As acknowledged by the Delaware Supreme Court, the number of Securities Act claims filed in state court in 2019 is “historically unprecedented,” jumping from only a handful of state court filings before 2015 to 65 filings in 2019.Īs a result, securities issuers and sellers subject to Sections 11 and/or 12 of the Securities Act have faced an increasing number of state court Securities Act lawsuits-including a number of instances in which identical Securities Act claims have been filed in both state and federal court simultaneously, with no mechanism to consolidate these duplicative actions-a costly and wasteful endeavor which could potentially result in inconsistent decisions. Following that ruling, plaintiffs’ counsel filed a flurry of claims in state court.

1061 (2018), which confirmed not only that state and federal courts exercise concurrent jurisdiction over Securities Act claims, but also that claims filed in state court are not removable to federal court. Supreme Court’s March 2018 decision in Cyan, Inc. The number of Securities Act claims filed in state court has dramatically increased over the past few years following the U.S. Ruhnn Holding Ltd., addressing the merits of the claim. However, state courts remain a viable jurisdiction for federal Securities Act claims, as shown by the Supreme Court of New York’s recent post- Cyan Securities Act ruling in Lyu v.State courts, including recent cases in California, are continuing to enforce federal forum provisions providing additional comfort to entities incorporated or organized in Delaware which have enacted such provisions.

The court emphasized that it was only addressing the “facial challenge” of the federal forum provision under Delaware corporate law and not its substantive application. 2020), the Delaware Supreme Court upheld a federal forum provision in a company’s charter finding that the provision was facially valid under the Delaware statute governing contents of certification of incorporation. 1061 (“ Cyan”) (2018), which reaffirmed that state courts have concurrent jurisdiction for claims brought under the Securities Act.

Beaver County Employees Retirement Fund, 138 S.

Corporations started inserting federal forum provisions in light of the decision of the United States Supreme Court in Cyan, Inc.

Dropbox inc. securities litigation