A Supreme Court decision could resolve significant inconsistency among trial courts as to the applicability of the PSLRA discovery stay.

Key Points:

..While federal district courts have consistently applied the Private Securities Litigation Reform Act (PSLRA) automatic stay to halt discovery until a determination that the complaint states a viable claim for relief, state trial courts have been divided as to whether that stay applies to actions filed in state court.

..If the Supreme Court rules in favor of petitioners, securities plaintiffs will not be able to use state court as an end-run to impose discovery on defendants before stating a viable claim for relief.

..The scope of the PSLRA discovery stay has far-reaching implications for public companies and financial institutions that underwrite IPOs, which have been subjected to a wave of parallel federal-state securities litigation in recent years.