Insights
This week in the UK is dedicated to our future leaders with National Apprenticeship Week. As such, we are looking at our future lawyers – always inspiring and good to see the enthusiasm and talent that there is out there.
DAC Beachcroft is leading the way in this area with a robust apprenticeship programme. Read about Karrie Mead‘s experience below.
Click on the link to read about our Early Talent opportunities – https://bit.ly/48DBhIi
Best Lawyers® and U.S. News & World Report, for the thirteenth consecutive year, collaboratively announced their “Best Law Firms” rankings.
Wilson Elser’s National Insurance Law Practice is again ranked Tier One, joined this year by Railroad Law. National Tier 2 rankings include Admiralty & Maritime Law and Mass Tort Litigation / Class Actions – Defendants; followed by National Tier 3 rankings in Commercial Litigation, Corporate Law and Mergers & Acquisitions Law. Seventeen of the firm’s offices received Metropolitan Tier 1, 2 and 3 rankings across a variety of practice areas.
Earlier this year, U.S. News & World Report and Best Lawyers® ranked 69 Wilson Elser attorneys representing 24 offices among the 2023 Best Lawyers in America, and named four attorneys “Lawyer of the Year.” Also named were 81 Wilson Elser attorneys included on the 2023 “Ones to Watch” list.
National Tier 1
- Insurance Law
- Railroad Law
National Tier 2
- Admiralty & Maritime Law
- Mass Tort Litigation / Class Actions – Defendants
National Tier 3
- Commercial Litigation
- Corporate Law
- Mergers & Acquisitions Law
Metropolitan Tier 1
- Houston: Railroad Law
- Jackson, MS: Litigation – Tax
- Louisville: Medical Malpractice Law – Defendants
- New Jersey*: Banking and Finance Law; Insurance Law; Legal Malpractice Law – Defendants; Litigation – Insurance; Product Liability Litigation – Defendants
- New Orleans: Admiralty & Maritime Law
- San Diego: Medical Malpractice Law – Defendants; Professional Malpractice Law – Defendants
- Washington, D.C.: Medical Malpractice Law – Defendants
Metropolitan Tier 2
- Baltimore: Product Liability Litigation – Defendants; Professional Malpractice Law – Defendants
- Birmingham: Litigation – Environmental; Mass Tort Litigation / Class Actions; Personal Injury Litigation – Defendants; Transportation Law
- Boston: Personal Injury Litigation – Defendants
- Houston: Admiralty & Maritime Law; Commercial Litigation; Mass Tort Litigation / Class Actions; Medical Malpractice Law – Defendants; Product Liability Litigation – Defendants
- Jackson-MS: Mass Tort Litigation / Class Actions; Personal Injury Litigation – Defendants; Product Liability Litigation – Defendants
- Los Angeles: Corporate Compliance Law; Corporate Governance Law; Insurance Law; Mergers & Acquisitions Law
- Louisville: Litigation – Health Care; Litigation – Insurance
- New Jersey*: Commercial Litigation; Corporate Law; Trust & Estates Law
- San Francisco: Product Liability Litigation – Defendants
- Stamford: Product Liability Litigation – Defendants
- Washington, D.C.: Personal Injury Litigation – Defendants
Metropolitan Tier 3
- Albany: Product Liability Litigation – Defendants
- Birmingham: Product Liability Litigation – Defendants
- Boston: Insurance Law
- Chicago: Commercial Litigation
- Colorado: Litigation – Insurance
- Dallas/Fort Worth: Personal Injury Litigation – Defendants
- Houston: Personal Injury Litigation – Defendants
- Los Angeles: Commercial Litigation
- Louisville: Personal Injury Litigation – Defendants
- New Jersey*: Professional Malpractice Law – Defendants
- New Orleans: Commercial Litigation
- New York City: Insurance Law; Medical Malpractice Law – Defendants
- Stamford: Insurance Law
* Included in a list called Super Lawyers® selected by independent research and peer nominations and evaluations, 2014–2023. No aspect of this selection is approved by the New Jersey Supreme Court.
It is always a pleasure to see Legalign Global™ being recognised as #bestinregion and congratulations are due to Wotton + Kearney which has been named Insurance Specialist Law Firm of the Year at the 2022 New Zealand Law Awards. The judges commented on “its impressive growth” and “strong specialist expertise and recognised as the market leader in insurance law”.
This is the sixth time Wotton +Kearney has won the award in the last seven years, reinforcing their reputation as one of New Zealand’s leading insurance and disputes firms. Congratulations to all of the NZ team !
DAC Beachcroft adds another awards to its collection – As well as being recognised for our legal expertise, Legalign Global™ firms are also being celebrated as being at the forefront of technology, creativity and innovation in terms in terms of offerings to our clients. Last week at the B2B Marketing Awards in London, DAC Beachcroft LLP won ‘Best Use of Technologies or Digital Techniques’ for the firm’s ´Noisy Innovation’ campaign – specifically for the What If experience launched this time last year.
A big shout out to the team involved Brooke Johnston Julia Felton Lucy Mitchell !
Our Canadian partner firm Alexander Holburn Beaudin + Lang LLP hosted an fantastic event at the Hockey Hall of Fame in Toronto last night attended by insurance lawyers from the Legalign Global™ alliance along with The ARC Group Canada . Clients and guests enjoyed a panel discussion looking at risks and trends in the insurance market chaired by Jennifer Huneault, LL.B. CRM with speakers including David McKnight, William Naylor from DAC Beachcroft LLP in London and Jennifer Stegmaier of Wilson Elser in Chicago. Special guest was Hayley Wickenheiser who spoke about her career and what she’s learned so far in medicine. Another great event showcasing our talent across the regions.
Wilson Elser has achieved Mansfield Rule 5.0 Certification Plus, which confirms achievement of 30 percent representation of underrepresented lawyers in many of the program’s designated categories.
“This is our first year participating in certification, and achieving the Plus Certification is a huge accomplishment,” said Wilson Elser Diversity & Inclusion Committee Chair Angela Russell. “It demonstrates the firm’s commitment to diversity and inclusion across all leadership levels, and is consistent with the firm’s strategic goal to increase representation and opportunities for those from diverse backgrounds and women lawyers.” Carolyn O’Connor, Wilson Elser’s Chair of Women Attorneys Valued & Empowered (WAVE) added, “Mansfield Certification Plus is a well-deserved recognition of the ways Wilson Elser supports its women attorneys through the WAVE initiative. I couldn’t be prouder of this moment in the firm’s history and look forward to celebrating our continued support for its women attorneys through Mansfield certifications in the future.”
Mansfield Certification is the standard by which law firms measure their progress toward recruiting and retaining women lawyers, lawyers from underrepresented racial and ethnic groups, lawyers with disabilities and LGBTQ+ lawyers. Sixty large law firms, including 49 firms seeking first-time certification, in the United States and Canada, participated in the Mansfield Rule 5.0 Certification process for 2022, which launched in July 2021. The one-year certification process is administered by Diversity Lab.
Declaring that the firm has committed to participate in Mansfield Rule 6.0 Certification, Wilson Elser Chair Dan McMahon reflects the feelings of the entire firm: “Diversity & Inclusion is a firm foundational value that is critical to our success. Achieving this certification confirms Wilson Elser’s ongoing efforts to mirror the diversity of our clients and of the communities in which we practice.”
New for Mansfield 5.0, firms were required to:
- Track their candidate pools in a disaggregated manner, prompting them to measure the impact of the Mansfield Rule according to each underrepresented group.
- Consider 30 percent underrepresented individuals when hiring and promoting for C-level or other senior-level professional staff roles.
Corporations are increasingly responding to environmental, social and corporate governance (ESG) concerns, driven by evolving public sentiment and investor demands. This has taken the form of corporate pledges of action on ESG issues, sometimes from the directors and officers (D&Os). Cannabis companies have been trailblazers on social equity, inclusion and environmental issues, highlighting their importance long before ESG gained traction in the wider corporate world. Despite its well-intentioned words and actions, however, the cannabis industry is not free from potential ESG-related exposures that may lead to additional risks for cannabis executives in the years to come.
The Impact of ESG
The growing importance of ESG is reflected by the emergence of shareholder resolutions around environmental and social issues. There was a record number of these shareholder demands in 2021, nearly doubling the prior record set a year earlier. This included proposals on environmental and climate change matters such as setting reduction targets for greenhouse gas emissions, as well as proposals on diversity at all corporate levels.[1] The Securities and Exchange Commission has echoed these concerns, reflected in proposed rules that were announced in 2021 on corporate disclosures related to board diversity, climate change, governance and cybersecurity risk management.[2]
There is increasing competition between companies to attract capital by making and following through on ESG goals. As noted by the Global Sustainable Investment Alliance, ESG investments grew to more than $30 trillion in 2018,[3] and these assets were poised to reach $41 trillion by the end of 2021.[4] ESG pledges have become an important mechanism for D&Os to raise capital and increase profits. Even a company’s ability to purchase insurance is now impacted, with certain carriers providing favorable pricing, policy retentions and limits if the company is advancing ESG initiatives.[5] Although the cannabis industry has recently benefitted from multiple new insurance products for D&O and other management liability, it remains a hard market with risks that are difficult to adequately insure.
Cannabis and ESG
Cannabis companies have made their own ESG pledges, such as HEXO Corp’s pledge to be carbon neutral, which was achieved in September 2021.[6] Cannabis giant Trulieve announced in November 2021 the publication of its first ESG Report, highlighting the company’s ESG achievements to date and establishing targets on environmental and diversity, equity and inclusion (DEI) initiatives.[7] Similar ESG pledges from cannabis companies soon will be commonplace and even expected.
Although ESG messaging and disclosures can be good for business, they come with significant disclosure-based risks. Some examples of ESG claims that already have impacted the corporate world include (1) environmental claims involving pledges on climate change and net water positivity, (2) social claims such as #MeToo and failure to meet DEI goals, and (3) corporate governance issues such as action around cybersecurity risks. Cannabis companies have been subject to management liability arising from these same issues. One may reasonably expect more ESG-related risk to cannabis D&Os going forward based on the combined impact of the cannabis industry’s rapid growth and increasing ESG pressures on all companies.
Environmental Claims
D&Os of cannabis companies already have been subject to traditional securities litigations over alleged false and misleading statements, such as that in Ortiz v. Canopy Growth Corp. et al.[8]; In re: Cronos Group Inc. Securities Litigation[9]; and Kasilingam v. Tilray Inc. et al.[10] As the public’s emphasis on environmental issues intensifies, there should be a greater concern for litigation over environmental-related corporate goals and statements. The cannabis industry is well aware of the dangers of public backlash on sensitive issues involving land and water use, pesticides and runoff, sustainable packaging and the high energy requirements of cultivation lighting.
To date, environmental claims made against cannabis companies have been connected with traditional securities class actions arising from alleged misstatements, such as that alleged in Acerra v. Trulieve Cannabis Corp., 2021 U.S. Dist. LEXIS 247894, at 2 (N.D. Fla. Dec. 30, 2021). That proposed class action against Trulieve, its CEO and former CFO was based partially on claims about the quality of Trulieve’s marijuana-growing facilities. Although the court ultimately dismissed the complaint, it found the company’s description of “climate controlled” involving “an outdoor facility in Florida with no heat or air-conditioning does not measure up” and was a “sufficient allegation of a material misstatement.”
DEI and Sexual Harassment
Litigation with cannabis companies also has resulted from equity and diversity concerns and sexual harassment claims. For example, in Lanora Vasquez v. Blubird World LLC, dba MindRite Dispensary, allegations were made involving various acts of sexual harassment by the male employees of MindRite, including causing sexual content to be on the workplace computer, sexualizing female customers, making comments about the bodies of female customers and coworkers, and trying to get female coworkers to engage in sex whenever a work event included alcohol.[11] Another litigation, EEOC v. AMMA Investment Group, involved claims of sexual harassment by a general manager of a retail distributor of medical cannabis products.[12]
On the diversity side, the cannabis industry, lawmakers and regulators have struggled in most jurisdictions to find the right formula for promoting social equity. Allegations of “rigged” lotteries and unfair points-based scoring systems for cannabis licenses abound, while many cities and states can’t seem to strike a fair balance between protecting social equity applicants from predatory operating agreements and recognizing the legitimate interest of the minority investor shareholders.
These issues have resulted in an explosion of litigation across the nation. Notable actions include MediGrow LLC v. Natalie M. Laprade Medical Cannabis Commission, involving a claim against the state of Maryland for failing to promote diversity in the cannabis industry,[13] and Sozo Illinois, Inc. v. Pritzker et al., challenging the priority given to social equity applicants.[14] Although these complaints did not name any D&Os as defendants, they show that the cannabis industry is not immune from social concerns around diversity and discrimination.
Data Privacy and Cybersecurity
Cannabis companies also have been subject to litigation for cyber breaches. In Warshawsky et al. v. cbdMD, Inc et al., a class action was brought by customers who purchased CBD products from cbdMD Inc and had their personal information compromised when cbdMD suffered two cyber-attacks on its e-commerce platform in the spring of 2020.[15] As alleged in the complaint, the breaches occurred as a result of cbdMD’s failure to implement reasonable security procedures and practices appropriate to the nature of the information they collected from customers. This case was settled in March 2021.
Other cyber breaches have impacted the cannabis industry, such as the data breach involving Sunniva, a cannabis company in Canada,[16] and the unsecured database belonging to THSuite, a point of sale software platform used by many cannabis businesses.[17] While these actions did not name the D&Os, there have been a number of data breach lawsuits where D&Os have been named, including recent ones in 2021 involving T-Mobile,[18] Ubiquiti [19] and 360 DigiTech.[20]
Adopting an ESG Mindset
Companies should never adopt a mindset that ESG is simply an annoying distraction or passing fad, and instead embrace ESG as an important cornerstone to the company’s future risk management planning. ESG should be seen as a process for identifying and mitigating a spectrum of evolving risks from cybersecurity and workforce-of-the-future issues to protecting the brand from business decisions that may harm the climate or alienate customers and investors. From this viewpoint, cannabis companies are uniquely situated to leverage their experience navigating strict regulations that already incorporate ESG policies involving sustainability, social equity and consumer protection.
Many cannabis companies have exceeded what is required in the regulations by voluntarily adopting DEI and environmental best practices. Although this head-start hopefully will result in decreased ESG-related claims and litigation against cannabis companies compared with other market sectors, cannabis D&Os should remain vigilant.
Companies that wish to begin embracing ESG principles may consider appointing an officer or director who is responsible for gathering information across departments that is needed for an initial ESG assessment. Changes to the company’s corporate governance should be made with input by legal counsel and approval by the board. When announcing ESG-related goals or making public statements that involve those issues, the company should be scrupulous in ensuring that proper disclosures are made. These public statements can readily become the basis of D&O litigation.
As the cannabis industry continues to mature, the concerns facing their D&Os will continue to mimic those of other companies. The growing focus on ESG initiatives will continue within the cannabis industry, and it is likely that cannabis companies will be held accountable for pledges made. Litigation involving environmental claims, diversity and inclusion, sexual harassment, cyber breaches and other governance issues are now being brought against cannabis companies, and future actions may name their executives as well. D&Os of cannabis-related entities must understand their organizations’ risks and opportunities related to ESG and have their disclosure and reporting match those issues.
There are financial incentives for cannabis companies to be ESG-conscious, but the landmines explode when actions do not match promises.
This article was originally published in Plus Blog.
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[1] “Investors Press for Progress on ESG Matters,” Harvard Law School Forum on Corporate Governance, February 9, 2022.
[2] Id.
[3] https://www.cnbc.com/2019/12/14/your-complete-guide-to-socially-responsible-investing.html
[4] https://www.bloomberg.com/news/articles/2022-02-03/esg-by-the-numbers-sustainable-investing-set-records-in-2021
[5] “ESG considerations increasingly factor into D&O underwriting,” Business Insurance, February 2022.
[6] https://www.yahoo.com/now/hexo-achieves-carbon-neutrality-103000632.html
[7] https://investors.trulieve.com/news-releases/news-release-details/trulieve-cannabis-corp-issues-inaugural-environmental-social-and
[8] Ortiz v. Canopy Growth Corp. et al., 19-cv-20543, U.S. District Court, District of New Jersey.
[9] In re: Cronos Group Inc. Securities Litigation, 20-cv-01310, U.S. District Court, Eastern District of New York.
[10] Kasilingam v. Tilray Inc. et al., 20-cv-03459, U.S. District Court, Southern District of New York.
[11] Lanora Vasquez v. Blubird World LLC, dba MindRite Dispensary, No. 18CV41572, Oregon Circuit Court, Multnomah County.
[12] EEOC v. AMMA Investment Group, LLC and Maryland Health Management, LLC, t/a, Nature’s Medicines, 20-cv-02786-DKC, U.S. District Court, District of Maryland.
[13] MediGrow LLC v. Natalie M. Laprade Medical Cannabis Commission, 487 F. Supp. 3d 364, 371 (D. Md. 2020).
[14] Sozo Illinois Inc. v. Pritzker et al., 21-cv-03809, U.S. District Court, Northern District of Illinois.
[15] Warshawsky et al. v. cbdMD Inc. et al., 20-cv-00562, U.S. District Court, Western District of North Carolina.
[16] https://www.bloomberg.com/press-releases/2019-09-09/sunniva-reports-filing-of-parallel-class-action-lawsuit-regarding-previously-announced-privacy-breach-at-natural-health-service-k0cjrn4q
[17] https://news.bloomberglaw.com/privacy-and-data-security/insight-mitigating-data-breach-risks-facing-marijuana-businesses
[18] In re: T-Mobile Customer Data Security Breach Litigation, Multidistrict Litigation Judicial Panel, MDL No. 3019.
[19] Molder v. Ubiquiti Inc., et al., 21-cv-4520, U.S. District Court, Southern District of New York.
[20] Balderas, et al. v. 360 DigiTech, Inc, et al., 21-cv-6013, U.S. District Court, Southern District of New York.
In breaking news, the High Court has today dismissed with costs The Star’s application for special leave, putting an end to The Star’s claim against its business interruption insurers. It also rejected similar special leave applications by other insureds in the industry test case known as the Second COVID-19 Business Interruption Test Case or Test Case 2.
The Star had sought to unlock billions in cover under a Civil Authority Extension (CAE) on the basis that the government orders were the actions of an authority to retard a “catastrophe” in the form of the pandemic. At first instance, Allsop CJ held in August 2021 that the CAE did not apply. In February 2022, the Full Federal Court dismissed The Star’s appeal, upholding the first instance judgment.
The High Court’s decision is significant for insurers generally and provides important guidance to the insurance industry on dealing with claims for COVID-19 related BI loss. It should end over two years of debate and litigation in which insurers have successfully prevailed.
The High Court today also rejected similar special leave applications by other insureds in the industry test case known as the Second COVID-19 Business Interruption Test Case or Test Case 2.
The W+K team has been delighted to act for the insurance market in this critical piece of indemnity litigation.
Read more in this case alert by Major Loss specialists Adam Chylek and Matthew Foglia.
You can download the update here.
The discovery of CTE in American National Football League players in the early 2000s was a body blow to the professional and amateur sporting landscapes around the world. While little is still known about the causative effects of CTE, sporting organisations, schools, community groups and their insurers have proactively responded to the emerging risk.
This report is a collaboration between Legalign Global alliance partners, Wotton + Kearney, DAC Beechcroft and Wilson Elser. It examines the various responses by sporting organisations, at both the professional and amateur levels, and their insurers to the risk of CTE in sport. It also looks at the legal risk posed by the condition, and the likely ‘battleground’ on which the issue of head knocks in sport will be fought in and out of courtrooms around the world.
Partners Charles Simon and William Robinson have led this initiative.
You can download the report here.
Onshore and offshore wind farms are the fastest growing renewable energy source in Australia, and the demand is accelerating. This growth is enabled by evolving wind technology, which continues to present distinct and expensive challenges for operators and their insurers.
In this article, Adam Chylek and Doug Heard look at how insurers are actively informing and stabilising this renewables market, as well as the key roles specialist loss adjusters and legal advisors have in mitigating risks and managing outcomes.
Download the full update here.
W+K has just released the latest issue of our NZ Insurance Market Trends Update. It explores emerging legal and claims trends impacting insurers, underwriters, brokers and corporates operating in the New Zealand market.
In this edition, we look at significant developments and issues across financial lines, casualty, property & energy, healthcare, and cyber & technology.
We highlight new trends in long-standing issues, such as the recent focus in D&O claims on directors’ liability when their company is financially distressed, the risks associated with an increased use of structural engineers to strengthen earthquake-prone buildings, and exposures for accountants and lawyers with regard to the bright-line property rule.
We also look at emerging issues, such as condensation claims, claims by workers who are forced to return to the office post-lockdowns, and the potential Income Insurance Scheme.
You can download a copy of the update here.
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