Business Roundtable and the Society for Corporate Governance filed an amicus brief with the U.S. Supreme Court on Sept. 5, 2017, in Cyan, Inc. v. Beaver County Employees Retirement Fund ,supporting continued federal jurisdiction in securities class-action litigation.

 

At issue is whether state courts have jurisdiction over securities class actions arising exclusively under the Securities Act of 1933.  Since the passage of the Securities Litigation Uniform Standards Act (SLUSA) in 1998, courts around the country have split on two related questions: (1) whether plaintiffs may pursue class actions alleging only 1933 Act claims in state court and (2) whether the 1933 Act bars defendants from removing class actions alleging only 1933 Act claims from state court to federal court.

 

Business Roundtable and Society for Corporate Governance argue that 1933 Act class actions must be brought in federal court.  The express congressional purpose of SLUSA—and the Private Securities Litigation Reform Act before it—was to ensure the fair and efficient adjudication of securities class-action cases by making federal court the exclusive forum for such actions.  Allowing state courts to exercise jurisdiction over 1933 Act class actions would deprive litigants of the substantive and procedural safeguards specifically designed to curtail the abuse of class actions.  Finally, the brief demonstrated that the uncertainty regarding the proper forum for securities class-action litigation harms the U.S. economy because its discourages capital formation and increases litigation risk.

 

Download the brief here.

 

 

On March 20, 2018, the Supreme Court ruled unanimously that the Securities Litigation Uniform Standards Act of 1998 did not strip state courts of jurisdiction to adjudicate class actions alleging only 1933 Securities Act violations; nor did it authorize removing such suits from state to federal court. See opinion here.