A recent decision, if widely adopted, could spare companies from unnecessary discovery costs in claims that may not survive a threshold pleadings challenge.
..State courts across the country have reached conflicting conclusions on whether the Private Securities Litigation Reform Act’s (PSLRA) automatic stay of discovery pending a ruling on a complaint’s legal sufficiency applies to cases filed in state court.
..Breaking from the majority approach among California courts, a San Mateo County Superior Court conducted a thorough statutory interpretation analysis and concluded that the PSLRA requires a stay of discovery in state court.
..If state courts were to reach consensus on this conclusion — or if the US Supreme Court were to adopt it - securities plaintiffs would possess less leverage to coerce settlements by filing in state court and forcing companies to engage in early discovery.
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