Welcome to A&O Shearman's Need-To-Know Litigation Weekly, which analyzes notable U.S. decisions, orders and developments each week in areas of Securities Litigation, Government/Regulatory Enforcement, M&A and Corporate Governance, Antitrust Litigation and IP Litigation. This weekly newsletter is intended to supplement our various publications and thought leadership concerning these important substantive areas.
Securities Litigation
District of Arizona Dismisses With Prejudice Putative Class Action Against Semiconductor Manufacturer
On July 23, 2026, Judge Susan M. Brnovich of the United States District Court for the District of Arizona dismissed with prejudice a putative securities class action against a semiconductor manufacturer (the “Company”) and its CEO and CFO (“Individual Defendants” and, together, “Defendants”), asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5. Jeffery S. Lew, et al. v. ON Semiconductor Corporation, et al., No. CV-24-00594-PHX-SMB (D. Ariz. July 23, 2026).Read More
Second Circuit Holds That “Blockers” In Derivatives Contracts Shield Liability For Short-Swing Profits Under Section 16(b)
On July 7, 2026, the United States Court of Appeals for the Second Circuit affirmed the dismissal of an action asserting claims under Section 16(b) of the Securities Exchange Act of 1934 seeking disgorgement of short-swing profits from an investment manager and its client fund. 20230930-DK-Butterfly-1, Inc. v. HBC Invs. LLC, --F.4th--, 2026 WL 1954771 (2d Cir. 2026). Plaintiff alleged that defendants were required to disgorge short-swing profits under Section 16(b) because they beneficially owned 10% or more of a company’s common stock or had the ability to acquire 10% or more pursuant to derivatives contracts, notwithstanding certain “blocker” provisions in the contracts that required defendants to stay below 10% ownership. The Second Circuit affirmed the district court’s dismissal, and, in an issue of first impression in the Second Circuit, held that the “blockers” protected defendants from Section 16(b) liability.Read More
Government/Regulatory Enforcement
DOJ And Agricultural Company Enter $10 Million Deferred Prosecution Agreement For One Count Of Conspiracy To Violate Foreign Corrupt Practices Act
On July 17, 2026, the Department of Justice (“DOJ”) entered into a three-year deferred prosecution agreement (the “DPA”) with a United States-based agricultural supply chain company (the “Company”) for alleged violations of the Foreign Corrupt Practices Act (“FCPA”). The allegations related to a multi-year scheme in which the Company directed third-party customs brokers to bribe Mexican officials to bypass border inspections. Under the DPA, the Company will pay a $9,769,521 criminal penalty and forfeiture of $414,351.Read More
DOJ Declines To Prosecute Optometry Company Under New Corporate Enforcement Policy After Self-Disclosure
On July 29, 2026, the National Fraud Enforcement Division of the Department of Justice (“DOJ”) declined to prosecute a management services organization and its holding company (collectively, “Optometry Company”) that provided billing and other administrative services to an optometry practice and an affiliated ambulatory surgery center (collectively, “Practice”) for health care fraud, illegal kickbacks and bribes, and conspiracy, pursuant to Part I of the DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”). The Practice was founded and controlled by an individual (“Founder”) who later formed Optometry Company with outside investors. Acting Attorney General Blanche announced the new CEP on March 10, 2026. The decision resolves a criminal health care fraud investigation and requires Optometry Company to pay $1 million in disgorgement to victims. The DOJ separately announced a seven-count indictment against the Founder for allegedly orchestrating diagnostic testing and kickback schemes.Read More
M&A and Corporate Governance
Delaware Court Of Chancery Dismisses Stockholder Derivative Suit, Rejecting “Eleventh Hour” Section 220 Demand Tolling Theory
On July 9, 2026, Vice Chancellor Lori W. Will of the Delaware Court of Chancery dismissed a stockholder derivative action against a biopharmaceutical company (the “Company”), as the nominal defendant, and several of its current and former officers and directors. In re Axsome Therapeutics, Inc. S’holder Deriv. Litig., Consol. C.A. No. 2025-1076-LWW (Del. Ch. July 9, 2026). The Court rejected plaintiffs’ argument that a Section 220 demand necessarily tolls the statute of limitations and held that plaintiffs’ breach of fiduciary duty, unjust enrichment, and waste claims were barred by laches because they were filed after the three-year limitations period expired. The Court explained: “A diligently pursued books and records suit may, in appropriate circumstances, justify equitable tolling. But an eleventh-hour, out-of-court demand pursued with little zeal does not.”Read More
Delaware Court Of Chancery Applies Section 144 Heightened Independence Presumption To Demand Futility
On June 15, 2026, Vice Chancellor Lori W. Will of the Delaware Court of Chancery granted in part and denied in part a motion to dismiss claims of breach of fiduciary duty and unjust enrichment in a stockholder derivative action challenging two board compensation decisions by a financial institution (the “Company”): a one-time $50 million equity grant to its founder and non-executive chairman, and the directors’ self-awarded compensation. Ayers v. Foley, No. 2025-0650-LWW, 2026 WL 1723538 (Del. Ch. June 15, 2026). Applying the recently amended 8 Del. C. § 144(d)(2), the Court dismissed the claims tied to the equity grant but sustained the claims arising out of director compensation.Read More
Antitrust Litigation
DOJ Withdraws Longstanding Business Review Letter Issued to Institutional Shareholder Services
On August 5, 2026, “DOJ announced the withdrawal of a 1987 Business Review Letter (the “1987 BRL” or the “Letter”) previously issued to Institutional Shareholder Services (“ISS”), a proxy advisory firm. Justice Department Withdraws Business Review Letter Issued to Proxy Advisory Firm, DOJ Antitrust Division, Press Release No. 26-886 (Aug. 5, 2026). The DOJ indicated that the withdrawal may signal future antitrust scrutiny of ISS and the proxy advisory industry, noting that a business review letter “states only the enforcement intention of the Antitrust Division as of the date of the letter, and the Division remains completely free to bring whatever action or proceeding it subsequently comes to believe is required by the public interest.”Read More
DOJ And FTC Extract Record $12 Million In Civil Penalties For Failing To Submit An HSR Filing
On July 13, 2026, the U.S. Department of Justice Antitrust Division and the Federal Trade Commission (the “Agencies”) filed a complaint and lodged a proposed final judgment in the U.S. District Court for the District of Columbia, looking to resolve allegations that a global medical-device manufacturer (“Buyer”) and a Singapore-based medtech group (“Seller”) (collectively “Defendants”) deliberately structured a $115 million acquisition to evade the notification and waiting-period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The complaint sought penalties for failure to file, and the proposed consent decree, which remains subject to court approval, imposes a combined $12 million penalty, the largest ever for failing to make an HSR filing. United States v. Edwards Lifesciences Corp. & Genesis MedTech Group Ltd., No. 1:26-cv-02450 (D.D.C. July 13, 2026).Read More
Intellectual Property Litigation
Federal Circuit Affirms JMOL Overturning $107.5 Million Jury Award: Patents Do Not Enable Unit Dosages For Treatment Of A Patient
In Wyeth LLC v. AstraZeneca Pharmaceuticals LP, No. 2024-2325 (Fed. Cir. July 9, 2026), the Federal Circuit affirmed the District of Delaware’s grant of judgment as a matter of law that asserted patent claims directed to methods of treating gefitinib- or erlotinib-resistant non-small cell lung cancer (NSCLC) were invalid for lack of enablement under 35 U.S.C. § 112(a). The Court affirmed the district court’s determination on JMOL that the patent specifications did not enable a person of ordinary skill in the art to determine, without undue experimentation, therapeutically effective daily dosages across the full scope of the claims. At trial, a jury had found the asserted claims of the patents not invalid and infringed, and awarded $107.5 million in damages. However, enablement is a question of law based on underlying facts, and is therefore amenable to resolution on JMOL.Read More
The Patent Eligibility Restoration Act: Where Things Stand After the Senate Judiciary Committee’s First Full-Committee Hearing
This note provides an update on Section 101 patent-eligibility legislation pending in Congress. On July 14, 2026, the Senate Judiciary Committee held its first full-committee hearing on S. 1546, the Patent Eligibility Restoration Act of 2025 (“PERA”). Co-Sponsored by Senators Thom Tillis (R-NC) and Chris Coons (D-DE), PERA would eliminate all judicially created exceptions to patent eligibility under 35 U.S.C. § 101 and replace them with defined statutory exclusions, leaving Sections 102, 103, and 112 (novelty, nonobviousness, and disclosure) unchanged. The bill addresses only the threshold eligibility question.Read More