The U.S. Supreme Court granted a petition for certiorari seeking review of a California state court decision to permit a securities class action lawsuit based solely on federal law to proceed in state court. The U.S. Chamber filed an amicus brief urging review and explaining that California state courts have become a hotbed for federal securities class actions, despite the fact that state court jurisdiction over these suits—based solely on federal securities law—are contrary to the express jurisdictional provision in the Securities Litigation Uniform Standards Act of 1998 (SLUSA), which eliminated state court jurisdiction for covered actions alleging claims under the Securities Act of 1933. Further, the Chamber argued that allowing these suits to proceed in state court, where federal procedural protections often do not apply, fuels uncertainty and drives up the cost of raising capital in U.S. markets, which ultimately hampers innovation and leads to lower returns for investors.
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