On August 25, 2021, WLF asked the Supreme Court to vacate a decision of the Court of Appeal for the State of California in a securities class action with far-reaching implications. As a key component of Congress’s overall statutory scheme for private securities actions, the PSLRA stays discovery during the pendency of a motion to dismiss in “any private action” under the Securities Act of 1933. Congress was concerned that plaintiffs bringing meritless securities suits were using abusive discovery as leverage to bolster their cases, avoid dismissal, and force settlements. The California court failed to apply the PSLRA’s mandatory discovery stay in this case. It held that the PSLRA’s discovery stay is procedural, not substantive, and so does not apply in state court. But as WLF explains in its amicus brief, the PSLRA’s plain language, overall statutory scheme, and animating public-policy concerns all confirm that the mandatory stay applies in all Securities Act cases, including those brought in state court. WLF’s amicus brief was prepared with the pro bono assistance of Lyle Roberts, George Anhang, and Stephen Janick of Shearman & Sterling LLP.
Update: On September 2, 2021, the case was removed from the argument calendar and the briefing schedule has been held in abeyance pending a likely settlement.