The Private Securities Litigation Reform Act’s (“PSLRA”) automatic stay during the pendency of a motion to dismiss is one of the most important procedural protections for defendants in a securities action. The stay, which applies to “all discovery and other proceedings” during the pendency of “any motion to dismiss,” protects defendants from incurring costs that may be obviated based on the outcome of the motion.[1] Some key questions about the scope of the stay have lingered though. Does a second (or other successive) motion to dismiss trigger the statutory stay even if some or all claims survived an earlier motion? Does a successive motion that only challenges portions of an amended complaint trigger the stay? Does the stay apply to expert discovery? Does the stay apply to proceedings relating to class certification?
Earlier this month, the U.S. District Court for the Eastern District of New York answered all these questions in the affirmative.[2] Relying principally on the plain language of the statute, the court held that the automatic stay applies to successive motions to dismiss, even when some claims survived a prior dismissal motion and even when the successive motion seeks only partial dismissal. The court also held that the stay applies not just to fact discovery but also to expert discovery and class certification proceedings. Patel appears to be the first decision to apply the PSLRA’s automatic stay after the close of fact discovery to expert discovery, and also the first in the Second Circuit to expressly apply the stay to class certification proceedings. Given that the Second Circuit has consistently ranked among the nation’s busiest forums for securities litigation, including as the top forum in 2025,[3] Patel is likely to carry significant weight in future disputes over the scope of the stay.
The decision reinforces the breadth of the stay and confirms that the broad statutory language means what it says: “all discovery and other proceedings” means all and “any motion to dismiss” means any. The decision also confirms that unless plaintiffs can meet their burden of proving that one of the two, narrow statutory exceptions applies—i.e., that particularized discovery is needed either to (i) preserve evidence or (ii) prevent undue prejudice—the automatic stay will not be lifted.
Overview
The Patel securities litigation relates to a global recall of respiratory devices, including CPAPs, by Philips RS North America LLC, one of the U.S. subsidiaries of the Dutch company, Koninklijke Philips N.V. As often occurs following a stock-price decline, plaintiffs promptly filed a securities fraud action against Philips and various of its executives. The Philips defendants moved to dismiss the complaint, and in September 2024, the court granted in part and denied in part their motion. Over the course of 2025, the case moved through fact discovery and class certification discovery and briefing. Near the end of 2025, the parties completed class certification briefing, and fact discovery concluded.
As the case was heading toward expert discovery on the merits, plaintiffs sought and obtained leave to file an amended complaint. The new pleading added new alleged misstatements, new alleged corrective disclosures, a new theory of scienter, and a new individual defendant (Philips’ current CEO). The Philips defendants again moved to dismiss. While Philips’ CEO sought dismissal of all claims asserted against him, the other Philips defendants sought partial dismissal in light of the prior motion to dismiss ruling.
With the filing of their motion to dismiss, the Philips defendants notified plaintiffs and the court that the PSLRA’s automatic stay had been triggered. As a result, the stay paused any further expert discovery and the additional class certification discovery and briefing made necessary by the amended complaint. Plaintiffs strenuously objected, arguing that because certain of their claims had already survived dismissal and the Philips defendants’ motion to dismiss only sought partial dismissal, the PSLRA’s protective function against potentially meritless claims had already been served. Plaintiffs also argued that there was no authority that the PSLRA stay applied after fact discovery had closed and encompassed expert discovery or class certification proceedings.
Following briefing and argument, on May 15, 2026, Magistrate Judge Henry rejected plaintiffs’ arguments, ruling that the Philips defendants’ motion triggered the stay and that the stay encompassed both expert discovery and class certification proceedings.[4] Plaintiffs appealed, and District Judge Korman affirmed Judge Henry’s ruling on July 15, 2026.[5]
Implications
Key Takeaway 1: The PSLRA stay applies to successive motions to dismiss, even partial motions to dismiss, and even when some claims previously survived dismissal.
It is not uncommon for courts, in ruling on motions to dismiss, to decide that claims based on certain alleged misstatements were adequately pled while dismissing others with leave to replead. When that happens, as a practical matter, defendants can typically only move to dismiss portions of the amended complaint. The same is true late in a case, when scheduling orders let plaintiffs amend to match their pleading to the evidence—any dismissal motion at that stage can likely be only a partial one.
In either of these situations, defendants should invoke the automatic PSLRA stay, citing Patel. Plaintiffs will likely urge the court, as the Patel plaintiffs did, to look beyond the statute’s text and focus on its purpose. The Patelplaintiffs argued that once at least some claims had survived dismissal, a successive motion challenging only a subset of claims no longer threatened the viability of the case as a whole—and therefore no longer justified the PSLRA stay. The court rejected that argument outright. As Judge Korman explained, “the PSLRA states that the stay of discovery applies during ‘the pendency of any motion to dismiss,’ without listing an exception either for successive motions or for when some claims have already been deemed viable.”[6] It does not matter that claims based on some alleged misstatements will be proceeding irrespective of the outcome of the motion; a motion to partially dismiss is still a motion to dismiss. The only way around the stay is to satisfy one of the two statutory exceptions.
Other courts, both within and outside the Second Circuit, have confirmed the applicability of the automatic stay whenever any type of motion to dismiss is pending. For example, a California district court held in In re Lantronix, Inc. Securities Litigation that the stay applied even though defendant’s initial motion to dismiss only sought partial dismissal, holding that “[e]ven with [defendant’s] concession on a portion of [plaintiff’s] claim, the pendency of the Motions to Dismiss . . . still trigger[s] the PSLRA’s discovery stay provisions.”[7] While that case involved an initial motion to dismiss, other courts later extended the principle to successive motions to dismiss, most often where the successive motion sought full (not partial) dismissal of the amended complaint.[8] Another court, in Sedona v.Ladenburg, went even further and applied the stay to a successive motion seeking partial dismissal, but it did so before much, if any, fact discovery had occurred.[9]
Patel takes the PSLRA’s text to its logical endpoint. In Patel, the court enforced the stay during a successive motion seeking partial dismissal after fact discovery had closed and class certification briefing (on the prior complaint) had been completed. In doing so, the court confirmed that application of the stay turns on the existence of a pending motion to dismiss, not the stage of discovery or whether the motion seeks only partial dismissal. Patel thus provides the clearest articulation of the PSLRA’s mandatory stay, free from any of the procedural wrinkles that are ultimately irrelevant to the interpretation of the clear statutory text.
Key Takeaway 2: The PSLRA stay applies to expert discovery, not just fact discovery.
As discussed above, toward the end of, or even after, fact discovery, plaintiffs may seek to amend their complaint based on evidence developed during discovery. If defendants move to dismiss the amended complaint, they should then invoke the PSLRA stay to pause any remaining discovery, including expert discovery. Patel confirms, for the first time, that the PSLRA stay applies just as much to expert discovery as fact discovery.
Again, the holding turned on the statute’s plain language. Plaintiffs tried to carve expert discovery out of the stay by arguing that no court had expressly applied the stay to expert discovery. The Patel court rejected that argument, explaining that the statutory language, which encompasses “all discovery,” is “very clear” and does not make “a distinction [] between the types of discovery that [are] stayed.”[10] In affirming, Judge Korman underscored this point, criticizing plaintiffs for “invent[ing] a distinction not reflected in the text of the PSLRA or the case law.”[11] The court’s reading also makes sense as a practical matter because otherwise, parties would have to undertake potentially needless expert discovery on issues, claims, and alleged misstatements that are pared away by the motion to dismiss.
Key Takeaway 3: The PSLRA stay reaches class certification proceedings as well.
Motions to dismiss and class certification proceedings often run on parallel tracks. Early in a case, plaintiffs may move for class certification while also seeking to amend their complaint. Later in a case, as in Patel, plaintiffs may seek leave to amend while their class certification motion is already pending.
Patel is the first decision from a court in the Second Circuit to expressly apply the PSLRA stay to class certification proceedings. Plaintiffs argued that the PSLRA’s reference to “other proceedings” was limited to “litigation activity relating to discovery,” and therefore did not cover class certification proceedings. But the court agreed with the Philips defendants that the substantial changes introduced by the amended complaint called for supplemental class certification discovery, including additional expert reports and expert depositions, and such activity fell squarely within the statute’s stay of “all discovery.” As a result, the court did not need to separately address the Philips defendants’ alternative argument that class certification proceedings fall squarely within the statute’s reference to “all . . . other proceedings,” as other courts outside the Second Circuit had ruled.[12]
The court’s decision is all the more logical in light of the recent price impact decisions by the Supreme Court and the Second Circuit in the Goldman Sachs litigation.[13] Those decisions made clear that in evaluating class certification motions, courts must compare, on a statement-by-statement basis, the genericness of an alleged misstatement against the specificity of an alleged corrective disclosure to determine whether the fraud-on-the-market (Basic) presumption applies to each particular statement. Courts also are required to shorten class periods where the alleged corrective disclosures “do not reveal additional falsity of actionable misstatements.”[14] As a result, prior to briefing class certification, defendants need to know whether any of the alleged misstatements or corrective disclosures are being dismissed from the litigation.
The plaintiffs’ bar made similar observations in a recent Law360 article[15] discussing the PSLRA stay. The authors explained that, although the PSLRA does not expressly state that it applies to class certification proceedings, it effectively does so because class certification requires discovery. “Thus, in staying discovery, the PSLRA effectively prohibits class certification until after any motion to dismiss has been decided, regardless of how ‘other proceedings’ is construed.” Defendants routinely rely on fact and expert discovery to rebut the Basic presumption, and courts must remain “open to all probative evidence” bearing on price impact.[16] Until a motion to dismiss settles the operative alleged misstatements and corrective disclosures, class certification proceedings are likely to be inefficient, if not mooted entirely by subsequent developments in connection with the dismissal motion. Patel recognizes that practical reality, and in doing so, it aligns the Second Circuit with courts in other jurisdictions that have reached the same result.
Conclusion
Amended complaints are a recurring feature of securities litigation. While the changes may not always be as extensive as those in Patel, defendants confronted with an amended complaint should be aware of the procedural protections that accompany successive motions to dismiss, even if only in part.
The aforementioned Law360 article highlighted Leone v. ASP Isotopes Inc.,[17] a securities class action in which the court ordered the parties to engage in simultaneous motion to dismiss and class certification briefing. It does not appear the court in that case was reminded of the mandatory, automatic stay provided by the PSLRA, leaving defendants to engage in expert discovery and class certification briefing before the viability of the claims had been fully tested. Patel confirms that Leone is an outlier and that, at least in the nation’s busiest securities litigation courts, the stay extends to expert discovery and class certification proceedings, and also applies to partial motions to dismiss. Defendants should therefore be mindful of these protections and raise them promptly.
That lesson rings true even when the litigation has reached a relatively advanced stage. Although successive motions to dismiss may not always dispose of the entire case, their resolution may substantially reshape the litigation. Claims and theories may be narrowed, defendants may be dismissed, and alleged misstatements and corrective disclosures may also be dismissed. Those changes can materially affect what work is ultimately required, including expert work and class certification work. Patel recognizes that reality and gives effect to one of the PSLRA’s core objectives: preventing parties from incurring unnecessary litigation costs before the contours of the case have settled.
Going forward, Patel leaves little room for securities litigants to narrow the PSLRA stay through procedural distinctions or policy-based arguments. Its message is straightforward: “any motion to dismiss” means any, and “all discovery and other proceedings” means all.
ENDNOTES
[1] 15 U.S.C. § 78u-4(b)(3)(B).
[2] Patel v. Koninklijke Philips N.V. et al., No. 1:21-cv-4606 (E.D.N.Y.).
[3] Cornerstone Research, Securities Class Action Filings: 2025 Year in Review, at 22 (2026).
[4] May 15, 2026 Order; see also Dkt. No. 128 (transcript of argument).
[5] July 15, 2026 Order.
[6] July 15, 2026 Order. In other contexts, courts have stated that the PSLRA stay provision is “crystal clear,” and “there is nothing ambiguous about the meaning of ‘any’ in the stay provision.” Altimeo Asset Mgmt. v. Qihoo 360 Tech., 2022 WL 1663560, at *1 (S.D.N.Y. 2022); In re Smith Barney Transfer Agent Lit., 2012 WL 1438241, at *2 (S.D.N.Y. 2012).
[7] 2003 WL 22462393, at *2 (C.D. Cal. 2003).
[8] See Moab Partners v. Macquarie Infrastructure Corp., 2025 WL 2080507 (S.D.N.Y. 2025); In re Smith Barney, 2012 WL 1438241 (S.D.N.Y. 2012); Lian v. Tuya Inc., 2024 WL 1932623 (S.D.N.Y. 2024); Fosbre v. Las Vegas Sands, 2012 WL 5879783 (D. Nev. 2012).
[9] 2005 WL 2647945 (S.D.N.Y. 2005).
[10] Dkt. No. 128 at 21-22.
[11] July 15, 2026 Order.
[12] See In re ValuJet, Inc., 984 F. Supp. 1472, 1481-82 (N.D. Ga. 1997); Vignola v. FAT Brands, Inc., 2019 WL 13038337, at *2 (C.D. Cal. 2019); Spears v. Metro. Life Ins., 2007 WL 1468697, at *5 n.2 (N.D. Ind. 2007); Winn v. Symons Int’l Grp., Inc., 2001 WL 278113, at *2 (S.D. Ind. 2001).
[13] Goldman Sachs v. Ark. Tchr. Ret. Sys., 594 U.S. 113 (2021); Ark. Tchr. Ret. Sys. v. Goldman Sachs, 77 F.4th 74, 81 (2d Cir. 2023).
[14] E.g., In re Veon Sec. Litig., 2025 WL 66444, at *6 (S.D.N.Y. 2025).
[15] Jesse Jensen and Alexandra Forgione, NY Securities Class Action Ruling Holds Rare Timing Insights, Law360 (January 28, 2026).
[16] Goldman Sachs, 594 U.S. at 122.
[17] 2025 WL 3484821 (S.D.N.Y. 2025).
The authors wish to thank Ju Hee Ahn and Bridget E. Le Donne for their significant contributions to this article.