we'll hear argument first this morning in case fourteen eleven thirty two merrill lynch pierce fenner and smith versus manning mr hacker mr chief justice in may please the court in language that differs distinctly from the arising under language section thirteen thirty one exchange act section twenty seven confers on the federal courts exclusive jurisdiction over all suits brought to enforce any duty created by the exchange act in its regulations that language estab a straightforward test the federal court has exclusive jurisdiction if the suit is brought to enforce exchange activities even if the suit is also brought up to enforce state law duties in particular the words brought to enforce focus on what the plaintiff itself wants the court to decide not on what the court would necessarily have to decide as thirteen thirty one has been read to require by applying the thirteen thirty one test the third circuit not only ignored section twenty seven distinct language but also its distinct policies which strongly disfavor state court adjudication of exchange activities and thus are exactly the opposite of the policies underlie the jackson pollock canvas this court has painted over section thirteen thirty one respondents however begin not with the necessity rule derived from thirteen thirty one but with a much more aggressive position is alleged in the complaint or what might be proven under a more generally worded complaint suppose the complaint in this case may no reference to an effect federal regulations bug i'm not that familiar with the rule in new jersey should be the same as the federal regulation with that fall within your test the way you put it at the very end the answer is no if the rule in new jersey is the same because it's the rule in new jersey then that would not be seeking to enforce in exchange activity the answer to the first part of your question is yes which is our test does look at the allegations on the face of the complaint is the complaint as pleaded seeking to enforce a duty created by the exchange act so they could amend the complaint and then we wouldn't be here because removal jurisdiction is tested at the time of removal if they amended their complaint now it wouldn't change the fact that there is federal jurisdiction based on the face of the complaint at the time of the removal of the court obligated to do a search of all federal federal statute under which the not thirteen thirty one but the specific federal statute that creates the duty or they just allege the duty most complaints i mean sure it depends on the jurisdiction but certainly in my bedside just a notice pleading on the federal standard they would almost certainly set forth  the statute under which their pleadings identifying the duty so that the court understands what the nature of the claim is that's very common precisely because you don't want the court to go looking around the cause of action especially after twamley and it ball but they but they don't have to do that as as i understand your case they don't have to explicitly refer to the federal statute that's that's right in the limited sense that i think that this court would recognize and has recognized an artful pleading doctrine where for example if you use this complaint as an example if they just literally whited out the lead of the references to reg show as such but were clearly unambiguously pleading violations of its requirements with the same capital l locate capital c close out in the federal district court it seems to me you have to sift through the complaint and see if any of the claimed causes of action under state law mirror a cause of action  that happens to exist under federal law without even the hint that they mention the federal statute well but that only goes to the question in an artful pleading situation which in this case doesn't present and would be you know the next third fourth fifth case down the road but certainly in the defendant you know who moves to seek jurisdiction the party seeking to establish jurisdiction would have to identify for the court the defendant's theory as to why the complaint seeks to enforce federal duty so it's not like the judge has to do it him or herself but all of these are hypothetical questions action here are under state law how is that seeking redress under federal law a couple of points first of all pan am was a well played a rule case the federal issue didn't appear on the face of the complaint so this court correctly applying th uncontroversially applying the well pretty complaint will read the complaint took it for what it said it looked at the operative paragraph swash right show the operative paragraph here at the close is very open but then turning to this complaint that the court looks at the causes of action each which obviously incorporates explicitly incorporates all of the prior conduct alleged as the basis for the violation of the cause of action and the the prior allegations and the cause of action themselves the cause of action selves are all about what the said there is no analog under new jersey law to regulation show nothing zero in new jersey law not a statute not a regulation not administrative guidance and not a common law in those letters if there's money lost certainly prohibits fraud so is are they doing anything more than saying we think this constitutes fraud they're saying what the violation would you say is the violation of federal law right what they're saying is fraud or is torturous interference or is negligence or is unjust  enrichment is the failure to get a locate the complaint isn't ambiguous about this the complaint explains what they locate is it's prescribed by regulation show so do they just have to expand their allegation and say ok we're not going to call it a locate but we think still you know short selling this and you're supposed to have it and you haven't borrowed this much blah blah blah in other words just creating a parallel duty which i understood you to tell justice alito that would be ok the using the shorthand that we've located does that is that all the the only difference well they're definitely not just using is to short and they're very explicit about it in defining a capital l that is the grab them and to use the phrase from this morning's decision that is the no matter how packaged that is addressing arising under under thirteen thirty one the court addressed exactly that situation it was precisely that situation the state of kentucky made it negligence per se to violate the safety appliances act and this court says and it used the exact phrasing that became section twenty seven when it said the state negligence per se statute incorporated the duties prescribed by the state we're seeking to enforce its own you're going to do you have to if  this court finds that the section here in section twenty seven is the same as a rise in under you lose no one no but for a different reason we do think it's actually necessary in the third circuit erred in that respect but that's not the question here the question here and we think it's perfectly clear that the arises under federal law but that a suit under that state standard that says it is a violation of state law to violate regs show for example of new jersey law said it is a violation it is a you know the statutory tort to violate regs show if that was the statu and you brought a suit under that statute you were seeing that it was seeking to enforce the duties created by reg show that's what this language is different from arising out of because like the answer deal is this question it would not necessarily be it would be only be a suit arising under if it was necessary but under this language it would be a federal court action because that suit would be a suit seeking to brought to enforce duties created by reg show and i donate and that's necessary for what because that's not the one we're talking about of thirteen thirty one this court has held since at least the smith case that a state an action brought under state law can be in state court even if it's a state cause of action if resolving a federal issue is necessary to resolve the state cause of action that's thirteen thirty one this statute is markedly and meaningfully different because it doesn't turn on whether it's a rising under what the cause of action is what it turns on is what was the suit brought to enforce that it was brought to enforce the duty created hacker just looking at the language i mean i understand your interpretation of it but it seems to me that there is you know just as good interpretation which says the opposite and then their words you know what does it mean to have for a suit to be brought to enforce a liability in the kind of circumstance you're talking about in the circumstance you're talking about the suit is brought to enforce state law now it's true that state law and i look to federal law state law incorporate federal law in certain ways state law might have some kind of relationship to federal law but what's the suit brought to enforce the suit is brought to enforce state law a couple of points so remember the statute doesn't say is the suit brought to enforce state law stole my abilities it's also not said said brought in for state liability it says brought to enforce state liability or brought to enforce liabilities or duties created by the act if it were liabilities alone this might be a different case because the exchange act creates liability by its own terms and an action brought to enforce exchange act liabilities basically remedies would be as i say that might well be a case that has would only be brought under the exchange act but when they added the words or duties clearly they're addressing the same kind of problem that this court addressed in more when the states was an emerging issue at the time when states were incorporating explicitly not just generally looking to but explicitly corporation federal duties in the state law and plaintiffs are bringing state cause of action for negligence saying that you would say that's a duty created under this chapter right created the regs show in the situations that might be why isn't it created under state law as well because the the cause of action is created state law state law says it is a violation of state law to violate a duty created by federal law state law doesn't itself care about the content it's incorporating it saying we leave to the congress we leave to the f c c whatever the regulatory body is the content of the law and we just say that you can have a cause of action under our state procedures if you violate duties created by federal law that's what i think we've got sort of ambiguous in the statute let's assume you have a state statute and a federal statute both of which impose the same duty ok and someone brings a suit only under the state's statute does not not even mention the federal statute as i understand your case you would say that that person is sewing to enforce a duty under federal law i would not say that i would say that person is seeking to enforce the duty that state law creates not the one the federal law creates and i agree with you argument is not if there are literally parallel state duties the state says if new jersey tomorrow or more importantly years ago had promulgated its own regs show and had its own locate requirements its own close out requirements and there was a state cause of action violated the new jersey regs show and you caused us injury we wouldn't be here there might be a preemption argument that the state can't do that but that would not trigger section twenty seven jurisdiction because you're clearly sick so you as have a duty you would have no case if new jersey passed a law saying as a matter of new jersey law we here by adopting you know everything under the securities exchange act including in particular regulation as a joe that is state law we're we're we're following the federal law because you know we think it's easier to do that than right up our own securities code that's fine with you know that's a different case because they're the new jersey new jersey isn't making its own politically accountable decision yes is it not it's saying it's saying wherever it says federal law as we just strike that and put in new jersey law they can do that they can adopt that whatever laws of sorts of law they want even though it's precisely the same at the same level of detail you have to say under your theory that if you  under the new jersey law that's ok i don't think so your honor because they're new jersey is leaving to congress and the f c c to decide what the law is the duties are always under that structure the duties are always created by federal law and then incorporated by the law that says we'll do whatever the federal law says right that's the duty as created by the f c c the by the exchange act it's regulation of the duty under new jersey law is passed by whatever statute they enact saying we must to we want to do well as well as a matter of new jersey law but they can do it separate they can establish their own independent duties but when they consciously choose not to create an independent duty but to say that we're going to in flint literally in the hypothetical you're adopting they're literally saying we're incorporating the federal duty and it has to make sure as new jersey law right but that still seeking an action under that law would still be seeking to enforce the duty created by the exchange act and it's regulations you know albeit incorporated into state law whether different then you're going to be in a situation where the judge is going to have to try to figure out whether state law exactly mimics federal law or whether there are minor that we are just in hyper but incorporating the federal standard then you have the duty is created by the federal standard to be comes in forcible under state law but the duty still is created by federal law states make other clear interpretation of a provision of the the new jersey uniform securities act with respect to short selling this is what it means and without ever referring to reg show adopt basically the same or exactly the same rule that is incorporated in that regulation would you say that then and at that an action under that provision of the new jersey securities act would be one seeking to enforce a federal duty and i think that would be a different case where the state is saying you know this seems like a pretty good rule we're going to drop it because we like it independently as our own rule and in any future case they might do something different as happened in the very new jersey case the third psych circuit cited for the proposition that new jersey law sometimes different differs from federal law it is seems to me what i hear the complaint i'm sorry the only one who benefits from that are are printing companies you say they can't say we have regulation s h o is new jersey law they have to actually go ahead and reprint everything that as a cio says and then it's ok well no it's definitely is a politically accountable choice of the new jersey you know wants to go to it's the the people of new jersey and all the interested parties and say we think we don't like the way the f c c has balanced the many competing interests involved in regulating the market for in this case the electronic market and short selling in the united states we want to done differently new jersey and all of the competing interest parties can come and talk to new jersey about whether it should they should do it that way or not what if what if the state law says and i'm not sure this one doesn't one of the state law says we are adopting the disposition the current regulation in you know in two thousand and fifteen all right that's all so with that regulation change and federal law changes state law would not change what happens in that situation i mean i think that would be an unusual way for a court to conduct itself but it won't work he did anyone say well i've never seen a court record likes this regulation it doesn't know what this cookie s e c is going to do in the future this regulation is ok so they put that they put that into state law i think that's right if the court said and made it clear that this is we find as a matter of new jersey fraud that under new jersey fraud law if you don't get a locate in accordance with the c c requirements  all of that right ok now that might be something you can object to at trial if they try to say state law is the same as federal law and can't prove it you then appeal that decision if it's wrong is state laws different you prove it's different but i'm just not sure what that has to do with the well pleaded complaint that they are saying this is a duty that arises on to the theft and fraud provisions of new jersey's uniform security sex right you won't see that sentence anywhere in this complaint it doesn't exist what this complaint says is in paragraph twenty four it says that illegal short selling is short selling that violates securities laws and regulations that's why they're complaining about short selling to find something that violently surely i mean elation current regulations right and you just told me that if the state law applies only to the current regulations it is not adopting federal law right so this complaint is referring to the current regulation how do you know it's referring to that regulation as it may change in the future it wants were for what's referred to past conduct to it saying what you did injured us because you violated the regulation as it exists today you committed this illegal short selling you didn't get locates as they thankfully the f c c would require was that regulation is a good regulation and it ought to be new jersey law but if that regulation changes we don't say that it ought to be new jersey let me try to exercise if you eliminated all of this suggests that you could just as easily eliminate all of the references to reg show all of the references to capital l locate app capital c close out and the complaint would just perceive the same way it would and we know that that's not true because they've got no source if they have a complaint like that that just says this is fraud this is tortious interference we're unhappy about it because you didn't short sell the way we whether what they've done violates regulation show it would say that anywhere in the complaint not even in paragraph twenty four which you cited i read his background and who say anything about it but isn't necessary is wasn't and we're not deciding that so since we're not deciding it we have to assume that it is not necessary correct ok if we assume it is not necessary if we assume that the conditions for thirty and thirty one are not m and therefore it doesn't get into fed federal court for that reason why would anyone want a case like that in federal court when the states want to adjudicate it because congress wanted in federal court but what is the evidence that congress wanted the language of the state and all you're left  you say read the language of the statute don't look to the purpose don't look to surround it don't look to the surrounding rules of law which actually make very little necessity for this to be in federal court and don't look anything else you have language i'm not saying you know we don't know and i put i couldn't disagree with you more ok go ahead the language first of all i think is unambiguous in our favor but we absolutely believe the objectives and purpose are uniformly in our favor because what you know if nothing else about section the same argument would apply to those that those are all similarly narrowly prescribe statutes and as the public citizen itself indicates was redacted mostly in the new deal era when we know if anything congress was looking to expand opportunities for players to get role case and the footnote that the other side relies on referring to arising out it was simply saying the fact that they used different language doesn't change the fact well plea to complaint rule applies as it does on its face brought to enforce requires the court to look at the service thank you mr chief justice and may please the court it is well settled that jurisdictional statutes will not be interpreted to intrude on state judicial authority in less congress makes its intention clear petitioners ask this court to interpret section twenty seven of the exchange act to strip state courts have jurisdiction to decide state law created claims when such claims have already fail there is no indication that congress clearly intended such an unprecedented intrusion on state court authority why do you think mr stress this different language was used in these and statutes so m best answer is to mirror essentially what army public citizen in the state securities regulators have said which is at the time that certainly the thirty three act and thirty four act were passed the federal question statute had an amount of controversy requirement now i understand that my friend mr hacker points out in his reply that there's a current statute twenty eight u s c thirteen thirty seven that was enacted in one nine hundred forty eight it had a predecessor statute twenty eight u s c forty one eight that was enacted in one thousand and eleven that removed the amount of controversy requirement for cases involving interstate commerce and one would think because it's the case today that that would apply to securities but as best we can understand from our research in the years that are relevant ninety nine eleven to the time of the thirty three act and thirty four act it was not interpreted that way so there was essentially an a mountain controversy requirement for securit least three thousand something like that well even less if we're attempting to ascertain why congress would choose to use this language instead of other language i would submit that any amount of controversy requirement if they felt they didn't want that for purposes of federally created claims that this is going to segue into my first point we think the most natural reading of section twenty seven is as a creation test and so that's what three thousand dollars probably a lot of money  i'm sorry three thousand dollars is probably a lot of money today well i don't i think i would you like to have three thousand one hundred thirty four dollars if i may i don't want to get into any debate yes or no question federal court but why that doesn't explain the use of the word exclusive none of it i think it does so so this particular statutory language is found in eleven statutes in some of them they use the term exclusive jurisdiction and in others they did not what follows exclusive jurisdiction is essentially a creation task which i'll explain in a moment the fact that they chose to confer exclusive jurisdiction here just means that when there was a cause of action that was created by the exchange act they wanted it to be in federal court so let me get to the spirit of the answer which is why i think that there's good reason to believe that exclusive jurisdiction in this statute is limited to cause of action that are created by the act itself so my friend mr hacker concedes i think reasonably that if someone sues under a parallel state duty that that is only a duty under so that's a lawsuit that's brought to enforce only a duty under state law i was pleased to hear that because i think that is the most natural reading of the language our position is that the result is no different if a state accomplishes the same thing through the expedient of incorporating or referencing federal law and i want to be clear on this point our position is not the plain meaning of the statute com that interpretation i'll be the first to say that one could theoretically read the language brought to enforce a liability or duty created by the actor it's regulations the way that my my friend suggest one could but i think it starts to break down and not really make much sense if we look at what's missing from section twenty seven here's what's missing there is no federal jurisdiction over exchange act owner which means that state court i'm sorry over so that means that congress was willing to have state courts adjudicate claims that were created by the act itself there is no exclusive jurisdiction over exchange act offenses and most notably that would include preemption and in the minor run preemption cases and only get to this in a little bit not only is the state court determining what the exchange access is but it doing it for the purpose of assessing whether there's a conflict between state and federal law it's really important that those two things are missing from the stature because i find it very difficult to believe that a congress that was not concerned about state courts adjudicating those cases somehow would be very concerned about a state court adjudicating a state law created cause of claims that they did not want you to cave in state court correct i agree all right so you seem to be saying that the category of crimes that did not want you to cave in state court are only  those in which the plaintiff is asking for the enforcement of a federal duty and there is no comparable state duty at that time and the state court is unwilling to recognize a comparable state duty in the context of that litigation so these are sensually cases in which the state is basically hostile to the federal duty and those are the only cases that congress did not want to have adjudicated in state court and i am i right have i gone wrong in that i don't think you've gone wrong but i think that that position is firmly supported by history if we look at the context of let me explain what i mean so at the time the exchange act was passed there were only three express rights of action and they were very minor there was no private right of action under tended there was a market manipulation of a nine a short swing profits and  third one that i don't recall so if we look at the context we have a history of states regulating securities we have a parallel provision in the exchange acts section twenty eight that this court in ma to acknowledge express y indorsed the fact that states were going to continue to regulate so i think the congress the past thirty four act was thinking the following they were thinking we have a very narrow window of claims that are created by this act and for those nine a straightforward market manipulation claim for for for a wash sales we don't want state courts adjudicating those because those are very technical we want to exclusive jurisdiction over those claims and i occurred but i won't resist the hypothetical i think i think the hypothetical you're asking reveals the most difficult part of our plain text interpretation which is in assume a state statute that seeks to enjoin what is only a federally created dude i don't know that that would come up but it could theoretically our position would be that that is still best interpreted as a lawsuit brought to enforce a duty or a liability created by state law because the state has decided by reference to have the duty being don't violate the federal standard that you would get the injunction for and i think in the real world what we're seeing are at best states that are creating parallel provisions that incorporate duties and liabilities merely because it's an expedient and so i think that i guessed before i move on you know it ministry of simplicity is a is a major virtu court has said that before without any strong evidence to interpret section twenty seven as anything other than a creation test i think that's the best result and i ask you to describe your complaint in other words mr hacker has a certain characterization or description of your complaint and and then the rule played in your complaint by that regulation so have you had to describe your complaint and particularly what role does this regulation play in your claims under state law i understand justice kagan so i think there's been some misunderstanding of what we're alleging we are not relying on the red show for any theory of liability and here's why we're bringing a straight up market manipulation claim and what that means is we're suggesting that the naked short selling that happened was not just a technical infraction not just a tech violation a retro but was done with the purpose of depressing sales price s a price of the security that's an analog to a ten b five action and so if we look at paragraph thirty of our complaint this is on pages fifty three eight fifty four ed we make clear that the relevant provision of new jersey law is substantially similar to the federal securities law we're referring to ten b when the uniform securities act was promulgated in one nine hundred fifty six and section one hundred one which new jersey adopted mirrors ten b if you're going to bring a claim under federal law you're not suing under reg manipulative short selling existed well before reg show it's a standard you're basically saying someone is taking a short position they're injecting inaccurate information into the market because they have taken a position that's larger than normal supply and demand would would bear given the size of the public float they've chosen to do that because they think it's going to drive prices down and they're going to make more money you don't need to prove all of that to get a violation of retro reg show with an act by the u s you see because this was a problem what reg show does is it allows the f c c to take an foresman action and to find people that engage in conduct that is likely to constitute market manipulation the point of it is not to punish market manipulation the point is to try and stop people from doing it in the first place to be noted to put it different mean there are parts of your complaint that go in much greater detail and focus on the federal rules like thirty three says you know as set forth in detail here in the defendants violated the trading rules and regulations requiring that they actually live or shares they owe to the d t c see to settle short sale transactions that's a duty imposed by federal law this is a very important point mr chief justice we mention this in detail for a very specific reason it has nothing to do with our theory of liability it was us attempting to get in front of the inevitable preemption defense which happens the short selling cases get litigated and they get litigated in state court a very significant one is on page twenty five of the blue brief note it's in california state for overstock in these cases the largest defense that's asserted in state court is we complied with the regs show we complied with the federal rules so if state law gives you a remedy it must be conflict preemptive so well along these lines to look at count one one hundred day of appendix to the petition each defendant one one one hundred each defendant enterprise owed plaintiffs a duty of care in their capacity as gatekeepers of the market each to pay and each defendant enterprise breached the duty of care that they owed to the plaintiffs to report suspicious transactions and they did short breached to do this is a claim for negligence requires a breach of a duty and you say the duty that they breached is a duty that's created by regs show i would characterize it a little bit differently here is what i would say i would say that if market manipulation requires that someone do something that injects inaccurate or artificial information into the market that's the theory of a market manipulation claim you're messing with the natural supply and demand forces of course any theory of market manipulation including under state law would have to reference and talk about the ground because the ground rules that are set up by the f c c are what set up the markets normal expectations of traditional supply and demand forces so it would really tie our hands to say that any time you talk about someone doing something that is inconsistent with the regulatory scheme you can't bring a state law claim that is truly a state law claim because if you're trying to allege that there is a saying they breached the duty of care that they owed to the plaintiffs to report suspicious transactions of naked short sales that's the allegation under negligence what duty of kid a duty of care imposed by new jersey law what new jersey law is it a duty of care imposed by a show it's a duty of care just as prior imposed by new p let's go through this let's suppose for present purposes that as i read through your complaint i find words if not the words we just said but similar words summer and ice think think but there is nothing under new jersey law unless new jersey picks up show right why isn't that good enough on that matter to get them into federal court in a rising under cases ok so if we're out of the world and you've rejected my creation argument i'm going out for arguing because i'm really concerned about i can't clarify in my mind the difference between somebody being thrown out in the rising under case and yet getting back in under section twenty seven that's what doesn't make too much sense to me if this is necessary the federal issue is necessary for the plaintiffs to win is a rising under jurisdiction then i don't know what to do with the word exclusive but all that seems not being the case well then if it is not sufficient to get in under a rising under why in heaven's name should it be to get in under twenty seven well i mean obviously i'm not going to  resist but what i we're not going to resist my conclusion but you see it's i need clarification because i'm not sure i've thought it through correct so here is my best attempt to clarify i think let me throw away the fax for a minute in other words i think there's no theory that we pled that satisfies even their standard but let me throw that away let me assume the best case for them that we've relied on federal duties and try and put it through the legal question that you've asked i think one way to resolve this is to take the simple approach which is what i advocated first and to say look if it's just in forcing a state law cause of action even if it incorporates federal law that's all twenty seven does and you're done i understand the premise of your question is let's say you' rejected that and we're thinking you know what maybe some state law claims fall within the sweep of section twenty seven how do we think about this here's what i would say i would say that whether this is in a rising under statute or not it has to incorporate what i'll call a federal necessity requirement because that's a longstanding rule that's part and parcel of the well pleaded complaint and if you look at pan american for example let's say i accept what my friend mr hacker says that it's just they weren't saying in the rising under statute they apply the court applied well put a complaint rule without looking at the text of the statute at all it's a sensible thing to say that when federal jurisdiction over state law claims it's predicated on the federal character there being a federal issue that we use the well that a complaint rule it's also similarly sensible that the well plea to complaint rule would have an adjunct which is federal necessity and that's precisely what the court said in christianson in our court the court well play the complaint rule focuses on claims not theories and just because an element that the central to a particular theory might be governed by federal patent law does not mean the entire monopolization claim arises under patent law now to the second half of your question which is well how does that how do they map together well then the question becomes how did we allegedly use this federal the do we use it in our rico claim as one of several predicate acts that's all that's ever been alleged in till today i was surprised to hear the suggestion that why should i since until today in till the briefing in this court in the lower court the suggestion was that we relied on a federal duty because it was somehow being snuck in as an additional predicate of our rico claim i with my problem ok i'm looking for a way to see if you really have to answer the all these difficult questions have been raised which are pretty tough and i was thinking look here's what you look to judge see if it the necessary thing and if so whether it falls under thirteen thirty one ok if it's in a rising under claim under thirteen thirty one kick it out of state court and send it to federal court but if it isn't arising on your client because it isn't necessary to winning for the plaintiff forget about it keep it in state court i don't care whether it's don't don't worry about whether the stake passed it this way or the state legislature reference it by numbers or references by don't worry about all that stuff just decide one question so does it meet the four criteria for arising under if so pick it out if not keep it so just right here might hear my thoughts on this i think the thirteen thirty one still exists thirty and thirty one is powerful and we can call it jackson pollock all we want but it's been adopted it exists and it's applied by courts so i think that there's a very small distinction between incorporating it here and not there is a distinction exclusivity versus versus not exclusive and i understand that but my point is the simplest way out of this morass i think is to say we want to simple administrators will rule and we only look there's two and i don't really need to advocate one as opposed to the other because we win under under both but i'll throw them out there one is to say we don't have to call this or an a rising under statute we don't have to reach the difficult question of well that w pan american was holding did they in did congress intend to in cappy incorporate thirteen thirty one wholesale and all of its elements there's a simple way out which is to say the notion of federal necessity this is the one question that you were saying does not in here in the words arising under it in here is in the well please complaint rule which is the backdrop presumption which should apply to any type of congressional in a grant of federal jurisdiction over state law claims in less congress says otherwise so i think that's the second best option you say ok it's not only a creation yes section twenty seven can reach some state law created claims but they must be assume if it's something that trigger is triggered by an exclusive jurisdiction provision of the exchange act it must be substantial it must fit the federalism balance destress i think it's i don't understand why you're resistant just they essentially refer to what the arising under test refers to it after all i mean the arising under test doesn't really have a whole lot to do with the language arising under anymore and that's true so so why isn't that just sort of the simplest thing to do we have a test it's a four part test and this language seems to fit that test pretty well and that's what we should do we should well have one test so justice kagan i won't resist too hard because obviously we win under that under that outcome i resist i resist a little bit and i'll tell you why certainly i can defend that proposition and we did you know in our briefing there's a solid basis to do that the court interpreted materially identical language that way and american as we pointed out in our brief section twenty two of the securities act which uses materially identical language then in the removal bar equate that language with a rising under i could defend that proposition i just don't think it's the most natural reading of the language if you're asking me honestly like what do i think congress intended i believe that they intended brought to enforce duties or liabilities created under under the act to mean the three narrow categories of federally created causes of action in one thousand nine hundred four i think that's what the statute meant i don't think congress has done anything since then to change that if you look to in one thousand nine hundred eight where there was this serious concern on the part of congress of what was happening in terms of state law created positive action the initial bill that was proposed would have preempted all state law critical as action didn't go very far instead congress said no we're going to restrict this to covered class action so if you're if we're trying to find what i think is the most intellectually honest reading of the language and consistent with the history i actually don't think it's adopting rising under but i certainly could defend it as as a reasonable interpretation of the language in the context hustle in light of slew so that the issue that's before us with apply only in individual actions and small class action that's what that's exactly right and i think maybe help maybe i'll close with this i think that's very important from the perspective of just sensibility and policy which is the following one of the things that animated the private securities litigation reform act was the concern that lawyers were driving litigation  clients and that's why for example one of the things that went into the p s l ira was a requirement if with the most appropriate playing defense that doesn't happen when you have cases like this when you have the c e o of a company who holds two point one million shares w bringing a claim and so not only was it not the point of congress in one thousand thirty three in one nine hundred thirty four to invade the province of state courts if we look at the entire history of purposes and and congress trying to say well we have some concerns about what state courts are doing there is never been an expressed concern about state courts enforcing state law in individual actions like this one for the court t  hold otherwise would be unprecedented because you would be stripping state courts of the type of juristic diction that they've had since the time of the exchange act ten b of the exchange act itself was predicated on common law deceit and fraud and a whole history of what was occurring in state forms and i just don't think there's any way to read section twenty seven that's workable from the court's jurisdictional precedents but that's also sensible in terms of what the dual system securities regulation is trying to do and so if there ever no further questions just out of curiosity why is it so important for your client not to be in federal district court so i think there's a few reasons the first his lawyers practice in state court the familiar with the procedures that's where they want to be the second is the procedures are better i mean it's not a surprise that a lot of securities plaintiff is want to be in state court in some instances they want to be there because the law is more robust there's no santa requirement you could bring a holder claim that's actually not the case here because new jersey law happens to parallel so so we don't have those benefits but we want to be able to take a  trying to take a new area these naked short selling cases their new you know the overstock case that's happened you know we would prefer state forum for our state law created a claims to convince a state selling will necessarily violate regulations show but every violation of regulation show is not market manipulation what regulation show does is it sets a floor and if you engage in certain conduct you short stock you haven't borrowed it you have no reason to believe you borrowed it the f c c can fine you understand troops there there's no prior right of action that doesn't make out the market manipulation came claimed justice ginsburg to prove marketing that manipulation you have to go a step further you have to show that that was done intentionally to try and depress the value of the stock so the point i was trying to make is if there were an analogue to our state law claim it's not rape show it's ten b five  reg show is what we're trying to enforce reg show is not relevant for that purpose reg show doesn't help us even under federal law we wouldn't have a private right of action section nine d of the exchange act there's no private right of action for that section ten a one of the exchange act these are the ones that do it make it which short selling no private right of action has to be ten b thank you counsel three minutes mr hacker mr chief justice in may it please the court the respondents argument has a problem with the language both of their own complaint with the language of the statute the complaint could not be clear that while it's true there are references to market manipulation what they're trying to establish is market manipulation by the mere fact that there were not locates that complied with a reg show that's what created what they call counterfeit shares that in all that sell for getting intent is also what diluted the shares and caused their problems that's clear from paragraph thirty three it's clear in paragraph eighty six and eighty seven what they talk about  violations of the rules and regulations that cause them harm they would also like to establish a martin market manipulation i'm sure if they could prove intent and all of that but the whole point of the complaint here is to say is to hope they can get in front of a jury and judge who will agree with them that those mere violations of red show in and of themselves establishes the state torts that they are pursuing it's perfectly clear in those paragraphs and through the rest of the complaint i don't think there's any ambiguity whatsoever nor is there ambiguity in the pla of the statute the first argument they make is that it effectively incorporates the view that it has to be a cause of action created by the act itself the section twenty seven answers that question it doesn't say that jurisdiction is a stablished and the whole structure of this provision talks first in the first half of the first sentence it talks about violations of law the second sentence parallels it says criminal the second half of the first sentence talks about civil proceedings on the other side doesn't disagree with that but let me turn to the last point justice briar's argument and i think justice kagan is that well maybe it's just the same thing as thirteen thirty one that too is contrary to the text of the statute because thirteen thirty one has been construed it also doesn't have the text or requirement as having this necessity component precisely because if you don't have a necessity component then you're taking away from state courts cases that state courts are competent to adjudicate we know that congress had literally the opposite on this year  the case is submitted