Class Action Decisions Published November 2023
A highlight from this issue includes:
Securities Exception to Class Action Fairness Act Jurisdiction. The Class Action Fairness Act (CAFA) grants federal court jurisdiction over class actions involving 100 or more members, an aggregate amount in controversy greater than $5 million and minimal diversity—cases where at least one plaintiff and one defendant are citizens of different states. The securities-related exception is a limit on CAFA jurisdiction, and excludes from federal jurisdiction any class action “that solely involves a claim . . . that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security . . .” The Second Circuit held that the “securities-related exception” applies when (1) an outsider aids and abets an insider’s purported breach of fiduciary duty arising from a security and owed to shareholders and (2) when an outsider tortuously interferes with a contract between a shareholder and a company where such contract sets out shareholder rights with respect to a security.
