The Intersection Among Torts, Science, Corporate Law, Insurance & Bankruptcy

Fresenius As “Event Driven” Litigation; The Delaware Supreme Court Rapidly Affirms the Trial Court Ruling That Fresenius Properly Invoked the Material Adverse Event Clause

Posted in Class Actions, D + O Issues, Litigation Industry, SEC Disclosures, Securities

Over the last couple of years, defense oriented commentators have used the meme “event driven securities litigation” as part of complaining about the increasing volume of class action litigation. From my perspective, there could be merit to some complaints, but the meme is far too broad and all “event driven” cases are not equal. Why? Because the events at issue may range from allegedly causing massive fires to allegedly concealing product liability risks to allegedly failing to disclose accurate facts regarding regulatory interactions with agencies such as FDA to losing verdicts in cases alleging perpetration of massive fraudulent conveyances. Simply put, one size memes do not fit all fact patterns.

That said, the “event driven” meme also came to mind while reading a December 5, 2018 article in LAW360 regarding oral arguments in the Delaware Supreme Court regarding the Fresenius case. There, a would be buyer terminated a corporate m&a deal based on the plummeting value of a target due to regulatory failures, which caused the buyer  to invoke a “material adverse event” clause. The issues went to trial, and a Delaware chancery judge (Lasker) upheld the termination based on adverse outcomes in events prior to the intended closing date for the transaction. In a nutshell, “What mattered was the root of this shortfall. Fresenius claimed that Akorn made misrepresentations when it claimed to be in compliance with Food and Drug Administration regulations and making progress in fixing manufacturing shortfalls. In particular, according to a NYT article of October 2, 2018, Fresenius said that Akorn had been sloppy with — or, worse, fabricated — the data that underlies F.D.A. drug approvals.”

Now, in just three days, the Delaware Supreme Court has affirmed the Fresenius ruling by Judge Lasker, in a brief three page order by Chief Justice Strine. It therefore seems logical to infer that the Delaware Supreme court found it easy to conclude that “event driven” problems could indeed alter the value of an entity so much that the material adverse event clause was properly invoked to terminate the deal. Therefore, one might see merit to at least some “event driven” securities suits.

Marchant and Lindor: “Genomic Malpractice: An Emerging Tide or Gentle Ripple?”

Posted in Medical Malpractice, Science

Yes, there is medical malpractice as to genomic information. The first real study on the topic is from ASU’s Gary Marchant (PhD in genetics and lawyer/law professor) and Rachel Lindor (physician/lawyer). A brief synopsis is provided in a December 5, 2018 post at an ASU law school blog, Bits Bots and Biomarkers.  The full paper is online and open access at this page of the Food and Drug Law Journal.

Another Step in Lung Cancer Screening: GRAIL Announces Plans to Initiate SUMMIT Study in 2019 to Support Development of Blood Test for Early Cancer Detection

Posted in Litigation Industry, Science

Another step forward is happening in the effort to find lung cancers early.  It’s an early detection study – in the UK – using both liquid biopsy and LDCT scans.  The program will start in 2019. The program is a joint effort between Grail, UK government agencies and UK medical centers.

The pace of change remains significant. Just under three years ago, Grail and its liquid biopsy goals were publicly announced.  The business is now well underway;  the SUMMIT  project is the third for Grail. The December 3, 2018 press release is pasted below; it provides further specifics.

GRAIL Announces Plans to Initiate SUMMIT Study to Support Development of Blood Test for  Early Cancer Detection

SUMMIT Study Partners Include UCL and University College London Hospitals NHS Foundation Trust in the United Kingdom, and Lung Cancer Alliance

December 03, 2018 07:01 PM Eastern Standard Time

MENLO PARK, Calif.–(BUSINESS WIRE)–GRAIL, Inc., a healthcare company focused on the early detection of cancer, today announced plans to initiate the SUMMIT study in early 2019. SUMMIT is a prospective, observational, longitudinal, cohort study designed to enroll approximately 50,000 men and women age 50 to 77 years who do not have a cancer diagnosis at the time of enrollment. The study will evaluate the ability of an investigational blood test using next-generation sequencing (NGS) technology to detect multiple cancer types, including lung cancer. Approximately half the participants will be people at high risk for lung and other cancers due to a significant smoking history, and the other half will be people who are not at high risk for cancer based on smoking history.

SUMMIT will be conducted in the United Kingdom in partnership with UCL (University College London) and University College London Hospitals National Health Service (NHS) Foundation Trust (UCLH). Lung Cancer Alliance (LCA), a non-profit organization based in Washington, DC, is also a SUMMIT study partner and provided guidance on the study design.

“The SUMMIT study will support the development of our blood test for the early detection of multiple cancer types in a diverse population,” said Anne-Renee Hartman, MD, Vice President of Clinical Development at GRAIL. “We are excited to partner with UCL, University College London Hospitals NHS Foundation Trust, and Lung Cancer Alliance on the SUMMIT study, as we continue to evaluate new ways to improve the early detection of cancer.”

SUMMIT also supports UCL’s and UCLH’s goal of assessing the feasibility of implementing lung cancer screening in the United Kingdom. By participating in the study, people determined to be at high risk for lung cancer will have an opportunity to undergo lung cancer screening with low dose computed tomography (LDCT) and will have access to resources for smoking cessation through the NHS in the United Kingdom. In the United States, LDCT is recommended by the U.S. Preventive Services Task Force (USPSTF) for people at high risk for lung cancer due to current or former smoking. However, currently in the United Kingdom, LDCT is not widely used as a screening tool.

“We have a common goal with GRAIL in conducting the SUMMIT study – the early detection of cancer,” said Sam Janes, Professor of Respiratory Medicine at UCL and Principal Investigator of the SUMMIT study. “By working together, we hope to bring lung cancer screening to people in the United Kingdom, while we also deepen our understanding of potential new technologies for early cancer detection.”

About GRAIL’s Clinical Research Program

GRAIL is conducting what the company believes to be one of the largest clinical research programs ever pursued in genomic medicine in collaboration with leading community and academic medical centers globally. In addition to SUMMIT, GRAIL is conducting two other large-scale studies, which are designed to characterize the landscape of genomic cancer signals in the blood, and to develop and evaluate GRAIL’s blood test for the early detection of multiple cancer types. The Circulating Cell-free Genome Atlas (CCGA) study is a prospective, observational, longitudinal study enrolling at least 15,000 people with and without cancer across 142 sites in the United States and Canada. The STRIVE study is a prospective, observational, longitudinal, cohort study that has enrolled approximately 100,000 women at the time of their screening mammogram across 37 sites in the United States.


GRAIL is a healthcare company whose mission is to detect cancer early, when it can be cured. GRAIL is using the power of high-intensity sequencing, population-scale clinical studies, and state-of-the-art computer science and data science to enhance the scientific understanding of cancer biology, and to develop and commercialize pioneering products for the early detection of cancer. The company is located in Menlo Park, California and Hong Kong. It is supported by leading global investors and pharmaceutical, technology, and healthcare companies. For more information, please visit

About UCLH

UCLH (University College London Hospitals NHS Foundation Trust) provides first-class acute and specialist services in six hospitals in Central London. UCLH is committed to education and research and forms part of UCLPartners which in March 2009 was officially designated as one of the United Kingdom’s first academic health science centres by the Department of Health. UCLH works closely with UCL, translating research into treatments for patients. For more information visit or follow on Facebook (UCLHNHS), Twitter (@uclh), Youtube (UCLHvideo), or instagram (@uclh).

UCLH Cancer Collaborative is the Cancer Alliance for north and east London and brings together hospital trusts, GPs, health service commissioners, local authorities and patients to improve early cancer diagnosis, outcomes and care for patients in our area. Working with its stakeholders, its mission is to achieve world-leading patient outcomes and experience for our local population.

About UCL (University College London)

UCL was founded in 1826. UCL was the first English university established after Oxford and Cambridge, the first to open up university education to those previously excluded from it, and the first to provide systematic teaching of law, architecture and medicine. UCL is among the world’s top universities, as reflected by performance in a range of international rankings and tables. UCL currently has over 39,000 students from 150 countries and over 12,500 staff. UCL’s annual income is more than £1 billion. For more information visit, or follow on Twitter (@uclnews), or YouTube (

About Lung Cancer Alliance

Lung Cancer Alliance (LCA) serves and listens to those living with and at risk for lung cancer to reduce stigma, improve quality of life and increase survival. LCA empowers its community by helping people navigate the paths of early detection, diagnosis and treatment. Insights allow LCA to improve care, amplify awareness, drive advocacy and lead research with the vision of tripling the number of survivors in the next decade. For more information, please visit

Charlotte Arnold, 650-255-1909



Praedicat Asks: “What’s the risk in learning about risks?”

Posted in Litigation Industry, Mass Tort Issues, Science

It’s an interesting week for thinking about risk. As it happens, I’m presenting on lethal diseases and “real world evidence” at the annual meeting of the Society for Risk Analysis. Meanwhile, the General Counsel of Praedicat recently published an interesting article on:  “What’s the risk in learning about risks?” It’s well worth reading. The article starts out as follows:

“In talking with product stewardship and risk management professionals, we occasionally see a fear of too much knowledge.  You may believe that knowing about a specific risk means being held legally responsible if the risk manifests.  Unfortunately, that’s true.

Proving liability when a harm results requires showing that the risk was reasonably foreseeable.  And known risks are by definition reasonably foreseeable.  In product liability cases in particular, a manufacturer has a duty to warn consumers of any risks that it knows about or reasonably should know about.”



What Long Term and Possibly Global Actions Will Arise from Massive Failures of Cyber Security: “Marriott: Data on 500 Million Guests Stolen in 4-Year Breach”

Posted in Litigation Industry, Science

The latest global failure of cyber security is covered in detail in a November 30, 2018 post at Krebs on Security, and is headline news around the world. Initial data shows a massive, global scale to the failure. This breach also is only one of many at international and national hotel chains, as explained by Krebs.

Market failures often lead to regulation. And, the pressure to block cyber failure is growing issue for corporate boards because so much corporate value lies in corporate reputation, data and intangibles, rather than tangible things, according to a 2015  article at the World Economic Forum.  One wonders how all of this will evolve vis a vis state based immunity and/or regulation at state, national and global levels.  And, if a global immunity/regulation process is built for cyber security, will that process then lead to more global regulation in other substantive areas? Global class actions? Or, will soft law provide alternative answers and outcomes? Interesting times ahead.

As explained by Krebs:

“Marriott said the breach involved unauthorized access to a database containing guest information tied to reservations made at Starwood properties on or before Sept. 10, 2018, and that its ongoing investigation suggests the perpetrators had been inside the company’s networks since 2014.

Marriott said the intruders encrypted information from the hacked database (likely to avoid detection by any data-loss prevention tools when removing the stolen information from the company’s network), and that its efforts to decrypt that data set was not yet complete. But so far the hotel network believes that the encrypted data cache includes information on up to approximately 500 million guests who made a reservation at a Starwood property.

“For approximately 327 million of these guests, the information includes some combination of name, mailing address, phone number, email address, passport number, Starwood Preferred Guest account information, date of birth, gender, arrival and departure information, reservation date and communication preferences,” Marriott said in a statement released early Friday morning.

Allianz and Praedicat Expand Access for Manufacturers to Access a System for Enhancing Product Stewardship and Monitoring Product Risks

Posted in Insurance, Insurance Coverage for Tort Claims, Litigation Industry, Science

A press release yesterday brought news of an interesting next step in the process of increasing the intersections between law and molecular science. In short, liability insurance clients of Allianz will receive access to the ChemMeta analytic system developed by Praedicat. The ChemMeta system evaluates scientific literature regarding a selected set of chemicals that are or alleged to be “toxic” to some degree or another. I’ve been publicly pointing out Praedicat since 2014. See Praedicat – Foretelling the Future of Toxic Tort Litigation.  Their work ties well to our work at ToxicoGenomica. Their latest action is further proof that the future is arriving more quickly than many anticipated. The press release is pasted below, and well worth reading.

“PRESS RELEASE. London/New York/Munich/Paris/Singapore – November 27, 2018.

Allianz Global Corporate & Specialty (AGCS), the Allianz corporate insurance carrier, together with Praedicat, an InsurTech analytics company based in Los Angeles, are expanding their partnership to provide a unique analytic resource to policyholders. Specifically, clients will benefit from access to ChemMeta®, Praedicat’s software solution delivering science and regulatory risk analytics for industrial companies. ChemMeta helps both chemical manufacturers and those who incorporate chemicals downstream minimize their product safety risks. Based on the latest peer-reviewed scientific literature and risk analysis, ChemMeta provides companies customized intelligence on thousands of chemicals and materials to help make better decisions across critical functions, including product stewardship, R&D, enterprise risk management, EHS and regulatory affairs.

“By offering access to ChemMeta with our product liability policies, we help clients maximize the overall safety of their products and production processes, striking the right balance between innovation and risk,” explains Hartmut Mai, Chief Underwriting Officer, AGCS. “Those opting to use ChemMeta will better understand which substances are more likely to cause negative impact on human health and wellbeing or trigger regulatory action in the future, helping them to look around the corner. This is another example of enriching our product offering with strategic risk management services that can prevent or mitigate potential losses.”

“Today’s science is tomorrow’s regulatory action and ChemMeta uses both AI and machine learning to scan, analyze and synthesize data from millions of peer-reviewed scientific journals to identify product risk,” says Robert Reville, CEO of Praedicat. “The early warning provided by mining technical literature at scale allows companies to make proactive product decisions.”

Understanding emerging risks inherent in any manufacturing process is particularly relevant in the chemical, pharmaceutical and food & beverage industries. In the end, it is relevant to any corporation which produces or uses chemicals within their own value chain.

Large companies from the mentioned sectors might employ teams of up to 100 scientists to monitor scientific publications and track relevant findings. However, the scope of their activity is often limited due to manual analysis and, as a result, only a certain number of production elements can be thoroughly investigated. For small and medium companies, resources are even scarcer. At the same time, there is exponential growth of data and information as a result of digitalization. To comprehensively evaluate chemical products or ingredients at a company, a scalable approach is required.

“Take DEHP, one of the most widely used phthalates, a plastics additive. More than 3,500 scientific papers are currently published on DEHP globally – with more than 200 articles having been released this past year alone,” explains Jessica Schuler, VP of Strategic Initiatives at Praedicat. “ChemMeta, when coupled with the expertise of the in-house teams, allows clients to significantly expand the scale of their research activities. As a result, they can track all relevant chemicals in their company’s portfolio throughout the product lifecycle, prioritize critical ingredients and more easily identify substances which can be replaced, if and when needed.”

“One of the exciting developments of InsurTech is the ability to bundle insurance with risk insights at scale,” says Nina Everding, Head of Business Analysis at AGCS Liability. “The Praedicat partnership allows us to bring product stewardship risk insights to our product liability clients. AGCS is committed to bringing the benefits of InsurTech directly to our clients.”

“With this partnership, product liability insurance instead becomes product stewardship insurance,” says Dr. Reville.

AGCS liability insurance policyholders may receive access to ChemMeta for a defined period. After this period, they can opt for their own subscription to the analytics.

AGCS and Praedicat began their partnership in 2014 to better predict key catastrophe liability risks of the future. By combining Praedicat’s forward-looking predictive modelling approach with its own underwriting expertise and extensive liability risk portfolio analysis, AGCS aims to accelerate its risk analytic capabilities to identify next generation catastrophe liability risks far earlier than currently possible. AGCS and Praedicat regularly publish white papers on emerging liability risks; the most recent risk bulletin “The Toxic Trio” investigates the potential impact of hazardous chemicals in personal care products.”

F Cubed Suits – “The Myth of Morrison: Securities Fraud Litigation Against Foreign Issuers”

Posted in Class Actions, Securities

A detailed data driven study of securities lawsuits before and after Morrison is the subject of a new paper by Professor Davidoff Solomon and colleagues. A summary is online in a November 21, 2018 article at; the full paper is available for download at SSRN. Part of the summary is pasted below.

“In The Myth of Morrison: Securities Fraud Litigation Against Foreign Issuers, we examine the effect of the Supreme Court’s decision in Morrison v. National Australia Bank. Morrison has been described as a “steamroller,” substantially paring back the ability of private litigants to sue foreign companies for securities fraud. In Morrison, the Supreme Court held that Section 10(b), the general antifraud provision of the Securities Act of 1934, does not apply extraterritorially in a private cause of action brought under Rule 10b-5. Rather, the Court stated that “Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.” Morrison is widely understood as reducing the litigation risk for foreign issuers, and the decision has been characterized as potentially “encourage[ing] non-U.S. issuers to continue to list their shares on U.S. exchanges and strengthen U.S. capital markets.”

We analyze pre- and post-Morrison litigation empirically and find that the dramatic claims about Morrison’s impact are largely a myth. Morrison did not substantially change the exposure of foreign issuers to federal securities fraud litigation or the types of issuers who face U.S. litigation. Even where the decision had its greatest impact—the composition of the plaintiff class—we find that U.S. exchange trading in defendant firms before Morrison was sufficiently robust that pre-Morrison cases could have pled an investor class that would have satisfied its transactional test. While Morrison may have put an end to the “global class action,” prior to Morrison, such cases were a rarity.

We conduct our analysis by examining a sample of 388 lawsuits alleging a violation of Rule 10b-5 that were filed between 2002 and 2017 against foreign issuers—issuers headquartered outside the United States. The first question we analyze is the impact of Morrison on overall litigation risk against what we call Foreign Listed Firms—foreign firms whose securities traded on at least one non-U.S. exchange. We focus on Foreign Listed Firms because the jurisdictional rule adopted by the MorrisonCourt is most likely to affect litigation against these firms as opposed to foreign-headquartered firms that are listed exclusively in the United States. One of the driving forces behind Morrison was the idea that foreign firms with limited connections to the U.S. were being targeted with burdensome U.S. litigation. For Morrison to address this concern, it should have reduced Foreign Listed Firms’ litigation exposure.

We confirm that class action suits against foreign issuers after Morrison were almost entirely confined to those issuers having a U.S. exchange listing at some point during the class period. Moreover, conditional on a firm having a U.S. exchange listing, Rule 10b-5 cases brought after Morrison consistently defined a class period that fully coincided with the period when the issuer maintained its U.S. listing. However, surprisingly, this focus of filed cases on firms with a U.S. listing did not represent a significant shift from the pre-Morrison era. Ninety percent of pre-Morrison cases were filed against foreign firm with a U.S. exchange listing, and nearly all of them alleged a class period that fully coincided with the period when the issuer maintained its U.S. listing. This result highlights the fact that F-cubed suits (suits brought by foreign investors, against foreign firms who bought on a foreign exchange) were not common prior to Morrison.”

The Myth of Morrison: Securities Fraud Litigation Against Foreign Issuers
UC Berkeley Public Law Research Paper, U of Penn, Inst for Law & Econ Research Paper No. 18-34, 44 Pages Posted: 13 Nov 2018 Last revised: 16 Nov 2018

“Cancer Rights Law: An Interdisciplinary Approach” by Bryant and Morales (2018) – Cyber Monday – 40% Off:

Posted in Cancer, Pro Bono

Today is the perfect day to buy a copy of “Cancer Rights Law: An Interdisciplinary Approach.” Why. Because today is the ABA’s annual cyber sale, with 40% off for law books and other written materials. This 2018 book was written  by the leaders of Triage Cancer, working with the ABA for publication.  Triage Cancer is a national not for profit that educates health professionals and patients regarding the entire range range of rights applicable during and after cancer. See  It’s a wonderful group I am proud to serve as a member of the board and as a pro bono advocate for persons facing cancer-related issues. The authors are two smart, experienced pragmatic and compassionate lawyers, Monica Fawzy Bryant and Joanna Fawzy Morales. The book is online at the ABA – here. If you are thinking about taking on pro bono projects involving cancer, this book is one of a kind and comprehensive.

BEWARE of STUB HUB (Tickets they sold were duplicates)

Posted in Uncategorized

 A word of warning regarding Stub Hub.  In short, the company has failed to put in place systems to block fraudsters from using online systems to create false or multiple sales of the same tickets. So I  learned when my girlfriend and I showed up for a Book of Mormon performance this weekend in Chicago. We were refused entry on our (expensive) tickets. Someone else had purchased the same seats. The other people apparently got in but we did not because we arrived after they did. We also were not offered any other seats, so we missed the show. We did receive a refund of what I paid.

In sum, like so many businesses today, Stub Hub has failed to invest enough to block fraud, and instead simply shifts the risk to consumers. One wonders what they do – or do not do – about prosecuting fraudsters.

For more specifics on its failure, see this review of Stub Hub, with links to other critiques.





Litigating Brain Disease Issues? New Molecular Science News Now on Hand; How Will It Evolve?

Posted in Litigation Industry, Science

Over the years ahead, the term “somatic recombination” may make its way into the lexicon of more lawyers. Why? Because a new, high quality study (published in Nature) shows that brain neurons appear to include mechanisms that intentionally induce somatic changes in brain cells.  Some are calling it a “landmark” study. That said, it is an “early days” results that will need confirmatory studies and much more work. That said, it raises interesting questions, including whether a mechanism of that sort could be part of Parkinson’s or other diseases/conditions.

A November 21, 2018 news article in Science provides a summary of some of the findings and possible implications:

“Rather than having one constant blueprint that stays with us throughout life, neurons have the ability to change that blueprint,” Chun proposes. That capability may benefit neurons by enabling them to generate a medley of APP versions that enhance learning, memory, or other brain functions. On the other hand, somatic recombination may promote Alzheimer’s disease in some people by producing harmful versions of the protein or by damaging brain cells in other ways, the scientists conclude.

Where do all these gene variants come from? Chun and his team think gene reshuffling depends on an enzyme called reverse transcriptase that makes DNA copies of RNA molecules. A new variant could arise when a neuron produces an RNA copy of the APP gene—this step is part of the cell’s normal procedure to produce proteins. However, reverse transcriptase may then recopy the RNA molecule to make a DNA duplicate of the APP gene that slips back into the genome. But because reverse transcriptase is “a sloppy copier,” Chun says, this new version may not match the original gene, and it may code for a different variant of APP. Drugs that block reverse transcriptase are part of the standard treatment cocktail for HIV infection, and they might also work against Alzheimer’s disease, Chun suggests.”