If you practice securities litigation in the First Circuit and feel like your motions to dismiss
now need caffeine and a microscope to get through, you’re not imagining things. Over the last few
years, securities class actions in the First Circuit have increased in number while courts –
especially in the District of Massachusetts – have raised the pleading bar higher than a tech
company’s stock-price guidance in a bull market.

National data from Cornerstone Research, NERA, and the Stanford Securities Class Action Clearinghouse
show that overall securities class action filings have remained relatively steady, with roughly
215–225 cases filed annually in 2023–2024 and a similar pace continuing into 2025.
What’s new is that the First Circuit – traditionally overshadowed by the busier Second and Ninth Circuits –
now regularly sees double-digit filings per year, reaching a five-year high in recent data.
At the same time, First Circuit courts continue to enforce the PSLRA’s strict pleading standards with gusto,
resulting in a meaningful dismissal rate at the motion-to-dismiss stage.

1. Where the First Circuit Fits in the National Securities Litigation Landscape

In the national picture, securities class actions are still concentrated in the Second and Ninth Circuits,
which routinely account for about 60–70% of core filings, especially against technology and life sciences
issuers listed on U.S. exchanges.
But recent circuit-level breakdowns show that the First, Fourth, and Fifth Circuits each saw at least
10 federal securities class action filings in 2024, marking five-year highs for those regions.

For the First Circuit – which covers Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island –
that shift is significant. Boston has become a hotspot for securities litigation in sectors like:

• Biotech and life sciences issuers
• Healthcare and medical device companies
• Fintech and emerging technology firms

Those industries are also the ones that dominate nationwide filing statistics, with technology and health-related
companies making up more than half of new federal securities class actions in recent years.

2. Filing Volume: Steady Numbers, Bigger Dollar Exposure

While overall filing counts have stayed relatively stable nationally, one trend stands out: the dollar value of
investor losses alleged in new filings has climbed. Cornerstone Research’s midyear 2025 assessment reports that
filing counts are roughly in line with historical averages, but the Disclosure Dollar Loss and
Maximum Dollar Loss associated with those suits have increased substantially, driven by “mega” filings
involving large-cap issuers.

The First Circuit participates in that trend in a slightly different way. Instead of housing the largest group
of mega-cap cases, it has become a venue where plaintiffs test complex theories against highly regulated companies,
particularly in life sciences and technology. Recent reports on life sciences securities litigation show that a
material share of these cases are filed in or touch the First Circuit, given the concentration of biotech firms
in Massachusetts.

In practical terms, that means:

• More suits based on clinical trial disclosures, drug safety signals, and regulatory interactions.
• More disputes over whether statements about trials, FDA feedback, or “commercial potential” were
  actionable misrepresentations or simply optimistic (but protected) forward-looking statements.
• Higher potential damages per case when stock drops follow binary events such as trial failures or
  regulatory setbacks.

3. The First Circuit’s Tough Scienter Standard

Perhaps the single most important trend in securities class actions in the First Circuit is doctrinal rather
than numerical: the circuit’s demanding approach to scienter. Under the PSLRA and the Supreme Court’s decision
in Tellabs, plaintiffs must plead facts giving rise to a “strong inference” of scienter that is at least
as compelling as any opposing innocent inference. The First Circuit has embraced that standard and, in some
respects, sharpened it.

In high-profile cases involving companies like Biogen and Vertex Pharmaceuticals, the First Circuit affirmed
dismissals where plaintiffs failed to allege particularized facts showing that executives knew, or were reckless
in not knowing, that their statements were misleading at the time.
The court has repeatedly stressed:

• Scienter cannot be inferred from poor business outcomes alone.
• Allegations of “must have known” based only on an executive’s title or access to information are not enough.
• Competing inferences – such as good-faith reliance on internal reports or regulatory feedback – must be weighed
  explicitly under Tellabs.

For plaintiffs, that means complaints must include more than generalized references to “red flags.” They need
emails, internal reports, whistleblower accounts, or other detailed facts tying specific decision-makers to the
alleged misstatements. For defendants, robust documentation and thoughtful disclosure controls can provide
credible alternative inferences that courts in the First Circuit are willing to credit at the pleading stage.

4. Material Misrepresentation and the PSLRA Safe Harbor

Another defining feature of First Circuit securities class action trends is the way trial courts – especially
the District of Massachusetts – are using the PSLRA’s safe harbor for forward-looking statements, combined with
Rule 9(b)’s particularity requirement, to screen out weak claims early.

Recent district-level decisions emphasize three recurring themes:

1. Forward-looking vs. present-tense statements.
   Courts closely parse whether statements about “expected revenue,” “anticipated regulatory timelines,”
   or “future market opportunities” are genuinely forward-looking (and thus potentially protected) or whether
   they embed misstatements of current fact.
2. Meaningful cautionary language.
   Issuers that pair earnings calls and investor presentations with specific risk disclosures – rather than
   generic “may, might, could” boilerplate – are better positioned to obtain dismissal under the safe harbor.
   Courts in the First Circuit have not been shy about calling out risk factors that merely describe the very
   problem that allegedly already occurred as insufficiently tailored.
3. Reasonable investor standard.
   Judges scrutinize whether challenged statements would actually mislead a reasonable investor, rather than a
   hyper-literal reader combing through transcripts with hindsight bias.

Law firm analyses of First Circuit decisions repeatedly highlight that cases are being dismissed not only for
lack of scienter but also for failure to plead falsity and materiality with adequate specificity.
For plaintiffs’ counsel, this raises the stakes of pre-filing investigation; for defense counsel, it underlines
the strategic importance of robust, well-supported motions to dismiss.

5. Class Certification, Loss Causation, and Settlement Dynamics

Most of the public commentary on First Circuit trends focuses on pleadings, but class certification and settlement
patterns are evolving too. Nationally, recent NERA and Cornerstone analyses show that:

• Certification rates for Rule 10b-5 classes remain high once cases survive motions to dismiss.
• Median settlements have increased, driven in part by larger issuer market capitalizations and
  “mega-settlements” exceeding $100 million.
• Cases involving accounting allegations and regulatory investigations tend to settle at higher multiples
  of estimated damages.

In the First Circuit, once a case clears the motion-to-dismiss phase, defendants face the same settlement
pressures seen nationwide: escalating defense costs, expert-intensive battles over market efficiency and
price impact, and the uncertainty of a jury trial. The stakes can be particularly high for life sciences issuers,
where stock drops following clinical or regulatory events often trigger outsized alleged losses.

At the same time, the First Circuit’s rigorous approach at earlier stages enhances defendants’ leverage to settle
for more moderate amounts in cases where some, but not all, claims survive dismissal. Plaintiffs and defense
counsel alike must factor in how First Circuit precedent on loss causation and damages will shape expert reports
and classwide theories of harm.

6. Emerging Themes: Crypto, ESG, and Tech Disruption

National trends suggest that new waves of securities class actions are forming around emerging technologies
and themes, and those are slowly washing up on First Circuit shores:

• Crypto and digital assets.
  NERA reports that crypto-related filings in the first half of 2025 already matched the total for full-year 2024,
  signaling continued scrutiny of token issuers, exchanges, and fintech platforms.
  While many of these suits are still concentrated in other circuits, First Circuit courts are beginning
  to see related claims as crypto businesses expand or relocate.
• ESG and climate-related disclosures.
  Issuers face increasing pressure to make detailed environmental, social, and governance statements.
  As other circuits grapple with suits alleging “greenwashing” or overstated climate resilience,
  the First Circuit’s stringent approach to falsity and scienter may make it an important venue for
  testing how far such claims can go.
• AI, data privacy, and cyber risk.
  Technology and data-driven companies in the First Circuit are exposed to suits alleging failure to
  disclose cybersecurity risks, data breaches, or the limitations of AI-driven products. These cases
  often turn on whether risk factors meaningfully warned of the precise problems that later materialized.

For issuers operating in or touching the First Circuit, that means disclosure committees need to keep an eye
not only on traditional financial metrics but also on how they describe technology, data, and ESG commitments
to investors.

7. Practical Takeaways for Issuers and Investors in the First Circuit

For Public Companies and Their Boards

• Invest in disclosure governance.
  Make sure that earnings scripts, investor presentations, and SEC filings are coordinated and backed by
  internal documentation. In a circuit that takes scienter and falsity seriously, paper trails showing
  good-faith processes can be invaluable.
• Use specific cautionary language.
  Boilerplate risk factors are out. Tailored, concrete risk disclosures that match the company’s actual
  business, regulatory posture, and technology are in – and they can make the difference under the PSLRA safe harbor.
• Prepare for early motion practice.
  Because First Circuit courts frequently resolve securities class actions at the pleading stage,
  companies should plan litigation strategy from day one, including identifying key documents and witnesses
  who can support an innocent inference of good faith.

For Institutional and Retail Investors

• Look beyond the headline drop.
  Not every sharp stock-price decline equals fraud. The First Circuit’s case law underscores that business
  setbacks, clinical failures, and regulatory delays – without more – rarely satisfy scienter standards.
• Evaluate case strength early.
  For potential lead plaintiffs, working with experienced counsel to test scienter, falsity, and loss causation
  theories before filing is critical in a demanding jurisdiction.
• Understand settlement dynamics.
  Stronger cases that survive dismissal may command substantial settlements, but weakly pled complaints risk
  early dismissal and no recovery at all.

8. Experience-Based Insights: Litigating Securities Class Actions in the First Circuit

Legal analytics and charts are helpful, but they don’t fully capture what it feels like to litigate
a securities class action in the First Circuit. Here are experience-based observations – the kind of lessons
lawyers tend to share over coffee after a long hearing.

1. The Motion to Dismiss Is the Main Event

In many First Circuit securities cases, the motion to dismiss is less a procedural hurdle and more the
championship game. Judge-specific histories in the District of Massachusetts show that courts are
comfortable issuing long, detailed opinions parsing each challenged statement, each alleged omission,
and each scienter allegation. Because discovery is generally stayed while that motion is pending,
plaintiffs can’t count on getting more facts later – what’s in the complaint is what they live or die on.

That reality changes how both sides behave:

• Plaintiffs’ lawyers spend months investigating, interviewing former employees where allowed, and
  reconstructing timelines from public filings and analyst reports before filing.
• Defense teams assemble cross-functional litigation “war rooms,” pulling in SEC reporting staff,
  investor relations, clinical or technical leaders, and outside experts to craft an alternative narrative
  that is plausible and well supported on the face of judicially noticeable documents.

2. Life Sciences Cases Are a Different Universe

If you litigate against a biotech or pharma issuer in the First Circuit, you quickly learn that words like
“promising,” “encouraging,” or “robust” can spark pages of briefing. Both sides wrestle with how to translate
complex scientific developments into plain-English statements for investors – and then argue over whether
those translations were misleading.

Defense counsel often highlight the inherent uncertainty of clinical trials and the detailed risk factors
embedded in offering documents. Plaintiffs, in turn, point to internal documents or regulatory feedback
(when they can find it) to claim that executives painted too rosy a picture. The First Circuit’s insistence
on particularized scienter allegations essentially rewards whichever side can present the more credible,
better-documented story of what management knew and when.

3. Judges Expect You to Know the Record – Cold

First Circuit panels and district judges have a reputation for pressing counsel on the details: which
statement in which filing, made on which date, matched which alleged corrective disclosure and price drop.
That’s not just folklore – hearing transcripts reflect meticulous questioning that forces lawyers to tie
legal arguments directly to specific allegations and exhibits.

Practitioners quickly learn that “hand-waving” about themes like “scheme to defraud” or “pattern of deception”
gets little traction without diving into the specific language of prospectuses, earnings calls, and
risk-factor sections. The upshot is that briefs in First Circuit securities cases tend to be dense,
cite-heavy documents that walk through allegations statement by statement.

4. Settlement Discussions Are Data-Driven

When cases do move into settlement discussions, parties lean heavily on empirical data from Cornerstone,
NERA, and other analytics providers. Counsel for both sides benchmark:

• Estimated “plaintiff-style” damages against historical median and average settlements;
• The impact of factors like parallel regulatory investigations or restatements;
• Comparable First Circuit and life sciences settlements over the last decade.

In practice, that means negotiation sessions often feel like blended conversations about law, economics,
and risk management. Boards want to know whether a proposed settlement fits within a defensible band given
the company’s market cap, the strength of the liability case, and insurance limits. Plaintiffs’ firms,
meanwhile, must justify why a particular multiplier over estimated damages is appropriate in light of
the First Circuit’s doctrinal headwinds.

5. Compliance Programs Are Quiet Heroes

One underrated trend from the trenches is how much weight courts give to robust compliance and
disclosure processes. Companies that can show that they:

• Held regular disclosure committee meetings;
• Documented internal debates about risk disclosures and guidance;
• Escalated concerns from operational teams to senior leadership;

are better positioned to argue that any misstatements were the product of good-faith judgment calls,
not intent to deceive. In a circuit that takes alternative inferences seriously, those internal processes
can be the difference between dismissal and a long, expensive trip through discovery and trial.

Taken together, these experiences show that securities class action trends in the First Circuit are about
more than rising filing numbers. They reflect a maturing, sophisticated ecosystem where courts demand
detailed pleading, parties rely heavily on empirical data, and companies that invest in compliance
and careful disclosures can meaningfully reduce litigation risk – even if they can’t eliminate it entirely.

Conclusion

Securities class actions in the First Circuit are no longer a rarity. Filing volumes have climbed to
five-year highs, especially in Massachusetts, even as courts maintain a strict approach to scienter,
materiality, and the PSLRA safe harbor. National data suggests that the overall number of cases may not
spike dramatically in the near term, but the size and complexity of those cases – particularly in biotech,
technology, and emerging sectors like crypto and AI – will continue to grow.

For issuers, the message is clear: treat disclosure controls and risk factors as strategic assets, not
compliance afterthoughts. For investors and their counsel, success in the First Circuit increasingly
depends on building fact-rich complaints that can survive rigorous scrutiny at the pleading stage.
Between those two realities sits a circuit that is shaping how modern securities litigation balances
investor protection against the risks of hindsight-driven lawsuits.

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