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Cyan, Inc. v. Beaver Cty. Emples. Ret. Fund

Supreme Court of the United States

November 28, 2017, Argued; March 20, 2018, Decided

No. 15-1439.

Opinion

 [*1066]  Justice Kagan delivered the opinion of the Court.

 This case presents two questions about the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 112 Stat. 3227. First, did SLUSA strip state courts of jurisdiction over class actions alleging violations of only the Securities Act of 1933 (1933 Act), 48 Stat. 74, as amended, 15 U. S. C. §77a et seq.? And second, even if not, did SLUSA empower defendants to remove such actions from state to federal court? We answer both questions no.

In the wake [***10]  of the 1929 stock market crash, Congress enacted two laws, in successive years, to promote honest practices in the securities markets. The 1933 Act required companies offering securities to the public to make “full and fair disclosure” of relevant information. Pinter v. Dahl, 486 U. S. 622, 646, 108 S. Ct. 2063, 100 L. Ed. 2d 658 (1988). And to aid enforcement of those obligations, the statute created private rights of action. Congress authorized both federal and state courts to exercise jurisdiction over those private suits. See §22(a), 48 Stat. 86 (“The district courts of the United States . . . shall have jurisdiction[,] concurrent with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created by this title”). More unusually, Congress also barred the removal of such actions from state to federal court. Id., at 87 (“No case arising under this title and brought in any State court of competent jurisdiction shall be removed to any court of the United States”). So if a plaintiff chose to bring a 1933 Act suit in state court, the defendant could not change the forum.

Congress’s next foray, the Securities Exchange Act of 1934 (1934 Act), operated differently. See 48 Stat. 881, as amended, 15 U. S. C. §78a et seq. That statute regulated not the original issuance of [***11]  securities but instead all their subsequent trading, most commonly on national stock exchanges. See Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 752, 95 S. Ct. 1917, 44 L. Ed. 2d 539 (1975). The 1934 Act, this Court held, could also be enforced through private rights of action. See id., at 730, and n. 4, 95 S. Ct. 1917, 44 L. Ed. 2d 539. But Congress determined that all those suits should fall within the “exclusive jurisdiction” of the federal courts. §27, 48 Stat. 902-903. So a plaintiff could never go to state court to litigate a 1934 Act claim.

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138 S. Ct. 1061 *; 200 L. Ed. 2d 332 **; 2018 U.S. LEXIS 1912 ***; 86 U.S.L.W. 4131; Fed. Sec. L. Rep. (CCH) P100,056; 27 Fla. L. Weekly Fed. S 121; 2018 WL 1384564

CYAN, INC., et al., Petitioners v. BEAVER COUNTY EMPLOYEES RETIREMENT FUND, et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, FIRST APPELLATE DISTRICT

Cyan, Inc. v. Superior Court, 2016 Cal. LEXIS 1266 (Cal., Feb. 24, 2016)

Disposition: Affirmed.

CORE TERMS

class action, state court, excepting clause, federal court, suits, removal, state-law, modifier, class-action, provisions, state law, conforming, Reform Act, courts, federal law, damages, district court, amicus curiae, words, adjudicate, misconduct, deceptive, offering, traded, cases, stock, concurrent jurisdiction, definitions, state-court, questions

Securities Law, Jurisdiction, Subject Matter Jurisdiction, Initial Offerings, Civil Liability Considerations, Securities Litigation Reform & Standards, Federal Preemption, Governments, Legislation, Interpretation, Postoffering & Secondary Distributions, Federal Jurisdiction