Broker-Dealer Litigation - Greenberg Traurig LLP

Ins. Co., 378 F.Supp.2d 1124, 1133 (S.D. Iowa 2005). The court also rejected plaintiffs’
argument that their failure to expressly plead a material misrepresentation or omission rendered
SLUSA inapplicable, reasoning that to hold otherwise would be to elevate form over substance,
allowing plaintiffs to evade SLUSA through artful pleading.
Hanson v. Morgan Stanley Smith Barney, LLC, 762 F. Supp. 2d 1201 (C.D. Cal. 2011).
The district court dismissed a putative state law class action on behalf of defendant’s
employees and their immediate family members as precluded under the Securities Litigation
Uniform Standards Act of 1998 (“SLUSA”). Plaintiffs alleged defendant misrepresented its
obligations under securities industry rules related to its policy that required employees to
maintain personal investment accounts with the defendant brokerage firm, as well as “postage
and handling” fees charged in connection therewith. Plaintiffs argued that SLUSA did not apply
because they had not alleged that defendant made any material misrepresentations “in connection
with” the purchase or sale of a security and their state law claims did not require proof of any
misrepresentation. The court held that, in essence, plaintiffs alleged misrepresentations that
coincided with the purchase or sale of covered securities in their personal investment accounts
and plaintiffs could not circumvent SLUSA preclusion through artful pleading. Accordingly, the
court granted defendant’s motion to dismiss but granted plaintiffs leave to amend.
West Va. Laborers Trust Fund v. STEC Inc., 2011 WL 6156945 (C.D. Cal. Oct. 7, 2011).
The district court granted plaintiffs’ motion to remand their action alleging violations of
the 1933 Act, finding that the Securities Litigation Uniform Standards Act of 1998 did not
provide a right to remove covered class actions that were not based upon state law. In reaching
this conclusion - which was the antithesis of that reached by the court in Northumberland Cty.
Retirement Sys. v. GMX Resources, Inc., 2011 WL 5578963 (W.D. Okla. Nov. 16, 2011) – the
California Central District Court reasoned that the statutory language of subsection (c) providing
that “any covered class action” was removable to federal court, “as set forth in subsection (b),”
and “shall be subject to subsection (b)” meant that the right to removal was limited to those
actions precluded entirely under the language of subsection (b). This approach which first read
subsection (c) and then read subsection (b) as limiting its scope is in stark contrast to the
approach taken by the Oklahoma Western District Court, which read subsection (b) as merely
setting forth actions that were wholly precluded and then reading subsection (c) as providing a
basis for removal that was independent of the limited grounds for preclusion set forth in
subsection (b). In reaching this conclusion, the court relied on the dicta in Kircher v. Putnam
Funds Trust, 547 U.S. 633, 643-44 (2006), as well as the Ninth Circuit’s holdings in Luther v.
Countrywide Home Loans Serv. LP, 533 F.3d 1031, 1033 (9th Cir. 2008) and Madden v. Cowen
& Co., 576 F.3d 957, 965 (9th Cir. 2009).
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