A unanimous Supreme Court today held that “covered class actions” over exchange-traded securities are not removable from state courts under SLUSA when they assert only ‘33 Act claims.
The Court held the removal provisions of the Act are in aid of its state-law claim bar (removed to ensure dismissal), and do not otherwise affect the long-standing grant of concurrent jurisdiction for ‘33 Act claims.
“Under our reading of SLUSA, all covered securities class actions must proceed under federal law; most (i.e., those alleging 1934 Act claims) must proceed in federal court; some (i.e., those alleging 1933 Act claims) may proceed in state court. We do not know why Congress declined to require as well that 1933 Act class actions be brought in federal court; perhaps it was because of the long and unusually pronounced tradition of according authority to state courts over 1933 Act litigation. … But in any event, we will not revise that legislative choice, by reading a conforming amendment and a definition in a most improbable way, in an effort to make the world of securities litigation more consistent or pure.” Op. at 15.
The Court rejected both the defense and the government’s “ halfway house” arguments:
“At bottom, the Government makes the same mistake as Cyan: It distorts SLUSA’s text because it thinks Congress simply must have wanted 1933 Act class actions to be litigated in federal court. But this Court has no license to ‘disregard clear language’ based on an intuition that ‘Congress must have intended something broader. ‘ … SLUSA did quite a bit to ‘make good on the promise of the Reform Act’ (as Cyan puts it). … If further steps are needed, they are up to Congress.”
Op. at 24 (citations omitted).
The Opinion is CYAN, INC. v. BEAVER COUNTY EMPLOYEES RETIREMENT FUND, No. 15–1439 ( U.S. March 20, 2018).