State Section 11 Litigation in the Post-Cyan Environment

22 Pages Posted: 1 Jul 2019 Last revised: 19 Apr 2020

See all articles by Michael Klausner

Michael Klausner

Stanford Law School; European Corporate Governance Institute (ECGI)

Jason Hegland

Stanford Law School

Carin LeVine

affiliation not provided to SSRN

Jessica Shin

Stanford Law School

Date Written: June 28, 2019

Abstract

In Cyan, Inc. v. Beaver County Employees Retirement Fund, the Supreme Court interpreted the Securities Litigation Uniform Standards Act of 1998 (SLUSA) to preserve state courts’ jurisdiction to hear cases brought under the Securities Act of 1933, a question on which courts had been split. The result has been a dramatic increase in the filing of Section 11 cases in state court, for which there is often a parallel case brought in federal court against the same defendants based on the same alleged misstatements. To understand the practical implications of Cyan, we analyze data on Section 11 cases filed since 2011, a point at which several federal courts had ruled that Section 11 cases could be brought in state court. Our key findings are the following: state courts have dismissed Section 11 cases less frequently than have federal courts; the relative size of settlements in state and federal cases is ambiguous; when parallel cases are filed in state and federal court against the same defendant, dismissal of both cases is rare and settlement is common.

Keywords: Securities litigation, Section 11, State Section 11 litigation, securities class action

JEL Classification: K22

Suggested Citation

Klausner, Michael D. and Hegland, Jason and LeVine, Carin and Shin, Jessica, State Section 11 Litigation in the Post-Cyan Environment (June 28, 2019). Available at SSRN: https://ssrn.com/abstract=3411861 or http://dx.doi.org/10.2139/ssrn.3411861

Michael D. Klausner (Contact Author)

Stanford Law School ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Belgium

Jason Hegland

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Carin LeVine

affiliation not provided to SSRN

Jessica Shin

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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