Source: https://www.law.cornell.edu/supremecourt/text/15-1439
Timestamp: 2018-06-22 09:42:18
Document Index: 512071056

Matched Legal Cases: ['§77', '§77', '§22', '§78', '§27', '§77', '§78', '§77', '§78', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§77', '§423']

CYAN, INC. v. BEAVER COUNTY EMPLOYEESRETIREMENT FUND | US Law | LII / Legal Information Institute
CYAN, INC. v. BEAVER COUNTY EMPLOYEESRETIREMENT FUND
CYAN, INC. v. BEAVER COUNTY EMPLOYEESRETIREMENT FUND ( )
Structure and context also support the Court’s reading of the except clause. Because Cyan treats the broad definition of “covered class action” as altering §77v(a)’s jurisdictional grant, its construction would prevent state courts from deciding any 1933 Act class suits seeking damages for more than fifty plaintiffs, thus stripping state courts of jurisdiction over suits about securities raising no particular national interest. That result is out of line with SLUSA’s overall scope. Moreover, it is highly unlikely that Congress upended the 65-year practice of state courts’ adjudicating all manner of 1933 Act cases (including class actions) by way of a mere conforming amendment. See Director of Revenue of Mo. v. CoBank ACB, 531 U. S. 316, 324. Pp. 8–12.
But Cyan ignores a different way in which SLUSA served the Reform Act’s objectives—which the Court’s view of the statute fully effects. The Reform Act included substantive sections protecting defendants in suits brought under the federal securities laws. Plaintiffs circumvented those provisions by bringing their complaints of securities misconduct under state law instead. Hence emerged SLUSA’s bar on state-law class actions (and its removal provision to ensure their dismissal)—which guaranteed that the Reform Act’s heightened substantive standards would govern all future securities class litigation. SLUSA’s preamble states that the statute is designed “to limit the conduct of securities class actions under state law, and for other purposes,” 112Stat. 3227, and this Court has underscored, over and over, SLUSA’s “purpose to preclude certain vexing state-law class actions.” Kircher v. Putnam Funds Trust, 547 U. S. 633, 645, n. 12. That object—which SLUSA’s text actually reflects—does not depend on stripping state courts of jurisdiction over 1933 Act class suits, as Cyan proposes. For wherever those suits go forward, the Reform Act’s substantive protections necessarily apply.
(2) Cyan finally argues that the except clause would serve no purpose at all unless it works as Cyan says. But Congress could have envisioned the except clause as the ultimate fail-safe device, designed to safeguard §77p’s class-action bar come whatever might. Congress has been known to legislate in that hyper-vigilant way, to “remov[e] any doubt” as to things not particularly doubtful in the first instance. Marx v. General Revenue Corp., 568 U. S. 371, 383–384. If ever it had reason to legislate in that fashion, it was in SLUSA—whose very impetus lay in the success of class action attorneys in “bypass[ing] . . . the Reform Act.” Kircher, 547 U. S., at 636. And regardless of any uncertainty surrounding Congress’s reasons for drafting the except clause, there is no sound basis for giving that clause a broader reading than its language can bear, especially in light of the dramatic change such an interpretation would work in the 1933 Act’s jurisdictional framework. Pp. 15–18.
In the wake of the 1929 stock market crash, Congress enacted two laws, in successive years, to promote honest practices in the securities markets. The 1933 Act required companies offering securities to the public to make “full and fair disclosure” of relevant information. Pinter v. Dahl, 486 U. S. 622, 646 (1988). And to aid enforcement of those obligations, the statute created private rights of action. Congress authorized both federal and state courts to exercise jurisdiction over those private suits. See §22(a), 48Stat. 86 (“The district courts of the United States . . . shall have jurisdiction[,] 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 title”). More unusually, Congress also barred the removal of such actions from state to federal court. Id., at 87 (“No case arising under this title and brought in any State court of competent jurisdiction shall be removed to any court of the United States”). So if a plaintiff chose to bring a 1933 Act suit in state court, the defendant could not change the forum.
Congress’s next foray, the Securities Exchange Act of 1934 (1934 Act), operated differently. See 48Stat. 881, as amended, 15 U. S. C. §78a et seq. That statute regulated not the original issuance of securities but instead all their subsequent trading, most commonly on national stock exchanges. See Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 752 (1975). The 1934 Act, this Court held, could also be enforced through private rights of action. See id., at 730, and n. 4. But Congress determined that all those suits should fall within the “exclusive jurisdiction” of the federal courts. §27, 48Stat. 902–903. So a plaintiff could never go to state court to litigate a 1934 Act claim.
In 1995, the Private Securities Litigation Reform Act (Reform Act), 109Stat. 737, amended both the 1933 and the 1934 statutes in mostly identical ways. Congress passed the Reform Act principally to stem “perceived abuses of the class-action vehicle in litigation involving nationally traded securities.” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U. S. 71, 81 (2006). Some of the Reform Act’s provisions made substantive changes to the 1933 and 1934 laws, and applied even when a 1933 Act suit was brought in state court. For instance, the statute created a “safe harbor” from federal liability for certain “forward-looking statements” made by company officials. 15 U. S. C. §77z–2 (1933 Act); §78u–5 (1934 Act). Other Reform Act provisions modified the procedures used in litigating securities actions, and applied only when such a suit was brought in federal court. To take one example, the statute required a lead plaintiff in any class action brought under the Federal Rules of Civil Procedure to file a sworn certification stating, among other things, that he had not purchased the relevant security “at the direction of plaintiff’s counsel.” §77z–1(a)(2)(A)(ii) (1933 Act); §78u–4(a)(2)(A)(ii) (1934 Act).
The first chunk of that provision identifies the removable cases, partly by way of a cross-reference (“as set forth in subsection (b)”) to the just-described class-action bar. The final clause of the provision (“and shall be subject to subsection (b)”) indicates what should happen to a barred class suit after it has been removed: The “proper course is to dismiss” the action. Kircher v. Putnam Funds Trust, 547 U. S. 633, 644 (2006). As this Court has explained, §77p(c) “avails a defendant of a federal forum in contemplation not of further litigation over the merits of a claim brought in state court, but of termination of the proceedings altogether.” Id., at 645, n. 12. The point of providing that option, everyone here agrees, was to ensure the dismissal of a prohibited state-law class action even when a state court “would not adequately enforce” §77p(b)’s bar. Brief for United States as Amicus Curiae 3; see Brief for Petitioners 7; Brief for Respondents 20.
We granted Cyan’s petition for certiorari, 581 U. S. ___ (2017), to resolve a split among state and federal courts about whether SLUSA deprived state courts of jurisdiction over “covered class actions” asserting only 1933 Act claims. 1
By its terms, §77v(a)’s “except clause” does nothing to deprive state courts of their jurisdiction to decide class actions brought under the 1933 Act. And Cyan’s various appeals to SLUSA’s purposes and legislative history fail to overcome the clear statutory language. The statute says what it says—or perhaps better put here, does not say what it does not say. State-court jurisdiction over 1933 Act claims thus continues undisturbed. 2
In any event, the definitional paragraph on which Cyan relies cannot be read to “provide[]” an “except[ion]” to the rule of concurrent jurisdiction, in the way SLUSA’s except clause requires. A definition does not provide an exception, but instead gives meaning to a term—and Congress well knows the difference between those two functions. Thousands of statutory provisions use the phrase “except as provided in . . .” followed by a cross-reference in order to indicate that one rule should prevail over another in any circumstance in which the two conflict; we count more than 30 such constructions in the 1933 and 1934 Acts alone. 3 Not one of those 30-plus provisions cross-references a definition; nor has Cyan pointed to a single such example from the whole rest of the U. S. Code. And the Congress enacting SLUSA had no reason to attempt that peculiar maneuver for the first time. If Congress had wanted to deprive state courts of jurisdiction over 1933 Act class actions, it had an easy way to do so: just insert into §77p an exclusive federal jurisdiction provision (like the 1934 Act’s) for such suits. That rule, when combined with the except clause, would have done the trick because it would have “provided” an “except[ion]” to §77v(a)’s grant of concurrent jurisdiction; by contrast, a mere definition of “covered class action” (as a damages suit on behalf of 50-plus people) does not so provide.
SLUSA’s other conforming amendment illustrates the two ways in which Cyan’s construction of the except clause departs from its language. Recall that §77v(a) includes a general bar on removal. See supra, at 2. And recall that SLUSA appended to that prohibition the phrase “[e]xcept as provided in section 77p(c)” to reflect the statute’s new permission to remove certain class actions. See supra,at 5. In that “except as provided” phrase—just four sentences down from the except clause central to this case—Congress pinpointed a subsection of §77p, rather than citing the entire section for only one of its parts. Still more, that cross-referenced subsection contains an operative provision that could limit a rule, rather than a mere definition of a statutory term. In short, Congress wrote the removal bar’s except clause in just the way a reader of legislation would expect—and not in the wholly irregular way Cyan proposes for the except clause at issue here. Especially given the two provisions’ “interrelationship and close proximity,” Commissioner v. Lundy, 516 U. S. 235, 250 (1996), the one conforming amendment highlights how far Cyan seeks to stretch the text of the other.
Cyan’s interpretation also fits poorly with the remainder of the statutory scheme. Because Cyan treats the broad definition of “covered class action” as altering §77v(a)’s jurisdictional grant, its construction would prevent state courts from deciding any 1933 Act class suits seeking damages for more than 50 plaintiffs. That would include suits not involving a “covered security”—i.e., a security traded on a national stock exchange. §77p(f)(3); Brief for Petitioners 29 (conceding that point). But this Court has emphasized that SLUSA’s operative provisions (including its state-law class-action bar, see §77p(b)) apply to only “transactions in covered securities”: The statute “ex-presses no concern” with “transactions in uncovered securi-ties”—precisely because they are not traded on national markets. Chadbourne & Parke LLP v. Troice, 571 U. S. 377, ___ (2014) (slip. op., at 9); see Brief for United States as Amicus Curiae 16–17 (SLUSA does not regard suits involving uncovered securities as “a matter of distinct federal concern”). Those securities, the Court explained, are “primarily of state concern,” and SLUSA “maintains state legal authority” to address them. Chadbourne, 571 U. S., at ___ (slip op., at 13). Except that under Cyan’s view, SLUSA would not. Instead, the law would strip state courts of jurisdiction over suits about securities raising no particular national interest. That result is out of line with SLUSA’s overall scope.
And finally, Cyan’s take on the except clause reads too much into a mere “conforming amendment.” 112Stat. 3230. The change Cyan claims that clause made to state-court jurisdiction is the very opposite of a minor tweak. When Congress passed SLUSA, state courts had for 65 years adjudicated all manner of 1933 Act cases, including class actions. Indeed, defendants could not even remove those cases to federal court, as schemes of concurrent jurisdiction almost always allow. See supra, at 2. State courts thus had as much or more power over the 1933 Act’s enforcement as over any federal statute’s. To think Cyan right, we would have to believe that Congress upended that entrenched practice not by any direct means, but instead by way of a conforming amendment to §77v(a) (linked, in its view, with only a definition). But Congress does not make “radical—but entirely implicit—change[s]” through “technical and conforming amendments.” Director of Revenue of Mo. v. CoBank ACB, 531 U. S. 316, 324 (2001) (internal quotation marks omitted). Or to use the more general (and snappier) formulation of that rule, relevant to all “ancillary provisions,” Congress does not “hide elephants in mouseholes.” Whitman v. American Trucking Assns., Inc., 531 U. S. 457, 468 (2001). That is yet one more reason to reject Cyan’s view of SLUSA’s text.
But even if Congress never specifically considered mixed suits, it could well have added the except clause in a more general excess of caution—to safeguard §77p’s class-action bar come whatever might. This Court has encountered many examples of Congress legislating in that hyper-vigilant way, to “remov[e] any doubt” as to things not particularly doubtful in the first instance. Marx v. General Revenue Corp., 568 U. S. 371, 383–384 (2013) (citing Ali v. Federal Bureau of Prisons, 552 U. S. 214, 226 (2008); Fort Stewart Schools v. FLRA, 495 U. S. 641, 646 (1990)). (The idea, to return to our prior example, is to make sure that even if the child thinks orange lollipops count as fruit, she will not act on that view.) And if ever Congress had reason to legislate in that fashion, it was in SLUSA—whose very impetus lay in the success of class-action attorneys in “bypass[ing] . . . the Reform Act.” Kircher, 547 U. S., at 636. Heedful of that history of machinations, Congress may have determined to eliminate any risk—even if unlikely or at the time unknown—that a pre-existing grant of power to state courts could be used to obstruct SLUSA’s new limitation on what they could decide. And so (this alternative explanation goes) Congress enacted the except clause—which, in insisting that the limitation prevailed, would function as the ultimate (though with any luck, unneeded) fail-safe device. 4
In fact, this Court already held as much, by concluding in Kircher that §§77p(b) and 77p(c) apply to the exact same universe of class actions. See 547 U. S., at 643–644. Kircher involved a securities suit that was unaffected by §77p(b)’s class-action bar—there, not because it was based on federal law but because it involved a form of conduct falling outside that subsection. The Court of Appeals decided that the suit could be removed under §77p(c) even though it was not precluded by §77p(b), thinking (as we later put it) that the removal issue and “the preclusion issue [were] distinct.” Id., at 638. We flatly rejected that understanding of the relationship between §77p(b) and §77p(c). The “straightforward reading” of those two provisions, we explained, is that removal is “limited to those [actions] precluded by the terms of subsection (b).” Id., at 643. And if that were not clear enough, we said it again: Removal under §77p(c) is “restricted to precluded actions defined by subsection (b).” Id., at 643–644. And just to pound the point home, we said it yet a third time: “A covered [class] action is removable if it is precluded.” Id., at 646. Kircher thus forecloses the Government’s argument. Section 77p(b) does not preclude federal-law class actions. So under our decision, §77p(c) does not authorize their removal. 5
But even putting aside respect for precedent, that argument is in many ways flawed. To start with, the Government provides no good reason to think that “as set forth in subsection (b)” modifies only the phrase “involving a covered security.” As stated above, the most natural way to view the modifier is as applying to the entire preceding clause—again, “[a]ny covered class action brought in any State court involving a covered security.” See supra, at 19. That is so because that clause hangs together as a unified whole, referring to a single thing (a type of class action). Consider the following, grammatically identical construction: “The woman dressed to the nines carrying an umbrella, as shown in the picture . . .” Would anyone think that “as shown in the picture” referred to anything less than the well-attired and rain-ready woman? No. And so too here, the modifier goes back to the beginning of the preceding clause. The rule of the last antecedent is not to the contrary. We have applied that rule when the alternative reading would “stretch[] the modifier too far” by asking it to qualify a remote or otherwise disconnected phrase. Jama v. Immigration and Customs Enforcement, 543 U. S. 335, 342 (2005); Lockhart v. United States, 577 U. S. ___, ___ (2016) (slip op., at 4) (using the rule “where it takes more than a little mental energy to process” a statute’s component parts, “making it a heavy lift to carry the modifier across them all”). 6 By contrast, we have not applied the rule when the modifier directly follows a concise and “integrated” clause. Jama, 543 U. S., at 344, n. 4. As it does here.
But let us even assume that “as set forth in subsection (b)” modifies “involving a covered security”: The language would still fail to explain the Government’s position. Remember that the Government reads the resulting phrase (again, “involving a covered security, as set forth in subsection (b)”) to point only to the forms of wrongful conduct listed in §§77p(b)(1) and (2)—for example, false statements or deceptive devices in securities sales. See supra, at 21. The problem is that no one would describe those misdeeds with that phrase. If Congress had meant to refer only to that behavior, rather than to everything in §77p(b), it would have done two things differently. First, Congress would have written “as set forth in paragraphs (b)(1) and (b)(2)” instead of “as set forth in subsection (b)” as a whole. See supra, at 9 (explaining that when Congress wants to refer only to a particular subsection or paragraph, it says so). And second, Congress would have written something like “involving allegations of misconduct,” rather than “involving a covered security”—because the latter phrase does not even passably describe §§77(b)(1) and (2)’s catalog of vices. We will not read “involving a covered security, as set forth in subsection (b)” to mean “involving allegations of misconduct, as set forth in paragraphs (b)(1) and (b)(2)” when Congress did not enact that formulation. See Lozano v. Montoya Alvarez, 572 U. S. 1, ___ (2014) (slip op., at 14) (“Given that the drafters did not adopt that alternative, the natural implication is that they did not intend” to do so).
At bottom, the Government makes the same mistake as Cyan: It distorts SLUSA’s text because it thinks Congress simply must have wanted 1933 Act class actions to be litigated in federal court. But this Court has no license to “disregard clear language” based on an in-tuition that “Congress must have intended something broader.” Bay Mills, 572 U. S., at ___ (slip op., at 11) (internal quotation marks omitted). SLUSA did quite a bit to “make good on the promise of the Reform Act” (as Cyan puts it). Brief for Petitioners 20; see supra, at 12–13. If further steps are needed, they are up to Congress.
2 This Court has often applied a “presumption in favor of concurrent state court jurisdiction” when interpreting federal statutes. Mims v. Arrow Financial Services, LLC, 565 U. S. 368, 378 (2012) (quoting Tafflin v. Levitt, 493 U. S. 455, 458–459 (1990)). Cyan argues that the presumption should not apply here because SLUSA included explicit “language addressing state-court jurisdiction” and “the only question is [its] scope.” Reply Brief 22. We need not address that contention because SLUSA’s text precludes Cyan’s position without aid from any presumption.
5 In light of SLUSA’s text and Kircher’s holding, it should come as no surprise that all seven Courts of Appeals to have considered the matter have concluded that §77p(c) allows removal of only class actions falling within §77p(b)’s prohibition. See Campbell v. American Int’l Group, Inc., 760 F. 3d 62, 64 (CADC 2014); Hidalgo-Velez v. San Juan Asset Management, 758 F. 3d 98, 103 (CA1 2014); Appert v. Morgan Stanley Dean Witter, Inc., 673 F. 3d 609, 615–616 (CA7 2012); Madden v. Cowen & Co., 576 F. 3d 957, 965 (CA9 2009); Sofonia v. Principal Life Ins. Co., 465 F. 3d 873, 876 (CA8 2006); Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F. 3d 25, 33 (CA2 2005), vacated on other grounds, 547 U. S. 71 (2006); Behlen v. Merrill Lynch, 311 F. 3d 1087, 1092 (CA11 2002).
6 The classic example comes from Barnhart v. Thomas, 540 U. S. 20 (2003). The statute at issue provided that a person is disabled if his impairment is so severe that “he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy.” Id., at 23 (quoting 42 U. S. C. §423(d)(1)(A)) (emphasis altered). Invoking the rule of the last antecedent, we concluded that the italicized phrase “which exists in the national economy” modifies only “substantial gainful work,” and not the more distant “previous work.” See 540 U. S., at 26. Needless to say, that statutory provision is a far cry from the one at issue here.