Among the important legal issues that arise in connection with securities class action litigation is the question of impact of the filing of a complaint on the running of the statutes of limitation and the statutes of repose. In analyzing statute of limitations issues, one of the tools that the courts have used is the so-called American Pipe tolling doctrine, named after the U.S. Supreme Court’s 1974 decision in American Pipe and Construction Co. v. Utah. A recurring question has been whether or not American Pipe Tolling applies to statutes of repose. In the following guest post, attorneys from the Paul Weiss law firm take a look a recent Sixth Circuit decision holding that American Pipe tolling doctrine does not apply to the federal securities laws’ statutes of repose.
Continue Reading Sixth Circuit, in Agreement with Second Circuit, Holds American Pipe Tolling Doesn’t Apply to Statutes of Repose
U.S. Supreme Court Review of Concurrent State Court Jurisdiction for IPO-Related Securities Class Suits Sought
As a consequence of increased IPO activity during the period 2013-15, IPO-related securities class action litigation has picked up as well, as I noted in my year-end review of 2015 securities class action litigation. An interesting aspect of this IPO-related litigation has been that much of it has been filed in state court, particularly in California state court, as detailed in a recent guest post on this site. Defendants in these suits can attempt to remove the state court lawsuits to federal court, but because of ongoing questions about whether or not SLUSA eliminated state court jurisdiction for class action lawsuits under the ’33 Act, some federal courts have remanded the federal actions back to state court. Because remand rulings are not appealable, defendants may find themselves consigned to litigating the plaintiffs’ federal securities class action lawsuit in state court, a jurisdiction in which plaintiffs potentially enjoy a number of advantages.
As the numbers of these state court class action lawsuits under federal law has mounted in recent months, defendants (particularly those sued in California state court) have continued to try to extricate themselves from the state court forum and transfer their cases to federal court. In some instances, defendants find themselves obliged to defend these state court lawsuits while also defending parallel or even identical federal court lawsuits raising essentially the same allegations.
A recent petition for writ of certiorari filed with the U.S. Supreme Court by Cyan,Inc. seeks to have the Court address these recurring questions and to specifically address the question of whether or not the Securities Litigation Uniform Standards Act of 1998 (SLUSA) eliminated concurrent state court jurisdiction for class action lawsuits filed under the ’33 Act. While it remains to be seen whether or not the Supreme Court will take up the case, Cyan’s petition at least potentially offers the prospect for a resolution that could eliminate the continuing phenomenon of state court class action lawsuits alleging claims under the ’33 Act. A copy of Cyan’s May 25, 2016 petition for writ of certiorari can be found here.
Continue Reading U.S. Supreme Court Review of Concurrent State Court Jurisdiction for IPO-Related Securities Class Suits Sought
Divided Loyalties? Defense Counsel in M&A Litigation
What is the role of defense counsel in deal litigation? What impact does the involvement of “top” deal litigation firms have on lawsuit outcomes? And what will the impact on deal litigation be from the advent of forum selection by-laws and the recent court crackdown on disclosure-only settlements? These are the questions addressed in an interesting May 2, 2016 paper entitled “Divided Loyalties? The Role of Defense Litigation Counsel in Shareholder M&A Litigation” (here), by C.N.V. Krishnan of Case Western Reserve University; Steven Davidoff Solomon of University of California Berkeley Law School; and Randall Thomas of Vanderbilt Law School. A summary of their paper appears in a May 23, 2016 post on the Harvard Law School Forum on Corporate Governance and Financial Regulation (here).
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Under Morrison, U.S. Securities Laws Don’t Apply to Toshiba’s Unsponsored ADRs Purchased OTC in the U.S.
It has been nearly six years since the U.S. Supreme Court’s landmark 2010 decision in Morrison v. National Australia Bank, in which the Court restricted the ability of shareholders of non-U.S. companies who purchased their shares outside the U.S. to file securities fraud lawsuit in U.S. courts under the U.S. securities laws. In the intervening years, many of the issues questions that the Morrison decision presented have been resolved by the lower courts. However, one issue that has continued to percolate is the question of whether under Morrison the U.S. securities laws apply to transactions involving foreign companies’ unsponsored ADRs traded over-the-counter (OTC) in the U.S.
These issues were presented in the class action lawsuit filed in June 2015 in the Central District of California against Toshiba Corporation. The consolidated lawsuit purported to be filed on behalf of a class of investors who purchased unsponsored Toshiba American Depositary Shares (ADS) over-the-counter in the U.S., as well as on behalf of investors who purchased Toshiba shares on the Tokyo stock exchange. In an interesting May 20, 2016 opinion (here), Central District of California Judge Dean Pregerson held under Morrison that the U.S. securities laws do not apply to unsponsored OTC transactions in Toshiba’s ADSs. Judge Pregerson also granted the defendants’ motion to dismiss the claims of the investors who purchased Toshiba shares on the Tokyo stock exchange.
Continue Reading Under Morrison, U.S. Securities Laws Don’t Apply to Toshiba’s Unsponsored ADRs Purchased OTC in the U.S.
Guest Post: Supreme Court Rejects Federal Jurisdiction over State Law Claims that Do Not Necessarily Raise Exchange Act Issues
Among the decisions that the Supreme Court issued this past Monday was its unanimous ruling in Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning (here), in which the Court held that the ’34 Act’s exclusive federal jurisdiction provisions do not preclude a claimant from pursuing state law securities claims in state court. In the following guest post, attorneys from the Paul Weiss law firm take a look at the Court’s decision in the case and discuss its implications. I would like to thank the Paul Weiss attorneys for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the Paul Weiss attorneys’ guest post.
Continue Reading Guest Post: Supreme Court Rejects Federal Jurisdiction over State Law Claims that Do Not Necessarily Raise Exchange Act Issues
Will Disclosure-Only Settlements in Merger Objection Suits Live On Outside Delaware?
When Delaware Chancellor Andre Bouchard rejected the proposed disclosure-only settlement in the litigation arising out of Zillow’s acquisition of Trulia, there was some belief that his decision represented the death knell for these kinds of settlements in merger objection lawsuits. There is indeed some evidence that the number of merger objection lawsuits filed has declined. However, as discussed in an April 29, 2016 Washington Legal Foundation article by attorneys Anthony Rickey and Keola R. Whittaker (here), “Delaware’s sister courts continue to approved disclosure only settlements and award six-figure attorneys’ fees.” As discussed below, the net effect of Delaware’s hostility to disclosure only settlements may not necessarily be that fewer of these kinds of cases get filed, it may be that weaker cases are “driven to other jurisdictions.”
Continue Reading Will Disclosure-Only Settlements in Merger Objection Suits Live On Outside Delaware?
Guest Post: IPO Companies, Section 11 Suits, and California State Court
One of the interesting (and challenging) quirks of the federal securities laws is that Section 22 of the ’33 Act provides concurrent state court jurisdiction for liability actions under the Act. Many courts have taken the view that legislation subsequent to the ’33 Act preempts state court jurisdiction under Section 22, as discussed here. While the courts continue to struggle with the preemption question, some plaintiffs are continuing to file ’33 Act actions in state court, particularly in California.
In the following guest post, Priya Cherian Huskins, Donna Moser, and Vysali Soundararajan of Woodruff-Sawyer & Co. take a look at these state court securities lawsuits, and in particular at the recently increased numbers of state court filings in California, as well as the practical implications. I would like to thank Priya, Donna and Vysali for their willingness to publish their article on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Priya, Donna, and Vysali’s guest post.
Continue Reading Guest Post: IPO Companies, Section 11 Suits, and California State Court
Cornerstone Research: Accounting-Related Securities Suit Filings and Settlements Increase
The number of securities class action lawsuit filings raising accounting-related allegations rose in 2015, as did the number and value of accounting-related securities suit settlements, according to a new report from Cornerstone Research. In addition to the increase in the number of accounted-related lawsuit filings, the market capitalization losses associated with those new filings increased as well. The April 19, 2016 report, entitled “Accounting Class Action Filings and Settlements: 2015 Review and Analysis,” can be found here. Cornerstone Research’s April 19, 2016 press release about the report can be found here.
Continue Reading Cornerstone Research: Accounting-Related Securities Suit Filings and Settlements Increase
Guest Post: Eight Circuit: Under Halliburton II, Defendants Successfully Rebut Fraud-on-the Market Presumption
In its June 2014 decision in Halliburton Co. v. Erica P. John Fund, Inc., the U.S. Supreme Court held, among other things, that in order to try to rebut the fraud-on-the-market presumption in order to defeat class certification, defendants can contend that the allegedly corrective disclosure did not impact the defendants company’s share price. In an April 12, 2016 decision in IBEW Local 98 Pension Fund v. Best Buy Co., Inc., the Eight Circuit, applying Halliburton, held that the defendants had successfully rebutted the presumption in the case by demonstrating absence of price impact. In the following guest post, attorneys from the Paul Weiss law firm takes a look at the Eighth Circuit’s decision and considers its significance. I would like to thank the attorneys from the Paul Weiss firm for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the Paul Weiss attorneys’ guest post.
Continue Reading Guest Post: Eight Circuit: Under Halliburton II, Defendants Successfully Rebut Fraud-on-the Market Presumption
PwC Report: Surge of Suits Involving Smaller Companies Drove 2015 Securities Suit Filing Increase
Largely as a result of the number of suits filed against smaller companies, the number of securities class action lawsuits filed in 2015 increased for the third year in a row, to the highest level since 2008, according to a new report from PwC. The April 2016 report, entitled “Small Companies, Big Targets: 2015 Securities Litigation Study,” can be found here. The numbers in the PwC report differ slightly from the figures reported in previously released annual securities class action litigation studies by Cornerstone Research (here) and NERA Economic Consulting (here), but the reports are directionally consistent. My own analysis of the 2015 securities litigation filings can be found here.
Continue Reading PwC Report: Surge of Suits Involving Smaller Companies Drove 2015 Securities Suit Filing Increase