Supreme Court rules state courts may hear certain securities class actions brought under federal law

Courts U.S. Supreme Court Securities Class Action

On March 20, the U.S. Supreme Court unanimously affirmed a California state appeals court decision in 2011, which ruled that state courts are permitted to hear certain securities class actions brought under federal law. Justice Kagan delivered the opinion. The decision resolves a question concerning whether the Securities Litigation Uniform Standards Act of 1998 (SLUSA), which made amendments to the Securities Act of 1933 (1933 Act), gave federal courts exclusive jurisdiction over covered class actions alleging only 1933 Act violations. SLUSA “does nothing to deprive state courts of their jurisdiction to decide class actions brought under the 1933 Act,” the Court stated when ruling that SLUSA allowed state courts concurrent jurisdiction over securities claims involving 50 or more plaintiffs. Rather, Section 77p of SLUSA “bars certain securities class actions based on state law,” but it “says nothing, and so does nothing, to deprive state courts of jurisdiction over class actions based on federal law.” And, the Court further opined, “Neither did SLUSA authorize removing such suits from state to federal court.”