Clifford Chance
NY State Court Rules that Common Law Claims are not Preempted by Martin Act
22 December 2011
On December 20, 2011, the New York Court of Appeals held that New York State's "blue sky" law, the Martin Act, does not preempt private plaintiffs from bringing traditional common law claims, including breach of fiduciary duty and gross negligence. See Assured Guaranty (UK) Ltd. v. J.P. Morgan Inv. Mgmt. Inc., No. 227 (N.Y. Dec. 20, 2011). The practical consequence of the Assured Guaranty decision is that plaintiffs who do not participate in class actions will be able to bring New York common law claims, which may be less rigorous to plead and prove compared to fraud claims. As such, defendants likely will face significantly increased exposure to liability and protracted litigation.
