OTLA Trial Lawyer Spring 2021

21 Trial Lawyer • Spring 2021 ultimately been difficult for us to prove the participants’ knowledge of Kniss’ misconduct, as other states require, Or- egon law made that hurdle easier to overcome. It put the onus on the par- ticipants to prove not only that they did not know, but that they could not have known had they exercised the due dili- gence that professional standards and the securities law required of them. In short, while it is possible that some other states’ laws would have gotten the Iris investors some recovery, only Oregon law made it possible for them to get as much back as they did. Practical considerations Because Oregon’s law is uniquely in- vestor-friendly, anyone seeking to plain- tiff an investor case should be prepared to educate the participant’s out-of-state counsel and insurance adjuster, who of- ten come to the case with assumptions about securities law derived from experi- ence in other, relatively investor-hostile jurisdictions. The mediator and court likely will need education too, even if they are local, simply because securities law is complex. My briefs and mediation statements are lengthy for each of these reasons. Another issue arising in the litigation of these cases is client management. Often these cases involve dozens of inves- tors, and you need to have a good procedure for communicating with all of them, both to keep them updated and to get their input when needed. Regular all-hands conference calls are one good method for doing this. Another solution is to file a class action, because it reduces the manageability problem significantly. In some cases, that approach makes much more sense. But beware that in the Class Action Fairness Act of 2005, Congress man- dated that state-law securities class ac- tions and mass actions of 100 or more investors be removable to federal court if the damages exceed $5 million and there is “minimal diversity.” 28 USC § 1332(d). The best way to stay in state court, given the Act, is to define your plaintiff group narrowly to stay under the 100-investor limit. If you must liti- gate in federal court, the Ciuffitelli opin- ion cited above shows federal district court in Oregon is capable of rendering sound opinions in cases involving the Oregon Securities Law. Parting thoughts How did Oregon investors come to enjoy such robust protection under the securities law? The genesis goes back over 50 years, to 1967, when the Oregon Legislature completely revamped the securities law it had had on the books since 1939. The Legislature initially in- tended to just adopt the Uni- form Securities Act of 1956, which most states at the time did. But during the legislative process the Legislature real- ized the Oregon Supreme Court had interpreted the prior act in a manner that protected investors with more safeguards than the uniform act provided. The Legislature and various stakeholder groups agreed to modify the uniform act to retain these desirable features. Starting in the mid-1970s, the U.S. Supreme Court launched a sustained attack on investors by repeatedly issuing decisions narrowly interpreting federal securities law and imposing obstacle upon obstacle on investors seeking to be made whole. Congress joined this effort in the 1990s and early 2000s, resulting in an absolute gauntlet that investors relying on federal law must run when bringing securities claims. Many states followed suit, through both legislation and court decision. But Oregon went the opposite direc- tion. Justice Linde’s 1988 opinion for the Oregon Supreme Court in Prince stands as a beacon of judicial restraint by giving effect to the Legislature’s 1967 policy choice rather than imposing judicially- crafted obstacles in the guise of interpre- tation. And in 2003, the Oregon Legis- lature expanded liability under the secu- rities law even further, to make it appli- cable to securities sold on the market, not just face-to-face transactions, among other things. This history of political and judicial decision-making shows Oregon law did not default into its present position — we chose this path. We should celebrate that choice and reaffirm it, lest future legislators or judges forget why things look different here and begin to blindly adopt the law of other jurisdictions as the law of Oregon. Cody Hoesly specializes in appeals, finan- cial fraud and commercial cases. He contributes to OTLA Guardians at the Sustaining Member level. Hoesly is a partner with Larkins Vacura Kayser LLP, 121 SWMorrison St., Ste. 700, Portland, OR 97204. He can be reached at 503-222- 4424 or choesly@lvklaw.com.