All posts by Cydney Posner

Morris Nichols discusses proposed new amendments to the DGCL

You might be interested in this recent Alert from the Delaware firm, Morris Nichols Arsht & Tunnell (including a more expansive article), which addresses amendments to the Delaware General Corporation Law just proposed by the Council of the Corporation Law Section of the Delaware State Bar Association. It’s worth emphasizing that the proposed amendments have not yet been submitted to the Delaware General Assembly for its consideration and approval, so they are not yet effective. As the Alert indicates, the proposed new amendments are designed to address the effects of recent Delaware cases highlighting “that the legal requirements identified in the cases were not necessarily in line with market practice.  The Amendments are designed to bring existing law in line with such practice.”

California moves to dismiss complaint challenging climate disclosure laws

Since we’ve been preoccupied with the litigation over SEC’s climate disclosure rules, it’s time for a break. Something new and different.  How about the litigation over the California climate disclosure rules: Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, Greenhouse gases: climate-related financial risk? (See this PubCo post.) In January, the U.S. and California Chambers of Commerce, the American Farm Bureau Federation and others filed a complaint (and in February, an amended complaint) against two executives of the California Air Resources Board and the California Attorney General challenging these two California laws. The lawsuit seeks declaratory relief that the two laws are void because they violate the First Amendment, are precluded under the Supremacy Clause by the Clean Air Act, and are invalid under the Constitution’s limitations on extraterritorial regulation, particularly under the dormant Commerce Clause.  The litigation also seeks injunctive relief to prevent CARB from taking any action to enforce these two laws. (See this PubCo post.) CARB has just filed a motion to dismiss the amended complaint for lack of subject matter jurisdiction and failure to state a claim. Interestingly, however, the motion does not seek dismissal of Plaintiffs’ First Amendment claim (except as to the Attorney General, whom the motion seeks to exclude altogether on the basis of sovereign immunity), even though CARB asserts that  Plaintiffs’ First Amendment challenge is “legally flawed.” No further explanation is provided.

SEC requests court deny stay in climate disclosure rules litigation

It’s been a day or two now—what’s going on with the SEC’s climate disclosure rules litigation?  When we left our tale, petitioners Liberty and Nomad had submitted this notice of pending emergency motion advising the Eighth Circuit of their request for a new administrative stay and a stay pending judicial review in connection with their petition challenging the rules.  And the SEC was directed to file a response by the close of business yesterday. (See this PubCo post.) As directed by the Court, the SEC did submit a letter of response. Now, another petitioner, the U.S. Chamber of Commerce, has also moved for a stay pending appeal. And a new petition for review has been filed.

Can director commitments policies help prevent overextended boards?

There is a lot going on at companies, and—you may be surprised to hear—not all of it is new regulation.  There are new technologies, such as AI, global political instability and social change, not to mention ESG and cybersecurity.  Many of these topics, as they affect a company, fall within the remit of the board for oversight. The energy and time necessary can be overwhelming. In this article, Director Commitments Policies, Overboarding, and Board Refreshment, proxy advisory firm Glass Lewis discusses one way to help ensure that directors have “sufficient time and energy to fulfill their duties and obligations to shareholders”: a director commitments policy. As a corollary, GL maintains, these policies can also serve to boost board refreshment, and can represent a vital measure of corporate governance. 

Back on the SEC climate rules rollercoaster in the Eighth Circuit—will a new stay be granted?

Liberty Energy Incorporated and Nomad Proppant Services LLC decided to give it another go. Are you surprised?  In this notice of pending emergency motion, Liberty and Nomad advise the Eighth Circuit of their request for a new administrative stay and a stay pending judicial review in connection with their petition challenging the SEC’s final climate disclosure rules.  As you may remember, a petition for review of the final rules was filed by Liberty and Nomad on March 6 in the Fifth Circuit and their motion for an administrative stay was granted on March 15.  That case was just one of nine challenging the SEC’s rules in six different circuits.  Upon request of the SEC, on March 21, 2024, the Judicial Panel on Multidistrict Litigation issued a consolidation order in these cases, randomly selecting the Eighth Circuit as the court in which to consolidate these petitions. Following that consolidation order,  the Fifth Circuit ordered the transfer of Liberty’s petition to the Eighth Circuit and the dissolution of the administrative stay. (See this PubCo post.)

Stay of SEC climate disclosure rules lifted

As discussed in these PubCo posts from Monday, Saturday, Tuesday  and Thursday, on March 15, in a one-sentence order, the Fifth Circuit granted a motion by Liberty Energy Inc. and Nomad Proppant Services LLC for an administrative stay of the SEC final climate disclosure rules. That case was just one of nine challenging the SEC’s rules in six different circuits.  As previously reported, upon request of the SEC, on March 21, 2024, the Judicial Panel on Multidistrict Litigation issued a consolidation order in these cases, randomly selecting the Eighth Circuit as the court in which to consolidate these petitions. Bloomberg has reported that, of 17 appellate judges in the Eighth Circuit, only one was appointed by a Democrat. Not that the politics should matter, of course. 

Judicial Panel consolidates petitions challenging SEC climate disclosure rules

As discussed in these PubCo posts from Monday, Saturday and Tuesday, on March 15, in a one-sentence order, the Fifth Circuit granted a motion by Liberty Energy Inc. and Nomad Proppant Services LLC for an administrative stay of the SEC final climate disclosure rules. That case was just one of nine challenging the SEC’s rules in six different circuits, with seven petitioners contending that the SEC went too far and had no authority to issue the rules and two affirming the SEC’s authority and contending that, in rolling back the proposal, the SEC has “fallen short of its statutory mandate to protect investors.”

SEC charges Skechers with failure to disclose related-person transactions involving family members

Recently, the SEC announced settled charges against Skechers U.S.A., Inc., a public footwear company traded on the NYSE, for allegedly failing to disclose payments to executives’ immediate family members and loans to executives and directors that represented unreimbursed personal expenses in excess of the disclosure threshold. In the settlement, Skechers agreed to pay a $1.25 million civil penalty. According to an SEC Associate Director of Enforcement, “[d]isclosure of related person transactions provides important information for investors to evaluate the overall relationship between a company and its officers and directors….Today’s action is a reminder that companies should take appropriate measures to ensure proper disclosure of such transactions.” This case serves as a good reminder, especially during proxy season, about the need to disclose, under Reg S-K Item 404, related-person transactions that involve significant unreimbursed personal expenses or family members who may be performing work for the company. Companies may want to beef up their due diligence processes and disclosure controls around these types of transactions.

New Cooley Alert: “Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks”

If you’ve been following the developments in climate disclosure regulation, you know that many U.S. companies may well be subject to disclosure regulations beyond those of the SEC; regulations adopted in the European Union, countries outside the EU and in some states, such as California, could be applicable. And some aspects of those regulations are more sweeping—or just different—than those recently adopted by the SEC. For example, the EU employs the concept of “double materiality,” meaning the impacts of companies’ “business on the environment and society irrespective of the positive or negative effect of such impacts on companies’ financials”; by contrast, the SEC looks at materiality from the perspective of the reasonable investor making investment or voting decisions. In light of these and other differences, companies may face challenges in attempting to implement all of the applicable rules.  This essential new Cooley Alert, Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks, from our ESG group provides some welcome guidance in sorting through the requirements of the different frameworks.