Four years later, in 1987, Plaut—alongside other investors—filed suit against Spendthrift Farm, thereby launching a class action lawsuit over securities fraud in federal court.

In the case of Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991), the Supreme Court of the United States held that the aforementioned practice of utilizing state law for securities fraud litigation under federal law is unconstitutional because doing so violates the Supremacy Clause as well as the Equal Protection Clause of the Fourteenth Amendment.

§ 78aa–1), subsection (b) therein allowed any unfinished cases about securities fraud which were dismissed as a result of the new rule from Lampf at the time of that decision to be revived in federal court.

Scalia had acknowledged historical evidence for reaffirming the decisions of the lower courts by siding with Spendthrift Farm instead of Plaut in this case.

Furthermore, in The Federalist Papers, the Founding Fathers of the United States such as Alexander Hamilton and James Madison criticized this practice.

He posits that section 476 of the law violates separation of powers because it affects a small number of securities fraud plaintiffs in a purely retroactive fashion.

Associate Justices John Paul Stevens and Ruth Bader Ginsburg dissented to assert that, based on about 150 years worth of judicial rulings, Congress was allowed to reopen previously adjudicated cases because the legal provision at hand did not dictate how courts can rule on cases involving securities fraud so much as it allowed for the restoration of such litigation which was wrongfully dismissed by the courts.