Specter Pushing Laws to Reverse U.S. Supreme Court’s Rulings in Stoneridge and Iqbal

We wanted to bring your attention to a couple of news items detailing some pretty exciting legislation in the works from U.S. Senator, Arlen Specter (D-PA).  The bills address two pretty bad U.S. Supreme Court decisions, both of which we’ve blogged about, and both of which, if allowed to stand, will continue to have devastating consequences on consumers everywhere—namely, the Stoneridge, and Iqbal decisions.

Stoneridge, you may recall, denied shareholders the right to hold so-called “secondary actors” (such as investment bankers, white-shoe corporate lawyers or high-priced accountants) responsible when they participate in a scheme with a public company to defraud shareholders.

Specter’s bill “would allow civil suits against anyone who ‘knowingly or recklessly provides substantial assistance’ to someone engaged in fraud.” 

Meanwhile, the interesting development on the Iqbal front (the case which created an across-the-board, unprecedented increase of what ANYONE bringing ANY KIND of lawsuit must initially show in order to avoid having his/her case tossed) is that the bill Specter introduced to reverse it last July, is gathering momentum from legislators (the House may introduce its version of the bill this week), academics, and other prominent advocates.

Here are some notable recent quotes:

Lisa Bornstein, senior counsel at the Leadership Conference on Civil Rights: “Under Iqbal, ‘the person filing the suit has to get inside the head of the employer’ before being given access to any documents—a Catch-22 that will thwart valid suits…’It's really a padlock on the courthouse door.’"

Arthur Miller, New York University School of Law professor and recognized expert on civil procedure: "I have spent my whole life with the federal rules, and this is one of the biggest deals I have ever seen….I see serious problems with democratic values here, with access to the courts, with resolution of disputes with a jury of peers."

Elizabeth Schneider, Brooklyn Law School professor “who has written extensively on federal civil procedure.”:  “Iqbal is forcing trial judges to go ‘line by line’ through pleadings, using subjective factors to decide what parts are factual and which statements are conclusory. ‘If that's not an open door to judicial bias, I don't know what is.’" 

Anyway, you get the idea—lots of cool stuff is happening, thanks in large part to the efforts of Senator Specter.  Here’s hoping his efforts pay off.