Eminence Investors v. BNYM

The Class Action Fairness Act (“CAFA”) securities exception under 28 U.S.C. § 1453(d)(3) applies where all of the claims in the class action relate to certain rights, duties, or obligations created by, or pursuant to a security.

Eminence Investors, L.L.L.P (“Eminence”) brought suit against the Bank of New York Mellon (“Bank”) for breaching its fiduciary duty and gross negligence when managing Bonds issued by the Jensen Ranch Public Finance Authority. Eminence filed an amended complaint, added class allegations for 100 class members, and requesting compensatory damages. The Bank removed the case to federal court, and Eminence moved to remand the case, arguing that “removal was untimely and that the CAFA securities exception applies.” The district court agreed and remanded. On appeal, the Ninth Circuit underscored that the securities exception specifies that it will apply “if all of the claims . . . relate to certain rights, duties, or obligations; those rights, duties, or obligations must be related to or created by or pursuant to a security.” The panel noted that it considers jurisdictional defects sua sponte. The panel found that all of the causes of action were related to the “‘rights, duties, . . ., and obligations’” associated with the Bonds. The panel concluded that the securities exception must apply, especially since Eminence was clearly asserting its rights as a holder of the Bonds, rather than as a purchaser of the Bonds. Finally, the panel indicated that since all of Eminence’s causes of action qualify under the exception to hold that it does not apply in this context would run counter to the statute’s text, which expressly includes causes of action based on “fiduciary duties.” APPEAL DISMISSED.