Golosiy v. Tintri, Inc. et al

Filing 19

ORDER TO SHOW CAUSE Show Cause Response due by 11/3/2017. Signed by Judge Yvonne Gonzalez Rogers on 10/30/17. Plaintiff brief filed by 11/7/2017. (fs, COURT STAFF) (Filed on 10/30/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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VLADIMIR GOLOSIY,
Plaintiff,

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CASE NO. 17-cv-05876-YGR
ORDER TO SHOW CAUSE

vs.
TINTRI, INC., ET AL.,
Defendants.

United States District Court
Northern District of California

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On October 3, 2017, defendants Tintri, Inc., et al. removed the above-captioned securities

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class action alleging violations of 15 U.S.C. § 77. (Dkt. No. 1.) On October 18, 2017, this Court

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related the case sua sponte to Clayton v. Tintri, Inc., 17-cv-05683-YGR and Nurlybayev v. Tintri,

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Inc., et al, 4:17-cv-05684-YGR. (Dkt. No. 16.) Clayton and Nurlybayev were remanded to state

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court on October 27, 2017, for want of subject-matter jurisdiction pursuant to 15 U.S.C. § 77(v)(a)

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which states that “[e]xcept as provided in section 77p(c) of this title, no case arising under this

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subchapter and brought in any State court of competent jurisdiction shall be removed to any court

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of the United States.” For ease of reference, this Court’s order is attached hereto.

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Accordingly, by Friday, November 3, 2017, defendants are ORDERED TO SHOW CAUSE

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as to why the above-captioned case should not be remanded to the California Superior Court in

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and for San Mateo County for want of subject-matter jurisdiction based on the analysis set forth in

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the attached order. Failure to timely file shall be deemed an admission that remand is proper.

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Plaintiff shall file any brief by Tuesday, November 7, 2017.

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IT IS SO ORDERED

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Dated: October 30, 2017
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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LAURENCE CLAYTON,
Plaintiff,

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vs.
TINTRI, INC., ET AL.,
Defendants.

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United States District Court
Northern District of California

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RUSTEM NURLYBAYEV,

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CASE NO. 17-cv-05683-YGR

CASE NO. 17-cv-05684-YGR

Plaintiff,
ORDER REMANDING CASES TO STATE
COURT

vs.
TINTRI, INC., ET AL.,
Defendants.

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On October 3, 2017, defendants Tintri, Inc., et al. (collectively “Tintri”) removed the

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above-captioned securities class actions alleging violations of 15 U.S.C. § 77 (the “Securities

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Act”). (See Clayton v. Tintri, Inc., et al, 4:17-cv-05683-YGR (“Clayton”), Dkt. No. 1;

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Nurlybayev v. Tintri, Inc., et al, 4:17-cv-05684-YGR (“Nurlybayev”), Dkt. No. 1.) Plaintiffs filed

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timely motions to remand on October 10, 2017. (Clayton, Dkt. No. 14; Nurlybayev, Dkt. No. 11.)

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On October 11, 2017, this Court ordered defendants to show cause as to why the above-

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captioned cases should not be remanded to the California Superior Court in and for San Mateo

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County for want of subject-matter jurisdiction. (See Clayton, Dkt. No. 17; Nurlybayev, Dkt. No.

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12.) In this Court’s order to show cause, the Court indicated that “[b]ased on the authorities cited

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in each motion to remand the Court views the motions proper and intends to remand the above-

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captioned cases to the state court.” (Clayton, Dkt. No. 17 at 1; Nurlybayev, Dkt. No. 12 at 1.)

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Having carefully considered the pleadings and the papers submitted on the motion to remand, and

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the parties’ responses to the Court’s order to show cause, and for the reasons set forth below, the

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motions to remand are GRANTED.

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I.

LEGAL FRAMEWORK
A. Removal Jurisdiction

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A defendant may remove a civil action filed in state court if the action could have

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originally been filed in federal court. See 28 U.S.C. § 1441. A plaintiff may seek to have a case

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remanded to the state court from which it was removed if the district court lacks jurisdiction or if

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there is a defect in the removal procedure. 28 U.S.C. § 1447(c). The removal statutes are

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generally construed restrictively, so as to limit removal jurisdiction. See Shamrock Oil & Gas

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Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). Typically a “strong presumption” exists against

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finding removal jurisdiction. Gaus v. Miles Inc., 980 F.2d 564, 566 (9th Cir. 1992). The burden

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United States District Court
Northern District of California

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of establishing federal jurisdiction for purposes of removal is on the party seeking removal.

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Ibarra v. Manheim Inv., 775 F.3d 1193, 1199 (9th Cir. 2015); Rodriguez v. AT&T Mobility Servs.

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LLC, 728 F.3d 975, 977 (9th Cir. 2013). Doubts as to removability are generally resolved in favor

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of remanding the case to state court. See Matheson v. Progressive Specialty Ins. Co., 319 F.3d

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1089, 1090 (9th Cir. 2003).

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B. The Securities Act of 1933

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“The Securities Act of 1933, which imposes liability for omissions and misstatements in

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various securities-related communications, provides concurrent jurisdiction in state and federal

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courts over alleged violations of the Act. “ Luther v. Countrywide Home Loans Servicing LP, 533

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F.3d 1031, 1033 (9th Cir. 2008). However, Section 77v(a) of the Securities Act “strictly forbids

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the removal of cases brought in state court and asserting claims under the Act.” Id. (highlighting

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“the specific bar against removal of cases under the ‘33 Act” (emphasis in original)).

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Pursuant to Section 77v(a), “[e]xcept as provided in section 77p(c) of this title, no case

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arising under this subchapter and brought in any State court of competent jurisdiction shall be

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removed to any court of the United States.” A litany of courts in this district have characterized

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Section 77v(a) as an “anti-removal provision.” Seafarers Officers & Emps. Pension Plan v. Apigee

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Corp., No. 17-cv-04106-JD, 2017 U.S. Dist. LEXIS 142292, at *4 (N.D. Cal. Sept. 1, 2017); Elec.

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Workers Local #357 Pension & Health & Trs. v. Clovis Oncology, Inc., 185 F. Supp. 3d 1172,
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1178 (N.D. Cal. 2016); Buelow v. Alibaba Grp. Holding Ltd., No. 15-cv-05179-BLF, 2016 U.S.

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Dist. LEXIS 7444 (N.D. Cal. Jan. 20, 2016); City of Warren Police & Fire Ret. Sys. v. Revance

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Therapeutics, Inc., 125 F. Supp. 3d 917 (N.D. Cal. 2015); Plymouth Cty. Ret. Sys. v. Model N,

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Inc., No. 14-cv-04516-WHO, 2015 U.S. Dist. LEXIS 1104 (N.D. Cal. Jan. 5, 2015); Liu v. Xoom

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Corp., No. 15-cv-00602-LHK, 2015 U.S. Dist. LEXIS 82830 (N.D. Cal. June 25, 2015); Toth v.

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Envivo, Inc., No. C 12-5636 CW, 2013 U.S. Dist. LEXIS 147569, at *3 (N.D. Cal. Oct. 11, 2013);

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Cervantes v. Dickerson, No. 15-cv-3825-PJH, 2015 U.S. Dist. LEXIS 143390 (N.D. Cal. Oct. 21,

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2015); Desmarais v. Johnson, No. C 13-03666 WHA, 2013 U.S. Dist. LEXIS 153165, at *8-*9

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(N.D. Cal. Oct. 22, 2013); Harper v. Smart Techs Inc., No. C 11-5232 SBA, 2012 U.S. Dist.

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LEXIS 191130, at *13 (N.D. Cal. Sept. 28, 2012).
“The exception in Section 77p(c) states that ‘[a]ny covered class action brought in any

United States District Court
Northern District of California

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State court involving a covered security, as set forth in subsection [77p](b), shall be removable to

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the Federal district court for the district in which the action is pending, and shall be subject to

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subsection (b).’” Apigee, 2017 U.S. Dist. LEXIS 142292, at *1-2 (quoting 15 U.S.C. § 77p(c)). In

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turn, section 77p(b) “defines a set of cases that Congress determined cannot be brought in any

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court,” namely “covered class action[s] based upon the statutory or common law of any State or

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subdivision thereof .” Id. (quoting 15 U.S.C. § 77p(b)). The Supreme Court has indicated that

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removal under section 77p(c) is “limited to those [cases] precluded by the terms of subsection

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(b).” Kircher v. Putnam Funds Trust, 547 U.S. 633, 643 (2006). Put differently, removal is only

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proper where necessary to “avoid an end-run around the federal securities laws by cases asserting

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state-law claims.” Apigee, 2017 U.S. Dist. LEXIS 142292, at *3 (citing Kircher, 547 U.S. at 643-

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44).

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II.

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DISCUSSION
In light of the Ninth Circuit’s holding in Luther and copious case law in this district, the

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Court finds that removal is barred under Section 77v(a). “More than twenty district courts in the

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Ninth Circuit have addressed this issue and remanded to state court every time.” Apigee, 2017

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U.S. Dist. LEXIS 142292, at *3 (collecting cases). “The Court sees no good reason to reconsider

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the question or depart from these consistent and considered decisions.” Id.
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Defendants rely on two arguments as to why this Court should decline to remand the

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above-captioned cases at this juncture: First, the “Court should defer ruling on the Remand

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Motions until the Supreme Court’s imminent and dispositive decision in Cyan.” Second,

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defendant’s bylaws require removal. Defendant does not persuade.
As to the first argument, defendants highlight that the Supreme Court is scheduled to hear

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argument in a case addressing removal jurisdiction under the Securities Act on November 28,

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2017. See Cyan, Inc. v. Beaver Cty. Empl. Ret. Fund, No. 15-1439, 2017 WL 2742854 (granting

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certiorari, June 27, 2017). Judge Donato’s opinion in Apigee is instructive:

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The mere granting of the writ does not displace the well-developed case
law on this issue . . . . There is no efficiency penalty imposed by remand,
because [defendants] will need to litigate the case in the meantime,
whether here or in the Superior Court . . . . One way or another, this case
will go forward. Under current law, the proper forum for that is the state
court.

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United States District Court
Northern District of California

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Apigee, 2017 U.S. Dist. LEXIS 142292, at *4.
Defendants’ second argument, which is that Tintri’s bylaws require removal, fails because

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this argument is premised on defendants’ flawed assumption this Court has jurisdiction over the
above-captioned cases. For the reasons discussed above, this Court lacks jurisdiction over the
above-captioned cases. Further, defendants cite no authority for the proposition that corporate
bylaws can preempt federal securities law. Accordingly, the Court GRANTS plaintiffs’ motions to
remand the above-captioned cases.
III.

For the reasons discussed above, plaintiffs’ motions to REMAND the above captioned cases

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CONCLUSION

to state court are GRANTED.
The Clerk of the Court shall remand and close the file.

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IT IS SO ORDERED.

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Dated:
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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