John C. Grugan

Litigation, Corporate and Government Investigations and White Collar Defense, Insurance

John C. Grugan is a partner in the Litigation Department, Vice Chair of the Corporate and Government Investigations and White Collar Defense Group, and a member of the Insurance Group. Mr. Grugan focuses his practice on representing parties in enforcement proceedings before the Securities and Exchange Commission, conducting investigations on behalf of committees of public companies, and on extra-contractual insurance litigation.

In the area of SEC enforcement, Mr. Grugan regularly represents companies and individuals in matters in which insider trading, earnings management, accounting irregularities, or other fraud is alleged. He also routinely represents audit committees and boards of directors in related reviews of internal controls and internal investigations. He is a frequent lecturer on the SEC enforcement process, conducting effective internal investigations, and the attorney-client privilege.

Mr. Grugan additionally has substantial white collar criminal defense experience and has represented corporations and individuals in Civil False Claims Act litigation and antitrust matters.

Mr. Grugan regularly advises insurance carriers on coverage and represents insurers in disputes arising under a variety of lines of insurance, including comprehensive general liability, property, casualty, law enforcement liability, and educators' legal liability. His insurance practice focuses primarily on defending insurers against claims of bad-faith conduct.

Representative Matters

Securities and White Collar Defense

• Represented an international shipbuilder with operations in Philadelphia in a lawsuit brought under the federal False Claims Act; after extensive discovery, the plaintiff/relator agreed to voluntarily dismiss her False Claims Act claims
• Represented the audit committee of a publicly traded weight-loss and nutrition company in a Sarbanes-Oxley investigation relating to the timing and propriety of a number of stock option grants
• Represented the audit committee of a publicly traded defense contractor in a Sarbanes-Oxley investigation arising out of a whistleblower's allegations regarding a possible violation of the Foreign Corrupt Practices Act
• Represented the audit committee of a publicly traded real estate investment trust in a Sarbanes-Oxley investigation relating to "tone at the top," which was alleged to have created a corporate environment in which inappropriately aggressive accounting was required and internal controls circumvented
• Represented the audit committee of a publicly traded clothing manufacturer in an internal review relating to the accounting for in-transit shipments
• Obtained judicial approval, following a lengthy evidentiary hearing, of a very favorable settlement of a False Claims Act case brought by a whistleblower/former employee against a client that conducts utilization review for medical insurers
• Represented the audit committee of a publicly traded insurance company in an SEC investigation into the company's practices for accounting for reinsurance
• Represented the audit committee of a publicly traded industrial pollution control and air-purification company in an SEC investigation relating to earnings management and misappropriation
• Represented the board of directors of a health system in an SEC investigation relating to a bond offering
• Represented the board of directors of a nonprofit victim services provider in connection with a Department of Justice investigation relating to a misappropriation and override of internal controls
• Represented a publicly traded industrial stored-energy company in an internal investigation relating to allegations of conflicts of interest by senior management

Litigation and Securities

• Obtained summary judgment on defamation and tortious interference claims brought against an insurer
• Obtained a permanent injunction against a Pennsylvania County Board of Commissioners that sought to repudiate a guaranty supporting the construction of a convention center
• Obtained a dismissal of a bad faith claim on a motion for judgment on the pleadings; successfully argued, based on correspondence from the underlying claim, that the statute of limitations on the plaintiffs' bad faith claim began to run five years before the plaintiffs filed their complaint
• Obtained a dismissal, on preliminary objections, of an attorney's quantum meruit claim for attorneys' fees arising out of a property dispute
• Won two decisions in an insurance "lost policy" case arising out of a malicious prosecution and wrongful imprisonment suit; in the first decision, the court granted a motion to strike expert testimony proffered by the third-party plaintiff in support of its coverage claim; in the second decision, the court granted the defendant's motion for summary judgment, finding that the plaintiff in the underlying suit did not allege bodily injury within the meaning of the reconstructed policies
• Successfully argued that an insurer's obligation to defend an insured was not acquitted by first assigning counsel to monitor the litigation and then later taking control of the defense; the court granted summary judgment in favor of the insured
• Successfully argued that, in the context of removal under 28 U.S.C. § 1446(b), a defendant's obligation to remove a case from state court is not triggered by the filing of a writ of summons and does not arise until the complaint is filed and properly served
• Represented an insurer in a bad faith action arising out of a significant fire that destroyed a beachfront condominium complex; as an alternative to litigation, was able to revive stalled discussions relating to an appraisal and obtained a voluntary dismissal of the contract and bad faith claims
• Won summary judgment on bad faith, negligence, intentional breach of contract, and Unfair Insurance Practices Act claims arising out of a significant commercial property loss, where the insured alleged a delay in payment of more than three years
• Obtained summary judgment on the third-party plaintiff's bad faith and contract claims based on the application of the policy's professional liability exclusion

Judicial Clerkships

Hon. James McGirr Kelly, U.S. District Court for the Eastern District of Pennsylvania

Professional Activities

American Bar Association

Pennsylvania Bar Association

Philadelphia Bar Association

Criminal Justice Act Panel for the U.S. District Court for the Eastern District of Pennsylvania, past member (2004-2006)

Philadelphia Hiring Committee, Ballard Spahr

Recognition & Accomplishments

Benchmark Litigation, "future star," litigation, 2009-2010

National Multiple Sclerosis Society, Leadership Honoree, 2005

LEADERSHIP Philadelphia, member, class of 2009

Publications

"Tone at the Top Part II," Metropolitan Corporate Counsel, July 2007

"Tone at the Top," Metropolitan Corporate Counsel, June 2007

"Discovery in the Philadelphia Court of Common Pleas," Pennsylvania Bar Institute's Philadelphia Court of Common Pleas Civil Practice Manual, April 2007, May 2009

"Risk Management For Prospective Outside Directors," Metropolitan Corporate Counsel, June 2006

In addition to writing articles for industry and trade publications, Mr. Grugan frequently authors Ballard Spahr Securities and Corporate and Government Investigations and White Collar Defense Alerts. His most recent alerts follow.

"SEC Announces Appointments to Specialized Enforcement Units, Guidelines To Promote Individuals' Cooperation with Investigations," January 13, 2010

"Insurer Required To Provide a Defense to Defendants in Ponzi Scheme Litigation," January 6, 2010

"Eastern District Hands Down Landmark Decision under False Claims Act," December 8, 2009

Co-author, "Appeals Court Reinforces Importance of Proper 'Upjohn' Warnings," October 2, 2009

Co-author, "Division Chief Announces Changes Aimed at Enhancing SEC Enforcement," August 10, 2009

Co-author, "SEC Halts Sixth Alleged Ponzi Scheme Since Madoff," April 2, 2009

Co-author, "Selective Waiver Doctrine Rejected," March 4, 2008

Co-author, "SEC Notifies at Least Three Firms That it May Bring Fraud Charges Related to the Municipal Market," February 13, 2008

Co-author, "Ex-Brocade CEO Sentenced to 21 Months in Stock Options Backdating Investigation," January 17, 2008

"Insider Trading Prosecutions on the Rise," October 2007

"Significant Deficiency Defined," July 2007

"DOJ and SEC Options Backdating Investigations Net First Indictments," July 2006

Speaking Engagements

Featured in interview, Compliance Week podcast, April 2009, discussing delivering proper Upjohn warnings when conducting interviews in internal investigations, and a recent decision highlighting the consequences of failing to deliver those warnings

"Recent Examples of Poor Tone at the Top," Tone at the Top: The Ethical Standards Set by Senior Management and How Those Standards, or Lack Thereof, Contribute to Corporate Fraud (CLE), January 2008

"What Happens in an Internal Investigation?," Navigating Attorney-Client Privilege and Work Product in Corporate Litigation, Transactions, and Investigations (CLE), December 2007

"Current Practice Developments Regarding Internal Investigations and Responding to Governmental Enforcement," Philadelphia Bar Association Business Law Section Meeting, October 2007

"Discovery - Where Most Cases are Won or Lost," Philadelphia; Pittsburgh; Mechanicsburg, Pennsylvania; August 2007

"Conducting Internal Investigations," FERC Compliance Webinar, June 2007

"Corporate Responses to Employee Misconduct," Tri-State Human Resource Management Association Annual Conference, May 2007

"Bad Faith Issues," Pennsylvania Bar Institute's Auto Law Update, Philadelphia; Conshohocken, Pennsylvania; October 2005

"Current Issues in Bad Faith Litigation," Pennsylvania Bar Institute, Philadelphia, Conshohocken, June 2005

"Civil Practice and Procedure in the Philadelphia Court of Common Pleas," Philadelphia, June 2005

"Succeeding in Federal Court: What You Need to Know about Rules and  Procedures," Philadelphia, February 2005

"Bad Faith Issues," Pennsylvania Bar Institute’s "Auto Law Update," Philadelphia, November 2004

Community Activities

Neighborhood Club (civic association) of Bala Cynwyd (Pennsylvania), Vice President

Board Memberships

Temple Law Alumni Association

St. Joseph's Preparatory School, Board of Governors

Temple University James E. Beasley School of Law (J.D.1998, cum laude)
Editor-in-chief, Temple Law Review; Member, Moot Court Honor Board

University of Pennsylvania (B.A. 1992)

New Jersey 1999

Pennsylvania 1999

U.S. District Court for the District of New Jersey

U.S. District Court for the Eastern District of Pennsylvania

U.S. Court of Appeals for the Third Circuit

U.S. Court of Appeals for the Tenth Circuit