Iron Workers District Council of New England Pension Fund v. MoneyGram International Inc. et al
Filing
28
MEMORANDUM OPINION re 8 motion to remand. Signed by Judge Leonard P. Stark on 9/2/16. (ntl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
IRON WORKERS DISTRICT COUNCIL OF
NEW ENGLAND PENSION FUND, individually
and on behalf of all others similarly situated,
Plaintiff,
C.A. No . 15-402-LPS
v.
MONEYGRAM INTERNATIONAL, INC .,
THOMAS H. LEE PARTNERS, L.P., PAMELA H.:
PATSLEY, W. ALEXANDER HOLMES , J.
COLEY CLARK, VICTOR W . DAHIR, ANTONIO:
0. GARZA, THOMAS H. HAGERTY, SETH W.
LA WRY, PEGGY VAUGHAN, GANESH RAO,
W. BRUCE TURNER, MERRILL LYNCH,
FENNER & SMITH IN CORPORA TED , WELLS
FARGO SECURITIES, LLC, GOLDMAN SACHS :
& CO., INC. , J.P . MORGAN SECURITIES, LLC,
MACQUARIE CAPITAL (USA) INC., and
WILLIAM BLAIR & COMP ANY, L.L.C. ,
Defendants.
Christine S. Azar, LABATON SUCHAROW LLP, Wilmington, DE.
Joel H. Bernstein, Ira A. Schochet, LABATON SUCHAROW LLP, New York, NY.
Attorneys for Plaintiff.
Kenneth J. Nachbar, John P. DiTomo, Shaun M . Kelly, MORRIS , NICHOLS, ARSHT &
TUNNELL LLP, Wilmington, DE.
John C. Wander, Andrew E. Jackson, Kimberly R. McCoy, VINSON & ELKINS L.L.P. , Dallas,
TX.
Attorneys for Defendants MoneyGram International, Inc. , Pamela H. Patsley, W.
Alexander Holmes, J. Coley Clark, Victor W . Dahir, Antonio 0 . Garza, Peggy Gaughan,
and W. Bruce Turner.
David E. Ross, Bradley R. Aronstam, ROSS ARONST AM & MORITZ LLP, Wilmington, DE.
Kevin B. Huff, Joshua D. Branson, KELLOGG, HUBER, HANSEN, TODD , EVANS & FIGEL
P.L.L.C., Washington, DC.
Attorneys for Defendants Thomas H. Lee Partners, L.P., Thomas H. Hagerty, Seth W.
Lawry, and Ganesh Rao.
Kevin G. Abrams, John M. Seaman, ABRAMS & BAYLISS LLP, Wilmington, DE.
Brian E. Pastuszenski, Daniel Roseser, GOODWIN PROCTER LLP, New York, NY.
Attorneys for Defendants Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells
Fargo Securities, LLC, Goldman Sachs & Co., J.P . Morgan Securities, LLC, Macquarie
Capital (USA) Inc. , and William Blair & Company, LLC.
MEMORANDUM OPINION
September 2, 2016
Wilmington, Delaware
L.~R, ~
STARK, U.S . District Judge:
Pending before the Court is the Motion to Remand to the Superior Court of Delaware
filed by Plaintiff Iron Workers District Council of New England ("Plaintiff') . (D.I. 8) ("Motion
to Remand") Briefing on the motion was completed on July 16, 2015. (D.I. 9, 12, 19) 1 The
Court heard argument on the motion on October 9, 2015. (See D.I. 25) ("Tr.") For the reasons
set forth below, the Court will deny the Motion to Remand.
I.
BACKGROUND
On April 15, 2015, Plaintiff filed a civil action in the Superior Court for the State of
Delaware against MoneyGram International, Inc. ("MoneyGram"), Thomas H. Lee Partners, L.P .
("THL"), Pamela H. Patsley, W. Alexander Holmes, J. Coley Clark, Victor W . Dahir, Antonio 0 .
Garza, Thomas H. Hagerty, Seth W . Lawry, Peggy Vaughan, Ganesh Rao, W . Bruce Turner,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, Goldman
Sachs & Co., Inc. , J.P. Morgan Securities, LLC, Macquarie Capital (USA) Inc., and William
Blair & Company, L.L.C. (collectively, "Defendants"). (See D.I. 9 at 2) In its Complaint,
Plaintiff alleges claims, on behalf of itself and a putative class, based on allegedly materially
false statements in a prospectus supplement associated with an offering for sale ofMoneyGram
stock, pursuant to Sections 11 , 12(a)(2), and 15 of the Securities Act of 1933 ("Securities Act"),
15 U.S.C. §§ 77k, 771 (a)(2), and 770. (See D.I. 1, Ex. C)
On May 19, 2015, Defendants filed a notice ofremoval, contending this Court has subject
matter jurisdiction under 28 U. S.C. § 1331 because Plaintiff s claims arise under federal law, and
1
0n April 8, 2016, Plaintiff filed a Notice of Supplemental Authority Regarding Motion
to Remand. (D.I. 26)
1
further that removal is proper under 28 U.S.C. § 1441. (D.I. 1 at iii! 8, 11) Defendants assert that
removal is proper because the Securities Litigation Uniform Standards Act's (" SLUSA")
amendments to Sections 16 and 22( a) of the Securities Act2 divested state courts of jurisdiction
over "covered class actions." (D .I. 1 if 9) Defendants further assert that under Section 16(c) of
the Securities Act, " [a]ny covered class action brought in any State court involving a covered
security, as set forth in subsection (b), shall be removable to the Federal district court for the
district in which the action is pending, and shall be subject to section (b)," 15 U.S .C. § 77p(c).
(D.I. 1 at iii! 8-14)
On June 18, 2015 , Plaintiff filed its Motion to Remand (D.I. 8), arguing that federal
courts do not have exclusive jurisdiction over "covered class actions." (D.I. 12 at 1-2) Instead,
in Plaintiff's view, Sections 16(b) and (c) of the Securities Act only provide for the removal of
covered class actions arising under state law. (See id.)
For the reasons below, the Court finds that neither Section 22(a) nor Section 16 of the
Securities Act (as amended)- bars removal of class actions arising under the Securities Act.
Accordingly, the Court will deny Plaintiff's motion.
II.
LEGAL STANDARDS
Whether an action was properly removed to federal court involves an analysis of the
availability of both this Court' s and the state court' s jurisdiction. With regard to federal
jurisdiction, 28 U.S .C. § 1441(a) provides : " [e]xcept as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of which the district courts of the United
2
SLUSA' s 1998 amendments to the Securities Act, see 112 Stat. 3227, came just three
years after Congress made significant changes to securities fraud litigation through the Private
Securities Litigation Reform Act ("PSLRA"), see 109 Stat. 737.
2
States have original jurisdiction, may be removed." State courts also have "inherent authority ...
to adjudicate claims" arising under federal law, but Congress retains the power to "give federal
courts exclusive jurisdiction" by "affirmatively divest[ing] state courts of their presumptively
concurrent jurisdiction." Yellow Freight Sys., Inc. v. Donnelly , 494 U.S. 820, 823 (1990)
(internal quotation marks omitted; emphasis added). The absence of statutory language that
"expressly confines jurisdiction to federal courts or ousts state courts of their presumptive
jurisdiction . .. is strong and arguably sufficient evidence that Congress had no such intent." Id.
(internal grammar omitted).
In this case, the existence ofthis Court' s removal jurisdiction and whether state courts
have concurrent jurisdiction both turn on interpretation of Sections 16 and 22(a), 15 U.S .C. §§
77v and 77p, as amended.
Section 22(a) provides:
The district courts of the United States and the United States courts
of any Territory shall have jurisdiction of offenses and violations
under this subchapter and under the rules and regulations
promulgated by the Commission in respect thereto, and, concurrent
with State and Territorial courts, except as provided in section 77p
of this title with respect to covered class actions, of all suits in
equity and actions at law brought to enforce any liability or duty
created by this subchapter. . . . Except as provided in section
77p(c) of this title, no case arising under this subchapter and
brought in any State court of competent jurisdiction shall be
removed to any court of the United States.
15 U.S.C. § 77v(a) (emphasis added to reflect SLUSA amendments). In other words, Section
22(a) provides for concurrent federal and state court jurisdiction over violations of the Securities
Act, (i) except for "covered class actions" "as provided in section 77p " and (ii) except that, "as
provided in section 77p( c)," there can be no removal to federal court of a Securities Act case
3
brought "in any State court of competent jurisdiction." Understanding the meaning of Section
22(a), then, requires turning to section 77p and 77p(c).
Section 77p- that is, Section 16 of the Securities Act, including Section 77p(c) (i.e. ,
Section 16(c)) - provides:
(b) Class action limitations
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(1 ) an untrue statement or omission of a material
fact in connection with the purchase or sale of a
covered security; or
(2) that the defendant used or employed any
manipulative or deceptive device or contrivance in
connection with the purchase or sale of a covered
security.
(c) Removal of covered class actions
Any covered class action brought in any State court involving a
covered security, as set forth in section (b), shall be removable to
the Federal district court for the district in which the action is
pending, and shall be subject to section (b ).
(f) Definitions
For purposes of this section, the following definitions shall apply:
(2) Covered class action
(A) In general
4
The term "covered class action"
means(i) any single lawsuit in which(I) damages are sought on
behalf of more than 50
persons or prospective class
members, and questions of
law or fact common to those
persons ... predominate ... ;
or
(II) one or more
named parties seek to
recover damages on a
representative basis ..
. , and questions of
law or fact common
to those persons .. .
predominate .. . ; or
(ii) any group of lawsuits filed in or
pending in the same court and
involving common questions oflaw
or fact, in which(I) damages are
sought on behalf of
more than 50 persons;
and
(II) the lawsuits ...
proceed as a single
action for any
purpose.
(3) Covered security
The term "covered security" means a security that
5
satisfies the standards for a covered security
specified in paragraph (1) or (2) of section 77r(b) of
this title at the time during which it is alleged that
the misrepresentation, omission, or manipulative or
deceptive conduct occurred . . ..
15 U. S.C. § 77p (emphasis added). Resolution of the pending motion turns on the parties'
competing interpretations of these provisions of Section 16(c).3
III.
DISCUSSION
The parties offer sharply contrasting positions as to how the applicable statutes should be
understood. Plaintiffs argument proceeds as follows : (i) Section 22(a) is a bar to removal of
Securities Act cases "[e]xcept as provided in section 77p(c) [i.e., Section 16(c)] of this title;"
(ii) Section 16(c), which does permit removal, applies only to "covered class action[ s] .. . as set
forth in section (b) [i.e., Section 16(b)];" and (iii) section (b ), permitting removal, only applies to
"covered class action[ s] [alleging fraud that are] based upon the statutory or common law of any
State." That is, the opportunity to remove a securities fraud-based class action is limited to such
actions that are based on state law, and does not apply to those that are based on violations of the
federal Securities Act.
In support of this view, Plaintiff relies on dicta in the Supreme Court' s decision in
Kircher v. Putnam Funds Trust, 547 U.S. 633 , 636 (2006). In Kircher, in the course of
3
Generally, there is a presumption against removal, and federal courts must resolve all
doubts in favor ofremand. See Carlyle Inv. Mgm t. LLC v. Moonmouth Co. SA, 779 F.3d 214,
218 (3d Cir. 2015) ("The federal removal statute, 28 U. S.C. § 1441 , is strictly construed,
requiring remand if any doubt exists over whether removal was proper."). The parties disagree as
to how strongly these general principles apply here. (Compare D.I. 9 at 4 with D.I. 12 at 8 n. 2;
see also Tr. at 25-26, 57-58) The Court has concluded that resolution of the Motion to Remand
turns entirely on questions of statutory interpretation and not at all on application of general
presumptions or resolution of factual disputes.
6
considering jurisdiction over covered class actions arising under state law, the Court made
statements in dicta about the scope of sections (b) and (c). Specifically, Kircher "read
authorization for the removal in section (c) . .. as confined to cases ' set forth in section (b) ." Id.
at 642 (quoting statute). Kircher went on to explain that federal district courts ' removal
jurisdiction to deal with removed cases is limited to those precluded by the terms of section (b). "
Id. at 643 . It continued: "If the action is not precluded [under section (b)] the federal court .. .
has no [removal] jurisdiction to touch the case on the merits, and the proper course is to remand
to the state court that can deal with it." Id. at 643-44. According to Plaintiff, because section (b)
applies only to "covered class action[ s] based upon the statutory or common law of any State or
subdivision thereof' - and does not apply to covered class actions based upon the federal
Securities Act - federal district courts have no removal jurisdiction in such cases and must
remand them to state court.
Plaintiff additionally points to Kircher's description of state courts as "equally competent
bod[ies ]" to federal courts. See id. at 646 ("A covered action is removable it if is precluded, and
a defendant can enlist the Federal Judiciary to decide preclusion, but a defendant can elect to
leave a case where the plaintiff filed it and trust the state court (an equally competent body) to
make the preclusion determination.") (emphasis added).
Plaintiff cites several district court cases (from outside the Third Circuit) adopting the
position it advocates here. See, e.g., Iron Workers Mid-South Pension Fund v. Terraform
Global, Inc., 2016 WL 827374 (N.D . Cal. Mar. 3, 2016); Patel v. Terraform Global, Inc., 2016
WL 827375 (N.D. Cal. Mar. 3, 2016); Badri v. Terraform Global, Inc., 2016 WL 827372 (N.D.
Cal. Mar. 3, 2016); Fraser v. Wuebbels, 2016 WL 827373 (N.D. Cal. Mar. 3, 2016); Rajasekaran
7
v. CytRx Corp. , 2014 WL 4330787, at *3 (C.D. Cal. Aug. 21, 2014); Niitsoo v. Alpha Natural
Res., Inc., 902 F. Supp. 2d 797, 805 (S.D. W. Va. 2012); W Va. Laborers Trust Fund v. STEC,
Inc., 2011WL6156945 (C.D. Cal. Oct. 7, 2011); see also Fortunato v. Akebia Therapeutics,
Inc.,_ F.3d _, 2016 WL 1734073, at *4 (D. Mass. Apr. 29, 2016) ("Courts across the nation
have come out both ways on this difficult, close question.").
Defendants counter with two alternative arguments for why the Court has removal
jurisdiction over this case. First, Defendants argue that SLUSA - by amending Section 22(a) to
add "except as provided in section 77p of this title with respect to covered class actions" divested state courts of concurrent jurisdiction over covered class actions under the Securities
Act, thereby giving federal courts exclusive jurisdiction over such suits. See 15 U.S .C. § 77v(a).
On this view, because state courts are divested of jurisdiction over covered class actions arising
under the Securities Act, it follows that state courts are not "courts of competent jurisdiction" for
these actions. Therefore, Section 22(a)'s removal bar (and exception to it) do not apply to
Securities Act actions. Instead, according to Defendants, the removal bar and its exception
prohibit removal of actions involving only individual claims based on the Securities Act (for
which the first sentence of Section 22( a) does not eliminate concurrent jurisdiction), allowing
removal of cases involving both individual claims based on the Securities Act and covered class
actions based on state law. (See Tr. at 52-53)
Alternatively, Defendants contend that even if state courts somehow remain "courts of
competent jurisdiction" over covered class actions arising under the Securities Act, such actions
come within Section 16(c) and are, therefore, exempted from the removal bar. On this view,
Section 16(c) - as limited by its reference to Section 16(b) - authorizes removal of any covered
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class action that alleges misstatements or omissions in connection with a covered security. See
15 U.S.C. § 77(p)(b)-(c).
Like Plaintiff, Defendants cite multiple district court decisions which have adopted their
position. See, e.g. , Knox v. Agria Corp., 613 F. Supp. 2d 419, 424 (S .D.N.Y. 2009); Pinto v.
Vonage Holdings Corp., 2007 WL 1381746, at *2 (D.N.J. May 7, 2007), Rovner v. Vonage
Holdings Corp., 2007 WL 446658, at *5 (D.N.J. February 7, 2007).
Having considered the parties' arguments, and the cases each side cites which have
adopted their competing positions, the Court agrees with Defendants' primary argument. The
Court concludes that Defendant' s principal position is consistent with the pertinent statutory
language and is further supported by the legislative history. Given the Court' s conclusions, it is
unnecessary to consider Defendants ' alternative basis for the Court to deny the Motion to
Remand.
Congress expressly eliminated state courts ' concurrent jurisdiction over covered class
actions arising under the Securities Act when it referred to the entirety of Section 16 - and not
just Sections (b) and (c) - in providing an exception to concurrent jurisdiction for covered class
actions. See 15 U.S.C. § 77v(a) ("except as provided in section 77p [i.e., Section 16(c)j of this
title with respect to covered class actions") (emphasis added). The Court agrees with Defendants
that concurrent jurisdiction was eliminated for all covered class actions, as they are defined in
Section 16(f), 15 U.S.C. § 77p(f), rather than only for those based on state law, which are the
subject of Section 16(b), 15 U.S.C. § 77p(b ). If Congress had wanted to refer only to Section
16(b)' s narrower definition of covered class actions brought under state law, it could have done
so, as it did with respect to Section 16(c) in Section 22(a)' s removal bar. Accordingly, state
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courts are not "courts of competent jurisdiction" over covered class actions based on the
Securities Act, and the removal bar found in Section 22(a) does not apply to this action.
This interpretation is consistent with the statutory text. It is also the only conclusion that
comports with the legislative history and stated purpose of the SLUSA. See generally King v.
Burwell, _ U.S._, 135 S. Ct. 2480, 2496 (2015) (" [I]n every case we must respect the role of
the Legislature, and take care not to undo what it has done. A fair reading oflegislation demands
a fair understanding of the legislative plan.").
Underlying SLUSA' s passage in 1998 was Congress ' s finding that
... in order to prevent certain State private securities class action
lawsuits alleging fraud from being used to frustrate the objectives
of [PSLRA], it is appropriate to enact national standards for
securities class action lawsuits involving nationally traded
securities, while preserving the appropriate enforcement powers of
State securities regulators and not changing the current treatment of
individual lawsuits.
P.L. 105-353 § 2, Nov. 3, 1998, 112 Stat. 3227. The PSLRA, which had been enacted three
years earlier than SLUSA, had sought "to prevent the filing of ' strike suits' - abusive class
actions" brought under the Securities Act. In re Lord Abbett Mut. Funds Fee Litig. , 553 F.3d
248, 250 (3d Cir. 2009). But the PSLRA had the "unintended consequence" of incentivizing
"members of the plaintiffs' bar to avoid the federal forum altogether." Merrill Ly nch, Pierce,
Fenner & Smith, Inc. v. Dabit, 547 U.S . 71 , 81-82 (2006). To address this situation, SLUSA
added Sections 16(b) and (c) to the Securities Act, providing for the removal of covered class
actions alleging "an untrue statement or omission of a material fact" or "any manipulative or
deceptive device or contrivance . .. in connection with the purchase or sale of a covered
security," and amending Section 22(a) of the Securities Act by cross-referencing Section 16 and
10
creating an exception to states ' concurrent jurisdiction over cases arising under the Securities
Act. See 15 U.S.C. § 77v.
Thus, when the Third Circuit considered the purpose of SLUSA in a case concerning
covered class actions arising under state law, it explained:
By 1998, Congress concluded that plaintiffs were circumventing
the requirements of the PSLRA by filing private securities class
actions in state rather than federal court. SLUSA was designed to
close this perceived loophole by authorizing the removal and
federal preemption of certain state court securities class actions.
As the Senate Banking Committee Report explained, Congress
envisioned a broad interpretation of SL USA to ensure the
uniform application offederal fraud standards.
Rowinski v. Salomon Smith Barney Inc., 398 F.3d 294, 298 (3d Cir. 2005) (emphasis added;
internal citation omitted). Barring removal of covered class actions arising under the Securities
Act, as Plaintiff argues is required, would not promote uniform application of federal fraud
standards.
To the Court' s knowledge, only one district court in this Circuit has considered the issue
now before the Court, and it reached the same conclusion as the Court does here. In Rovner v.
Vonage Holdings Corp, Judge Wolfson of the District ofNew Jersey undertook a thorough
analysis of the statutory language and legislative history of SLUSA, concluding "the plain
language of the statute, coupled with the legislative history and a healthy dose of common sense
compel the conclusion that this class action, which alleges only federal Securities Act claims,
was removable ." 2007 WL 446658 , at *5 (D.N.J. 2007). With respect to the statutory language,
Judge Wolfson explained:
Plaintiff contends that the cross-reference to section 77p( c) in the
removal provision of section 77v(a) insulates those class actions
11
raising strictly Securities Act claims because section 77p(b)
referenced in section 77(c) provides only for the preemption of
actions brought under state law. This Court cannot accept
Plaintiffs interpretation given the express language of section
77v(a), which bars removal of cases "arising under" the Securities
Act, "except as provided in section 77p(c)." As Defendants point
out, for the "arising under" exception to have meaning, it must
apply to some subset of cases that actually arise under the
Securities Act. Under Plaintiffs interpretation of section 77p(c),
the exception would only apply to claims arising under state law.
This cannot be what Congress intended as state law claims do not
"arise under" the Securities Act, but rather under state law. If
Congress had indeed intended to limit the exception to
non-removability to state law claims of the type described in
section 77p(b ), then that section read in conjunction with section
77p( c) accomplishes that purpose without any amendment to
section 77v(a).
Id. at *4; see also Pinto v. Vonage Holdings Corp., 2007 WL 1381746, at *2 (D.N.J. 2007)
(same district court agreeing with Rovner' s analysis).
Turning to legislative history, Rovner emphasizes that " [b )ecause the PSLRA failed to
achieve Congress ' s goal in curtailing meritless class actions alleging fraud, Congress enacted the
SLUSA to ' make[] Federal court the exclusive venue for securities class actions. "' 2007 WL
446658 , at *5 (citing Securities Litigation Uniform Standards Act: Hearing of the Finance and
Hazardous Materials Subcommittee of the House Commerce Committee, 105th Cong.); see also
Pinto, 2007 WL 1381746, at *2 (same district court agreeing with Rovner' s analysis).
A case from the Southern District of New York, Knox v. Agria Corp., also found that
SLUSA authorizes removal of covered class actions arising under the Securities Act:
Through the definitional lens of Section 16(±), Section 22(a)
reinforces the meaning of covered class action by referencing
Section 16. The reference to Section 16 does not add a substantive
limitation to the exception to concurrent jurisdiction in Section
22(a); rather, it simply points the reader to the definition of a
12
"covered class action." . .. The exception in the jurisdictional
provision of Section 22( a) exempts covered class actions raising
1933 Act claims from concurrent jurisdiction. By excluding these
covered class actions from concurrent state and federal jurisdiction,
federal courts alone have jurisdiction to hear them. After SLUSA,
state courts were no longer "court[ s] of competent jurisdiction" to
hear covered class actions raising 1933 Act claims. Thus, the
anti-removal provision does not apply to these covered class
actions asserting exclusively federal claims.
613 F. Supp. 2d 419, 424 (S.D.N.Y. 2009). Knox explained that its conclusion was "consistent
with SLUSA' s addition to the anti-removal provision. After SLUSA, covered class actions
asserting either 1933 Act claims or certain state law claims or both are removable, but individual
1933 Act claims are not subject to removal." Id. at 425 .
Moreover, like Rovner, Knox emphasized that its interpretation was
consistent with Congress ' s general remedial intent in passing
SLUSA: "to prevent certain State private securities class action
lawsuits alleging securities fraud from being used to frustrate the
objectives of the [PSLRA] ," and to make "federal court the
exclusive venue for class actions alleging fraud in the sale of
certain covered securities."
Id. (internal citations omitted).
Contrary to Plaintiffs' view, the Court' s interpretation of SLUSA is not inconsistent with
the Supreme Court' s dicta in Kircher v. Putnam Funds Trust, 547 U.S. 633 (2006), which
involved state law securities class actions removed from state court. See generally Knox, 613 F.
Supp. 2d at 425 ("The Supreme Court' s dicta in Kircher . .. is not to the contrary. In Kircher,
the Supreme Court was previewing the scope of Section 16(c) removal of covered class actions
raising state law claims, not the question of removal of covered class actions raising 193 3 Act
claims."). Because Kircher did not involve "covered class actions" raising Securities Act claims,
13
its statements cannot be read broadly as governing such actions, which are the type of actions
Plaintiff asserts here. See id.
Additionally, Kircher' s explanation that state courts are courts of competent jurisdiction
over preclusion decisions regarding covered class actions brought under state law is irrelevant to
the Court' s inquiry here. See 547 U.S. at 646 ("[N)othing in the Act gives the federal court
exclusive jurisdiction over the preclusion decision. A covered action is removable it if is
precluded, and a defendant can enlist the Federal Judiciary to decide preclusion, but a defendant
can elect to leave a case where the plaintiff filed it and trust the state court (an equally competent
body) to make the preclusion determination.") (internal citation omitted). The existence of
concurrent state court jurisdiction over preclusion issues in cases arising under the Securities Act
does not require that states also have concurrent jurisdiction over the merits of such cases.
The Court appreciates that Plaintiff has cited several district court cases that have
resolved essentially the same issue here with the opposite outcome. The Court simply finds these
cases - on which Plaintiff's position is based - not as persuasive as the contrary cases relied on
by Defendants. While the statutory language is such that one could reasonably reach the
conclusion that Plaintiff's desire, in this Court's view the most reasonable reading of the statute
is the one that, here, is fully consistent with the legislative history and the policy judgment of
Congress. That is the position advocated by Defendants and persuasively articulated by the cases
on which they rely.
In the end, the Court finds no reason to deviate from the thorough and well-reasoned
analyses in Rovner and Knox, which find that "covered class actions" arising under the Securities
Act are properly removed to federal court. SLUSA divested state courts of jurisdiction over
14
"covered class actions" under the Securities Act, thereby giving federal courts exclusive
jurisdiction over such suits. Therefore, state courts are divested of jurisdiction over "covered
class actions" under the Securities Act and, hence, are not "courts of competent jurisdiction" for
these actions. Thus, Section 22(a)' s removal bar thus does not apply to them. Accordingly, the
Court will deny Plaintiff's Motion to Remand.
IV.
CONCLUSION
An appropriate order will be entered.
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