On March 20, the U.S. Supreme Court in Cyan v. Beaver County Employees Retirement Fund, reaffirmed that because federal and state courts share concurrent jurisdiction over class actions alleging violations of the Securities Act of 1933 (1933 Act), such actions can remain in state court. The court rejected arguments that recent amendments to the 1933 Act allow defendants to remove such actions from state courts. The decision ensures class actions alleging 1933 Act violations will continue to be litigated in state court absent future action by Congress to limit jurisdiction to the federal district courts.

The underlying litigation in Cyan was initiated by three pension funds and an individual who had purchased shares of Cyan through an initial public offering. After the stock declined in value, the purchasers brought a class action for damages alleging Cyan’s offering documents contained material misstatements in violation of the 1933 Act. Plaintiffs did not allege any state law claims. Cyan moved to dismiss the claims for lack of subject matter jurisdiction, arguing that provisions of the Securities Litigation Uniform Standards Act of 1998 (SLUSA) stripped state courts of the power to adjudicate 1933 Act claims. The trial court denied the motion and the California appellate courts declined to review the ruling. The U.S. Supreme Court granted Cyan’s petition for certiorari to resolve a split among state and federal courts on the jurisdictional issue.