Securities defence lawyers and their clients breathed a sigh of relief last month as the US Supreme Court ruled that class action suits cannot be brought under state law by plaintiffs claiming damages for having held onto securities.
The ruling in Merrill Lynch v Dabit was a victory for those lawyers, politicians and business people who have argued that the US plaintiff bar has too much power to bring class action suits against corporations. It effectively bars investors from using state law and state courts to bring class action suits, and means that further tort reform by the Congress is unlikely in the next legislative cycle.
Defence lawyers welcomed the decision, and argued that it would have been difficult for the Supreme Court to reach a different conclusion. Jay Kasner of Skadden Arps Slate Meagher & Flom, who argued the case on behalf of Merrill Lynch, warns that, if the...