Cyan's Petition for Certiorari Granted by U.S. Supreme Court
On June 27, 2017, the Supreme Court of the United States granted a petition for certiorari filed by Wilson Sonsini Goodrich & Rosati on behalf of its clients, Cyan, Inc. and its officers and directors. The question before the Supreme Court is whether securities class actions under the Securities Act of 1933 (Securities Act) may be brought in state courts. The grant of certiorari will let the Supreme Court resolve a split in the lower courts.
Several months after its 2013 initial public offering, Cyan was sued by shareholders in a class action. The plaintiffs alleged that Cyan's IPO registration statement was misleading under the Securities Act. The plaintiffs brought only federal claims but did not sue in federal court. Instead, they filed suit in California state court.
Cyan and its officers and directors moved for judgment on the pleadings for lack of subject matter jurisdiction. The motion argued that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) divested state courts of jurisdiction over federal Securities Act class actions. SLUSA was passed by Congress in 1998 to prevent securities plaintiffs from filing class actions in state court and thus evading the requirements of the Securities Litigation Reform Act of 1995. Cyan's motion was denied. Cyan then filed a writ petition with the California Court of Appeal, which denied relief without opinion. The California Supreme Court subsequently denied review. Cyan and its officers and directors then filed a petition for certiorari in the U.S. Supreme Court, requesting the Court hear the case to resolve the split in the district courts, and to hold that state courts lack jurisdiction over Securities Act class actions.
After reviewing Cyan's petition and related briefing, the Supreme Court invited the Acting Solicitor General to file a brief expressing the views of the United States. The brief, filed on May 23, 2017, urged the Court to grant Cyan's petition. The brief emphasized the "substantial confusion" plaguing the district courts. It agreed with Cyan that this case is an appropriate vehicle for Supreme Court review in light of the procedural hurdles to appellate review of remand orders.
On June 27, 2017, the Court granted Cyan's petition. It is expected to hear the case during its October Term 2017.
For more information, please refer to our WSGR Alert.