Summary
In addition, as law professor Michael Klausner and other Stanford Law School researchers reported in a 2020 study, shareholders might benefit from a disparity in discovery rules in state and federal court. In federal court, the PSLRA bars shareholders from obtaining discovery from defendants until they have survived a dismissal motion. But state courts frequently allow shareholders to assert discovery demands before judges have ruled on dismissal motions. So, according to the Stanford paper, state-court plaintiffs might be able to leverage the cost of complying with their discovery demands to pressure defendants to settle.
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