Broker-Dealer Litigation - Greenberg Traurig LLP

found that such pleading tactics used in an attempt to evade the reach of SLUSA were
unavailing. The court further held that that SLUSA is not a preemption statute, but rather, “it
denies plaintiffs the right to use the class-action device to vindicate certain claims.”
Northumberland Cty. Ret. Sys. v. GMX Resources, Inc., 2011 WL 5578963 (W.D. Okla. Nov. 16,
2011).
The district court denied plaintiffs’ motion to remand their action alleging violations of
the Securities Act of 1933 because it found that the Securities Litigation Uniform Standards Act
of 1998 (“SLUSA”) conferred a right to remove the action. Plaintiffs argued that SLUSA’s §
77p(b) restriction on class actions applies only to state law claims and that the removal rights
conferred by § 77p(c) had to be read together with subsection (b) and, therefore, actions based on
Federal law could not be removed. The court disagreed, reasoning that while subsection (b)
prohibited a covered class action based upon state law being brought in either a state or federal
forum, the express language of subsection (c) providing that “any covered class action” was
removable to Federal court stood on its own. The court acknowledged a clear division of
authority among courts which had considered the issue. Interestingly, it noted that both parties
in the case and courts on both sides of the issue cited to Supreme Court dicta in Kircher v.
Putnam Funds Trust, 547 U.S. 633 (2006). Accordingly, the court looked to the legislative
history and found that Congress had an overarching goal of making the federal courts the
“exclusive venue” for the overwhelming preponderance of securities class actions. Viewing the
literal language of the statute together with the legislative history, the court concluded that
securities class actions were removable to federal court, regardless of whether they alleged
violations of state or federal law.
RGH Liquidating Trust v. Deloitte & Touche LLP, 955 N.E.2d 329 (N.Y. 2011).
In an action brought by a Chapter 11 bankruptcy liquidating trust, the New York Court of
Appeals reversed the lower court’s decision dismissing the action as precluded by the Securities
Litigation Uniform Standards Act of 1998 (“SLUSA”). The trust had brought the action on
behalf of the bankrupt company’s creditors and bondholders alleging that the defendant
accounting firm had committed fraud in connection with various accounting and actuarial
services rendered. In the lower court, defendant moved to dismiss, arguing in part that the trust’s
claims on behalf of bondholders were precluded by SLUSA. The trial court found that the trust
was a single entity within the meaning of SLUSA because it was formed for broader purposes
than bringing the fraud claims at issue and denied defendant’s motion to dismiss in that regard.
The appellate court disagreed, finding that the trust’s claims originally belonged to the individual
bondholders, were not being asserted on behalf of the bankruptcy’s estate and, thus, SLUSA
applied. The Court of Appeals disagreed with the appellate court and found that the trust was
one person within the meaning of SLUSA because the trust was the debtor’s successor. The
Court of Appeals relied upon legislative history to find that SLUSA was not intended to prevent
entities “duly authorized by law ... to seek damages on behalf of another person or entity.” Since
the trust was not formed only for the purpose of bringing the fraud claim or to otherwise
E.
E.
220