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Second Circuit Review: Expanding the Scope of ‘Securities-Related’ Exception to the Class Action Fairness Act
November 22, 2023
Litigation of counsel Martin Flumenbaum and firm Chairman Brad Karp’s latest Second Circuit Review column, “Expanding the Scope of ‘Securities-Related’ Exception to the Class Action Fairness Act,” appeared in the November 22 issue of the New York Law Journal. The authors discuss the Second Circuit’s decision in Krasner v. Cedar Realty Trust, regarding whether the securities-related exception to the federal jurisdiction conferred by the Class Action Fairness Act (CAFA) prohibited removal to federal court of a class action alleging aiding and abetting the breach of fiduciary duties and tortious interference claims. CAFA expands the jurisdiction of federal courts to hear certain class actions of national importance even absent the federal question or diversity of jurisdiction requirements that generally determine federal court jurisdiction. CAFA also carves out exceptions to that authority, including an exception concerning certain securities-related actions. In Krasner, the Second Circuit, again adopting a relatively expansive interpretation of the securities-related exception, unanimously held that this exception applies. The decision may lead other circuits to follow a similar approach. Litigation associates Kristina Bunting and Sarah Prostko assisted in the preparation of this column.
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