Gentleman's Agreement: The Antisemitic Origins of Restrictions on Stockholder Litigation

Abstract

A deeply ingrained, seemingly ineradicable, hostility to plaintiffs' lawyers and especially to plaintiffs' lawyers in stockholder suits seems to have existed for most of the past century. This hostility is manifest not only in the tone of judicial opinions but in law review articles, the popular press, and, often, in legislation. This article analyzes the circumstances under which the first security-for-expense statute was adopted in New York in 1944, including the contemporaneous justification for the statute, focusing on the demographics of the New York bar at the time and the ethnic sociology of New York. In so doing, it concludes that both the statute and the justification were deeply flawed, and finds a pervasive antisemitism as a proximate cause of the statute's adoption. The article further goes on to argue that this antisemitism poisons, albeit subconsciously, our contemporary attitudes towards plaintiffs' lawyers, an attitude which led to excessive and poorly justified restrictions on stockholders' litigation in the Private Securities Litigation Reform Act of 1995. The author concludes that this history should caution us to be careful in examining our motivations for restricting the corporate plaintiffs' bar.