Facts
- Cyan, Inc. conducted an initial public offering of its shares.
- After Cyan’s share price declined, investors filed a putative class action in California state court.
- The complaint asserted only claims under the Securities Act of 1933, alleging materially misleading statements in offering documents.
- Cyan moved to dismiss for lack of subject-matter jurisdiction, arguing SLUSA stripped state courts of jurisdiction over “covered class actions” asserting only Securities Act claims and required such suits to proceed in federal court.
- Cyan also argued SLUSA permitted removal of such Securities Act class actions from state to federal court.
- The California trial court and court of appeal rejected Cyan’s position and allowed the case to proceed in state court.
- The Supreme Court granted review to resolve disagreement over SLUSA’s effect on state-court jurisdiction and removability for Securities Act class actions.
Issues
- Whether SLUSA’s amendments to the Securities Act of 1933 removed state-court subject-matter jurisdiction over “covered class actions” asserting only Securities Act claims.
- Whether SLUSA authorizes removal to federal court of Securities Act class actions filed in state court that plead only Securities Act claims.
Decision
- The Supreme Court affirmed, unanimously (9–0), in an opinion by Justice Kagan.
- State courts retain concurrent jurisdiction over covered class actions asserting only Securities Act of 1933 claims.
- SLUSA does not authorize removal of Securities Act–only class actions filed in state court.
Legal Principles
- The Securities Act of 1933 grants state and federal courts concurrent jurisdiction over actions enforcing liabilities created by the Act, and it generally bars removal of such actions filed in state court.
- SLUSA’s “except” clause in the Securities Act’s jurisdiction provision functions to resolve conflicts by giving effect to SLUSA’s provisions when they apply; it does not broadly strip state courts of jurisdiction over federal Securities Act class actions.
- SLUSA’s preclusion and removal provisions address certain covered class actions based on state law; they do not bar, and do not make removable, class actions asserting only federal Securities Act of 1933 claims.
Conclusion
The Court held that SLUSA left intact state courts’ concurrent jurisdiction over Securities Act of 1933 class actions and preserved the Act’s general rule that such suits, when filed in state court and pleading only Securities Act claims, are not removable to federal court.