fulltext - From the SelectedWorks of Matthew O'Brien...

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From the SelectedWorks of Matthew O'Brien February 2009 Choice of Forum in Securities Litigation: Confronting the Aftermath of Congressional Reform of the Securities Act of 1933 Contact Author Start Your Own SelectedWorks Notify Me of New Work Available at: http://works.bepress.com/matthew_obrien/1
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1 C HOICE OF F ORUM IN S ECURITIES L ITIGATION : C ONFRONTING THE A FTERMATH OF C ONGRESSIONAL R EFORM OF THE S ECURITIES A CT OF 1933 Matthew O’Brien Abstract: The article addresses the wave of federal legislative reform since the mid-1990s aimed at reducing forum shopping by plaintiffs in securities class actions. In particular, the article examines the direct conflict between section 22(a) of the Securities Act of 1933 (“1933 Act”), which prohibits defendants from removing 1933 Act cases from state court to federal court, and the Class Action Fairness Act of 2005 (“CAFA”), which permits removal of high-dollar class actions involving diverse parties. The article shows how this statutory conflict has produced a recent split between the Seventh and Ninth Circuit Courts of Appeals. In July 2008, the Ninth Circuit affirmed a district court’s remand order and held that the 1933 Act’s bar on removal trumps CAFA. In contrast, in January 2009, the Seventh Circuit rejected the reasoning of the Ninth Circuit and held that CAFA’s removal provisions supersede the 1933 Act. The article critiques these decisions, as well as several district court and appellate opinions from the Second Circuit that support the Seventh Circuit’s viewpoint. The article examines the underlying policy considerations, and sets forth steps Congress and the courts may take to clarify federal jurisdiction in the midst of an upsurge in securities class actions stemming from the mortgage-backed securities crisis. J.D., University of Oregon School of Law, 2008. The author is a law clerk to the Honorable Alfred T. Goodwin of the United States Court of Appeals for the Ninth Circuit. The ideas expressed herein represent the author’s viewpoint only and in no way reflect the opinions of any judge sitting on the Ninth Circuit.
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2 As the financial crisis deepens, aggrieved investors seek relief from the corporations and officers that allegedly issued misleading financial statements despite knowledge of potentially massive liabilities. 1 Despite – or perhaps because of – a wave of federal legislative reform since the mid-1990s aimed at reducing plaintiffs’ “forum shopping,” the debate concerning which judicial fora are available for plaintiffs alleging certain types of securities fraud persists. Plaintiffs argue that they should be able to litigate in state court so long as they draft their complaints so as to avoid the jurisdictional hooks of federal legislation such as the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) 2 and the Class Action Fairness Act of 2005 (“CAFA”). 3
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fulltext - From the SelectedWorks of Matthew O'Brien...

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