• Supreme Court to Resolve Circuit Split Over Scope of Securities Litigation Uniform Standards Act
  • January 12, 2006 | Authors: Bruce A. Ericson; Maria T. Galeno
  • Law Firms: Pillsbury Winthrop Shaw Pittman LLP - San Francisco Office ; Pillsbury Winthrop Shaw Pittman LLP - New York Office ; Pillsbury Winthrop Shaw Pittman LLP - San Francisco Office
  • Congress passed legislation designed to curb "abusive" shareholder class actions brought in federal courts. When plaintiffs began moving their class actions to state courts, Congress responded by passing legislation allowing defendants to remove from state court to federal court certain class actions brought "in connection with the purchase or sale of a covered security." Since then much litigation has ensued over the coverage of this removal statute, leading to a split among the circuits. Some circuits have given the statute broad coverage, thus limiting attempts to move securities class actions out of federal court. Other circuits -- such as the Second Circuit -- have given the statute a narrower reading. On September 27, 2005, the Supreme Court moved to resolve the split by granting review of Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25 (2d Cir. 2005).