Supreme Court Rules That Securities Act Claims Can Be Brought in State Court
By Anthony Antonelli, Douglas H. Flaum, Shahzeb Lari, Molly L. Leiwant, Peter M. Stone, and William F. Sullivan
In recent years, plaintiffs have flooded state courts—particularly those in California—with lawsuits asserting claims under the Securities Act of 1933 (‘‘Securities Act’’). Last week’s much-anticipated decision by the United States Supreme Court in Cyan, Inc. v. Beaver County Employees Retirement Fund, 583 U.S. ___ (2018), has now cleared the path for even more state court litigation of Securities Act claims.
In Cyan, issued on March 20, 2018, the Supreme Court unanimously held that state courts have concur-rent subject matter jurisdiction over class actions that exclusively allege claims under the Securities Act, and such claims cannot be removed to federal court. The de-cision will undoubtedly continue the trend of Securities Act claims being filed in state court—where plaintiffs may avoid the more stringent procedural requirements applicable in federal district court—and will likely ac-celerate filings in state courts in New York and other ju-risdictions that previously refused to exercise subject matter jurisdiction over such claims.