Seafarers Officers & Employees Pension Plan v. Apigee Corporation et al

Filing 16

ORDER by Judge James Donato granting 10 Motion to Remand. (jdlc1S, COURT STAFF) (Filed on 9/1/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SEAFARERS OFFICERS & EMPLOYEES
PENSION PLAN,

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United States District Court
Northern District of California

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Plaintiff,
v.

Case No.17-cv-04106-JD
ORDER RE REMAND
Re: Dkt. No. 10

APIGEE CORPORATION, et al.,
Defendants.

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Defendant Apigee Corporation (“Apigee”) removed this securities class action alleging

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violations of the ’33 Act from San Mateo Superior Court. Dkt. No. 1. Plaintiff Seafarers Officers

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& Employees Pension Plan (“Seafarers”) moves to remand on the basis that Title 15 of the U.S.

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Code, Section 77v(a) bars removal. Dkt. No. 10. The Court finds that removal was improvident,

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and the case is remanded to San Mateo Superior Court.

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Section 77v(a) is an anti-removal provision and states that “[e]xcept as provided in section

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77p(c) of this title, no case arising under this subchapter and brought in any State court of

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competent jurisdiction shall be removed to any court of the United States.” The exception in

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Section 77p(c) states that “[a]ny covered class action brought in any State court involving a

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covered security, as set forth in subsection (b), shall be removable to the Federal district court for

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the district in which the action is pending, and shall be subject to subsection (b).”

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“Subsection (b)” refers to Section 77p(b), which defines a set of cases that Congress
determined cannot be brought in any court:
No covered class action based upon the statutory or common law of
any State or subdivision thereof may be maintained in any State or
Federal court by any private party alleging . . . an untrue statement
or omission of a material fact in connection with the purchase or
sale of a covered security; or . . . that the defendant used or

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employed any manipulative or deceptive device or contrivance in
connection with the purchase or sale of a covered security.

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The parties agree that this case is a “covered class action” but dispute the applicability of Section

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77p(c) and whether the San Mateo Superior Court was a court of competent jurisdiction under

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Section 77v(a).

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In a decision on the nonappealability of district court remand orders, the Supreme Court
held the removal under Section 77p(c) is “limited to those [cases] precluded by the terms of

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subsection (b).” Kircher v. Putnam Funds Trust, 547 U.S. 633, 643 (2006). In essence, the Court

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found that Congress allowed removal only to avoid an end-run around the federal securities laws

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by cases asserting state-law claims. See id. at 636. The Court did not expressly address whether

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removal is limited to state-law claims, because Kircher involved only state-law claims. Still, the

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United States District Court
Northern District of California

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Court found that the purpose of Section 77p(c) is to ensure that a federal court could dismiss a

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state-law action precluded by Section 77p(b). Id. at 643-44. Clearly, then, only actions based on

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state law are removable under Section 77p(c). Since Seafarers alleges only ’33 Act claims,

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removal was improper.

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As the parties acknowledge, none of this is new or unexpected. The Ninth Circuit has

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recognized “the specific bar against removal of cases arising under the ’33 Act.” Luther v.

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Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1032 (9th Cir. 2008) (emphasis in

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original). More than twenty district courts in the Ninth Circuit have addressed this issue and

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remanded to state court every time. See, e.g., Book v. Pronai Therapeutics, Inc., 16-cv-7408-EJD,

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Dkt. No. 42 (N.D. Cal. June 12, 2017); Rivera v. Fitbit, Inc., 2016 WL 4013504 (N.D. Cal. July

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27, 2016); Plymouth Cnty. Ret. Sys. v. Model N, Inc., 2015 WL 65110 (N.D. Cal. Jan. 5, 2015).

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The Court sees no good reason to reconsider the question or depart from these consistent and

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considered decisions.

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Apigee’s suggestion that the grant of certiorari in Cyan Inc. v. Beaver Cnty. Emps.

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Retirement Fund, No. 15-1439, provides a reason is not well taken. The mere granting of the writ

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does not displace the well-developed case law on this issue. In the event the Supreme Court

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overturns the apple cart, so to speak, and holds that the Superior Court was not a court of

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competent jurisdiction for ’33 Act claims, Apigee presumably would be entitled to an immediate
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dismissal of the case by the state court. Or it might possibly seek removal again, though the Court

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expresses no opinion on that question here. There is no efficiency penalty imposed by remand,

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because Apigee will need to litigate the case in the meantime, whether here or in the Superior

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Court. And the work involved could be minor, because as the parties both note, another case

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bringing claims under the same statute on behalf of the same defendants for the same statements

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and omissions is already being litigated in San Mateo Superior Court. See Dkt. No. 3 at 1; Dkt.

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No. 10 at 3. One way or another, this case will go forward. Under current law, the proper forum

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for that is the state court.
CONCLUSION

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Because removal is barred by Section 77v(a), the Court remands the case to San Mateo

United States District Court
Northern District of California

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Superior Court. Since the case is not properly in federal court, a stay pending a decision in Cyan,

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Inc. is denied.

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IT IS SO ORDERED.
Dated: September 1, 2017

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JAMES DONATO
United States District Judge

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