- Court: U.S. Supreme Court Certiorari Granted
- Area(s) of Law: Preemption
- Date Filed: January 18, 2013
- Case #: 12-79
- Judge(s)/Court Below: Court Below: Court of Appeals for the Fifth Circuit, 675 F.3d 503 (2012)
- Full Text Opinion
Petitioners tried to remove the case to federal court, claiming that the Securities Litigation Uniform Standards Act (SLUSA) precluded the state action. SLUSA normally precludes a state-law class action lawsuit if the allegation is “a misrepresentation. . . in connection with the purchase or sale of a covered security.” 15 U.S.C §78bb(f)(1)(A). The Court of Appeals for the Fifth Circuit held that SLUSA did not preclude the state-law class action because the misrepresentation and subsequent sale of securities was only slightly connected to the alleged fraud.
The Supreme Court granted a writ of certiori to decide whether the a state-law class action suit is precluded by the Securities Litigation Uniform Standards Act (SLUSA) when the alleged fraud includes a misrepresentation made during a transaction of SLUSA-covered securities.
On appeal, Petitioners argue that there is a split in the circuits involving the preclusion of state-law class action in these cases. Petitioners ask the Supreme Court to adopt the position taken by the Courts of Appeals for the Eleventh and Second Circuits, which held that a misrepresentation was made “in connection with” a covered securities transaction if the fraud “necessarily involve[d]” or “depended on” an SLUSA covered-security.