A New York federal judge has certified a class of investors in a securities suit against financial technology startup GreenSky Inc. that accuses the company of making misleading statements ahead of its initial public offering.

The green light issued by U.S. District Judge Alvin K. Hellerstein on Monday gives the investors who bought the 43.7 million shares of GreenSky Class A common stock in the May 2018 IPO a path to continuing their attempt to recoup losses.

Shareholders allege in their November 2018 suit that GreenSky — which arranges loans between merchants and consumers — didn’t disclose in its registration statement to the U.S. Securities and Exchange Commission that its plan to shift away from highly profitable loans for solar panel purchases could affect its bottom line.

Investors claim GreenSky, along with its director and underwriters, was deceptive in omitting from the document its planned expansion into the elective health care field, leading to the company’s stock dropping 60% just months after the IPO raised $874 million.

In his order Monday, Judge Hellerstein named lead plaintiffs Northeast Carpenters Annuity Fund, El Paso Firemen and Policemen’s Pension Fund, and the Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge class representatives and lead counsel Cohen Milstein Sellers & Toll PLLC and Scott+Scott Attorneys at Law LLP as class counsel.

“Plaintiffs are pleased by the court’s order on class certification and look forward to getting into merits discovery and pushing the case forward,” Steven J. Toll, counsel for the investors, told Law360 Wednesday.

A federal appeals court upheld a ruling that reinstated former Michigan Gov. Rick Snyder and other state officials in the class action lawsuit over the Flint Water Crisis.

The judges of the U.S. Sixth Circuit Court of Appeals upheld the 2019 ruling from U.S. District Court Judge Judith Levy that reinstated Snyder and nearly all other officials.

“This is yet another step on the long road to justice,” said Theodore J. Leopold, Partner at Cohen Milstein Sellers & Toll and co-lead Plaintiffs’ attorney. “We have fought for justice for the citizens of Flint and defeated the State at every turn. To this day, residents continue to suffer because of the reckless decisions of former Governor Snyder and others, and we hope to provide a measure of justice and some much-needed relief to those still struggling to recover.”

They’ve represented consumers, companies, and government entities, taken on Goliaths in industries ranging from aerospace to health care to finance to technology to sports, and won landmark victories on behalf of clients across the country.

. . .

The 10 attorneys honored by Law360 as influential plaintiffs lawyers all scored significant wins in 2019. They are also firm leaders, mentors, parents and active members of their communities. They participate in organizations, at their firms and beyond, that advance causes from voting rights to gender equality in the legal world.

Congratulations to Daniel A. Small and the other accomplished lawyers who earned a spot on Law360’s 2020 Titans of the Plaintiffs Bar list.

See Mr. Small’s Titans of the Plaintiffs Bar profile.

See also the complete list of those named 2020 Titans of the Plaintiffs Bar.

From a public company in Texas to a number of C-suites and boardrooms across the United States, business leaders grapple with the complexity of managing corporate culture. Everything from ensuring that employees feel comfortable reporting issues through company hotlines to updating policies around sexual harassment has come under the microscope in the wake of the MeToo movement.

But one of the most critical decisions for board members — and one with potential to bring significant criticism — is whether accused executives have to leave the company, and if so, on what terms, sources say.

In the case of an executive like a general counsel, one would expect an emergency board discussion about the implications of dismissing the executive with cause versus allowing a quieter exit with some money, says Suzanne Hopgood, a seasoned board director and the former CEO of Houlihan’s Restaurant Group and Furr’s Restaurant Group. Misconduct-related executive departures are “major” events, she says. Board members are suddenly launched into deliberating whether lawsuits may flow from either outcome and if the victim may wish to have the matter disappear, she says.

A board also must consider the signal that the ultimate decision sends throughout an organization, says Hopgood, who is now president and CEO at consulting company The Hopgood Group. It may be that the best decision is to get someone out quickly with a payout, but board members should know that such choices may not sync with employees’ expectations, she explains.

The law gives board members considerable latitude in carrying out their fiduciary duties, says Dorothy Lund, assistant professor of law at the University of Southern California Gould School of Law. And that fact extends to instances in which directors decide to have accused executives leave with severance.

. . .

Ousted executives do indeed initiate court battles with companies over a lack of severance. Following the 2018 termination of former Barnes & Noble CEO Demos Parneros for alleged violations of company policies, Parneros sued, claiming that B&N breached his employment contract in refusing to pay out his severance. Parneros has denied in court filings that he violated company policies. The resulting litigation has spurred numerous depositions that have exposed the way the company handled an accusation of sexual harassment against Parneros, which included an apology meeting between the accuser and the accused, as Agenda has reported.

Still, in Lund’s opinion, there are indicators of a shift in the risks associated with misconduct claims against executives. For one, litigation specific to such allegations has resulted in multimillion-dollar settlements, she points out.

Twenty-First Century Fox Inc. reached a $90 million settlement in 2017 to resolve shareholder claims that senior executives facilitated a culture of sexual harassment that board members did not take steps to address. A $41 million settlement was reached last year in a derivative suit associated with disputed allegations against former Wynn Resorts CEO Steve Wynn.

. . .

Moreover, Lund says considerations beyond just discretion under the law should factor into directors’ decisions about the departures of accused higher-ups. Board members ought to consider the implications of sending off an executive accused of misconduct with a high-dollar pay package, says Lund. Under the narrow assumption that board members prioritize shareholders above other stakeholders, there’s an argument to be made that allowing someone credibly accused of harassment to quietly walk away with a payout impacts employee productivity and — if the story comes out — the ability to hire talent, she notes.

But with the push to consider more than shareholders’ interests, there’s a sense that board members and other corporate fiduciaries need to think about their duties differently, Lund adds.

Julie Goldsmith Reiser, partner at Cohen Milstein, echoes the importance for board members grappling with these circumstances to think beyond their own shareholders when dealing with executives credibly accused of sexual misconduct. Directors don’t have a fiduciary duty to any other company’s employees or shareholders, if the executive were to land elsewhere, notes Reiser, a lead attorney in the derivative suit against Wynn Resorts insiders. But particularly as the intensity of the allegations increases, she says, there’s room for thought from directors about acting in “a more public way.”

“[W]hether it’s a hero’s farewell or [they] leave because they’re moving on, … who else are you putting at risk?” she asks.

Two former Casino Queen employees have filed suit against the casino’s old owners over the 2012 sale of the property that made it employee-owned.

The plaintiffs, Tom Henseik and Jason Gill, allege the former owners of the Casino Queen Inc. sold their stake in the company into an employee stock ownership program (ESOP) at a vastly inflated price and then kept the true value secret for years. The proposed class action lawsuit was filed last month in U.S. District Court in East St. Louis.

“Plaintiffs allege that the Casino Queen ESOP’s fiduciaries concealed for years that the ESOP transaction was intended to benefit the Casino Queen’s prior owners and executives while providing only a hollow promise to employees,” said Michelle C. Yau, a lawyer representing Henseik and Gill. “Employees learned in October 2019 that the Casino Queen stock in their retirement accounts [the only asset held in those accounts] was nearly worthless.”

. . .

In 2012, the Casino Queen sold for $170 million to an employee stock ownership plan (ESOP), a trust that was supposed to guarantee retirement savings for current employees.

The transaction happened after the owners spent years unsuccessfully trying to sell the company to a third-party buyer, according to the suit.

“Given their inability to find a buyer willing to pay what the selling shareholders wanted for the Casino Queen, the selling board members created their own buyer for the company by establishing the ESOP to buy it outright,” according to the filing.

. . .

“The board retained the power to dismiss the co-trustees (who continued serving on the board while charged with approving the 2012 transaction) and administrative committee members, and thus controlled their decision-making,” according to the filing.

The plaintiffs allege the board violated their responsibilities to employees of the casino by approving $170 million in debt the ESOP took on to purchase Casino Queen stock.

The complaint also states that employees of the casino were unaware of any transaction until after it occurred and were forced to invest their employee-sponsored retirement savings into Casino Queen stock.

“Shortly after the 2012 transaction, the company stopped making employer contributions to other retirement plan(s). Instead, the company contributed solely to the ESOP which holds only Casino Queen stock, a stock that lacks a public market,” according to the filing.

The plaintiffs allege the board misled them to believe their retirement accounts were growing quickly until 2019 when employees learned the value of Casino Queen stock, the only investment in their ESOP accounts, was worth 5% of what they had been told.

Two participants in the Casino Queen Employee Stock Ownership Plan have filed a class-action lawsuit against CQ Holding Co., East St. Louis, Ill., and other fiduciaries alleging they violated their duties in the management of the ESOP.

The lawsuit, filed Monday in U.S. District Court in East St. Louis, alleges the company’s board of directors and the ESOP’s administrative committee violated their duties under the Employee Retirement Income Security Act of 1974 by approving $170 million in debt the ESOP took on to purchase Casino Queen stock, when it was created in 2012 to make Casino Queen a wholly employee-owned company.

“Casino Queen employees were forced to invest their employer-sponsored retirement savings in Casino Queen stock at a price and terms approved by the ESOP trustee without employee input,” according to the filing. The lawsuit also alleges that employees did not learn that the ESOP purchased Casino Queen until after the purchase price was agreed to and the transaction completed.

. . .

“As alleged in the complaint, the ESOP’s fiduciaries concealed for years that the ESOP transaction was designed and executed to benefit the Casino Queen’s prior owners and executives while providing only a hollow promise to employees,” Cohen Milstein Sellers & Toll, attorneys for the plaintiffs, said in a statement. “It was not until October 2019 when employees were told that the company stock in their retirement accounts was nearly worthless. Our clients are committed to obtaining justice for themselves and their fellow participants in the Casino Queen ESOP who were harmed by this alleged misconduct.”

A North Dakota federal judge on Monday approved a settlement between Native American tribes and North Dakota’s secretary of state that expands voter identification options for tribe members at the polls.

The Spirit Lake Tribe and Standing Rock Sioux Tribe submitted a consent decree Friday with Secretary of State Al Jaeger, formalizing a settlement the parties reached in February. The settlement resolved two suits alleging state voter identification laws discriminated against Native American voters.

Moving forward, Native American voters who are not able to confirm their street address at the polls will be able to mark where they live on a map before casting their ballots, according to the decree. The onus will then be on the state to assign an address to the voter.

. . .

The state will also reimburse tribes for the cost of issuing IDs and addresses to members, according to the decree.

“The court finds the consent decree is fair, reasonable, and consistent with the law and the public interest,” U.S. District Judge Daniel L. Hovland wrote Monday.

Monday’s order ends years of litigation over alleged disenfranchisement of Native American voters in North Dakota, thanks to multiple iterations of a law that limited valid voter identification.

. . .

The plaintiffs are represented by Timothy Q. Purdon of Robins Kaplan LLP; Jacqueline De León and Matthew Campbell of the Native American Rights Fund; Mark P. Gaber, Danielle M. Lang and Molly Danahy of the Campaign Legal Center; and Joseph M. Sellers of Cohen Milstein Sellers & Toll PLLC.

A lawsuit filed in the Northern District of Illinois accuses GreatBanc Trust Co. of mishandling a stock plan transaction that caused employees of Triad Manufacturing Inc. to pay $106 million for employer stock that may have been worth less than $4 million.

The class action complaint, filed Wednesday by former Triad employee James Smith, claims GreatBanc signed off on the deal without performing adequate due diligence. GreatBanc, which allegedly represented the Triad employees by serving as the stock plan trustee, disregarded structural problems and failed to account for Triad’s “shrinking customer base due to the widespread closure of retail stores,” Smith claims.

At issue is a 2015 transaction in which Triad—a producer of custom wood furniture and fixtures—became 100% employee-owned through the creation of an employee stock ownership plan. Smith alleges that Triad employees had no input on the deal, which significantly reduced their retirement savings and caused them “tens of millions of dollars in losses.”

Specifically, Smith says the deal was based on unrealistic and inflated financial projections that didn’t account for the rapid closure of brick-and-mortar retail stores, which make up Triad’s primary customer base. Smith also charges GreatBanc with failing to properly account for how the deal’s financing would affect Triad’s balance sheet and future cash flow.

. . .

Cohen, Milstein, Sellers & Toll PLLC and Nichols Kaster PLLP represent the proposed class.

During the inauguration of his successor, outgoing Michigan Governor Rick Snyder needed a favor.

At the January 2019 event, Snyder approached Karen Weaver, who was then the mayor of Flint, a city of nearly 100,000 people that was still reeling from financial decay and a toxic-water crisis. He asked whether she could meet with Congressman Elijah Cummings.

“You have a lot of influence with him,” Weaver remembered a worried Snyder saying to her about Cummings. At the time, Cummings was the incoming chairman of the powerful U.S. House Oversight Committee.

Throughout the water crisis, Cummings led the charge as Congress demanded Snyder and his administration provide more information about what he knew about the poisonous water that ravaged the impoverished majority-minority Rust Belt city after it switched water sources to the corrosive Flint River in 2014, and when he knew it. More specifically, Cummings pushed for more information on when Snyder first learned of the lethal Legionella pneumophila bacterial outbreak in Flint. Snyder testified to Congress that he first became aware of Legionella in January 2016 and held a press conference the next day. Flint residents didn’t believe the governor; their doubt intensified after Harvey Hollins, the director of the state’s Urban and Metropolitan Initiatives office, contradicted the governor, testifying to Congress that he informed Snyder about Flint’s Legionella outbreak in December 2015.

Back at the inauguration, Weaver said, Snyder asked her to get Cummings to “back off” from investigating him, emphasizing that he wanted to move on with his life as a private citizen. He said “it would go a long way” if the request to the congressman came from her, Weaver recalled to VICE. Weaver’s former spokesperson, Candice Mushatt, as well as two other sources, confirmed that she had described the governor’s request to them after it occurred. (Snyder did not respond to multiple requests for comment on this story).Hundreds of confidential pages of documents obtained by VICE, along with emails and interviews, reveal a coordinated, five-year cover-up overseen by Snyder and his top officials to prevent news of Flint’s deadly water from going public—while there was still time to save lives—and then limit the damage after the crisis made global headlines.

What Snyder didn’t know then was that Cummings and Weaver had already spoken after Democrats won control of the House in the 2018 midterm election. Weaver said Cummings disclosed his plan to compel Snyder back to Congress for additional questioning. He wanted her there. But Cummings’ death in October 2019 prevented that from occurring.

After a VICE investigation spanning a year and a half across the state of Michigan, overwhelming evidence indicates Snyder had good reason to worry.

Cohen Milstein is Co-Lead Counsel in In re Flint Water Cases (E.D. Mich.)

Two former Performance Sports Group executives can’t dodge a proposed securities class action accusing them of misleading shareholders about sketchy sales tactics that bankrupted the sports gear manufacturer after a New York federal judge ruled that alleged misstatements were plausibly misleading.

U.S. District Judge Gregory H. Woods rejected the dismissal bid by ex-CEO Kevin Davis and former Chief Financial Officer Amir Rosenthal on Tuesday, finding that shareholders in the now-defunct PSG provided detailed arguments showing how the two former executives purportedly led the company into ruin.

Led by the Plumbers & Pipefitters National Pension Fund, the investors alleged that under Davis and Rosenthal, PSG’s sales departments made a habit of forcing customers, mostly large retail chains, to increase the size of their orders by threatening to revoke steep wholesale discounts, and that this strategy led to a buildup of unused inventory that the executives should have known would eat into future sales.

“The fund has adequately alleged that PSG’s sales practices created a trend of increasing inventory of PSG products at PSG retailers and that defendants should have disclosed this trend,” Judge Woods said Tuesday. “It was both reasonably foreseeable and material to PSG’s future performance that a buildup of inventory would lead to a decline in PSG’s future sales. And the fund has alleged circumstances that create a plausible inference that defendants had actual knowledge of this trend because they received repeated warnings that PSG’s sales tactics were cannibalizing future sales.”

. . .

Lead counsel for the shareholders told Law360 on Wednesday that they were “very pleased” with Judge Woods’ decision.

“This was a hard-fought motion, involving complex factual and legal issues,” Carol V. Gilden of Cohen Milstein Sellers & Toll PLLC said. “The Court engaged in a very thorough analysis of both sides arguments, and ruled validating the Lead Plaintiff’s claims. We look forwarding to proceeding with the case.”

Plumbers & Pipefitters National Pension Fund is represented by Carol V. Gilden, Alice R. Buttrick, Steven J. Toll, Megan Kinsella Kistler and S. Douglas Bunch of Cohen Milstein Sellers & Toll PLLC and James R. O’Connell and Mark W. Kunst of O’Donoghue & O’Donoghue LLP.