Securities Litigation Expert WitnessesIntroduction:

The 2018 wildfire season in California has been considered the deadliest by various government agencies, and the damage it caused was tremendous. See, e.g., California Department of Forestry and Fire Protection, (CAL FIRE) “2018 Statewide Incidents Map,” at (last visited Jan. 3, 2019). In November of alone, about 1,500 structures were destroyed or damaged, and 3 people were killed because of a fire in Woolsey. See, e.g., CAL FIRE, “Woolsey Fire Incident Information,” Dec. 14, 2018, at (last visited Jan. 3, 2019). A number of lawsuits have been filed or are likely to arise in connection with the fires. This article is part of a series that examines the types of civil litigation that concern forest fires and liability theories for recovery, which attorneys may expect to see in 2019 and future years.


One complaint was filed on November 16 of 2018 and alleged that a utility company bears legal responsibility for issues arising in conjunction with the California fires. See, e.g., Kevin LaCroix-1[1], “Examining a Post-Wildfire Securities Suit,” Law360, Nov. 27, 2018, at (last visited Jan. 3, 2019). The lawsuit was filed in federal court and is a class action on behalf of individuals and entities who are or were shareholders in the company during the time of the November fires. See, e.g., Kevin LaCroix-2, “First, Wildfires. Then What? Securities Litigation, Of Course,” The D & O Diary, Nov. 18, 2018, at (last visited Jan. 3, 2019).

According to the complaint, the plaintiffs are entitled to “damages under Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 based on the defendants’ alleged misrepresentations to investors.” Id. Section 10(b) of the Act gives an action to investors who are manipulated or deceived in connection with the purchase and sale of securities.  See 15 U.S.C. §78j(b). Its fundamental purpose is to prevent securities fraud. See, e.g., Thomson Reuters, “Securities and Exchange Act Rule 10b,” no date given, at (last visited Jan. 3, 2019). Section 20(a) of the Act gives aggrieved parties a private right of action in instances of insider trading. See, e.g., Allen R. Friedman & Cameron Balahan, “Section 20A liability must be based on a violation that involves insider trading,” Lexology, Jun. 6, 2008, at (last visited Jan. 3, 2019).

In the case filed against the California utility company, the plaintiffs claim the defendants made “false and misleading statements or failed to disclose” a number of issues that are related to the fires. See Kevin LaCroix-2. According to the complaint, the defendant company did not maintain or comply with electricity transmission and distribution requirements, in violation of state law. See id. Further, the plaintiffs contend that the defense’s conduct heightened the risk of wildfires and that those acts prompted an investigation, which led to a sharp decline in share prices. See id.

What is unique about this lawsuit is that it reflects an important trend in securities litigation. In the past, such lawsuits were typically “based on allegations of financial misstatements or accounting misrepresentations.” Id. However, cases based on such statements have been declining, and to fill the gap, attorneys have turned to new approaches. See, e.g., id. As one lawyer in the field explains, “Under this new approach, the plaintiffs seek to rely on problems the defendant companies have experienced in their operations that caused their share price to drop. First comes the event, then comes the lawsuit.” Id. This type of case is also known as “event-driven” securities litigation, and practitioners can expect to see more of it. See, e.g., id.

The suit that was filed in November and similar litigation that will invariably follow may hinge on expert witnesses. Those who specialize in securities and financial misrepresentation, natural disasters, utility regulation and responsibility, and related matters may prove to be invaluable resources for both sides in cases of this nature. Because of the shift to “event-driven” lawsuits and the high tolls the forest fires have exacted in lives and economic devastation, people will seek ways to hold someone liable for their damages. Experts may offer evidence of many kinds, and the strength of their arguments regarding causation, damages, and liability will be critical.


Event-driven securities litigation is, in many analysts’ views, likely to “become increasingly important in recent years, and it is, in fact, one of the significant factors explaining why the number of securities lawsuits filings is so high above historical norms.” Id. With wildfires having caused immense damage in 2017 and 2018, and with no end in sight, cases of this nature are worth examining and following for securities attorneys. Experts who stay on top of such cases will be an invaluable asset to everyone involved.

[1] Kevin LaCroix-1 refers to an article written about event-driven securities litigation on November 27, 2018. Kevin LaCroix-2 is a November 18, 2018 piece about the same topic.