Cyan, Inc. v. Beaver County Employees Retirement Fund

Beaver County Employees Retirement Fund filed a class action in California state court against Cyan, Inc., alleging material misstatements in an IPO registration statement in violation of the Securities Act of 1933. Cyan moved to remove the case to federal court, arguing that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) mandated federal jurisdiction over such "covered class actions." The district court denied removal, and the Ninth Circuit affirmed. The U.S. Supreme Court granted certiorari to resolve whether SLUSA stripped state courts of jurisdiction over class actions asserting only 1933 Act claims. In a unanimous opinion delivered by Justice Elena Kagan on March 20, 2018, the Court held that the 1933 Act expressly provides for concurrent state and federal jurisdiction, and SLUSA's text does not divest state courts of that power or make such actions removable.

The Supreme Court unanimously affirmed the Ninth Circuit, holding that SLUSA did not strip state courts of their traditional concurrent jurisdiction over class actions brought exclusively under the Securities Act of 1933. Such lawsuits may be filed and maintained in state court and are not removable to federal court.

Whether the Securities Litigation Uniform Standards Act of 1998 deprived state courts of subject-matter jurisdiction over class actions alleging only violations of the Securities Act of 1933, thereby making such cases removable to federal court.

The ruling preserved plaintiffs' ability to pursue 1933 Act class actions in state courts, potentially encouraging forum shopping and increasing state-level securities litigation. It affirmed the continued role of state courts in securities regulation, significantly influencing the strategic choices of both plaintiffs and defendants in IPO-related shareholder disputes.