In 2018, the U.S. Supreme Court held in Cyan, Inc. v. Beaver County Employees Retirement Fund that class actions under the Securities Act of 1933 brought in state court can no longer be removed to federal court. Cyan ushered in a new era of federal securities litigation: the filing of securities class actions in the courts of states with little or no connection to the plaintiffs, the public offerings of stock, or the operative facts of the litigation. In one of the first such cases filed in Texas, SKV, led by Partners Craig Smyser and Razvan Ungureanu, defended a British company and four of its individual officers in a ’33 Act class action brought by two out-of-state pension funds. Plaintiffs claimed that in connection with an August 2017 initial public offering and November 2017 secondary public offering, the company and the individuals failed to disclose in SEC filings the true extent of the fire damage to an overseas manufacturing plant and misrepresented that the plant could be repaired rather than abandoned.
SKV and co-counsel challenged the Dallas state court’s personal jurisdiction over the company and the individual defendants. After the trial court denied the special appearances challenging jurisdiction, the company and the individuals appealed to the Dallas Court of Appeals. In an opinion that received considerable attention in the legal press, the Court of Appeals reversed the trial court’s holding and dismissed the case against SKV’s clients. The Court of Appeals found that there was neither general nor specific jurisdiction over these defendants as they were “not at home” in Texas and there was “no substantial connection” between Texas and the operative facts giving rise to the claims against them. On April 3, 2020, the appellate court’s ruling became final when Plaintiffs elected not to seek review in the Texas Supreme Court.
