2/24/2023 0 Comments Dropbox inc. securities litigation![]() The Delaware Supreme Court addressed the enforceability of such a FFP under Delaware law in Sciabacucchi v. After the Cyan decision, and the publication of Professor Grundfest’s approach, it became more common for public corporations, particularly those incorporated in Delaware to include FFPs in their corporate documents. In the wake of Cyan, Professor Joseph Grundfest of Stanford Law School has advocated including federal forum selection clauses in certificates of incorporation or bylaws as a means of trying to combat the adverse effects of multiple jurisdiction litigation in Securities Act cases. Additionally, different state courts have reached contradictory conclusions as to whether federal safeguards, such as some of those provided by the PSLRA and federal common law principles, apply in state court proceedings. Moreover, nearly half of the state court cases filed in 2018-2019 coincided with concurrent filing of federal litigation. Immediately after the decision was issued, the number of Securities Act claims filed in state court increased. Cyan has resulted in duplicative, unnecessary, and costly litigation. The Cyan ruling allows plaintiffs to avoid at least some aspects of the Private Securities Litigation Reform Act’s (“PSLRA”) provisions designed to eliminate meritless securities litigation by filing Securities Act claims in state court while simultaneously filing nearly identical actions in federal court. Beaver County Employees Retirement Fund, the Supreme Court held state courts have jurisdiction over claims brought under the Securities Act of 1933, prohibiting removal of these claims to federal court. These decisions are significant because they increase the number of applicable circumstances in which courts have allowed companies to use FFPs to avoid the risk of costly and duplicative parallel state and federal litigation or litigation in multiple states under the Securities Act and may pave the way for other courts, not bound by the decisions, to follow their logic and reach similar conclusions. ![]() ![]() ![]() Three separate California Superior Courts have recently upheld federal forum provisions (“FFP”) in governing corporate documents to preclude state court actions under the Securities Act of 1933 (the “Securities Act”) (15 U.S.C. ![]()
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