We have represented L&L Energy and various current and former directors and officers in two sets of securities class actions in federal court in Washington and New York, five shareholder derivative actions in federal and state court in Washington and Nevada, and potential opt-out litigation. In general terms, the securities class actions assert that L&L and its directors and officers made false and misleading statements about L&L’s financial condition and asset ownership and the derivative actions assert that the board failed to properly oversee L&L’s operations and compliance with the securities laws. After obtaining dismissal with leave to amend in one of the securities class actions, the plaintiffs successfully re-pleaded their claims. At that point, stays were lifted in the derivative actions. We proceeded to a global mediation, and settled all pending actions. While we were approaching mediation, the former CEO was indicted for securities fraud. After we settled the matter but before the settlements were finalized and approved by the courts, the CEO was sentenced to five years in prison, and the Company ran out of funds and ceased operations. A group of large investors opted out of the securities class action settlement, and have threatened individual actions. The case is remarkable because we were able to resolve seven extraordinarily difficult securities and derivative actions with limited insurance funds. The resolution required aggressive advocacy against the plaintiffs’ counsel, who understandably felt good about their cases. We emphasized a few pivotal defenses and the practical difficulties the plaintiffs faced. The resolution also required a delicate strategic alliance with the insurer, which has significant coverage defenses, especially after the CEO’s criminal conviction. We pride ourselves on our ability to work closely with insurers, whose interests are typically more closely aligned with defendants’ interests than other defense lawyers realize. The defense counsel-insurer relationship is more difficult when, as here, the insurer has strong coverage defenses, but we have been able to pull it off — which has helped us protect our clients, who have no other assets, and validated our unique approach.
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