Securities Law and the Supremacy Clause

In this article for Securities Regulation Daily, Kirkland partners Stefan Atkinson, Matt Solum, Martin Roth and Juliana Dowling analyze efforts to stay discovery pending resolution of a motion to dismiss in state court Securities Act cases.

Federal law applies in state court when federal law says so, and one law, The Private Securities Litigation Reform Act of 1995 (PSLRA), mandates that all discovery must be stayed upon the filing of a motion to dismiss. Claims under the Securities Act brought in state court are subject to this automatic discovery stay, according to experts at Kirkland & Ellis and, although some state courts have reached the opposite conclusion, the Kirkland attorneys argue that the Supremacy Clause requires state courts to enforce the stay. They discuss the decisions in City of Livonia Retiree Health & Disability Benefits Plan v. Pitney Bowes Inc. and In re Everquote, Inc. Securities Litigation which they believe provide reasoning that should be followed by attorneys in state court Securities Act cases moving to stay discovery pending resolution of a motion to dismiss.

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