Securities Regulation Daily Wrap Up, CORPORATE GOVERNANCE—D.N.J.: Exxon defeats discovery attempt in Retail Voting Program challenge, (Jan 2, 2026)

By Anne Sherry, J.D.

The PSLRA’s automatic stay of discovery applies to state breach-of-fiduciary-duty claims premised on violations of federal securities law.

A procedural ruling shot down an Exxon investor’s attempt to obtain discovery before the motion to dismiss is decided. The plaintiff wanted discovery to prepare for a preliminary injunction hearing on Exxon’s alleged violations of the SEC’s proxy solicitation rules. But the PSLRA’s automatic stay of discovery is wide-ranging, and the court found that it applies to state fiduciary duty claims premised on breaches of federal securities law (City of Hollywood Police Officers’ Retirement System v. Woods, No. 25-cv-16633 (D.N.J. Dec. 30, 2025)).

Last September, Exxon Mobil Corporation won SEC approval to create a Retail Voting Program whereby shareholders that opt in can have their shares voted according to the recommendations of the Exxon board, rather than have the shares go unvoted. When it requested this no-action relief, Exxon conceded that 14a-2(a)(1)’s requirements for proxy solicitation would apply.

A class-action followed in which the plaintiff pension fund contends that the move “violates nearly every substantive requirement for proxy solicitations.”

The plaintiff then sought expedited discovery to prepare for a preliminary injunction hearing during which it will seek to prevent these alleged violations in advance of Exxon’s 2026 annual meeting. Specifically, the plaintiff proposed to serve specific discovery requests and to depose one Exxon board member, one executive, and a specific in-house lawyer.

The defendants argued that the motion was foreclosed by the PSLRA’s automatic stay, and the court agreed. Even though the plaintiff brought only fiduciary duty claims under state law, those claims are for alleged breaches of the Section 14(a) disclosure requirements, and the PSLRA “intentionally casts a broad net.” The court said it would not allow the plaintiff to make an “end run” around the PSLRA and found that the “automatic stay provision applies to state law claims for breach of fiduciary duties premised on violations of the securities laws even when those claims are brought without corresponding claims asserted directly under federal law.”

While the PSLRA stay is rebuttable, the plaintiff simply did not make this case. It provided no authority or legal analysis and made no showing of undue prejudice or particularized discovery. Accordingly, the request for expedited discovery was denied.

The case is No. 25-cv-16633.

Judge: Quraishi, Z.

Attorneys: Caleb Seeley (Seeger Weiss LLP) for City of Hollywood Police Officers' Retirement System. Maureen Theresa Coghlan (Archer & Greiner, PC) for Darren W. Woods.

Companies: Exxon Mobil Corporation

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