state court securities litigation

In an important development affirming the use of federal forum provisions (FFP) to avoid duplicative parallel state court securities lawsuits, a New York state court judge has granted the securities suit defendants’ motion to dismiss based on the FFP in the corporate defendant’s charter. The ruling appears to be the first in New York – indeed, the first outside of California – to enforce an FFP. The New York court’s enforcement of the FFP is a significant step in companies’ efforts to try to avoid the duplicative litigation problems caused by the U.S. Supreme Court’s March 2018 decision in Cyan. A copy of the August 31, 2021 opinion of the New York state court in the Casa Systems case can be found here.
Continue Reading New York State Court Enforces Federal Forum Provision

Largely due to a “substantial reduction” in the number of merger objection lawsuit filings, as well as a decline in the number of Section 11 and 1933 Act securities class action filings, the number of federal and state court securities class action lawsuits filed in the first six months of 2021 “dropped considerably” compared to the second half of 2020, according to a new report from Cornerstone Research. Filings of core Section 10(b) suit filings were, however, only “down modestly.” The report, entitled “Securities Class Action Filings: 2021 Midyear Assessment,” can be found here. Cornerstone Research’s July 28, 2021 press release about the report can be found here. My own analysis of the 1H21 federal court securities class action lawsuit filings can be found here.
Continue Reading Cornerstone Research: Securities Suit Filings Declined in Year’s First Half

In March 2018, when the U.S. Supreme Court held in the Cyan case that state courts retain jurisdiction for securities class action litigation under the ’33 Act, it set up the state courts and state court securities class action litigants for a host of practical problems. The first is that Cyan allowed the possibility of competing sets of plaintiffs’ lawyers to sue the same defendants in parallel state and federal lawsuits, in what can only be called inefficient and wasteful duplicative litigation. The second is that Cyan left unanswered many questions about the procedures applicable in the state court securities litigation, including questions having to do with the applicability of the procedural safeguards under the PSLRA. Among the many procedural questions that state courts now have to wrestle with is whether the PSLRA’s stay of discovery pending a ruling on the defendants’ motion to dismiss applies to state court proceedings.
Continue Reading Supreme Court Takes Up Discovery Stay Question in State Court Securities Class Action Litigation

Securities class action lawsuit filings declined 22% in 2020 compared to the year prior but remained well above long-term annual averages, according to a February 3, 2021 report by Cornerstone Research published in conjunction with the Stanford Law School Securities Class Action Clearinghouse. The Cornerstone Research report’s analysis of the 2020 filings is consistent with prior reports on the topic; however, the Cornerstone Research report, unlike prior reports, includes data both for federal and for state securities class action lawsuit filings. The Cornerstone Research report can be found here. Cornerstone Research’s February 3, 2021 press release about the report can be found here.
Continue Reading Cornerstone Research: Both Federal and State Securities Suit Filings Declined in 2020

A third California state court has ruled that a provision specifying that federal courts are the exclusive forum for the resolution of ‘33 act liability actions is valid and enforceable. This latest decision — in a state court securities class action lawsuit pending against Dropbox — suggests that a broad consensus is emerging in California court to enforce federal forum provisions. But while the Dropbox decision is largely consistent with the prior California state court decisions enforcing FFP, there are certain features of the Dropbox decision that make it noteworthy and interesting in its own right. A copy of the December 4, 2020 decision in the Dropbox case can be found here. A December 8, 2020 memo from the Seyfarth Shaw law firm about the ruling can be found here.
Continue Reading Third California State Court Upholds Enforceability of Federal Forum Provision

recent guest post on this site opined that because of the volume of Section 11 litigation being filed in New York state court, New York’s courts “will have a major role in shaping the standards applied in Securities Act litigation going forward.” If that is the case, then the recent New York appellate court ruling reversing a trial court’s dismissal motion denial in a state court Section 11 action could be significant. According to a December 4, 2020 Law360 article (here), the ruling represents the first time the New York appellate division has addressed the merits of a federal ’33 Act claim since the U.S. Supreme Court’s decision in Cyan. The New York appellate court’s December 3, 2020 ruling can be found here.
Continue Reading NY Appellate Court Reverses Trial Court’s Dismissal Denial in State Court Securities Suit

In a study that analyzes both federal and state securities suit filings during the first half of 2020  (unlike other prior first half reports that analyzed only federal court filings), Cornerstone Research reports that combined state and federal suits in the year’s first six months were down 18% compared to the second half of 2019 and at the lowest level since 2016.  The report, which was published in conjunction with the Stanford Law School Securities Class Action Clearinghouse, is entitled “Securities Class Action Filings: 2020 Midyear Assessment,” can be found here. Cornerstone Research’s July 29, 2020 press release about the report can be found here.
Continue Reading Cornerstone Research: Federal and State Securities Suit Filings Down in Year’s First Half

A recent guest post on this site expressed the view that because of the volume of Section 11 litigation being filed in New York state court, New York’s courts “will have a major role in shaping the standards applied in Securities Act litigation going forward.” If that is the case, then the recent ruling by a New York trial court judge granting the defendants’ motion to dismiss in a state court Section 11 action could be significant. New York (New York County) Supreme Court Judge Barry Ostrager’s May 15, 2020 ruling in the consolidated Sundial Growers Securities Litigation can be found here.
Continue Reading Dismissal Granted in New York State Court Securities Class Action

Cornerstone Research has released its annual survey of securities class action lawsuit filings for 2019. The year’s version of the report introduces some notable innovations. In prior years, the annual report focused exclusively on federal court securities suit filings. In last year’s report, the survey also incorporated significant state court securities litigation data. This year for the first time the report fully incorporates the state court data in the presentation and analysis. The updated report also includes several new interesting perspectives on the past year’s securities litigation filings, particularly with respect to state court lawsuit filings. As the report details, the state court filings “helped push filing activity to record levels.”
Continue Reading Cornerstone Research: Combined Federal and State Data Shows Securities Filings at “Record Levels”

The number of federal court securities class action lawsuit filings during 2019 was consistent with the heightened number of filings in each of the two prior years. The total number of suits during 2019 was significantly increased by the number of federal court merger objection lawsuit filings, but even just with respect to the traditional suit filings, the number of securities suit filings in 2019 was well above historical levels. The 2019 federal court securities litigation rate (that is, the number of lawsuits relative to the number of listed companies) was at an all-time high.
Continue Reading Federal Court Securities Suit Filings Remain at Elevated Levels