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

Gregory A. Markel
Sarah A. Fedner

As this blog’s readers know, a recurring recent topic on this blog has been the need for another round of securities class action litigation reform. In the following guest post, Gregory A. Markel and Sarah A. Fedner of the Seyfarth Shaw law firm explore the possible opportunities for reform with respect two specific areas of concern: duplicative state and federal court litigation in the wake of Cyan and the payment of mootness fees in merger cases. The authors outline the policy objections to these practices and suggest that Congress should intervene to end them. My thanks to Greg and Sarah 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 Greg and Sarah’s article.
Continue Reading Guest Post: Two Areas for Reform in Securities Litigation

As observers have discussed the kinds of problems that the U.S. Supreme Court’s Cyan decision can create, specific concerns have included the possibility of parallel state and federal court litigation, and even the possibility of parallel litigation in multiple states. In the course of the discussion of these issues, these litigation risks might have seemed merely theoretical. However, a series of lawsuits filed against a recent IPO company show that these kinds of multiple and parallel litigation risks are far from merely theoretical. The raft of jurisdictionally complicated litigation the company now faces shows the extent of the problems that Cyan creates. The company’s situation also underscores the dramatic need for Congress to address revise the securities laws in order to prevent these kinds of situations.
Continue Reading Multiplied and Parallel Litigation: The Mess that Cyan has Wrought