Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-02512/USCOURTS-cand-4_15-cv-02512-4/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 28:1331 Fed. Question: Securities Violation

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CITY OF WARREN POLICE AND FIRE 

RETIREMENT SYSTEM,

Plaintiff,

v.

REVANCE THERAPEUTICS, INC., et al.,

Defendants.

Case No. 15-cv-02512-HSG 

ORDER GRANTING MOTION TO 

REMAND

Re: Dkt. No. 8

Pending before the Court is Plaintiff City of Warren Police and Fire Retirement System’s 

motion to remand. For the reasons articulated below, the Motion is GRANTED. 

I. BACKGROUND

On May 1, 2015, Plaintiff City of Warren Police and Fire Retirement System filed this 

securities class action in the San Mateo County Superior Court. Dkt. No. 1-2. In its complaint, 

Plaintiff asserts only federal Securities Act claims against Defendant Revance Therapeutics, Inc., 

certain officers and directors thereof, and certain venture capitalists and underwriters associated 

with a public offering of Revance securities. Id. On June 5, 2015, Defendant removed this case to 

federal court pursuant to 28 U.S.C. § 1441(a). Dkt. No. 1. In the present motion, Plaintiff argues 

that Defendant’s removal of the case is expressly barred by the Securities Act of 1933.

II. DISCUSSION

A. Legal Standard

“Except as otherwise expressly provided by Act of Congress, any civil action brought in a 

State court of which the district courts of the United States have original jurisdiction, may be 

removed” to federal court. 28 U.S.C. § 1441(a). The Ninth Circuit has held that “[f]ederal 

jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” 

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Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Because of this “strong presumption 

against removal jurisdiction,” a defendant “always has the burden of establishing that removal is 

proper.” Id. (internal quotation marks omitted). But “a plaintiff seeking remand [on the basis of 

an express exception to removal jurisdiction] has the burden to prove that an express exception to 

removal exists.” Luther v. Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1034 (9th Cir. 

2008).

B. The Securities Act Of 1933 And The Securities Litigation Uniform Standards 

Act

In 1998, Congress enacted the Securities Litigation Uniform Standards Act (“SLUSA”), 

which amended, in relevant part, the jurisdictional and antiremoval provisions of the Securities 

Act of 1933. Before 1998, the jurisdictional provision of the Securities Act granted concurrent 

jurisdiction over Securities Act claims to both state and federal courts as follows: “The district 

courts of the United States . . . shall have jurisdiction of offenses and violations under this 

subchapter . . . concurrent with State and Territorial courts, of all suits in equity and actions at law 

brought to enforce any liability or duty created by this subchapter.” 15 U.S.C. § 77v(a) (1997). 

The Securities Act also contained an antiremoval provision that stated: “No case arising under this 

subchapter and brought in any State court of competent jurisdiction shall be removed to any court 

of the United States.” Id.

SLUSA amended § 77v(a) by adding the following italicized language:

The district courts of the United States . . . shall have jurisdiction of 

offenses and violations under this subchapter . . . concurrent with 

State and Territorial courts, except as provided in section 77p of this 

title with respect to covered class actions, of all suits in equity and 

actions at law brought to enforce any liability or duty created by this 

subchapter. . . . Except as provided in section 77p(c) of this title, no 

case arising under this subchapter and brought in any State court of 

competent jurisdiction shall be removed to any court of the United 

States.

15 U.S.C. § 77v(a) (emphases added).

Section 77p(c), which was also added by SLUSA, is titled “Removal of covered class 

actions,” and states:

Any covered class action brought in any State court involving a 

covered security, as set forth in subsection (b), shall be removable to 

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the Federal district court for the district in which the action is 

pending, and shall be subject to subsection (b).

15 U.S.C. § 77p(c). Section 77p(b) (another SLUSA addition), in turn, is titled “Class action 

limitations” and describes certain securities class actions that are now completely precluded under 

the Securities Act:

No 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 private party alleging—

(1) an untrue statement or omission of a material fact in connection 

with the purchase or sale of a covered security; or

(2) 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. § 77p(b).

Finally, SLUSA also added a definitions provision that defines “covered class action” to 

include “any single lawsuit in which[] damages are sought on behalf of more than 50 persons or 

prospective class members, . . . [or] one or more named parties seek to recover damages on a 

representative basis on behalf of themselves and other unnamed parties similarly situated.” 15 

U.S.C. § 77p(f)(2)(A)(i).

C. Statutory Interpretation

The parties dispute whether the above provisions, taken together, prohibit the removal of 

securities fraud class actions like the present one that bring claims only under the federal 

Securities Act and not under state law.

1. Plain Language

“As with any question of statutory interpretation,” the Court’s “analysis begins with the 

plain language of the statute.” Jimenez v. Quarterman, 555 U.S. 113, 118 (2009). Plaintiff’s 

position is that “the language that was inserted into the first sentence of the jurisdictional provision 

. . . references the entirety of 77p, a section that is exclusively concerned with state law class 

actions.” Rajasekaran v. CytRx Corp., No. 14-cv-03406-GHK, 2014 WL 4330787, at *5 (C.D. 

Cal. Aug. 21, 2014). According to Plaintiff, the Rajasekaran court concluded,

The SLUSA amendment to § 77v(a) does not go so far as to take all 

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securities class actions out of state court. The better view is that the 

amendment to the jurisdictional provision was meant to simply 

acknowledge that there is now a subset of class actions that are no 

longer cognizable in either state or federal court—those state law 

class actions that are precluded by § 77p(b). Had Congress intended 

to make federal district courts the exclusive forum for securities 

class actions, we presume it would have said as much. It is dubious 

that Congress would have instead evinced its intent by making an 

oblique reference to a section that is exclusively concerned with 

state law class actions and never directly addresses 1933 Act claims.

Id.

Turning to the antiremoval provision, Plaintiff’s position is that the plain language of the 

exception to that provision applies only to “covered class action[s] . . . as set forth in subsection 

(b).” 15 U.S.C. § 77p(c). And subsection (b) applies only to “class action[s] based upon the 

statutory or common law of any State.” Id. § 77p(b). Since Plaintiff’s complaint alleged only 

federal Securities Act claims, and no claims under state law, the exception permitting removal 

does not apply, and Defendants are barred from removing the instant lawsuit to federal court.

Defendants counter that the Court need not even consider the antiremoval provision 

because the jurisdictional provision of the Securities Act, as amended by SLUSA, strips state 

courts of jurisdiction of covered class actions—including those asserting only federal securities 

claims. In other words, Defendants read the “except as provided in section 77p of this title with 

respect to covered class actions” clause of the jurisdictional provision as referring only to 

§ 77p(f)’s broad definition of covered class actions. Id. § 77v(a). Because state courts lack 

jurisdiction of federal securities class actions, according to Defendants’ interpretation, the 

antiremoval provision would not bar removal here since that provision is relevant only to suits 

brought in state courts “of competent jurisdiction.” Id.

The Court finds that Plaintiff’s interpretation of the provisions at issue better reflects the 

plain language of the statute. Defendants’ interpretation relies on an overly constricted reading of 

the jurisdictional provision’s reference to § 77p. Additionally, Plaintiff’s position is supported by 

dicta from both the Supreme Court and the Ninth Circuit. See Kircher v. Putnam Funds Trust, 

547 U.S. 633, 643-44 (2006) (noting that “[i]f the action is precluded [under § 77p(b)], neither the 

district court nor the state court may entertain it, and the proper course is to dismiss,” but that “[i]f 

the action is not precluded, . . . the proper course is to remand to the state court that can deal with 

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it”); Madden v. Cowen & Co., 576 F.3d 957, 965 (9th Cir. 2009) (“As the Supreme Court has 

explained, any suit removable under SLUSA’s removal provision, § 77p(c), is precluded under 

SLUSA’s preclusion provision, § 77p(b), and any suit not precluded is not removable.”); Luther, 

533 F.3d at 1033 (noting that § 77v(a)’s antiremoval provision “strictly forbids the removal of 

cases brought in state court and asserting claims under the [Securities] Act” and that the plaintiff’s 

“class action falls within [§ 77v(a)’s] removal bar because it was brought in state court and asserts 

only claims arising under the Securities Act of 1933”).

Finally, Plaintiff’s position “appears to be emerging as the dominant view around the 

country” and has almost uniformly been upheld by district courts since 2012. Plymouth Cnty. Ret. 

Sys. v. Model N, Inc., No. 14-cv-04516-WHO, 2015 WL 65110, at *3 (N.D. Cal. Jan. 5, 2015). To

the Court’s knowledge, only a single district court in any district has denied remand since August 

2012—and that denial took the form of a summary two-paragraph order. See Wunsch v. Am. 

Realty Cap. Props., No. 14-cv-04007-JFM, 2015 WL 2183035, at *1 (D. Md. Apr. 14, 2015). The 

Northern District of California has “soundly rejected” Defendants’ position in recent years. Liu v. 

Xoom Corp., No. 15-cv-00602-LHK, at 6 (N.D. Cal. June 25, 2015) (granting remand); see 

Plymouth Cnty, 2015 WL 65110, at *4 (same); Desmarais v. Johnson, No. 13-cv-03666-WHA, 

2013 WL 5735154, at *5 (N.D. Cal. Oct. 22, 2013) (same); Toth v. Envivo, Inc., No. 12-cv-05636-

CW, 2013 WL 5596965, at *2 (N.D. Cal. Oct. 11, 2013) (same); Reyes v. Zynga, Inc., No. 12-cv05065-JSW, 2013 WL 5529754, at *4 (N.D. Cal. Jan. 23, 2013) (same).

2. Legislative History

Defendants also assert that their interpretation is more consistent with the stated purpose of 

SLUSA. In Defendants’ view, that purpose is “to curtail the proliferation in state courts of 

securities fraud class actions (federal or state) beyond the reach of the [Private Securities 

Litigation Reform Act of 1995]’s heightened pleading standards.” Knox v. Agria Corp., 613 F. 

Supp. 2d 419, 421 (S.D.N.Y. 2009); see also H.R. Conf. Rep. No. 105-803, at 13 (stating goal of 

making “Federal court the exclusive venue for most securities class action lawsuits[] [and] . . . to 

prevent plaintiffs from seeking to evade the protections that Federal law provides against abusive 

litigation by filing suit in State, rather than Federal, court”). 

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But the legislative history is simply too “murky” to be of any “help in answering the 

question that is before us.” Rajasekaran, 2014 WL 4330787, at *7. For example, the very first 

sentence of SLUSA states that the purpose of the amendments is “to amend the Securities Act of 

1933 . . . to limit the conduct of securities class actions under State law.” Pub. L. No. 105-353, 

112 Stat. 3227 (1998). And a May 1998 Senate Report reads: “[SLUSA] makes clear the 

Committee’s intention to enact this legislation in order to prevent state laws from being used to 

frustrate the operation and goals of the 1995 Reform Act.” S. Rep. 105-182 at 1 (1998). 

In the end, Defendants have not carried their burden to establish that removal is proper. 

The Court grants the motion to remand in the face of this inconsistent legislative history because 

“[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal.” Gaus, 980 

F.2d at 566.

III. CONCLUSION

For the foregoing reasons, Plaintiff’s motion to remand is GRANTED. This action is 

remanded to the Superior Court of the State of California for the County of San Mateo. The Clerk 

of this Court shall transmit forthwith a certified copy of this order to the Clerk of the Superior 

Court and close this case displaying all pending motions as resolved.

IT IS SO ORDERED.

Dated: August 31, 2015

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

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