In numerous prior posts, I have noted the problems and inefficiencies that the U.S. Supreme Court’s March 2018 Cyan decision have wrought, such as, for example, the possibility of multiplied parallel litigation (discussed here). There are a host of other issues as well, such as the absence in state court of procedural protections available in federal court; the prevalence in state court of weaker suits; and the pressure that multiple suits puts on defendants to settle, as discussed here. These and other concerns arising from Cyan have led the U.S. Chamber of Commerce’s Institute for Legal Reform (ILR) to issue a new paper entitled “Courting Confusion: Federal Securities Class Actions Don’t Belong in State Courts,” in which the ILR calls for Congress to “close the loophole” by requiring that all 1933 Act claims must be brought in federal court and authorizing the removal to federal court of ’33 Act liability actions filed in state court. The ILR’s August 30, 2021 press release, to which the paper is attached, can be found here.
Continue Reading Institute for Legal Reform: Congress Should Enact Reforms to Address Cyan

In prior posts, I have detailed the havoc that the U.S. Supreme Court’s March 2018 decision in the Cyan case has wrought, as Securities Act liability class action defendants find themselves facing multiple parallel suits in both federal and state court. A recent ruling in a consolidated federal court action involving the failed Miller Energy Company underscores the procedural disarray that Cyan continues to cause; in this case, the federal court, in reliance on Cyan, has remanded to state court two actions that pre-Cyan had been removed to federal court and consolidated with a third federal court action. As discussed below, this decision demonstrates yet another way in which Cyan produces outcomes contrary to procedural simplicity and judicial efficiency.  Eastern District of Tennessee Judge Thomas Varlan’s December 6, 2019 decision in the case can be found here.
Continue Reading Cyan Compels Remand of Previously Removed State Court Securities Suits

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

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