committed violations of the Securities Exchange Act related to its proposed acquisition by Novartis AG and Medusa Merger Corp.

Data processing and outsourced services

Carbonite Inc. and certain of its executives and directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by Open Text Corp. and Violet Coral Merger Sub Inc.

Electronic equipment and instruments

Fitbit Inc. and certain of its executives and directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by Google LLC and Magnoliophyta Inc.

Healthcare distributors

Cardinal Health Inc. and its board of directors are facing a verified shareholder derivative complaint related to the company's lack of corrective action after it learned that it was distributing excessive amounts of prescription opioids in violation of its obligations under the Comprehensive Drug Abuse Prevention and Control Act. This led to the suspension of its controlled-substance distribution licenses.

Healthcare supplies

Merit Medical Systems Inc. and certain of its executives are facing a class action lawsuit alleging violations of the federal securities laws related to its acquisition of Cianna Medical Inc. and Vascular Insights LLC, which had allegedly caused operational disruptions and reduced sales.

Homebuilding producers

William Lyon Homes and its board of directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by the affiliates of Taylor Morrison Home Corp., which is expected to close in the first half of 2020.

Household appliances producers

IRobot Corp. and certain of its executives are facing a class action lawsuit related to the company's alleged acquisition of its two largest distributors to facilitate and conceal a channel-stuffing scheme that inflated its sales and revenue figures.

Integrated telecommunication services

Pareteum Corp. and certain of its executives and directors are facing a verified shareholder derivative complaint alleging that the company improperly recognized certain customer transactions as revenue in its financial statements despite knowing it was unlikely to collect revenue from these transactions. The action allegedly caused its revenue backlog and accounts receivable to be artificially inflated.

Internet and direct marketing retail

Baozun Inc. and certain of its executives are facing a securities class action lawsuit alleging that the company's heavy reliance on a single brand partner, Huawei Technologies Co. Ltd., for its historical exponential service fee growth resulted in lower-than-expected financial results when Huawei took its online merchandising in-house.

Internet software and services

Cision Ltd. and certain of its executives and directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by Platinum Equity Advisors LLC's affiliates, MJ23 U.K. Acquisition Ltd. and Castle Merger Ltd.

J Fogaca Investco Inc. also sued Cision and its board of directors alleging violations of federal securities laws related to the proposed merger.

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Twitter Inc. and certain of its executives are facing a class action lawsuit alleging securities fraud related to issues with the personalized ads settings for users in the company's platform, which allegedly caused a material decline in advertising revenue after the issues were fixed.

Investment banks, brokers and capital markets

Ladenburg Thalmann Financial Services Inc. and its board of directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by the affiliates of Advisor Group Holdings Inc.

Oil and gas storage and transportation

LE GP LLC and certain of its executives and directors are facing a verified unitholder derivative complaint related to an alleged scheme to force the Pennsylvania Department of Environmental Protection to approve construction permits that were critical to the continued development of one of the company's major pipeline systems, the Mariner East Pipeline.

Payment processors

Net 1 UEPS Technologies Inc. and certain of its executives are facing a class action lawsuit related to the company's ineffective internal control over financial reporting, the misclassification of its investment in Cell C Proprietary Ltd., and its overstated income in its financial statements for the fiscal year 2018.

Pharmaceuticals

Canopy Growth Corp. and certain of its executives are facing a class action lawsuit related to the company's alleged exaggeration of the potential market for its products in Canadian retail stores, resulting in inventory write-offs and restructuring charges.

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Foamix Pharmaceuticals Ltd. and its board of directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by Menlo Therapeutics Inc. and Giants Merger Subsidiary Ltd.

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Johnson & Johnson and certain of its executives and directors are facing a verified stockholder derivative complaint alleging that the company knew that its talc-based body powder products contained cancer-causing asbestos since at least 1971.

The company also allegedly rigged its tests to suppress the evidence of talc in its products and pressured the U.S. Food and Drug Administration against testing asbestos levels in cosmetic products.

Specialty REIT

GEO Group Inc. will face trial in June 2020 over allegations of forced labor and wage theft after it was sued by immigrants detained in its civil immigration facilities by the U.S. Immigration and Customs Enforcement.

The company allegedly forced the detained immigrants, which were only paid $1 a day, to work at its facility in Adelanto, Calif.

Technology distributors

Anixter International Inc. and its board of directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by CD&R Arrow Parent LLC, an affiliate of Clayton Dubilier & Rice LLC.

Tobacco producers

Juul Labs Inc. is facing a lawsuit filed by a former employee alleging that the company did not take her complaints of workplace sexual harassment seriously.

The former employee also alleged that she was wrongfully terminated after being defamed by upper-level employees, according to the lawsuit, which also named two of Juul's vice presidents and 50 other unidentified employees.