” The Casa court held that, if Delaware law applied (where Casa is chartered), the FFP was enforceable under the holding in Salzberg. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of.
The FFP provided that “the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act of 1933. (“Casa”), due to an FFP in Casa’s charter. On August 31, 2021, in Casa, Judge Margaret Chan of the New York State Supreme Court granted a motion to dismiss Securities Act claims arising out of the IPO of Casa Systems, Inc. The New York State Supreme Court Enforces an FFP as to All Defendants Under New York Law These decisions all enforced FFPs based on application of California law, and it remained to be seen whether state courts outside California would similarly enforce such provisions. Subsequently, several judges in California enforced FFPs and dismissed Securities Act claims improperly filed in state court, including in cases arising out of the IPOs of Restoration Robotics, Uber, Dropbox, and Sonim Technologies. Sciabacucchithat FFPs included in corporate charters are facially valid under Delaware law. In March 2020, the Delaware Supreme Court held in Salzberg v. The decision is also notable because it dismissed the Securities Act claims as to all defendants, including the underwriters of Casa’s IPO who were not parties to the corporate charter containing the FFP.Īn FFP provides that claims brought against the company under the Securities Act may only be brought in federal district courts.
is the first in New York-and the first in any state court outside California-to enforce an FFP, and continues a pattern of FFP enforcement that bodes well for corporations that have adopted FFPs to avoid the risk and cost of duplicative Securities Act litigation in state courts.
On August 31, 2021, a New York State court dismissed claims brought under the Securities Act because the defendant-issuer’s charter contained an FFP requiring Securities Act claims to be brought in federal court. In a recent decision, a New York court for the first time reached the same conclusion. Those charter provisions have been upheld in a number of California state courts. Beaver County Employees Retirement Fund, which held that state courts have concurrent jurisdiction over claims brought under the Securities Act of 1933 (the “Securities Act”), many corporations began adopting a federal forum provision (“FFP”) in their charters, requiring Securities Act claims to be brought in federal court. In the wake of the Supreme Court’s holding in Cyan, Inc.
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