Doug Greene, Jessie Gabriel, Brian Song, Marco Molina Provide In-Depth Look at Future of Securities Class Actions Post-Cyan

Articles / August 23, 2018

Doug Greene, Jessie Gabriel, Brian Song and Marco Molina authored “The Coming Securities Class Action Storm: Multijurisdictional Litigation after Cyan,” which examines the likely repercussions of the March 2018 U.S. Supreme Court decision in Cyan, Inc. v. Beaver County Employees Retirement Fund. The court’s ruling that securities plaintiffs could bring class actions under the Securities Act of 1933 in state courts simultaneously with a related federal class action “portends a paradigm shift in how defense lawyers defend securities class actions and how D&O insurers cover and monitor them,” the attorneys write. Defendants will face parallel federal and state securities actions, stemming from the same operative facts that they cannot consolidate and to which the discovery stay and pleading burdens under the Private Securities Litigation Reform Act do not apply. The attorneys note that under this new legal paradigm, the tried and true legal defense strategy of moving to dismiss and then settling is outdated. Instead, they write, the best legal defense strategy “will now require actual litigation.” Defense firms will need to employ “a sky-high thought-to-action ratio” to defend parallel state and federal litigation, drive down settlement values, and deter frivolous lawsuits.

The article also provides a comprehensive overview of the state of securities litigation in state and federal court, discusses how the Cyan ruling disrupts key provisions of current regulations and examines potential future paths for litigation. It also provides suggestions for a new approach to defense strategy for securities defense litigators and D&O insurers. The periodical PLUS Journal published this article in its Third Quarter 2018 issue, which can be accessed via the below link.

Read the article.