Securities Litigation and Enforcement Group Co-Chairs Andrew Ehrlich and Audra Soloway and litigation counsel Dan Sinnreich published an expert analysis in Law360 covering a recent decision by a state appellate court in California dismissing a securities lawsuit against an issuer and its underwriters. In “Using Federal Forum Provisions To Nix State Securities Cases,” the authors discuss Bullock v. Rivian Automotive Inc., in which the Court of Appeal of the State of California, Fourth Appellate District, affirmed the dismissal of Securities Act claims against an issuer and its underwriters based on a federal forum provision (FFP) in the issuer’s articles of incorporation.
Following an increase in Securities Act class actions filed in state courts after the Supreme Court held in 2018 that claims brought solely under the Securities Act in state court are not removable to federal court, corporations began adopting FFPs providing that federal district courts are the exclusive forum for any lawsuit against the corporation asserting claims under the Securities Act. The appellate court’s decision in Rivian affirms that underwriters have standing to enforce FFPs. The opinion is welcome news for companies seeking to eliminate costly, uncertain and often duplicative Securities Act litigation in state courts, which are generally perceived as more favorable forums for plaintiffs than federal courts. Litigation associate Sarah Shin contributed to the preparation of the article.
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