The U.S. Supreme Court’s recent decision in Cyan v. Beaver County Employees Retirement Fund, — U.S. —, 2018 WL 1384564 (March 20, 2018), resolved the previously-controversial issue of whether the Securities Litigation Uniform Standards Act of 1998 (SLUSA) stripped state courts of their ability to adjudicate class action lawsuits asserting claims only under the Securities Act of 1933 (1933 Act). The court in Cyan held that SLUSA does not prohibit state courts from adjudicating such claims, and that defendants may not remove such cases to federal court. As a result, it is likely that the recent trend of such claims being asserted in state courts will accelerate.
What the Supreme Court did not clarify in Cyan, and what is likely to now become an increasingly litigated issue, is the question of precisely which provisions and elements of the Private Securities Litigation Reform Act of 1995 (PSLRA) apply to state court class action lawsuits asserting claims under the 1933 Act. Court decisions and practitioner commentary are unclear on this question, at times taking conflicting views. This article examines several key PSLRA provisions, including the PSLRA’s automatic stay of discovery during the pendency of a motion to dismiss, and considers their post-Cyan applicability in the context of state court class action lawsuits asserting 1933 Act claims.
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