Concurrent Jurisdiction

Priya Cherian Huskins

As I noted in prior posts, in March 2018, the U.S. Supreme Court held in the Cyan case that state courts retain concurrent jurisdiction for liability actions under the Securities Act of 1933. This development has been regarded as primarily a concern for IPO companies.  However, as discussed in the attached guest from Priya Cherian Huskins of Woodruff Sawyer, the Supreme Court’s affirmation of concurrent state court jurisdiction for ’33 Act claims may also be a concern for M&A companies as well.  A version of this article was previously published in Woodruff Sawyer’s D&O Notebook. I would like to thank Priya for her willingness to allow me to publish her 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 Priya’s article.


Continue Reading Guest Post: A New Twist in M&A Litigation: Section 11 Cases in State Court

When the U.S. Supreme Court confirmed in its March 2018 Cyan decision that state courts retain concurrent jurisdiction over ’33 Act liability actions, commentators suggested that plaintiffs’ lawyers would opt to pursue Section 11 claims in state court, either in preference to or in addition to parallel federal court actions. Indeed, in many lawsuits filed in the past few months involving IPO companies, plaintiffs’ lawyers have indeed resorted to state court. However, a recent decision from a Texas state court highlights the fact that  whatever advantages the plaintiffs’ lawyers may think they have by proceeding in state court, their claims will still face scrutiny – and in the specific case at issue in Texas, dismissal. As noted in a November 13, 2018 Law 360 article (here), the Texas court’s dismissal is among the first by a state court following the U.S. Supreme Court’s decision in Cyan.
Continue Reading Texas State Court Dismisses Post-Cyan Securities Act Lawsuit

As I noted at the time, on March 20, 2018, the U.S. Supreme Court issued its unanimous decision in Cyan, Inc. v. Beaver County Employees Retirement Fund, holding that state courts retain concurrent jurisdiction for liability actions under the Securities Act of 1933. In the following guest post, Doug Greene, Jessie Gabriel, Marco Molina, and Brian Song of the Baker & Hostetler law firm take a comprehensive look at the decision, including its context and significance. As the authors note, the decision has important implications for companies and their D&O insurers, as well as for claims going forward. I would like to thank the authors 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 authors’ article.
Continue Reading Guest  Post: The State of Securities Litigation After Cyan

Boris Feldman
Ignacio Salceda

As I discussed in a post last week, on March 20, 2018 the U.S. Supreme Court unanimously held in Cyan, Inc. v. Beaver County Employees Retirement Fund that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) did not eliminate state courts’ concurrent jurisdiction to hear liability lawsuits alleging only violations of the Securities Act of 1933. In the following guest post, Boris Feldman and Ignacio Salceda of the Wilson Sonsini law firm review the court’s decision and consider what may be next for claimants and for companies. A version of this article previously was published on Law 360. I would like to thank Boris and Ignacio for their willingness to allow 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 Boris’s and Ignacio’s article.
Continue Reading Guest Post: After Cyan — Some Prognostications

In a unanimous March 20, 2018 opinion written by Justice Elena Kagan, the U.S. Supreme Court held that state courts retain concurrent jurisdiction over class action lawsuits alleging only violations of the Securities Act of 1933’s liability provisions and that these state court class action lawsuits are not removable to federal court. The court’s holding resolves a lower court split in the authorities on question of whether or not the Securities Litigation Uniform Standards Act of 1998 (SLUSA) eliminated concurrent state court jurisdiction for these ’33 Act class action lawsuits or made the state court ’33 Act lawsuits removable to federal court.

As discussed below, Court’s ruling is likely to result in an increase in ’33 Act claims in state court, a development that could have unwelcome consequences for corporate defendants and their insurers. The Supreme Court’s March 20, 2018 decision in Cyan, Inc. v. Beaver County Employees Retirement Fund can be found here.
Continue Reading U.S. Supreme Court: Notwithstanding SLUSA, State Courts Retain Concurrent Jurisdiction for ’33 Act Claims

For a time a few years ago, litigation management bylaws were all the rage. Driven by concerns about multi-forum merger-related litigation, commentators proposed company adoption of forum selection bylaws for internal corporate disputes. The debate widened when reformers suggested that companies adopt fee-shifting bylaws. The debate subsided in 2015 when the Delaware legislature adopted legislation authorizing the adopting of bylaws designating Delaware’s courts as the preferred forum for disputes under Delaware, but prohibiting fee-shifting bylaws.

The topic of litigation management bylaws resurfaced in recent months in connection with the debate about plaintiffs lawyers’ resorting to state court (primarily in California) to assert securities class action claims, in reliance on the concurrent jurisdiction provisions under the Section 22 of the Securities Act of 1933. Concerns about this kind of litigation has in turn precipitated various self-help measures companies could adopt to try to avoid getting hauled into state court for these kinds of suits.
Continue Reading Delaware Chancery Court Action Challenges Federal Forum Bylaws

For almost the entire time that there have even been federal securities laws, the U.S. Supreme Court only rarely and infrequently agreed to take up cases arising securities cases. Until recently, years would pass between the times that securities cases appeared on the Supreme Court’s docket. For some reason, beginning around the middle of the last decade, the Court has become increasingly willing to take up securities cases. The U.S. Supreme Court’s 2017-2018 term, which commences on Monday, is no exception to this recent trend. There are three important securities cases on the Court’s docket for the upcoming term, and these cases could have, both individually and collectively, a significant impact on many securities law cases and on securities litigation in general.
Continue Reading Three Key Securities Law Cases on Supreme Court’s Docket as Term Begins

sup ct 3In a June 27, 2017 order (here), the United States Supreme Court granted the petition of Cyan, Inc. for a writ of certiorari to consider the question of whether or not state courts retain concurrent jurisdiction for liability lawsuits under the ’33 Act, or whether as a result of changes to the relevant statutes under the Securities Litigation Uniform Standards Act of 1998 (SLUSA), state courts lack subject matter jurisdiction over ’33 Act suits. This case will address what has become a significant issue in IPO-related securities class action litigation, particularly in California, which is whether or not the plaintiffs’ state court securities class lawsuits can be removed to federal court or must be remanded back to state court.
Continue Reading Supreme Court Agrees to Hear Whether State Courts Retain Jurisdiction for IPO Securities Suits

priya
Priya Cherian Huskins

One of the more interesting current issues in the securities litigation arena is the question of whether or not the concurrent jurisdiction provisions in the ’33 Act continue to afford state court jurisdiction for Section 11 securities class action lawsuits, or whether the Securities Litigation Uniform Standards Act of 1998 (SLUSA) superseded these provisions. As I noted in a recent post, a corporate defendant recently filed a petition for writ of certiorari with the U.S. Supreme Court to try to get the Court to take up this question. In the following guest post, Priya Cherian Huskins, of Woodruff-Sawyer & Co. examines three different “solutions” that have been proposed to address the ongoing question regarding concurrent state court jurisdiction for Section 11 class action lawsuits. One of the three proposed solutions in the cert petition recently filed with the U.S. Supreme Court, while the other two suggested solutions involve different alternative approaches, including one suggested by Stanford Law Professor Joseph Grundfest.
Continue Reading Guest Post: The State Court Section 11 Problem: Three Solutions

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