Dallas Bar Association
HEADNOTES |
|
Focus | Corporate Counsel/Securities
February 2022 Volume 47 Number 2
Hartline Barger Continues Support of DVAP Through Pandemic BY MICHELLE M. ALDEN
As the unique challenges of the pandemic continue through the current Omicron surge, businesses and nonprofits continue to adjust to changing circumstances. Outstanding DVAP supporter Hartline Barger LLP has stepped up once again with a donation of $30,500—one of only two donations at this top level during this year’s Equal Access to Justice Campaign! The firm has a long history of supporting pro bono in Dallas through the Campaign. Including this gift, the firm has donated more than $185,000 to legal aid for low-income people since 2007. “We hope our continued support of DVAP will help narrow the justice gap in Dallas County. It’s surreal to be heading into our second year of the pandemic, and the need for quality legal services has not diminished. We are grateful that our attorneys have adjusted to practicing law in this uncharted territory, and that our clients have continued to support us. Because our business has stayed viable, we are in the fortunate position to give back to our community,” said partner Melissa Dorman Matthews. Hartline Barger LLP focuses on general civil litigation defense and trials. While the firm’s services are wide-ranging, they focus on product liability litigation, personal injury defense, commercial litigation, construction litigation, and labor & employment litigation, among other areas. Access to justice is a core value of the firm. “We work tirelessly to provide support to our clients when they need it most. How-
Focus
Melissa Dorman Matthews
Richard Crews
ever, we understand not everyone has the means or opportunities to obtain dedicated representation. Our team at Hartline Barger is proud to support the Equal Access to Justice Campaign. We hope to be an example for other law firms that are similarly situated and thus encourage them to be supportive of such a deserving cause,” added Managing Partner Richard Crews. Access to legal services continues to be incredibly important during the pandemic as people are isolated and facing economic challenges. DVAP continues its weekly virtual intake clinics every Thursday, along with monthly virtual veterans’ clinics, as well
as periodic virtual wills clinics and driver’s license restoration clinics. One recent applicant, “Joanne,” came to DVAP seeking help. She made an oral agreement with a property manager to lease a commercial space to run a restaurant. Joanne began renovations and was in the process of obtaining all necessary permits to run her business, when the property manager locked her out and blocked her from re-entering the premises, taking her belongings without explanation. Volunteer attorneys S. Wesley Butler and Raymond Fisher, of Kilpatrick Townsend & Stockton LLP, accepted the case for pro bono representation. They sued
the defendant, lost the case in Justice of the Peace Court, and appealed to County Court. There, a judgment was entered in favor of the client, and the defendant was ordered to pay $8,347. The client has since received the amount owed to her and is very thankful to her attorneys, who made it possible to move on from this unfortunate situation and gain a new start for her fledgling business. The justice gap in Dallas County is daunting. In a country based on justice for all and access to our court system, over 25 percent of Dallas County residents live near the poverty level, and 42 percent have slim hope of affording an attorney. With annual poverty incomes of $33,125 for a family of four, justice is a luxury for low and moderateincome families. As partner Jeffrey Patterson stated, “We are well acquainted with the impact that DVAP has on the underrepresented in North Texas; its efforts towards mitigating the staggering justice gap are unparalleled. We know our contribution helps put resources into the right hands.” DVAP is a joint pro bono program of the DBA and Legal Aid of NorthWest Texas. The program is the only one of its kind in Texas and brings together the volunteer resources of a major metropolitan bar association with the legal aid expertise of the largest and oldest civil legal aid program in North Texas. For more information, or to donate, visit www. dallasvolunteerattorneyprogram.org. HN Michelle Alden is the Director of the Dallas Volunteer Attorney Program. She can be reached at aldenm@lanwt.org.
Corporate Counsel/Securities
COVID Securities Cases and Regulatory Actions BY CLINT A. CORRIE
When COVID struck the U.S. in March 2020, and the stock market dropped 40 percent almost overnight, many industries and experts anticipated an avalanche of litigation eclipsing the wave of lawsuits filed after the 2008 financial crises. So far, this prediction has not played out, with only 29 securities cases filed since the initial shutdown and only 10 COVID-related filings in the first four months of 2021. Those suits and enforcement actions may represent the calm before the storm.
Inadequate Disclosure Suits
The early days of the coronavirus pandemic focused largely on high-profile news stories about close-quarters COVID outbreaks on cruise ships and the resulting passenger quarantines. Shareholder law-
suits were filed against Norwegian Cruise Line and Carnival Cruise Line for allegedly releasing misleading statements and engaging in aggressive sales campaigns downplaying the pandemic risks to passengers, concealing early knowledge of the threats of COVID, violating port call regulations, and failing to follow their own health and safety protocols by continuing cruise operations during the pandemic. Similarly, shareholders of a REIT named Geo Group, Inc., that operates residential recovery facilities, alleged that the Geo Group made omissions and misstatements regarding the effectiveness and diligence of its COVID response procedures.
Regulatory Actions
Following its disclosure guidelines for publicly reporting companies in April 2020, the S.E.C. brought an enforcement action
against Praxsyn Corporation and its CEO, alleging that the substantial uptick in company share prices was caused by false assertions that Praxsyn had negotiated agreements to buy and sell large amounts of N95 masks. The S.E.C. filed two other lawsuits against companies for releasing false statements about the availability and efficacy of COVID supplies such as testing kits, hand sanitizers, and thermal imaging equipment to detect individuals with fevers in large crowds. In early June 2020, the S.E.C. targeted individual defendants in two separate “pump and dump” complaints, alleging the defendants misrepresented investor responses and investment opportunities in order to inflate share prices and then dump the stock over a short period. In December 2020, the S.E.C. levied a hefty fine against the Cheesecake Factory for allegedly concealing the extent of the financial difficulties it faced during the pandemic. Private
investor lawsuits against them followed. The DOJ filed its first-ever criminal securities action against the president of medical technology company Arrayit Corporation alleging securities and healthcare fraud for misrepresenting Arrayit’s ability to provide accurate, fast, reliable, and cheap COVID tests, inflating test sales numbers, and misleading investors about future prospects.
Shareholder Derivative Suits
In the past year, courts in two Delaware cases Marchand v. Barnhill, and In re Clovis Oncology, Inc. Deriv. Litig. have focused on director liability when it comes to public safety and health concerns in food distribution, and in Clovis, the court emphasized the board’s oversight function must be continued on page 22
Inside 6
DBA Board Elects Chair and Vice Chair
8
Inaugural of Krisi Kastl
14 Nuts and Bolts: Some Basics about the FLSA 22 Growing Litigation & Enforcement Risks for SPACs in 2022
DBA MEMBER REMINDER: All members who have not yet renewed for 2022 will be dropped on March 1, 2022. Renew TODAY in order to continue receiving all your member benefits. Thank you for your support of the Dallas Bar Association!