A national law was passed in 1995 to protect
companies from a skyrocketing number of frivolous class
action lawsuits brought by shareholders when the value of
their stock holdings declines precipitously.
- Due to loopholes in the legislation,
however, these lawsuits have now flooded into state courts—particularly
in California—where high tech companies are the primary
target.
- These lawsuits force high-tech companies
to expend valuable human and monetary resources on costly
litigation, rather than on technological development and
innovation.
- Uniform National Standards (UNS) legislation—H.R.
1689 and S. 1260—is making its way through Congress. It
would close the loopholes and transfer these class action
suits from state to federal courts, where standards exist
to determine the validity of the claim.
UNS
legislation is a fair deal that shields high-tech companies
from frivolous lawsuits while providing recourse to investors
who are confronted with securities fraud. It is broadly
supported by Democrats and Republicans.
"For too long, the plaintiff lawyers
have held industry hostage. It's time to spend dollars on
innovation, not fighting frivolous lawsuits."
Dan Scheinman
Vice President, Legal and Government Affairs
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