Law360 Quotes Partner Jeff Jacobson on State Court’s Interpretation of Federal Securities Law
May 17, 2016

Litigation Partner Jeff Jacobson was quoted in the Law360 article, “Attorneys React To High Court's Merrill Lynch Ruling,” regarding the court’s decision that federal securities laws do not preempt certain claims from being brought in state court. In Merrill Lynch v. Manning, the U.S. Supreme Court held that federal securities laws don't preempt some claims from being brought in state court. The court upheld a lower court ruling that sent a suit against a Merrill Lynch unit and other Wall Street firms back to a New Jersey state courts determining that the 1934 Securities Exchange Act lets state courts handle claims filed under their own investor-protection laws even if the litigation might involve the interpretation of federal law. Mr. Jacobson, who has nearly two decades of experience both defending against and prosecuting securities litigation, commented:

"The decision should serve as a reminder that New Jersey, home to many securities firms, has some of the country’s most stringent state securities laws. As for the remand, although the court reached its conclusion unanimously, we probably have not heard the last of the debate between Justices Thomas and Sotomayor in concurrence and the rest of the court. The six-justice view that took hold was that, for a case to be removable, an issue must facially 'arise under' the Securities Exchange Act. The court said that test is met if an Exchange Act issue is 'really and substantially disputed.' The two-justice concurrence would have framed the question differently, as whether a complaint calls for the judge to 'resolve the merits of Exchange Act rights or liabilities,' or 'establish the breach of an Exchange Act requirement.' Reasonable minds can disagree as to which test is more generous toward removal, and it will be interesting to see how future litigants try to play those two standards off of each other."

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