Williams v. Bristol-Myers Squibb Company et al
MEMORANDUM OPINION AND ORDER re: 21 MOTION to Remand to State Court . filed by Tara Williams. In short, by its terms, CAFA does not provide for subject-matter jurisdiction over this case. As that was the sole basis on which Defendan ts removed the case to this Court, see Notice of Removal 1, it follows that the case must be and is remanded back to the state court from whence it came. The Clerk of Court is directed to remand this case back to New York Supreme Court, to terminate ECF No. 21, and to close the case on this Court's docket. SO ORDERED. (Signed by Judge Jesse M. Furman on 9/16/22) (yv) Transmission to Docket Assistant Clerk for processing.
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
TARA WILLIAMS, on behalf of herself and all others
BRISTOL-MYERS SQUIBB COMPANY et al.,
JESSE M. FURMAN, United States District Judge:
In this putative class action, Plaintiff Tara Williams sues Defendant Bristol-Myers Squibb
Company (“BMS”) and several of its directors and officers, alleging that the Registration
Statement they filed in connection with certain Contingent Value Rights (“CVRs”) was false and
misleading, in violation of the Securities Act of 1933 (the “1933 Act”), 15 U.S.C. § 77a et seq.
See ECF No. 1-2 (“Compl.”). Williams initiated the case in New York state court, but BMS
timely removed it to this Court, asserting federal subject-matter jurisdiction pursuant to the Class
Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d) et seq. See ECF No. 1 (“Notice of
Removal”), ¶¶ 16-26. Williams now moves, pursuant to 28 U.S.C. § 1447(c), to remand the case
back to state court, arguing that BMS removed the case in violation of 15 U.S.C. §77v(a), the
1933 Act’s “removal ban,” which generally prohibits removal of cases, such as this one, “arising
under” the Act. See ECF No. 21-1 (“Pl.’s Mem.”), at 1; see also Cyan, Inc. v. Beaver Cnty.
Emps. Ret. Fund, 138 S. Ct. 1061, 1075 (2018) (“[F]ederal-law suits like this one — alleging
only 1933 Act claims — are . . . subject to the 1933 Act’s removal ban.” (emphasis omitted)).
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The parties spill considerable ink on who bears the burden on this motion and whether or
when a later statute (here, CAFA) can override an earlier one (here, the 1933 Act). Compare
Pl.’s Mem. 5-14, with ECF No. 22 (“Defs.’ Opp’n), at 8-15. But these disputes are irrelevant for
the simple reason that the premise of all Defendants’ arguments — that CAFA provided for
removal — is wrong. Sure, the case meets the requirements of Section 1332(d)(2), which
provides for removal of certain class actions. But another provision of CAFA provides that
Section 1332(d)(2) “shall not apply to any class action that solely involves a claim . . .
concerning a covered security as defined under [section] 16(f)(3) of the Securities Act of 1933
and section 28(f)(5)(E) of the Securities Exchange Act of 1934.” 28 U.S.C. § 1332(d)(9)(A)
(citations omitted). Section 16(f)(3) of the 1933 Act defines a “covered security” to mean (with
one exception not relevant here) “a security that satisfies the standards for a covered security
specified in paragraph (1) or (2) of section 18(b) at the time during which it is alleged that the
misrepresentation, omission, or manipulative or deceptive conduct occurred.” 15 U.S.C.
§ 78bb(f)(5)(E). And Section 18(b), in turn, defines a covered security to mean “a security
designated as qualified for trading in the national market . . . that is listed, or authorized for
listing, on a national securities exchange.” Id. § 77r(b); see also Merrill Lynch, Pierce, Fenner
& Smith Inc. v. Dabit, 547 U.S. 71, 83 & n.9 (2006) (“A ‘covered security’ is one traded
nationally and listed on a regulated national exchange.”). The CVRs at issue here plainly fall
within the scope of this definition, as they were traded publicly on the New York Stock
Exchange. See Pl.’s Mem. 14; Compl. ¶ 10. It follows that the “covered security” exception
applies and that Defendants cannot claim federal jurisdiction under CAFA. See, e.g.,
Vanbecelaere v. YayYo, Inc., No. 20-CV-7997, 2020 WL 5362696 (C.D. Cal. Sept. 8, 2020)
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(finding that because the removed class actions “assert only 1933 Act claims concerning covered
securities, neither action is removable under CAFA”). 1
Defendants do not, and cannot, dispute that this case falls squarely within the plain
language of CAFA’s “covered security” exception. Nor do they cite a single case in which a
defendant has successfully removed a class action that, like this one, solely involves claims
regarding a covered security under the 1933 Act — a failure that is all the more notable given
that class actions alleging 1933 Act claims are regularly brought in state courts. See, e.g., St.
John v. Cloopen Grp. Holding Ltd., 171 N.Y.S.3d 893 (Table) (N.Y. Sup. Ct. Aug. 10, 2022);
Erie Cnty. Emps.’ Ret. Sys. v. NN, Inc., 170 N.Y.S.3d 15 (1st Dep’t May 31, 2022); City of
Warwick Mun. Emps. Pension Fund v. Rest. Brands Int'l Inc., 166 N.Y.S.3d 510 (Table) (N.Y.
Sup. Ct. May 2, 2022). Instead, Defendants rely primarily on the legislative history and
purported purpose of CAFA to argue that Congress did not actually intend to carve out all claims
concerning covered securities, but only claims concerning covered securities brought under state
law. See Defs.’ Opp’n 16-21. But, as the Supreme Court and Second Circuit have repeatedly
emphasized, “a court may engage with legislative history only when the plain meaning of a
provision is ambiguous.” Springfield Hosp., Inc. v. Guzman, 28 F.4th 403, 422 (2d Cir. 2022)
(emphasis added); see also Bostock v. Clayton Cnty., 140 S. Ct. 1731, 1749 (2020) (“This Court
has explained many times over many years that, when the meaning of the statute’s terms is plain,
our job is at an end.”). Where, as here, “the statutory language is unambiguous, any reliance on
CAFA contains another potentially pertinent exception, for “any class action that solely
involves a claim . . . that relates to the rights, duties (including fiduciary duties), and obligations
relating to or created by or pursuant to any security (as defined under section 2(a)(1) of the
Securities Act of 1933 and the regulations issued thereunder).” 28 U.S.C. § 1332(d)(9)(C)
(citation omitted). Given its conclusion that the “covered security” exception applies, the Court
need not and does not address the question of whether this exception applies as well.
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legislative history to reach a contrary result is precluded.” Springfield Hosp., 28 F.4th at 422;
accord Bostock, 140 S. Ct. at 1749 (“Legislative history, for those who take it into account, is
meant to clear up ambiguity, not create it.” (internal quotation marks omitted)); Novak v. Kasaks,
216 F.3d 300, 310 (2d Cir. 2000) (“Only if the text of the statute is not unambiguous do we turn
for guidance to legislative history and the purposes of the statute.”). Thus, Defendants’ reliance
on legislative history and purpose is misplaced.
In any event, the legislative history Defendants cite is not the silver bullet they believe it
to be. Defendants assert that the Senate Report with respect to CAFA reveals that the covered
securities exception was “meant to apply to ‘securities class actions covered by [the] Securities
Litigation Reform Act,’ that is, state law securities class actions for a ‘precipitous drop in the
value of its stock, based on fraud.’” Defs.’ Opp’n 16 (quoting S. Rep. No. 109-14, at 29, 50
(2005)) (emphasis added). But the key words “state law” appear nowhere in the legislative
history (let alone the statute). Moreover, in explaining the purpose of the covered securities
exception, the Senate Report states that, “[b]ecause Congress has previously enacted legislation
governing the adjudication of these claims, it is the Committee’s intent not to disturb the
carefully crafted framework for litigating in this context.” S. Rep. No. 109-14, at 50 (footnote
omitted). It is true that a footnote to that sentence in the Senate Report cites the Private
Securities Litigation Reform Act of 1995 (the “PSLRA”), Pub. L. 104-67, and the Securities
Litigation Uniform Standards Act of 1998 (“SLUSA”), Pub. L. 105-353, see S. Rep. No. 109-14,
at 50 n.137. But Congress passed each of those laws to build upon, and plug holes in, the
framework established by the 1933 Act and the Securities Exchange Act of 1934. See, e.g.,
Cyan, 138 S. Ct. at 1066-67 (explaining that “Congress passed the [PSLRA] principally to stem
‘perceived abuses of the class-action vehicle in litigation involving nationally traded securities,”
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and passed SLUSA “[t]o prevent plaintiffs from circumventing the [PSLRA]”); Lander v.
Hartford Life & Annuity Ins. Co., 251 F.3d 101, 111 (2d Cir. 2001) (considering “the larger
statutory context in which SLUSA resides, including [the] PSLRA . . . , the Securities Act of
1933, [and] the Securities Exchange Act of 1934”). In other words, the 1933 Act is not merely a
part of the “crafted framework for litigating in this context.” S. Rep. No. 109-14, at 50. It is the
very foundation on which that framework is built.
Nor do the cases cited by Defendants provide any reason to deviate from the plain
language of CAFA’s “covered security” exception. Defendants cite Estate of Pew v. Cardarelli,
527 F.3d 25 (2d Cir. 2008), in which the Second Circuit observed that the “covered security”
exception “carves out class actions for which jurisdiction exists elsewhere under federal law,
such as under [SLUSA], i.e., state-law fraud claims in connection with the purchase or sale of
securities traded on a national stock exchange.” Id. at 30; see Defs.’ Opp’n 16, 18. But that
observation is dicta and, in any event, cannot be read to hold that the exception is limited to
SLUSA class actions, as the Court’s own language (“such as”) makes plain that SLUSA is
merely cited as an example. 2 Meanwhile, the other cases cited by Defendants are easily
distinguished because they either did not involve “covered securities” within the meaning of the
statutory language, see Katz v. Geradi, 552 F.3d 558, 563 (7th Cir. 2009) (concluding that the
exception did not apply because the “[u]nits” at issue were not “trade[d] on a national securities
exchange, . . . senior to a traded security, or . . . issued by registered investment company”);
At least two district courts have relied on Cardarelli to suggest that the “covered
security” exception “could . . . be interpreted to apply only to the state law fraud claims which
were the subject of SLUSA.” Owen v. Elastos Found., 438 F. Supp. 3d 187, 193 n.4 (S.D.N.Y.
2020); accord Pinchasov v. Robinhood Fin., LLC, No. 20-CV-24897, 2021 WL 4991104, at *3
(S.D. Fla. Feb. 17, 2021). But neither court had occasion to decide the issue. Had they done so
despite the plain language of the statute, the Court would decline to follow them.
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Luther v. Countrywide Home Loans Servicing, LP, No. 07-CV-8165, 2008 WL 11339604, at *2
(C.D. Cal. Feb. 28, 2008) (noting that “the claims do not involve a ‘covered security’”), aff’d,
533 F.3d 1031 (9th Cir. 2008); New Jersey Carpenters Vacation Fund v. HarborView Mortg.
Loan Tr. 2006-4, 581 F. Supp. 2d 581, 583 (S.D.N.Y. 2008) (noting that the case, based on
claims related to certain mortgage-backed securities not traded or listed on any national
exchange, “does not involve ‘covered securities’”); Owen, 438 F. Supp. 3d at 187 (considering
claims based on “unregistered securities in the form of Elastos Foundation cryptocurrency
tokens,” which are not covered securities), or they did not “solely involve” claims concerning a
covered security, 28 U.S.C. § 1332(d)(9) (emphasis added); see, e.g., Coffey v. Ripple Labs Inc.,
333 F. Supp. 3d 952, 958 (N.D. Cal. 2018) (“Here, plaintiff alleges claims under both California
law and the Securities Act [of 1933].”). See generally YayYo, Inc., 2020 WL 5362696, at *3
(distinguishing these cases on the same grounds).
In short, by its terms, CAFA does not provide for subject-matter jurisdiction over this
case. As that was the sole basis on which Defendants removed the case to this Court, see Notice
of Removal 1, it follows that the case must be and is remanded back to the state court from
whence it came. 3 The Clerk of Court is directed to remand this case back to New York Supreme
Court, to terminate ECF No. 21, and to close the case on this Court’s docket.
Dated: September 19, 2022
New York, New York
JESSE M. FURMAN
United States District Judge
Although 28 U.S.C. § 1447(c) provides that “[a]n order remanding the case may require
payment of just costs and any actual expenses, including attorney fees, incurred as a result of the
removal,” Williams does not seek fees or costs in her motion.
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