United States Court of Appeals

Fifth Circuit

FILED

April 22, 2004

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 03-20575

JACOB BLAZ, On behalf of Himself and all others Similarly 

Situated,

Plaintiff-Appellant,

versus

ROBERT A. BELFER; NORMAN P. BLAKE, JR.; RICHARD B. BUY; RICHARD 

A. CAUSEY; RONNIE C. CHAN; JOHN H. DUNCAN; ANDREW S. FASTOW; JOE

H. FOY; WENDY L. GRAMM; KEN L. HARRISON; ROBERT K. JAEDICKE;

KENNETH L. LAY; CHARLES A. LAMAISTRE; JEROME J. MEYER; JEFFREY S.

SKILLING; JOHN A. URQUHART; JOHN WAKEHAM; CHARLES E. WALKER;

BRUCE G. WILLISON; HERBERT S. WINOKUR, JR.; ARTHUR ANDERSEN LLP,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Texas

(H-02-CV-1150)

Before DAVIS, BARKSDALE, and PRADO, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

At issue is the claimed impermissible retrospective

application of the Securities Litigation Uniform Standards Act,

Pub. L. No. 105-353, 112 Stat. 3227 (1998) (codified as amended at

15 U.S.C. §§ 77p & 78bb)(SLUSA), which provides for the removal and

dismissal of certain state law securities class actions. Jacob

Blaz challenges SLUSA’s application to his putative state law

securities class action arising out of pre-enactment conduct. The
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application is permitted because SLUSA governs only secondary

conduct — procedural requirements for filing certain state law

securities claims — and not the primary conduct that is the subject

of those claims. AFFIRMED.

I.

In January 2002, more than three years after SLUSA’s

enactment, Blaz filed this putative state law class action in Texas

state court. Blaz presented state law claims for fraud,

misrepresentation, and conspiracy in connection with the purchase

of publicly traded securities (Enron Corporation) from 11 April

1997 to 15 October 1998 (class period). 

The action was removed to federal court pursuant to SLUSA,

which provides for removal and dismissal of certain state law

securities class actions. See 15 U.S.C. § 78bb(f)(1)(A), (B) &

(f)(2) (class actions based on state common or statutory law

misrepresentation, omission, or deception with respect to purchase

of securities subject to removal and dismissal). The parties do

not dispute that, under SLUSA, Blaz’ state law action is a “covered

class action” involving a “covered security”. See 15 U.S.C. §

78bb(f)(5)(B) & (E).

The class period designated by Blaz ends shortly before

SLUSA’s enactment on 3 November 1998; Blaz claims the alleged fraud

was not discovered until 16 October 2001, almost three years after

that enactment. Blaz moved to remand, contesting removal and
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dismissal on the basis that applying SLUSA to the pre-enactment

conduct would have the impermissible retroactive effect of

preempting his state law claims. Moreover, acknowledging that the

three-year statute of repose under the Securities Exchange Act of

1934 barred his pursuing a federal class action, Blaz contended

SLUSA’s application effectively denied the putative class

meaningful relief.

Remand was denied; the putative state law class action was

dismissed with prejudice. Blaz v. Belfer, et al., No. H-01-3624

(S.D. Tex. 16 Aug. 2002). In its quite comprehensive and wellreasoned opinion, the district court held: SLUSA’s provisions are

procedural and do not impair the substantive rights of Blaz or the

putative class members individually to pursue their claims in state

court; consequently, SLUSA does not have an impermissible

retroactive effect. Id. at 22-23.

II.

In our deciding whether applying SLUSA to the pre-enactment

conduct at issue has an impermissible retrospective effect, the

remand-denial and dismissal are reviewed de novo. E.g., Morris v.

TE Marine Corp., 344 F.3d 439, 443 (5th Cir. 2003) (citing Miller

v. Diamond Shamrock Co., 275 F.3d 414, 417 (5th Cir. 2001)). For

essentially the reasons stated by the district court, we hold that

such application is permissible.
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Landgraf v. USI Film Products, 511 U.S. 244 (1994), provides

the well-settled framework for determining the issue at hand.

“[T]he presumption against retroactive legislation is deeply rooted

in our jurisprudence, and embodies a legal doctrine centuries older

than our Republic.” Id. at 265 (emphasis added). Nevertheless,

“[c]hanges in procedural rules may often be applied in suits

arising before their enactment without raising concerns about

retroactivity ... [b]ecause rules of procedure regulate secondary

rather than primary conduct”. Id. at 275 (citations omitted). See

also Hughes Aircraft v. United States ex rel. Schumer, 520 U.S. 939

(1997) (applying Landgraf analysis to action filed after amendment

to statute, but challenging pre-enactment conduct). A two-part

alternative analysis is used for determining whether the

presumption against retroactivity is rebutted. 

First, retroactive application is not impermissible where

there is an express congressional intent favoring it. Landgraf,

511 U.S. at 280. In SLUSA, Congress did not expressly provide for

such application. 

Second, such application is permissible if it does not “impair

rights a party possessed when he acted, increase a party’s

liability for past conduct, or impose new duties with respect to

transactions already completed”. Id. (emphasis added). Blaz

claims SLUSA’s application impairs the substantive rights of
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defrauded securities purchasers to pursue class relief in state

court.

In this regard, relying on W.R. Huff Asset Management Co., LLC

v. BT Securities Corp., 190 F. Supp. 2d 1273 (N.D. Ala. 2001), Blaz

contends SLUSA has an impermissible retroactive effect by unfairly

depriving class members of meaningful access to the courts. As in

the action at hand, the BT Securities plaintiffs: filed an action

post-SLUSA’s enactment, involving pre-enactment conduct, id. at

1275; and could no longer pursue a federal securities class action

because it would be time-barred by the three-year statute of

repose, see Section 18(c) of the Securities Exchange Act of 1934,

48 Stat. 881, 898 (codified at 15 U.S.C. § 78(i)(e)). (Pursuant to

the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, § 804(a) &

(b), 116 Stat. 801 (codified at 28 U.S.C. § 1658(b)), this statute

of repose has been extended to five years after the conduct

accrues.) BT Securities concluded:

[T]he practical effect of a retrospective

application of SLUSA would be to trim down

[plaintiffs’] case to a virtual nothing. Not

taking this eventuality into account when

measuring the impact of retrospective

application in this case would be holding

[plaintiffs] accountable for [their] “failure”

to bring [their] state law claims within the

periods of repose and limitation applicable to

federal claims that are preemptive only if

retroactive.... The reasonable expectations

[plaintiffs] had at the time of the allegedly

actionable conduct cannot be reconciled with

such a relinquishment of a substantive right.
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BT Securities, 190 F. Supp. 2d at 1281 (emphasis added).

Blaz contends: this analysis applies with even greater force

here because defendants fraudulently concealed their wrongdoing

until 16 October 2001 and therefore prevented filing a federal

securities class action within the statute of repose; and it is

unfair to permit such fraudulent concealment likewise to deny him

a class action in state court, by application of SLUSA. Blaz

acknowledges that he and other putative class members individually

may pursue their claims in state court; but, he maintains this

access to those courts will not be meaningful because potential

individual recoveries are comparatively small. According to Blaz,

this causes SLUSA to operate to create “new legal consequences”,

not present before its enactment, that transform its retrospective

effect from procedural to substantive. Blaz notes that, although

there is no right to “litigate” a claim as a class action, Rule 23

of the Federal Rules of Civil Procedure confers the right to “seek”

certification of a class action, including the rights to have the

district court consider a class certification motion and to appeal

an order denying such certification. See FED. R. CIV. P. 23.

A.

Obviously, Blaz’ attempt to distinguish “litigating” a class

action from “seeking” one fails; for purposes of the issue at hand,

there is no difference. Nor is there a substantive right to pursue
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a class action, in either Texas state or federal court. As the

Texas Supreme Court explained:

The class action is a procedural device

intended to advance judicial economy by trying

claims together that lend themselves to

collective treatment. It is not meant to

alter the parties’ burdens of proof, right to

a jury trial, or the substantive prerequisites

to recovery under a given tort.

Soutwestern Ref. Co., Inc. v. Bernal, 22 S.W.3d 425, 437 (Tex.

2000) (emphasis added); see also Frazar v. Gilbert, 300 F.3d 530,

545 (5th Cir. 2002) (“A class action is merely a procedural device;

it does not create new substantive rights....”), rev’d on other

grounds, Frew ex rel. Frew v. Hawkins, 124 S. Ct. 899 (2004).

In his state court complaint, Blaz defines the class period as

ending on 15 October 1998 and claims that the alleged fraudulent

conduct was not discovered until 16 October 2001 — exactly one day

past the then three-year statute of repose for a federal securities

claim. In the light of his class period and discovery date, Blaz

could not pursue a federal class action. Of course, it is the

defined class period and claimed fraudulent concealment, not

SLUSA’s retroactive application, that causes this result. In any

event, there is no right to pursue a state class action; and,

again, despite SLUSA’s application, each plaintiff may pursue

individual relief in state court.

B.
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As Landgraf explained, retrospective changes to “procedural

rules” do not raise retroactivity concerns because they regulate

secondary, rather than primary, conduct. Landgraf, 511 U.S. at

275. SLUSA provides a procedural framework for the secondary

conduct of filing certain state securities claims; it does not

regulate the primary conduct that is the subject of those claims.

Again, there is no substantive right to a class remedy; a class

action is a procedural device. As such, SLUSA’s regulating filing

certain state securities claims is not impermissibly retroactive.

Except for the BT Securities court, all others that have

evaluated the retrospective application of SLUSA have reached this

conclusion. See, e.g., Professional Management Assoc., Inc. v.

KPMG LLP, 335 F.3d 800, 803-04 (8th Cir. 2003) (applying SLUSA to

pre-enactment conduct presents no retroactivity concern because

SLUSA regulates only “secondary conduct, the filing of the lawsuit,

not the primary, allegedly illegal pre-enactment conduct”); see

also Winne v. Equitable Life Assurance Society, 2003 WL 22434215,

*9 (S.D.N.Y. 2003) (“since SLUSA governs only procedural

requirements and is not substantive in scope, it may be applied to

suits ... that were filed after ... the statute’s enactment, even

if those suits concern pre-enactment conduct”) (citing Gray v.

Seaboard Securities, Inc., 241 F. Supp. 2d 213, 217-18 (N.D.N.Y.

2003)).
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For the foregoing reasons, the judgment is

AFFIRMED.