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This is a story of parallels-two cases decided by the United States Supreme Court eleven years apart, one now overruled, the other unchallenged for over twenty-five years. Both cases are important federal securities law decisions, but substantively they are quite different. In Wilko v. Swan, a 1953 decision, the Supreme Court held that predispute agreements to arbitrate claims arising under the Securities Act of 1933 (1933 Act) were unenforceable because arbitration would not adequately protect the rights the 1933 Act gave injured investors. In J.I. Case Co. v. Borak, decided in 1964, the Court held that persons injured by false and misleading proxy statements had an implied private right of action under section 14(a) of the Securities Exchange Act of 1934 (1934 Act).
These two cases, each tremendously important to federal securities law when decided, have little surface similarity. They involve different issues and different legal analyses, but their subsequent treatments by the Supreme Court are astoundingly parallel. After each case was decided, the Supreme Court began to chip at its foundation, first distinguishing it, but eventually rejecting its reasoning outright. Although the foundation on which each case stood was demolished and neither holding would have survived under the new standards, initially the Supreme Court allowed the narrow holdings of both Wilko and Borak to survive.