29 Importantly, however, the statute does not expressly purport to deprive courts of jurisdiction under federal law, including the Securities Act.30 This means that litigants may continue to commence actions asserting Securities Act claims in state court without facing the SLUSA’s removal and preemption provisions. As the Court noted, however, such an option is not available for class actions asserting claims under the Exchange Act, which, under 15 U.S.C. § 78bb(f)(1), only may be filed in federal court.31 The lower federal courts, in contrast, have been focused not on which federal claims may be brought in state court, but on which state law claims may be brought in federal court. Under SLUSA, “covered class actions” involving “covered securities” that are filed in federal court, invoke state law, and allege that securities fraud are subject to dismissal.32 In Brink v. Raymond James & Associates, Inc.,33 the Eleventh Circuit held that SLUSA did not require the dismissal of a class action in federal court asserting claims for breach of contract and negligence under state law.

SLUSA is a federal statute adopted in 1998 that prohibited large securities class actions under state law including those alleging "a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security." 15 U.S.C. § 78bb(f)(1). In the decision, the Court determined that SLUSA's inapplicability to "uncovered securities" remains even where "defendants falsely told the victims that the uncovered securities were backed by covered securities."

Specifically, under SLUSA, “[n]o covered class action based upon the statutory or common law of any State . . . may be maintained in any State or Federal court by any private party” if that party alleges either “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security” or “that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security.” 15 U.S.C. § 78bb(f)(1) (emphasis added).SLUSA provides that a “single lawsuit” qualifies as a “covered class action” when:Damages are sought on behalf of more than 50 persons or prospective class members, and questions of law or fact common to those persons or members of the prospective class, without reference to issues of individualized reliance on an alleged misstatement or omission, predominate over any question affecting only individual persons or members; orone or more named parties seek to recover damages on a representative basis on behalf of themselves and other unnamed parties similarly situated, and questions of law or fact common to those persons or members of the prospective class predominate over any questions affecting only individual persons or members . . . .15 U.S.C. § 78bb(f)(5)(B)(i) (emphasis added).

at *5–6 (quoting Merrill Lynch v. Dabit, 547 U.S. 71, 81 (2006)).[3]Dabit, 547 U.S. at 82.[4]Fleming v. Charles Schwab Corp., 878 F.3d 1146, 1152 (9th Cir. 2017); see also 15 U.S.C. 78bb(f)(1). A “covered class action” is “a lawsuit in which damages are sought on behalf of more than 50 people” and a “covered security” is one that is “traded nationally and listed on a regulated national exchange.”

6Id. at 6-7.7 15 U.S.C. § 78bb(f).8 15 U.S.C. § 78bb(f)(5)(E).9Chadbourne, slip op., at 8.10Id.11Id.

The companion cases are Willis of Colorado Inc. et al. v. Troice et al. and Proskauer Rose LLP v. Troice et al.2Id. at 8-9.3Id. at 18-19.4Id. at 5.5Id. at 7, 18.6Id. at 6-7.7 15 U.S.C. § 78bb(f).8 15 U.S.C. § 78bb(f)(5)(E).

Based on Commonwealth’s representations, Broyles allowed Commonwealth to liquidate his individual investment assets and purchase interest in certain pooled-asset funds created and managed exclusively, which are collectively referred to as the CA Funds. Broyles alleged that CA Funds were comprised in part of subprime residential mortgage-backed securities. With the market downturn in 2007, Commonwealth implemented a plan to maintain and/or inflate the apparent value of the ownership interest in the CA Funds, which would be reflected on the investment statements. Broyles alleged that Commonwealth mismanaged his retirement funds, made misrepresentations of material fact, and violated Louisiana Blue Sky Law, LSA-R.S. 51:701, breached its contract, and breached its fiduciary duty among other things.The defendant, Cantor Fitzgerald, removed this action under 28 U.S.C. § 1441(b), federal question, based on the Securities Litigation Uniform Standards Act, 15 U.S.C. § 78bb (“SLUSA”) arguing that this case was a covered class action involving a covered security and thus, removable under § 78bb (f)(2). The defendants alternatively argued that removal was proper based on diversity jurisdiction under CAFA. Broyles filed a motion to remand.

Prior to this case, the investors brought another one, individually and as a putative class action, all based on the alleged unsuitability of the RCNs. The broker successfully argued that it was precluded by the Securities Litigation Uniform Standards Act (“SLUSA”), 15 U.S.C. § 78bb(f). Then, the investors filed, individually and for a purported class, a second lawsuit alleging that the broker breached a written contract by selling RCNs to inexperienced customers.

Whether the individual actions satisfied the definition of a “covered class action” in this case turned on whether, with respect to the prior class actions, the individual actions were “joined, consolidated, or otherwise proceed[ed] as a single action for any purpose.” 15 U.S.C. § 78bb(f)(5)(B)(ii)(II). Interpreting that statutory phrase, the court held that joinder, consolidation or proceeding as a single action requires actual coordination between the individual actions and the class action.

Taksir v. The Vanguard Group, ___ F.3d ___ (3d Cir. 2018). As relevant to this appeal, the Securities Litigation Uniform Standards Act of 1998, 15 U.S.C. §78bb (“SLUSA”), states that “[n]o covered class action based upon the statutory or common law of any State or subdivision thereof may be maintained in any State or Federal court by any party alleging — (A) a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security.” Plaintiffs sued Vanguard for allegedly misrepresenting the fee that defendant charged plaintiffs to buy and sell securities, asserting a Pennsylvania statutory claim and a breach of contract claim.Vanguard moved to dismiss the entire case, asserting an absolute bar under SLUSA, but the District Court granted that only as to the statutory claim, and that dismissal was not based on SLUSA.