Cyan, Inc. v. Beaver County Employees Retirement Fund

(Slip Opinion) OCTOBER TERM, 2017 1 Syllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. SUPREME COURT OF THE UNITED STATES Syllabus CYAN, INC., ET AL. v. BEAVER COUNTY EMPLOYEES RETIREMENT FUND ET AL. CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, FIRST APPELLATE DISTRICT No. 15–1439. Argued November 28, 2017—Decided March 20, 2018 In the wake of the 1929 stock market crash, Congress enacted two laws, in successive years, to promote honest practices in the securities markets. The Securities Act of 1933 (1933 Act) creates private rights of action to aid the enforcement of obligations pertaining to securities offerings. The Act authorizes both federal and state courts to exer- cise jurisdiction over those private suits and, more unusually, bars the removal of such suits from state to federal court. The Securities Exchange Act of 1934 (1934 Act), which regulates not the original is- suance of securities but all their subsequent trading, is also enforcea- ble through private rights of action. But all suits brought under the 1934 Act fall within the exclusive jurisdiction of the federal courts. In 1995, the Private Securities Litigation Reform Act (Reform Act) amended both Acts, in order to stem perceived abuses of the class- action vehicle in securities litigation. The Reform Act included both substantive reforms, applicable in state and federal court alike, and procedural reforms, applicable only in federal court. Rather than face these new obstacles, plaintiffs began filing securities class ac- tions under state law. To prevent this end run around the Reform Act, Congress passed the Securities Litigation Uniform Standards Act of 1998 (SLUSA), whose amendments to the 1933 Act are at issue in this case. As rele- vant here, those amendments include two operative provisions, two associated definitions, and two “conforming amendments.” First, 15 U. S. C. §77p(b) completely disallows (in both state and federal courts) “covered class actions” alleging dishonest practices “in connection with the purchase or sale of a covered security.” Accord- ing to SLUSA’s definitions, the term “covered class action” means a 2 CYAN, INC. v. BEAVER COUNTY EMPLOYEES RETIREMENT FUND Syllabus class action in which “damages are sought on behalf of more than 50 persons.” §77p(f)(2). And the term “covered security” refers to a se- curity listed on a national stock exchange. §77p(f)(3). Next, §77p(c) provides for the removal of certain class actions to federal court, where they are subject to dismissal. Finally, SLUSA’s “conforming amendments” add two new phrases to §77v(a), the 1933 Act’s juris- dictional provision. The first creates an exception to §77v(a)’s gen- eral removal bar through the language “[e]xcept as provided in sec- tion 77p(c).” The other—the key provision in this case—expresses a ...

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