- class action •
- litigation •
- shareholder •
- securities •
- PSLRA •
- private securities litigation •
- plaintiff •
- frequent filer •
- nuisance •
This chapter explores class action nuisance suits by examining the plaintiffs that bring them. It focuses on merger litigation—claims brought by shareholders in the wake of corporate mergers and acquisitions transactions—and uses as evidence the litigation history of seven “frequent filer” shareholder plaintiffs.
The chapter argues that these litigation patterns have evolved in response to efforts to contain nuisance suits. Claims moved from state to federal court to evade hostile state law precedent. Once in federal court, claims changed from settlement to mootness resolutions to avoid further judicial scrutiny and to avoid possible application of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Further innovations in nuisance filings seem specifically designed to evade the PSLRA.
Consistent application of the PSLRA to merger litigation would reverse the flow of claims back to state court if not eliminate them altogether. However, any hope of this depends upon a more coordinated judiciary. Courts must coordinate their approach to merger litigation generally and to the PSLRA in particular. Fortunately, coordination mechanisms do exist. Courts should use them to halt the inundation of merger-related nuisance suits.