Over the last two years, there have been two important judicial decisions concerning Section 11 litigation. In March 2018, the United States Supreme Court unanimously held in the Cyan case that state courts retain concurrent jurisdiction over lawsuits asserting liability claims under the Securities Act of 1933, a development that has increased the number of state court securities class action lawsuits. In March 2020, in Salzberg v. Sciabacucchi, the Delaware Supreme Court upheld the facial validity of corporate charter provisions requiring Section 11 claims to be litigated in federal court. A June 22, 2020 post of the CLS Blue Sky Blog entitled “State Section 11 Litigation in the Post-Cyan Environment (Despite Sciabacucchi)” (here) assesses the Section 11 litigation environment in light of these developments. The paper, written by Stanford Law School Professor Michael Klausner and Jason Hegland, Carin LeVine, and Jessica Shin of Stanford Securities Litigation Analytics, summarizes the authors’ more detailed academic paper (here), as discussed below.
Continue Reading The Post-Cyan Section 11 Litigation Environment

paul weiss largeOne of the important and recurring issues under the federal securities laws is the question of whether or not American Pipe tolling applies to the statute of repose in the securities laws’ liability provisions. Specifically, the question is whether or not the three-year limitations period in Section 13 of the ’33 Act may be tolled (under a legal theory known as the American Pipe tolling doctrine) by the filing of a putative securities class action, or rather that the three-year provision cannot be tolled. As discussed here, the U.S. Supreme Court recently dismissed the cert petition in  the Indy Mac case, leaving standing a Second Circuit ruling in that case that the filing of a securities class action lawsuit does not toll the ’33 Act’s statute of repose.

In the following guest post, the attorneys from the Paul Weiss law firm take a look at two recent Second Circuit decisions that raised these questions of tolling under the ’33 Act’s statute of repose. As discussed below, the authors conclude that the Second Circuit’s most recent decisions suggest that statutes of repose generally—and not simply statutes of repose established under the federal securities laws—are immune to tolling.

I would like to thank the attorneys at the Paul Weiss firm for allowing me to publish their 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: Second Circuit Expands the IndyMac Rule

sup ct 5As 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

An important recurring issue is the questions whether the prior filing of a securities class action lawsuit tolls the applicable statute of repose under the federal securities laws. In an important June 27, 2013, the Second Circuit issued an important decision on this question, holding that the tolling doctrine does not apply to three-year statue