X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

scales of justiceIn Cyan v. Beaver County Employees’ Retirement Fund, 138 S. Ct. 1061 (2018), the Supreme Court unanimously held that state courts have jurisdiction over class actions alleging only violations of the Securities Act of 1933 (1933 Act). The court did not address whether all of the procedural protections of the Private Securities Litigation Reform Act (PSLRA) apply with equal force when plaintiffs bring 1933 Act suits in state court. It is exceedingly unlikely, however, that the Cyan court intended to permit plaintiffs to circumvent the PSLRA’s limitations by bringing class actions asserting 1933 Act claims in state court rather than federal court.

One of the PSLRA’s key procedural protections is the automatic stay of discovery during the pendency of a motion to dismiss. This serves “to protect defendants … from the burden and expense of premature discovery … until the court sustains the sufficiency of the complaint.” ATSI Communications v. Shaar Fund, Ltd., 2003 WL 1877227, at *2 (S.D.N.Y. April 2, 2003). “The legislative history of the PSLRA indicates that Congress enacted the discovery stay to prevent plaintiffs from filing securities class actions with the intent of using the discovery process to force a coercive settlement.” In re LaBranche Sec. Litig., 333 F. Supp. 2d 178, 181 (S.D.N.Y. 2004). Congress also aimed “to prevent plaintiffs from … using [a meritless lawsuit] as a vehicle ‘in order to conduct discovery in the hopes of finding a sustainable claim not alleged in the complaint.’” In re Vivendi Universal, S.A. Sec. Litig., 381 F. Supp. 2d 129, 129-30 (S.D.N.Y. 2003) (quoting S. Rep. No. 104-98, at 14 (1995)).

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Law Firms Mentioned

 

New York Motion Practice Handbook and FormsBook

New York Motion Practice Handbook Formsidentifies the statutory provisions governing various types of motions and the key decisions that interpret them. The book address...
Get More Information

America's Claims Executive (ACE) 2020Event

ACE Leadership Forum & Expo is the annual conference for Senior Claims Managers in Insurance organizations.
Get More Information

 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.