Supreme Court Rules Data Claim Against Google “Doomed to Fail”

The value of litigation insurance, and the natural pairing of this coverage with litigation funding, is often highlighted as one of the core strengths of the current litigation environment. However, a significant reversal of a $1.6 billion judgement has shown that insurers must carefully balance the risks of uncertain outcomes when providing judgement preservation insurance.

Reporting by Bloomberg Law covers the ongoing impact of the decision by the US Court of Appeals for the Fifth Circuit to overturn a $1.6 billion judgement against IBM, which has left Liberty Mutual facing up to $150 million in coverage for judgement preservation insurance it provided. According to Bloomberg’s sources, Liberty Mutual has since withdrawn from “at least two potential litigation insurance deals” since the appeals court’s ruling. The $1.6 billion judgement was reportedly insured by a group of insurers to cover between $500 million and $750 million, with Liberty alone having covered between $100 million and $150 million.

Richard Angevine, a spokesperson for the insurer, said: “Liberty Mutual Insurance does not publicly discuss individual commercial insurance customers.”

Speaking to Bloomberg Law about the broader impact of this type of judgement on the litigation insurance market, Jason Goldy, a global team leader for Alliant Insurance’s Litigation & Contingent Risk Practice, said that insurers will continue to adjust their approach. Goldy said that “in the last six months you’ve seen these adjustments and I would think that you’re likely to see them accelerated if there are material losses,” but clarified that “the market will survive.” 

In a similar vein of thinking, Michael Perich, head of litigation insurance at Lockton, agreed that “the market is fluid and it's proven the ability to adapt to things.”

Shareholder claims have often been identified as lucrative opportunities for litigation funders, with class actions being brought on behalf of investors who allege that companies have failed in their disclosure and transparency obligations. However, as with all litigation investments, there can be no certainty of success as has been demonstrated in the judgement for two shareholder claims brought in Australia.

An article in The Australian Financial Review covers the judgement handed down in the Federal Court of Australia, where Justice Yates ruled in favour of Commonwealth Bank of Australia (CBA) in two shareholder class actions brought against the bank. The judgement covered the Zonia Holdings Pty Ltd v Commonwealth Bank of Australia and Philip Anthony Baron and Joanne Baron v Commonwealth Bank of Australia cases.

The class actions had been brought over allegations that CBA had failed in its disclosure obligations to shareholders over breaches of anti-money laundering and counter-terrorism financing regulations. In the summary of his judgement released today, Justice Yates concluded that information around these breaches were not “likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of CBA shares”.

The summary of Justice Yates’ judgement can be read here, with the full judgement scheduled to be released on 15 May.

Omni Bridgeway, which provided funding for the class action through its Funds 2&3, released an announcement following the judgement and said that “the applicant’s legal team is reviewing the Judgment and assessing the prospects of an appeal.” The funder went on to provide some insight into the financials behind its investment in the case, explaining that “Funds 2&3 invested A$9.6 million in the CBA investment and sold a 20% interest for A$7.5 million in June 2022.” Omni Bridgeway stated that “there is no cash impact from any adverse costs arising from the judgement”, due to its portfolio adverse costs insurance policy.The full Omni Bridgeway announcement can be read here.