Following the U.S. Supreme Court’s decision in Cyan v. Beaver County Employees Retirement Fund, 138 S. Ct. 1061 (2018)—affirming state courts’ concurrent subject matter jurisdiction over class actions alleging claims under the Securities Act of 1933 (Securities Act)—several securities cases were brought in the Commercial Division of New York Supreme Court. Recently, several motion to dismiss decisions have been appealed to the New York Appellate Division, First Department. As the First Department navigates Securities Act cases in New York, these decisions provide important guidance for plaintiffs and defendants alike on pivotal questions of first impression covering applicable pleading standards, damages, standing and the applicability of the Private Securities Litigation Reform Act of 1995 (PSLRA).

In almost every post-Cyan Securities Act case brought in the Commercial Division, the parties debate the applicable pleading standard. While plaintiffs maintain that New York Civil Practice Law and Rules (CPLR) 3013 requires only that a complaint give notice of the circumstances of the claim, often referred to as “notice pleading,” defendants point to CPLR 3016(b), which requires that, where a cause of action or defense is based upon misrepresentation or fraud, “the circumstances constituting the wrong shall be stated in detail.”

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