Sale of Subsidiary
A manufacturer of medical devices offered to sell one of its subsidiaries to another corporation, which is considering investments in a variety of different ventures. The officers of the manufacturer prepared financial information for review by the buyer. After reviewing the information, the buyer decided to forgo its other opportunities and purchase the subsidiary. After the sale, the buyer filed a lawsuit against the manufacturer and its officers alleging that they had made false and misleading statements to the buyer in connection with the sale. In particular, the buyer charged that the financial condition of the subsidiary was far worse than the seller had represented at the time of the sale, and that the buyer would have made more money if it had pursued one of its other investment opportunities. Following a trial, a jury determined that, while the seller did not knowingly make any deliberate misrepresentations, the officers negligently failed to exercise reasonable care in communicating accurate information to the buyer. While on appeal, the case settled for $500,000 and defense costs reached $625,000, for a total cost to the manufacturer of more than $1.1 million.

Loss of Profits
A retail company filed a lawsuit against a competitor and its Chief Executive Officer, alleging that the competitor's new agreement with the retail company's most important supplier made it impossible for the supplier to satisfy its obligations to the retail company, causing them to lose profits. Ultimately, the competitor wins its motion for summary judgment, and that "win" is upheld on appeal. Defense costs, however, totaled $500,000, and these costs could not be recovered from the retail company that sued.

Shareholder Claim
A Midwest-domiciled home products company retained an independent research firm to evaluate its new home product. Based on a favorable review by the outside firm, the company raised in excess of $10 million for the production and marketing of the new product. Prior to releasing the product, the company's internal evaluation team discovered, after extensive testing, that the new product did not work properly. Shareholders have brought suit against the company and the directors and officers for misrepresentation in the offering documents. The plaintiffs assert causes of action for violation of various state securities laws and the Securities and Exchange Act of 1934. Damages alleged in the lawsuit exceeded $15 million.

Competitor Disputes
The plaintiff filed a complaint against their competitor alleging that a former employee, now working at the competition, engaged in unauthorized use of confidential and proprietary information and committed other acts of unfair competition. As a result, the plaintiff alleged it had suffered irreparable and immediate injury. In addition, the plaintiff alleged that the defendant had possession of its confidential information and intellectual property. The plaintiff asserted causes of action for misappropriation of trade secrets and confidential information, violation of the Computer Fraud and Abuse Act, unlawful access to stored information, and unfair competition. Total defense costs and settlement exceeded $350,000.

Loan Default
A diversified sports product company received a lawsuit against the President, CEO, and Chairman of the Board for not honoring a promissory note. The plaintiff alleged that it loaned $1 million to the company. The company allegedly agreed to pay the funds back within a month pursuant to the promissory note. Despite requests for return of the money, plus interest, the company has not returned the funds to the plaintiff. Total defense costs and settlement exceeded $250,000.

Inadequate Financial Reporting
A technology company received a complaint from an investor who alleged the company improperly induced the plaintiff to issue a note payable to the company. The plaintiff specifically alleged the company made false representations and other false statements regarding the company's forecasted rate of growth and failure to disclose its tax lien. The company defaulted on the promissory note when it failed to make the required principle and interest payments. The plaintiffs issued a demand letter and filed suit against the company. The plaintiff agreed to accept the company's offer to convert the promissory note to stock in the company, but the defense costs exceeded $100,000.

Inaccurate Disclosure:
A class action suit was commenced by various investors who participated in an Internet startup company's Private Placement that raised in excess of $5 million to fund capital expenses, to provide working capital and to cover operating losses. An investigation made by and through counsel, primarily from corporate records and public records, showed that the Private Placement Memorandum contained an unaudited year-end balance sheet and statement of profits and losses that were materially misleading. Total defense costs and settlement exceeded $500,000.

Deceptive Trade Practices
A private company that manages and operates a major natural resource received a claim against the company and various members of the board of directors. The plaintiff alleged that the board of directors had used their position for their own private benefit and personal advantage, and for the benefit and advantage of their private employers. The plaintiff also alleged that the board of directors assigned a valuable contract without receiving any consideration. The plaintiff further alleged that such assignment also constituted misappropriation of valuable assets for the benefit of a private party in violation of state codes. Total defense costs exceeded $250,000.

Government Agency
The federal government sued the CEO, the President and other officers of an East Coast manufacturing company for price fixing. After an extensive trial, the allegations were dismissed due to lack of circumstantial evidence, but the defense costs and fees incurred were in excess of $750,000.