The End of the Vexatiousness Rationale

Securities Regulation Law Journal, Vol. 41, p. 301, 2013.

18 Pages Posted: 9 Jul 2013 Last revised: 2 Jan 2014

Date Written: July 8, 2013

Abstract

This Essay argues that the "vexatiousness rationale," which posits that securities fraud litigation poses a danger of vexatiousness different in degree and in kind from that accompanying litigation in general, should not influence the future development of securities fraud jurisprudence. This Essay demonstrates that this vexatiousness rationale, first adopted by the Supreme Court in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 739 (1975), has been extraordinarily influential in the development of securities fraud jurisprudence, rising to the level of a "policy heuristic." Yet, this Essay argues that the reasons for the Blue Chip Stamps Court’s adoption of the vexatiousness rationale are now largely defunct, and no intervening reasons support the vexatiousness rationale. Under current law, therefore, this Essay contends that securities fraud litigation poses no greater risk of vexatiousness than other types of class actions asserted against companies. In fact, the Supreme Court intimated as much in its recent decision, Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 133 S. Ct. 1184, 1201-02 (2013). As such, the vexatiousness rationale should not influence the future development of securities fraud jurisprudence, including the Court’s anticipated revisiting of the fraud-on-the-market presumption of reliance.

Copyright 2013 by Thomson Reuters. All rights reserved. Reprinted by permission of Thomson Reuters/West from Securities Regulation Law Journal.

Keywords: Securities Regulation, Securities Litigation, Policy, Class Actions, Fraud-on-the-Market Presumption of Reliance

Suggested Citation

Couture, Wendy Gerwick, The End of the Vexatiousness Rationale (July 8, 2013). Securities Regulation Law Journal, Vol. 41, p. 301, 2013., Available at SSRN: https://ssrn.com/abstract=2291147

Wendy Gerwick Couture (Contact Author)

University of Idaho College of Law ( email )

501 W. Front St.
Boise, ID 83702-7232
United States
208-364-4547 (Phone)

HOME PAGE: http://www.uidaho.edu/law/people/faculty/wgcouture

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