Key COVID-19-Related Securities Cases Implicating the Availability of D&O Insurance: 2022 Tracker | Practical Law

Key COVID-19-Related Securities Cases Implicating the Availability of D&O Insurance: 2022 Tracker | Practical Law

A table of key cases filed between January 1, 2022 and December 31, 2022 that implicate the availability of directors and officers (D&O) insurance for corporate defendants in securities litigation (direct and derivative securities claims) and class actions related to the ongoing 2019 novel coronavirus disease (COVID-19) pandemic. The table lists the cases in reverse chronological order, summarizes each case, and contains links to the complaints and other key pleadings.

Key COVID-19-Related Securities Cases Implicating the Availability of D&O Insurance: 2022 Tracker

by Practical Law Commercial Transactions
Law stated as of 03 Jan 2023 • USA (National/Federal)
A table of key cases filed between January 1, 2022 and December 31, 2022 that implicate the availability of directors and officers (D&O) insurance for corporate defendants in securities litigation (direct and derivative securities claims) and class actions related to the ongoing 2019 novel coronavirus disease (COVID-19) pandemic. The table lists the cases in reverse chronological order, summarizes each case, and contains links to the complaints and other key pleadings.
More than two years into the pandemic, businesses continue to face a broad range of COVID-19-related losses that implicate a similarly broad range of insurance coverages, including whether directors and officers (D&O) insurance provides coverage for lawsuits brought by company stakeholders (shareholders, investors, creditors, or trustees) against company officers and directors alleging that business decisions they made in response to the COVID-19 pandemic caused the company to incur losses and liabilities.
This tracker includes key cases filed after January 1, 2022 that implicate whether (and under what circumstances) D&O insurance coverage is available for:
  • Securities lawsuits arising out of:
    • misleading disclosures related to the company's performance or expected performance during the COVID-19 pandemic; or
    • mismanagement during the COVID-19 pandemic.
  • Claims made by shareholders and other company stakeholders that:
    • directors, officers, executives, or other company employees breached their duties to the company during the COVID-19 pandemic; or
    • corporate mismanagement led to insolvency or bankruptcy during the COVID-19 pandemic.
The tracker:
  • Lists cases in reverse chronological order based on filing date.
  • Provides a summary and procedural history.
  • Links to the complaint and, if applicable, other key pleadings.
For a tracker of key cases filed prior to January 1, 2022 that implicate the availability of D&O insurance to cover COVID-19-related losses, see Practice Note, Key COVID-19-Related Securities Cases Implicating the Availability of D&O Insurance Chart.
For more information on D&O insurance, including D&O insurance for shareholder derivative suits, see Practice Note, Directors and Officers Insurance Policies and Criminal and Civil Liability for Corporations, Officers, and Directors: Shareholder Derivative Actions.
For additional guidance on the availability of insurance coverage for COVID-19 losses, see:
For additional guidance on the commercial impacts of COVID-19, see Commercial Global Coronavirus Toolkit and Practical Law's COVID-19: Pandemic Response page.
Pleading Date
Case Name
Procedural History and Case Summary
February 7, 2022
The Firemen’s Retirement System of St. Louis v. Telos Corp., et. al., 22-cv-00135 (E.D. Va., Feb. 7, 2022)
Key Pleadings and Court Orders:
Summary: On Feb. 7, 2022, the Firemen's Retirement System of St. Louis filed a COVID-19-related securities class action on its own behalf and on similarly situated shareholders against Telos Corporation (Telos), a company that that develops and implements cyber, cloud, and enterprise security technology and products. Plaintiffs allege that Telos intentionally downplayed cybersecurity and coronavirus related “headwinds” that postponed the company’s performance of two key contracts, and the company's stock declined precipitously when those difficulties came to light.
The plaintiffs' complaint includes counts for:
  • Violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5 (against all defendants).
  • Violation of Section 20(a) of the Securities Exchange Act (against the individual defendants).
Amongst other things, the plaintiffs allege Telos made false and misleading statements regarding its ability to perform ten-year contracts it entered into with the Transportation Security Administration (the TSA) and with the Centers for Medicare and Medicaid Services (CMS), including in public statements and public filings the company made in conjunction with its IPO (Compl. at ¶¶ 4-8). Despite repeated assurances that Telos would begin providing services under both contracts in 2021, in an earnings call on August 16, 2021 the Company announced its contracts with the TSA and CMS "were experiencing headwinds" due to recent cyber-attacks and COVID-19 disruptions (Compl. at ¶ 10). In reaction to these revelation, Telos' stock price fell 28 percent (Compl. at ¶ 17).
For more information on the availability of directors & officers insurance to cover third-party shareholder claims, see Practice Note, Directors and Officers Insurance Policies. For more information on shareholder derivative lawsuits, see Practice Note, Shareholder Derivative Litigation.
January 24, 2022
Crisitan Dal Bosco, et. al. v. NRx Pharmaceuticals, et. al., 1:22-cv-00066 (D. Del., Jan. 18, 2022)
Key Pleadings and Court Orders:
Summary: On Jan. 18, 2022, a shareholder filed a COVID-19-related securities class action against NRx Pharmaceuticals, Inc. (NRx), a pharmaceutical company that develops therapeutics, including ZYESAMI, a pre-commercial drug for COVID-19-related respiratory failure. The Complaint alleges that NRx made materially false and misleading statements and failed to disclose that its COVID-19-related drug was not likely to gain FDA approval. 
In June 2021, NRx announced it filed an application with the FDA requesting Emergency Use Authorization ("EUA") for the ZYESAMI. On November 4, 2021, the FDA announced that because it did not have sufficient data regarding the known and potential benefits and risks of ZYESAMI, it could not grant an EUA. On this news NRx's stock price fell more than 25%.
The plaintiff class filed its complaint on Jan. 18, 2022, including counts for:
  • Violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5 (against all defendants).
  • Violation of Section 20(a) of the Securities Exchange Act (against the individual defendants).
Amongst other things, the plaintiff shareholders allege NRx made false and misleading statements in press releases and on investor calls throughout the summer of 2021 regarding the likelihood that the FDA would grant it an EUA, including noting that it had provided and was continuing to provide the FDA with data and statistical analysis to support its application and the company "remain[ed] firm in [its] belief" that the results of its ongoing studies of the efficacy of ZYESAMI were "clear and significant" and "warranted grants of emergency use" (Compl. at ¶¶ 21-27). However, NRx failed to disclose that:
  • The ZYESAMI EUA application contained insufficient data regarding the potential benefits and risks of ZYESAMI; therefore, 
  • The FDA was unlikely to approve the ZYESAMI EUA application. 
    (Compl. at ¶ 28.)
For more information on the availability of directors & officers insurance to cover third-party shareholder claims, see Practice Note, Directors and Officers Insurance Policies. For more information on shareholder derivative lawsuits, see Practice Note, Shareholder Derivative Litigation.