John G. Roberts, Jr.: We'll hear argument first this morning in Case 15-1439, Cyan versus Beaver County Employees Retirement Fund. Mr. Katyal.
Neal Kumar Katyal: Thank you, Mr. Chief Justice, and may it please the Court: Congress in 1998 reacted to a new problem. After its 1995 Reform Act, which dealt with the crisis of abuse of federal claims in federal court, plaintiffs had responded by shifting their litigation to state court. The upshot was that the pre-'95 abuses were happening; they were just happening in state court. Congress, in the Securities Litigation Uniform Standards Act, SLUSA, took three steps. First, it precluded certain causes of action. Second, it modified its anti-removal bar. And, third, it eliminated concurrent jurisdiction for many '33 Act federal claims in state court. Respondents disagree with this third one, but the text, structure, and purpose are all against them. And the best way of understanding our argument is this: If Beaver County brought the exact same complaint that they did here, alleging a federal '33 Act claim, but did one thing differently, they also brought a state law claim, they'd be knocked out of state court. That's their own reading. But, they say, because they didn't bring their state law count, they are now -- the state law claim, they are now entitled to bring their federal claim in state court.
Ruth Bader Ginsburg: Mr. Katyal --
Neal Kumar Katyal: That makes zero sense.
Ruth Bader Ginsburg: Well, one could say, with respect to your argument, that Congress chose a rather obtuse way of saying that federal courts shall have exclusive jurisdiction. It could have simply said, in covered class actions related to claims under the '33 Act, federal courts shall have exclusive jurisdiction, period, and that would be clear and everybody would understand and you would prevail. But the Congress certainly took an odd route to getting there.
Neal Kumar Katyal: Justice Ginsburg, we agree with you that this is an obtuse way of getting there. And, you know, this body could have written a much better statute than our friends across the street or so on, but I do think it's the best way of understanding the text. I'll explain why in a moment. And as I was saying a moment before, the anomaly on the other side is far worse. This would then -- in no other statute that they point to, that I've ever heard of, does bringing a state count force you out of state court, but that's their reading. And if Congress is going to do something that strange, you would expect them to have said so --
Sonia Sotomayor: I'm sorry, I thought the whole purpose, the main purpose, of SLUSA was just that, to ensure that claims of this particular type were not covered under state law but covered under federal law. If I accept that that was the main purpose of Congress's position, what difference does it make who adjudicates the claim if both courts are going to be bound by federal law?
Neal Kumar Katyal: Justice Sotomayor, we disagree with the premise and what it eventually leads you to in your -- in your question to me in terms of your conclusion. So we disagree that the main purpose was preclusion of state claims. They pointed to nothing saying so. And I'll walk you through the actual statutory findings in the text of the statute which I think rebel at that. And then even if it were a main purpose to deal with the precluded claims, there's certainly nothing to exclude, and I think there's legislative history and the statute itself is pretty clear that Congress also had in mind the abuse that was going on because these federal claims were being brought to -- were being brought in state court. And, you know, the text of the statute itself, Justice Sotomayor, says that.
Sonia Sotomayor: Doesn't your -- doesn't your reading contain an inherent contradiction? If the first clause is supposed to preclude or give exclusive jurisdiction to the district courts over all covered class actions, which under your reading includes even those that are not federal --
Neal Kumar Katyal: Yes.
Sonia Sotomayor: -- why then have the second "except"? Isn't there a tension between the two?
Neal Kumar Katyal: No, I don't think there's a tension. As our reply brief, you know, I think, outlines, it's exactly actually the compromise that was struck in the '34 Exchange Act because the Exchange Act --
Sonia Sotomayor: Well, you're -- there's an inherent tension in the two "except" clauses otherwise. You're giving -- you're saying the second "except" helps you, but --
Neal Kumar Katyal: I don't --
Sonia Sotomayor: -- they're contradictory on that.
Neal Kumar Katyal: I don't think they're contradictory. I think that what our reading does is leave the '33 and '34 Acts in exactly the same position; that is to say that both of them say if you're bringing a federal claim, either '33 or '34, you can't bring it in state court. You're ousted of jurisdiction.
Sonia Sotomayor: I -- I'm sorry. Your -- your -- your reading of that first "except" clause --
Neal Kumar Katyal: Uh-huh.
Sonia Sotomayor: -- is that it covers all covered class actions as defined in p(f)(2). P(f)(2) defines covered class actions only as those that have 50 or --
Neal Kumar Katyal: Correct.
Sonia Sotomayor: -- 50 or more people, a certain amount of damages.
Neal Kumar Katyal: Correct.
Sonia Sotomayor: That could include federal or state law claims. Under your reading, this reference to "except" is definitional, p(f)(2).
Neal Kumar Katyal: Justice Sotomayor, you're right to say that under our reading the except -- the jurisdiction that is ousted of the state court is greater than what is precluded by Congress. That was intentional. What I'm trying to say is that's exactly what happened in the '34 Act. And it's done so for good reason, because as this Court said in Chadbourne, when Congress is precluding something, that's very strong medicine. That's them saying to states you can't have this law at all, the substantive law, but when we're talking about jurisdiction over federal claims, Congress is the master of that and can -- they can decide, you know, where to bring a case and so on. Now, you had asked about the legislative history and I want to get back to that because -- and the purpose because I do think it is very strong. The purpose is found in our blue brief -- the statutory findings are in our blue brief at page 20. I want to isolate three of them. This is the text of the statute.
Elena Kagan: Could we -- I'm sorry, could we -- could we just talk about the text before we speak about the purpose --
Neal Kumar Katyal: Sure.
Elena Kagan: -- which -- because, you know, "except as provided" in 77p, the natural way to read that is we look at 77p, the whole thing, and we see what's the "except" that's provided in. We don't look to an ancillary definitional provision that all it does is define a term. We look for a rule that might be in conflict, that could be taken to be in conflict, with the jurisdictional provision.
Neal Kumar Katyal: Right. So --
Elena Kagan: So, you know, it just seems as though your interpretation does a very odd thing, textually, when you read "except as provided" in Section 77p to say let's look to a definition in that section.
Neal Kumar Katyal: So, Justice Kagan, you're reading from Section 22(a), the "except" clause, which is also v -- which is also 77v(a). It's found in our blue brief at page 8a. And you're absolutely right that the clause says "except as provided" in Section 16. And you'd say -- if that alone, which is the part you read to me, were enough, you would say, well, do you look to the definition? It's unclear. But it's more than that because then it says "with respect to covered class actions." So there are two halves to this "except" clause. The first half is, you're right -- is to say -- point you in the direction of where to look, but it's the second part with respect to covered class actions that I think our reading gives effect to these words and theirs does not. That is, it points you --
Samuel A. Alito, Jr.: Mr. Katyal, I had -- I had a similar concern as Justice Kagan. Our late colleague wrote a book called Reading Law, which provides guidance about how you read statutes. And I looked through that to see what we are supposed to do when Congress writes gibberish. And that's what we have here. You said it's obtuse. That's flattering. (Laughter.)
Samuel A. Alito, Jr.: And we have very smart lawyers here who have come up with creative interpretations, but this is gibberish. It's -- it is just gibberish. It says -- the provision that was read says that the state courts have jurisdiction over federal claims, except as provided in Section 77p, which says nothing whatsoever about jurisdiction for state -- for federal claims.
Neal Kumar Katyal: So, Justice --
Samuel A. Alito, Jr.: So what are -- what are we supposed to do with this?
Neal Kumar Katyal: Justice Alito, I -- I think I'd say three things about that. First is -- as I was saying to Justice Ginsburg, I don't think the statute's by any stretch a model of clarity, but I don't go so far as to say it is gibberish. Your late colleague in that book did talk about how if you really can't figure it out, then you look to, for example, the statutory findings, that even as a textualist as he was, said, you know, look to that to try and figure out what Congress was getting at. And this returns me to Justice Sotomayor's claim -- question and the blue brief at page 20, because the statutory findings really do tell you, I think, what Congress is doing. They're as follows: "Since enactment of that [Reform Act] legislation, considerable evidence has been presented to Congress that a number of securities class action lawsuits have shifted from Federal to State courts." And then "this shift has prevented that Act from fully achieving its objectives," and then "it is appropriate to enact national standards [...] while preserving the appropriate enforcement powers of State securities regulators and not changing the current treatment of individual lawsuits."
Sonia Sotomayor: I'm sorry, that says nothing about ousting the state courts. It says providing national standards that will control state enforcement agencies. So whether it's state court or federal court, it's still the same national standards.
Neal Kumar Katyal: Well, it's not the same national --
Sonia Sotomayor: But -- but -- but going --
Neal Kumar Katyal: -- standards because Congress cared very much about the procedures. The whole Reform Act did things like say you can't have professional plaintiffs, there are limits on attorneys' fees, all sorts of stuff --
Sonia Sotomayor: What was very clear in the Act is that there are certain sections that were clearly intended to be national, certain things that were and were not covered, and then there were, you're right, some procedural aspects, but nowhere in those procedural aspects did Congress say they have to be followed both in state and federal court.
Neal Kumar Katyal: In the Reform Act, you're absolutely right, but I do think that is the way of understanding what SLUSA was doing. It's precisely because they weren't followed, Justice Sotomayor, in state court --
Sonia Sotomayor: Can we -- can we go back to your definition? A covered class action under, I call it 77p, it's just easier for me, has a bunch of different subsections.
Neal Kumar Katyal: Yes.
Sonia Sotomayor: You're relying on the definitional one. But each of the pertinent ones also talks about class action limitations, removal of covered class actions by referencing "p" in its entirety. What is either illogical, contextually wrong, or improper about looking at all of the provisions of "p" that talk with respect to covered class actions?
Neal Kumar Katyal: I --
Sonia Sotomayor: Because b and c are certainly talking with respect to covered class actions.
Neal Kumar Katyal: So I certainly agree with you, Justice Sotomayor, that when Congress used the -- and pointed to the entire clause, it could point to any part of the clause, you know, and I think the definition does give you the best indicia of it. But there's nothing that says that you should only look, as my friend on the other side does -- says, only look at the preclusion provisions. After all, these are about preclusions.
Sonia Sotomayor: No, he's not doing that. He's saying you look at every provision that mentions or talks about the covered class action.
Neal Kumar Katyal: And if you did, then you'd look to the definition as well. And that would say, as I was saying to Justice Kagan, except as provided in Section 16, so you look to Section 16, with respect to covered class actions, and you look to what that is.
Elena Kagan: Well, if your reading were right, Mr. Katyal, it would be written something like: Except with respect to class actions as defined in -- not as provided by -- as defined in 77p(f)(2), not just 77p. So there are two ways in which your reading really does seem at odds with the statutory text. First by not saying the -- the text says provided in, you're saying defined by, and, second, the -- the statute makes clear you look to 77p as a whole, not to some sub-subsection within it.
Neal Kumar Katyal: So I don't think either of those means that our reading is at odds, Justice Kagan. I think all that suggests is that, you know, as I was saying to Justice Ginsburg, Congress had other ways of writing the statute that are clear, that could have been clearer, but this Court confronts this -- and this returns to Justice Alito's question -- all the time, in big cases like Burwell, in small cases like Perry versus Merit Systems Protection Board last term, you're dealing with the statute that, maybe if you look at it one way it's gibberish, maybe some of you could have written it better, but it still has to be given some meaning. And our reading of --
Ruth Bader Ginsburg: Under your reading -- under your reading, Mr. Katyal, are there any 1933 Act claims that could be brought, federal claims, under the 1933 Act that could be brought in state court?
Neal Kumar Katyal: Absolutely, Justice Ginsburg. And that's why, to return to your first question, why Congress didn't say exclusive jurisdiction as they did in the '34 Act. Congress in SLUSA made -- took care, and this is Finding 5 that I had read to Justice Sotomayor earlier, to say, look, we want to preserve the vast majority of concurrent jurisdiction in state courts. That's individual lawsuits and class actions that aren't covered. So that's derivative actions or actions not seeking money damages or actions for fewer than 50. But if you accept their reading, what you're essentially doing is saying, look, Congress in this statute, they built this super safe house, you know, in SLUSA with a front door that was locked that had alarm systems to bar against federal court abuse of federal claims -- that's the Reform Act -- and then the side doors they locked because they were worried about state court abuse and federal court abuse of state law claims -- that's Justice Sotomayor's point -- but they didn't even build the back of the house. They didn't build even a door to deal with the problem of all of this being repleaded now in state courts. These are federal claims.
Stephen G. Breyer: -- kind of claims?
Elena Kagan: Well, but you're -- you're forgetting that most securities actions are Exchange Act actions. They're not Securities Act actions. And for that, Congress did everything it wanted because Exchange Act actions are all in the federal courts. There is exclusive jurisdiction there. So essentially what was happening was that in Exchange Act actions, it -- that exclusive jurisdiction was being compromised by the ability of people to bring state law actions. And Congress completely shut that down. So Congress did everything it wanted with respect to Exchange Act actions, which are the lion's share of securities lawsuits.
Neal Kumar Katyal: Justice Kagan, I don't know about lion's share or not, but it is very clear, manifestly clear, that SLUSA dealt with both problems, '33 and '34. There are two separate titles that deal with this. And there is a good -- you know, as the amici here say, this is a huge problem on the ground. You know, the Alibaba brief says that 50 percent now of these '33 Act claims involving IPOs, which, you know, if it's an IPO, it's usually a '33 Act claim, 50 percent of them have parallel --
Stephen G. Breyer: All right --
Neal Kumar Katyal: -- federal and state court litigation.
Stephen G. Breyer: Let me ask one textual question and one purposeful question. All right. The textual question, think of v, okay, and v, it -- it talks about "except as provided in 77p," et cetera, and covered, "suits in equity and actions at law," does that phrase specifically refer to the '33 Act?
Neal Kumar Katyal: Yes.
Stephen G. Breyer: It says the '33 Act?
Neal Kumar Katyal: Yes, so it says -- it's all actions at law, and the next words -- and, again, I'm reading at Blue Brief page 8a. We're reading 22a or 77v(a): "Actions at law brought to enforce any liability or duty created by this subchapter." Created by this subchapter.
Stephen G. Breyer: Well, does this subchapter mean '34, '33 --
Neal Kumar Katyal: Yes.
Stephen G. Breyer: -- or is it ambiguous between the two?
Neal Kumar Katyal: It's not ambiguous, Justice Breyer. It is modifying the '33 Act.
Stephen G. Breyer: Yes.
Neal Kumar Katyal: And that is crucial to our argument. The title --
Stephen G. Breyer: Yeah, it is crucial, okay.
Neal Kumar Katyal: Yes. The title of --
Stephen G. Breyer: Yeah, yeah, yeah. Your argument is stronger with that.
Neal Kumar Katyal: Absolutely.
Stephen G. Breyer: I -- I -- I agree.
Neal Kumar Katyal: The title of this act is called -- this provision is called --
Stephen G. Breyer: Yeah.
Neal Kumar Katyal: -- Jurisdiction of Offenses in Suits. It is about federal claims.
Stephen G. Breyer: Okay, okay. I'll ask my question to the other side. The -- the -- the -- the -- on the -- on the purpose, I -- I assumed that you put the strongest legislative history argument you could find on page 20 of your brief -- and that's when President Clinton, when he signed it and so forth and all that stuff you have there -- and -- and it seemed to me in reading through the legislative history, I couldn't find anything that really makes clear that it's referring to the '33 Act. It could be just referring to the '34 Act, I think. Is there something you want to point me to that -- that would absolutely make clear that this is referring to the '33 Act?
Neal Kumar Katyal: I think the conference report does --
Stephen G. Breyer: Where?
Neal Kumar Katyal: -- in its very first lines.
Stephen G. Breyer: Says what?
Neal Kumar Katyal: And I think it is talking about both the --
Stephen G. Breyer: In respect to --
Neal Kumar Katyal: -- '33 and '34 Act. And there's no --
Stephen G. Breyer: It's -- it's absolutely clear on -- it's pretty clear on that fact?
Neal Kumar Katyal: I do think it's clear. I think that, you know, that -- I mean, and Congress, again, this returns to my point to Justice Kagan --
Stephen G. Breyer: All right. Okay. Okay.
Neal Kumar Katyal: -- Congress affirmatively --
Stephen G. Breyer: I'll go read that. I'll read it. I'll read it.
Neal Kumar Katyal: -- modified the '33 Act.
Stephen G. Breyer: Got it. I'll read it.
Sonia Sotomayor: Assuming --
Stephen G. Breyer: My textual argument question is this. My textual question is that what I think your argument, but perhaps not the government's argument, requires us to read c in a pretty unnatural way, that's -- that's p(c), see, because it says "as set forth in subsection (b)." So what you want us to do is to look at subsection (b) and you -- take that as referring to -- which is possible, but it's tough -- not having the words "based upon statutory or common law of any state." You see, because -- because if it -- if it picks that up, well, then -- then all we're talking about is those actions that have the state action within it are removable, which explains the anomaly that you started out with and it would just be an anomaly and you'd say, well, it isn't a practical anomaly because no sensible lawyer is going to include the state one anymore. He'll just include the '33 one.
Neal Kumar Katyal: Right. So, Justice Breyer, I get --
Stephen G. Breyer: So how do I -- how do I deal with that textual problem?
Neal Kumar Katyal: Certainly, I think the Solicitor General's way of dealing with that is available to you, but I think that our argument does not depend on, you know, on read -- reading the removal provision the way it does. All our argument depends on -- it's a straight-forward reading, and it -- you know, I understand Justice Kagan --
Stephen G. Breyer: It says "a covered security as set forth in subsection (b)." Now, there are commas around the (b), around that phrase I just read, I agree, but the most natural thing is it's referring to those covered actions that are referred to in (b). And what it refers to in (b) are covered actions all right, but -- but they're involving state law.
Neal Kumar Katyal: Right. So my only point to you is the first -- our argument is really about the first half, the jurisdiction clause.
Stephen G. Breyer: Yeah.
Neal Kumar Katyal: And the jurisdiction clause is all you need to look at. It says that there's concurrent jurisdiction, that's what the '33 Act said, except as provided in Section 16 with respect to covered class actions. And so, in order to decide does a state court have jurisdiction, you look to Section 16 and you look to the definition of a covered class action. Our argument is that is, you know, it's not the -- you know, the usual way "provided" is -- is written -- Justice Kagan's right to say that -- but it's not such an unusual way. There are other statutes that do exactly this. You know, the National Guard statute and the scholarship statute, vessels, and the like, our example about -- you know, about parking that's in our reply brief at page 5. These are ways of doing this. And, again, I think that, you know, if Congress was going to do what my friend on the other side says --
Stephen G. Breyer: Uh-huh.
Neal Kumar Katyal: -- which is to say that by bringing a state law count in your federal complaint, you now are ousted out of state court, one would expect that --
Sonia Sotomayor: All right.
Stephen G. Breyer: You --
Sonia Sotomayor: So why not -- why not make the second "except" clause read identically? But the Congress didn't. Under your theory, assume somebody brings a 1933 Act claim, in state court, tied to a non-1933 state law action. Under your theory, what happens to that case?
Neal Kumar Katyal: Yep.
Sonia Sotomayor: It can't get removed because under (c) you can only remove those claims that are -- state law claims that are based on 1933. And this says you can't remove them. So now what happens?
Neal Kumar Katyal: Right. So, Justice Sotomayor, you're exactly right that, under our reading, the preclusion is narrower than the ousted jurisdiction in SLUSA so that there is a category of cases, non-covered securities or claims that aren't about fraud, in which there is no preclusion, but we believe there is no state court jurisdiction over these federal claims.
Sonia Sotomayor: So your theory is that on those claims they just get ousted out of court, even though they have a non-covered, completely viable non-'33 state law action?
Neal Kumar Katyal: Exactly. And that's exactly the balance --
Sonia Sotomayor: That's -- that's a fairly extreme result on a reading that bucks the presumption, and one that exists when there's an ambiguity, that says we presume in favor of concurrent jurisdiction. So you're taking a very strong presumption, turning it on its head, and saying we're ousting state courts over jurisdiction of securities actions that have nothing to do with federal law.
Neal Kumar Katyal: So -- so two things.
Sonia Sotomayor: That's -- that's what you're saying.
Neal Kumar Katyal: Well, I don't think that's exactly right. So two things. First is --
Sonia Sotomayor: Why is it not exactly right?
Neal Kumar Katyal: Because, first, I don't think this is some anomalous reading. This is reading the '33 Act exactly the way the '34 does. Now, you say --
Sonia Sotomayor: No, this Act does not preempt those state law non-1933, non-federal actions.
Neal Kumar Katyal: Justice Sotomayor, with -- with respect, it actually does. SLUSA has a removal provision and a preclusion provision for the 1934 Act.
Sonia Sotomayor: For those state law claims that relate to federal claims -- that relate to federal claims. But it explicitly exempts out those that don't.
Neal Kumar Katyal: With respect to state claims, it's precluding --
Sonia Sotomayor: Exactly. State claims.
Neal Kumar Katyal: -- in the '34 Act, it's precluding the same basket of state claims as the '33 Act, and the jurisdiction, the way we read it, is exactly the same. That is, that same category of cases, non-covered securities, non-fraud cases, there's no jurisdiction in state courts for them, but they are -- but they don't happen to be precluded under both the '33 and '34 Act.
Sonia Sotomayor: Exactly.
Neal Kumar Katyal: Now, you -- and now, you had asked about the presumption about concurrent jurisdiction. And I don't think that presumption even applies here. Those cases that my friend cites are cases --
Sonia Sotomayor: So how about --
Neal Kumar Katyal: -- in which the statute's silent --
Sonia Sotomayor: -- anti-commandeering cases? In what other situation where we do not have a federal law that preempts a state law have we ever permitted the federal government to tell the states that they can't adjudicate a case under their own law?
Neal Kumar Katyal: Well, my friend on the other side hasn't even made that argument, but I do think preclusion --
Sonia Sotomayor: I -- I --
Neal Kumar Katyal: -- and preemption --
Sonia Sotomayor: -- I think it's a very natural argument. Under what --
Neal Kumar Katyal: Preclusion and preemption are pretty natural concepts in the law. And --
Sonia Sotomayor: But it's not -- you just said to me the '33 and the '34 Act do not preclude certain state law securities actions. If they're not precluded, how can we give a reading to this provision that would stop the state courts from adjudicating those cases?
Neal Kumar Katyal: Justice Sotomayor, I'd caution the Court into adopting a ruling that would call into question the constitutionality of not just the '33 Act --
Sonia Sotomayor: No --
Neal Kumar Katyal: -- but the '34 Act.
Sonia Sotomayor: -- you can -- you can pass a federal law that says this federal law precludes these actions. But if you don't have one that says that --
Neal Kumar Katyal: But I think --
Sonia Sotomayor: -- how can you order the state court not to adjudicate a claim that is not precluded --
Neal Kumar Katyal: So the --
Sonia Sotomayor: -- that is expressly not precluded.
Neal Kumar Katyal: The answer to this is found in the Senate report brief -- Senate report at page 4 in which they said we are very concerned for federalism reasons about preclusion because it's such strong medicine. But when we're dealing with jurisdiction, we have the ability to paint with a broader brush without interfering with federalism principles. Here, we're only talking about federal court count -- federal court causes of action, and all Congress is saying is that they are the master of that and you can't bring those in state court when it's subject to very different standards than you can in federal court.
Ruth Bader Ginsburg: Mr. -- Mr. Katyal, you make this as a -- as taking -- allowing a state court to hear a federal claim that shouldn't be there. But on your reading of this statute, the cure is in your own hands, because you agree with the government that you could remove this case to federal court and then you'd have your federal forum. But you didn't do that. You didn't --
Neal Kumar Katyal: So -- so you're about to hear from the government about their -- their theory. We do think it does solve a lot of the policy concerns that Congress was getting at. We think our textual reading is better because we actually give effect to the 12 words in the -- in the modification of federal court jurisdiction. And so we think that's why you should adopt our reading over the Solicitor General's. If I may reserve.
John G. Roberts, Jr.: Thank you, counsel. Mr. Kedem.
Allon Kedem: Mr. Chief Justice, and may it please the Court: Petitioners are correct that Congress enacted SLUSA to reestablish federal courts as the preferred venue for large class actions involving nationally traded securities. But it did so not by eliminating state court jurisdiction over suits involving federal claims but by permitting removal of such suits from state to federal court. Perhaps a good place to start, Justice Breyer, would be with your question about the removal provision and how, under the text of that provision, removal of actions that only involve federal claims is permitted. And I think it's easiest to understand if you're looking directly at it, 77p, subsection (c), on page 1a of the red brief. I think the question for the Court is whether the limiting clause, as set forth in subsection (b), modifies the phrase immediately before it, "involving a covered security," or instead modifies the phrase that comes at the beginning of the sentence, "any covered class action." If it modifies "any covered class action," Justice Breyer, I think you would be correct that what Congress would mean by that is the type of class action that's specified at subsection (b), which would have all of the criteria, including that it would be pleaded under state law. But if we're correct that instead it modifies "involving a covered security," then I think you would look to subsection (b) to answer the question what type of connection to a covered security did Congress have in mind when it used that phrase?
Stephen G. Breyer: Well, why, if all they wanted -- the parenthetical "as set forth in subsection (b)" -- that's the words we're talking about, right?
Allon Kedem: That's correct.
Stephen G. Breyer: And it's in commas.
Allon Kedem: That's correct.
Stephen G. Breyer: Why wouldn't they say "as set forth" and then they'd refer to (2)(a), the definition of covered class action?
Allon Kedem: I think what we're talking about is not just the definition of covered class action. It's what Congress meant by the phrase "involving a covered security," which is a phrase that doesn't have its own definition.
Stephen G. Breyer: Ah.
Allon Kedem: And to figure out what that means, you look at (b)(1) and (b)(2), which talk about certain types of misconduct in connection with the purchase or sale of a covered security. We think that's --
Stephen G. Breyer: True, but then -- then -- suppose, all right, involving a covered class action. Now --
Allon Kedem: But it's not involving a covered class action.
Stephen G. Breyer: What --
Allon Kedem: It's involving a covered security.
Stephen G. Breyer: Involving a covered security.
Allon Kedem: And we think -- we think for a few reasons it makes the most sense to read the limiting clause as applying to that phrase. First of all, based on the rule of the last --
Elena Kagan: So, Mr. Kedem, so now I understand your argument, but -- but still it doesn't really fit with (b)(1) and (2). I mean, if it were just involving a covered security, as set forth in subsection (b), you would look to something which told you what a covered security is. But (b)(1) and (2) don't do that. They talk about, you know, the kind of conduct that's illegal.
Allon Kedem: That's right.
Stephen G. Breyer: Yeah.
Allon Kedem: Because it's not just modifying "covered security." It's modifying the phrase "involving a covered security." And you have to figure out what does it mean to involve the security in the relevant sense. Perhaps it would be useful to consider an example of a hypothetical statute in which Congress imposed liability for "impeding interstate commerce as set forth in Section 100." In that case, I think you would want to look to Section 100 --
Stephen G. Breyer: Ah, I see. Okay.
Allon Kedem: -- and the type of impeding acts that are described there to tell you what it means to impede in the relevant sense.
Stephen G. Breyer: Okay. So your point -- your point is involving a covered security?
Allon Kedem: That's right.
Stephen G. Breyer: So you have to both know what a covered security is, and you also have to know is what kind of involvement.
Allon Kedem: That's right. The first part is very --
Stephen G. Breyer: And so for covered security you could have just referred to (3) where they define it, but you have to know a second thing, which is how is it involved?
Allon Kedem: That's correct.
Stephen G. Breyer: And (1) and (2) in (b) tell you how it is involved?
Allon Kedem: That's right. We think that's the better reading, first --
Stephen G. Breyer: Okay, I see.
Allon Kedem: -- based on the rule of the last antecedent --
Stephen G. Breyer: I see, I see, I see.
Allon Kedem: -- under which the limiting clause is most naturally applied to the thing that comes immediately before it, rather than to something that comes earlier in the sentence.
Stephen G. Breyer: I see.
Ruth Bader Ginsburg: Should we pass on -- pass on that in a case where there was no effort to remove? Removal isn't part of this case.
Allon Kedem: That's right. It's not squarely presented, but we do think that it's covered by the question presented in the following sense: both Petitioners and Respondents make structural arguments about the relationship between the except clause and the anti-removal provision in the penultimate sentence of 77v, subsection (a). And this is an explanation that responds to both of those arguments. Moreover, Petitioners make a very powerful policy-based argument that Congress could not have intended for federal claims to be stuck in state court where they wouldn't benefit from the protections of the Reform Act. That was the whole point of SLUSA. This is also a powerful response to that. In addition, we do think that it would be very useful --
Neil Gorsuch: So you --
Allon Kedem: -- that the lower court --
Neil Gorsuch: -- you understand the -- the legislative history that Justice Breyer was asking about is relevant to the '33 Act, not just the '34 Act?
Allon Kedem: That's -- that's right. Congress was concerned about both acts. In addition to the rule of the last antecedent, I would point to the fact that in between our two candidates for the limiting clause, "any covered class action" at the beginning of the sentence and "involving a covered security" later on, there's an intervening phrase, "brought in any state court." And that phrase doesn't have any obvious analog in subsection (b), which, as the Court is well aware, applies regardless of whether you're in federal or state court. And we think that strengthens the inference that the limiting clause should be applied to the thing adjacent to it.
Elena Kagan: Could -- I just want to get the -- the best version of your argument.
Allon Kedem: Sure.
Elena Kagan: (1) and (2) involve a covered security because what?
Allon Kedem: Because they involve certain types of misconduct in connection with the purchase and sale of a covered security. In other words, what does it mean to involve a covered security in a sense that's relevant for the removal provision? It has to have an omission with regard to that covered security, a false statement with regard to that covered security, and the like, the types of misconduct specified in those two provisions.
Sonia Sotomayor: Counsel, what do you do with our statement in Kircher? And I know you try to distinguish it.
Allon Kedem: Sure.
Sonia Sotomayor: But it very explicitly says removal and jurisdiction to deal with removed cases is limited to those precluded in the terms of subsection (b).
Allon Kedem: That's right.
Sonia Sotomayor: And that was the very argument that was raised there.
Allon Kedem: Well, the Court said it both ways in Kircher. It said it that way, that the two provisions, the scope of them is identical, but it also said that they were identical in that they both require certain types of misconduct.
Sonia Sotomayor: Counsel, that's a bit of a stretch. When I read the --
Allon Kedem: Well --
Sonia Sotomayor: -- opinion, every time it related to, itself to (1) or (2), it would say something like, like (1) and (2), or (1) and others. It would not limit itself to just (1) and (2). It would just --
Allon Kedem: I think it was talking about the types of misconduct at issue in 1 and 2. And the reason I think that is because the specific argument that the Court was considering in Kircher was the argument that the plaintiffs made that the case did not belong in federal court because it didn't involve the purchase or sale of a covered security. The defendants responded: Even if true, that's an argument about preclusion under subsection (b), not an argument about removal under subsection (c).
Samuel A. Alito, Jr.: Do you really think that whoever wrote this removal provision thought about all this stuff that you're telling us now?
Allon Kedem: I'm not sure that they thought about the rule of the last antecedent and the like. But I do think that --
Samuel A. Alito, Jr.: I mean, they set out to do what you say this does, and they decided this is the way we're going to do it.
Allon Kedem: I think it's --
Samuel A. Alito, Jr.: It is SO far from reality that it really strains credulity.
Allon Kedem: I think even if you think that our reading is a little bit of a stretch, I think the contrary reading is also a little bit of a stretch. I think --
Samuel A. Alito, Jr.: I mean, all the readings that everybody has given to all of these proceedings -- provisions are a stretch. (Laughter.)
Allon Kedem: I think -- I think --
Samuel A. Alito, Jr.: I'm serious. Is there at a certain point at which we say this means nothing, we can't figure out what it means, and, therefore, it has no effect, it means nothing?
Allon Kedem: Justice --
Samuel A. Alito, Jr.: Can we not -- we have to say it means something?
Allon Kedem: I would caution the Court against saying it means absolutely nothing. I do think that if the Court is concerned about the policy arguments that Petitioners raise, which we think are very important arguments, and based on the findings of fact in SLUSA these -- they are things that Congress was concerned about, we think that our removal argument gets to essentially the same place as a policy matter but with a much more plausible textual basis.
Stephen G. Breyer: Part of the problem, I mean, I don't think -- I don't find this as confusing as -- I mean, I might be wrong in how I'm looking at it -- but as Justice Alito. I'm thinking the drafter is given a task and his task is to do two things, economically, efficiently, I mean, that is efficiently with words. One thing he has to do is get rid of these state actions. That's one. And the second thing he has to do is to remove the federal act cases into federal court. Okay? And that's whether they're mixed, or not mixed, or so forth.
Allon Kedem: Right.
Stephen G. Breyer: If he was given that task, this is the language that does it. But I would expect there would be a report, and in this report there would be an explanation such as you gave me of the word "involving." And my guess is there is no such report.
Allon Kedem: That's correct.
Stephen G. Breyer: That moves me and --
Allon Kedem: There is no such explanation, but there's also no contrary explanation that we're aware of.
Stephen G. Breyer: Well, that's true. That's true.
Allon Kedem: If I could add two more textual points --
Stephen G. Breyer: Yeah.
Allon Kedem: -- that support our reading of the statute. If what is meant is the contrary reading, any covered class action of the sort that's specified in subsection (b), it's not clear what the words "involving a covered security" would be doing in that sentence. At best, it would be superfluous and at worst confusing and distracting.
John G. Roberts, Jr.: Thank you, counsel. Mr. Goldstein.
Thomas C. Goldstein: Thank you, Mr. Chief Justice, and may it please the Court: When the Petitioners' lawyer stands up and says in the first minute that his reading is obtuse and when the Solicitor General's lawyer spends the entire time on an argument that isn't in any of their briefs in the case, you know that the lawyers are scrambling to try and figure out what the statute means. And the way we think you would resolve that is to recognize that these words actually mean something. They may target a null set. They may not accomplish anything. But this Court has said in cases like Manning that if Congress is going to change this kind of law significantly, you don't find elephants in mouse holes. You don't say that obtuse language disrupts and takes away from the state courts a long-standing form of jurisdiction, and that's what the other side wants to happen here. The Securities Act of 1933, unlike the '34 Act, always has provided for state court jurisdiction. That is the way it has always been. And if Congress wanted to disrupt that and get rid of that, it would say so quite expressly.
Anthony M. Kennedy: I -- I can see the importance of deciding the removal issue here because it's central to the interpretation of the question -- the answer to the question before us. On the other hand, as Justice Ginsburg pointed out, the case wasn't removed. Could the -- a clear opinion be written and reserve the removal question?
Thomas C. Goldstein: Well, Justice Kennedy, I have learned that the answer to the question can the Supreme Court do X is always yes. (Laughter.)
Thomas C. Goldstein: You -- you can write an opinion that says we agree, for example, with the government and the Respondents that this language at the very least isn't clear enough to accomplish this result. We reserve for another day the removal question. To be -- and that honestly as a matter of jurisprudence is probably the right thing to do. You're talking about two things. They didn't remove it and it's not in the question presented. And if you want to signal to the lawyers how it is that we're supposed to litigate these cases, that's probably not the -- the best signal to send. On the other hand, it's true, for example, that if the Court were to understand the Kircher decision that we do and the structure between (b) and (c) in 77p as having a parallel in v(a), one could effectively resolve the removal question, but you could only, essentially, resolve it in the favor of non-removal. I -- it would be very hard, I think, to write an opinion honestly that says what should happen here is these cases should be removed under 77p(c).
Neil Gorsuch: Mr. Goldstein, speaking of gibberish --
Thomas C. Goldstein: Yes?
Neil Gorsuch: -- aren't we stuck with gibberish your way too? I mean, it seems like it's gibberish all the way down here --
Thomas C. Goldstein: It --
Neil Gorsuch: -- because -- because under your version, as I understand it, v(a), that first "except" clause, is superfluous. It doesn't -- doesn't do anything. And also we render "involving a covered security," that language, potentially superfluous in (c).
Thomas C. Goldstein: Okay. So --
Neil Gorsuch: So help me out with that.
Thomas C. Goldstein: I -- I --
Neil Gorsuch: And -- and I know -- I know we generally -- you know, we -- nobody likes gibberish, but it is our job to try and give effect whenever possible to Congress's language. It's not for us to assume that Congress's language means nothing --
Thomas C. Goldstein: Sure.
Neil Gorsuch: -- and was a waste of time. It went through bicameralism and presentment. And, normally, respect for the legislative process dictates that we afford some meaning to these words.
Thomas C. Goldstein: Fair -- fair enough. I will say, however, just to be clear, that you do have a background presumption that Congress would do something like this clearly and these are conforming amendments. To be sure, if you decided that my reading just came up with nothing and his was perfectly sensible --
Neil Gorsuch: But --
Thomas C. Goldstein: -- we would have a problem.
Neil Gorsuch: -- doesn't yours --
Thomas C. Goldstein: No.
Neil Gorsuch: -- indeed come up with nothing --
Thomas C. Goldstein: No. It doesn't.
Neil Gorsuch: -- with respect to that first "except" clause and also with respect to the "provided" -- "involving covered securities" --
Thomas C. Goldstein: Sure. So two things about that --
Neil Gorsuch: -- language? Help me out with that.
Thomas C. Goldstein: Okay. So the phrase "except as provided in section X with respect to subject matter Y" appears throughout the U.S. Code a bunch of times.
Neil Gorsuch: I'm talking about this one now.
Thomas C. Goldstein: Okay, I promise that --
Neil Gorsuch: Let's get there.
Thomas C. Goldstein: Okay. Mixed cases is one example. Also the cases like those described in your Merrill Lynch versus Manning decision. So there are cases that involve either a state law claim that isn't expressed -- that -- that relies on the Securities Act of -- the '33 Act, for the substantive standard or a case that combines a '33 Act case with also a state law case. And so --
Neil Gorsuch: Help -- help me out. How -- how --
Thomas C. Goldstein: Okay. So what would happen is that if Congress had not amended v(a), what you would have had is, in 77p(b), a prohibition on a complaint that combines a state law --
Neil Gorsuch: Right. It's a -- it's a straight prohibition, this Court has said, in Kircher. It's not -- it has nothing to do with jurisdiction.
Thomas C. Goldstein: Well --
Neil Gorsuch: It's a preclusion provision.
Thomas C. Goldstein: Okay. Fair enough.
Neil Gorsuch: So -- so --
Thomas C. Goldstein: It is -- it is much closer to a jurisdiction --
Neil Gorsuch: You don't need it.
Thomas C. Goldstein: It is much closer to a jurisdictional provision than the definition in (f)(2). It says shall not be --
Neil Gorsuch: Well, this Court -- this Court has said it's a preclusion provision.
Thomas C. Goldstein: Okay.
Neil Gorsuch: So we're stuck with that --
Thomas C. Goldstein: Okay. But it is --
Neil Gorsuch: -- all right? Work with -- work with -- just let me -- work with me, all right?
Thomas C. Goldstein: Sure.
Neil Gorsuch: You can't refer to (c) because we have another "except" clause that refers to (c). So it has to refer to (b), but there's no point in referring to (b) if Kircher is right and this is just a preclusion provision.
Thomas C. Goldstein: I would disagree. And so, if you were to ask -- to Justice Breyer's point, if -- if you gave a drafter a mission, what would they do? If I -- if this is the mission and that is (b) -- under 77p(b), what we're going to do is bar complaints, call it preclusion, bar complaints that combine a state law claim that involves a covered security and is a covered class action with a -- some other claim, so a '33 Act claim. And if what you wanted to do is avoid confusion about what you do with the concurrent jurisdiction under v(a), because that same complaint would both be precluded under p(b) and within the concurrent jurisdiction of the states under v(a), it makes perfect sense to have a conforming amendment that says, okay, the -- the concurrent jurisdiction doesn't include the cases that we just barred in p(b).
Neil Gorsuch: But that's stating the blindingly obvious.
Thomas C. Goldstein: Oh, well, you know, to Mr. Katyal's point about closing doors --
Neil Gorsuch: That's superfluous.
Thomas C. Goldstein: -- and windows and everything -- it is not superfluous.
Neil Gorsuch: It's closing a door twice. It's not closing a window.
Thomas C. Goldstein: It is not superfluous, sir, because, remember, jurisdiction says the courts don't have jurisdiction no matter if the defendant invokes this matter -- this provision or not. It is a categorical instruction to the courts; whereas p(b) is something that --
Neil Gorsuch: Okay. You haven't helped me out much there. Maybe you can help me with the -- the language in -- in (c), "involving a covered security."
Thomas C. Goldstein: Sure.
Neil Gorsuch: How is that not superfluous on your reading?
Thomas C. Goldstein: It is only an indication of where it is that you look in p -- in 77p, because there are a lot of provisions that are in 77p. So, if you say look at 77p, what happens to covered securities? If I just -- if you just take the language in these terms and you ask what does 77p provide with respect to covered securities --
Neil Gorsuch: I think we're speaking past each other again, because I -- I'm referring to, I'm sorry, 77p(c), all right?
Thomas C. Goldstein: Oh.
Neil Gorsuch: Which says "any class -- covered class action brought in a state court involving a covered security as set forth in subsection (b)." The government's position is that the words "involving a covered security" must be doing some work. And it seems to me --
Thomas C. Goldstein: Oh, I -- I -- I'm not sure what you're reading from, sir. You're talking about in v(a) --
Sonia Sotomayor: The removal.
Neil Gorsuch: The removal provision.
Thomas C. Goldstein: Of v(a)?
Neil Gorsuch: No.
Thomas C. Goldstein: Okay. Of 77p(c)?
Neil Gorsuch: P(c).
Thomas C. Goldstein: Okay. Great.
Neil Gorsuch: Okay? Still p(c).
Thomas C. Goldstein: Yes. Right.
Neil Gorsuch: All right? "Any covered class action brought in a state court involving a covered security as set forth in (b)." The government makes the argument that if, in fact, all you were doing was referring to (b), including state law classes -- state law causes of action, you wouldn't need "involving a covered security."
Thomas C. Goldstein: There's going to be --
Neil Gorsuch: That language would be superfluous.
Thomas C. Goldstein: Well, there would be superfluity on anybody's reading because "brought in any state court" would also be arguably superfluous; "any covered class action" would be superfluous. If all you're doing is saying pick up the cases in (b) -- what Kircher says and I do think it does -- Justice Sotomayor is right that it --
Neil Gorsuch: No, no, because we're talking about removal here. So you have to identify cases that are in state court in order to do any of that.
Thomas C. Goldstein: Okay. Well, then any covered class action. Okay?
Neil Gorsuch: Any covered class action could be one in federal court. So it makes sense to put it --
Thomas C. Goldstein: No, I'm just saying in terms of it would be superfluous as -- as well.
Neil Gorsuch: I don't see why, any covered class action brought in state court may be removed.
Thomas C. Goldstein: Well, everything --
Neil Gorsuch: That makes sense.
Thomas C. Goldstein: Well, every -- (b), everything that is in (b) is with respect to a covered class action. To the point that this statute is not drafted with incredible precision, what Kircher says is going on in SLUSA is in (b) we're going to ban a set of cases; in (c) we're concerned that we might have recalcitrant state courts; the cases that are banned in -- in (b) can be removed under (c). And I don't even think this last antecedent argument would help the other side very much for two reasons. The first is the last antecedent is "covered securities." It's not "involving a covered security." And the second is you have to ask, Justice Kagan, when -- when they refer to involving a covered security, it's not just involving a covered security in the air; it is an action involving a covered security. And that action has to be one that's based on state law.
Elena Kagan: I'll -- I'll add to that. I mean, as I stare at it a little bit more, I wish I had asked Mr. Kedem, "and shall be subject to subsection (b)," because that suggests that it has to be dismissed, and you wouldn't want to dismiss the kind of cases that Mr. Kedem wants to remove.
Thomas C. Goldstein: His whole point is that you wouldn't dismiss them, but that's Your Honor's point.
Elena Kagan: Yeah, but that would make "and shall be subject to subsection (b)" superfluous and -- and essentially mean nothing.
Thomas C. Goldstein: Right. So just to circle back around to the question, and, Justice Alito, you -- you have pointed out that maybe this thing does nothing at all. That may well be true. We do think it picks up the mixed cases. The mixed cases did exist previously, but --
Samuel A. Alito, Jr.: What sense does that -- what sense does that make? The fed -- the state courts have concurrent jurisdiction over '33 Act claims, except if a lawyer is foolish enough to include in the state court complaint state claims that fall within the -- the prohibition? What -- what sense does that make?
Thomas C. Goldstein: Well, Justice Alito, it would make sure that there isn't confusion. It would resolve an ambiguity. It's not intended to do very much. It's a conforming amendment. We don't think that the statute -- this provision, which isn't discussed anywhere in the legislative history at all, is intended to accomplish very much. All it's intending to do, we think, and it obviously didn't do it, is --
Ruth Bader Ginsburg: Which -- which provision are we talking about?
Thomas C. Goldstein: The v(a) amendment of the jurisdictional provision.
Ruth Bader Ginsburg: So you -- are you answering the road to nowhere?
Thomas C. Goldstein: Yes. I'm answering the road to nowhere. We don't think that it is a road to nowhere because it does make clear that the courts, without regard to whether or not the defendant invokes p(b), do not have jurisdiction. It actually accomplishes that result. But no matter --
Ruth Bader Ginsburg: Is it just matching the jurisdictional to the preclusion and removal?
Thomas C. Goldstein: All right. If you -- if you told someone to write a statute that says modify v(a) to make sure there isn't jurisdiction over the cases we just banned, you would use this exact language. And the one thing I do want to be clear on is that this phrase -- we do start just with the simple text, that phrase, "except as provided in section X with respect to subject matter Y," everywhere in the U.S. Code it's used refers to the -- the person to a rule. It's the opposite of a "notwithstanding" clause. It always has some measure of superfluity -- superfluity. What it's doing is just -- you've got two different provisions and it tells you which one controls. A "notwithstanding" provision --
Ruth Bader Ginsburg: Mr. Goldstein, why -- why would Congress want to do that, given that if the federal claim is in federal court, there are, as Mr. Katyal pointed out, all these restrictions on counsel and who's the represented party? You have the same -- the federal claim in state court, and none of those restrictions apply.
Thomas C. Goldstein: That's the usual rule, Justice Ginsburg. And, remember, we have a really good indication that's what Congress intended, because that's the PSLRA. Congress, when it wrote the PSLRA against the backdrop of state law -- state court secured -- '33 Act class actions, wrote it to say that the procedural protections apply in cases that are -- are subject to the Federal Rules of Civil Procedure. What it decided to do is it matched the same compromise that's in the '33 Act itself, which is it allowed these cases to be decided in state court. And as we explained, state courts have their own discovery stays. They have it in their rules.
Stephen G. Breyer: There, I -- I see that. But, look, I have one textual question on your side.
Thomas C. Goldstein: Sure.
Stephen G. Breyer: My textual question, which we're discussing now, is we go to v.
Thomas C. Goldstein: Yeah.
Stephen G. Breyer: And let's look at the second part, which says "except as provided" in p(c) --
Thomas C. Goldstein: Yeah.
Stephen G. Breyer: -- you can't remove it.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: So that means if it's provided -- "except" as provided in p(c).
Thomas C. Goldstein: Yep.
Stephen G. Breyer: And it's talking about the '33 Act.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: All right. So now let's go over to -- to c. And since they're talking about removal of a '33 Act case --
Thomas C. Goldstein: A case with a '33 Act claim.
Stephen G. Breyer: With a '33 Act claim.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: A case with a '33 Act claim, we look to (c) and say (c), therefore, must refer in part to cases with '33 Act claims.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: And if that's so, since -- involving a covered security --
Thomas C. Goldstein: So, it would be a mistake --
Stephen G. Breyer: -- if it refers to -- if it refers to all of v, including the state law problem, there is virtually no scope.
Thomas C. Goldstein: No, that's not true. It's the mistake.
Stephen G. Breyer: Ah, you're going to -- I get it. I get it. You're going to say --
Thomas C. Goldstein: Here's what I think happened.
Stephen G. Breyer: All right. Is this the answer?
Thomas C. Goldstein: Yeah. So SLUSA is a door-closing statute.
Stephen G. Breyer: Yeah.
Thomas C. Goldstein: It looks back to the PSLRA and says we've had a statute that's been evaded a bunch. We just don't want it to happen again. So we're going to ban a set of cases that have shifted from federal to state court. Those are '34 Act cases by and large. We're going to ban those. What might a clever plaintiff's lawyer do? Well, what they might do is slap a '33 Act claim on here and say it's still within the concurrent jurisdiction of the state courts. So we're just going to make clear that's not true. That's all --
Stephen G. Breyer: Okay.
Thomas C. Goldstein: -- that this provision does.
Stephen G. Breyer: Now, this is my choice then. All right. The choice is reading v for '33 Act, back to c, and when they talk about (c), which refers to (b), they either mean all of (b), which is a case with a state law claim in it --
Thomas C. Goldstein: Yes.
Stephen G. Breyer: -- and also a '33 Act claim.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: That's your view.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: Or the government's view is that involving just refers to (1) and (2) in (b) and so it refers to '33 Act claims sitting there by themselves in state court, too.
Thomas C. Goldstein: Right.
Stephen G. Breyer: That's my choice, right?
Thomas C. Goldstein: Yes.
Stephen G. Breyer: And I've got to see which of those two makes more sense in terms of the Act, which is why I started out with I want to know what they want to do --
Thomas C. Goldstein: Sure.
Stephen G. Breyer: -- with '33 Acts --
Thomas C. Goldstein: Sure.
Stephen G. Breyer: -- because a '33 Act is a big deal here.
Thomas C. Goldstein: Right.
Stephen G. Breyer: Then the -- the SG's position looks better.
Thomas C. Goldstein: Sure.
Stephen G. Breyer: And if it's a not much of a deal, a throwaway --
Thomas C. Goldstein: Right.
Stephen G. Breyer: -- then yours looks better.
Thomas C. Goldstein: Right. And so --
Stephen G. Breyer: Is that right?
Thomas C. Goldstein: Yes. So here is why you know that the '33 Act is the tail and the '34 Act is the dog. The -- the legislative history and the findings that my friend talks about refer to the shift of cases from federal to state court. These are not cases that shifted. '34 Act case shifted. The '34 Act requires you to file in federal court. What happened is people instead brought securities fraud cases under state law in state court to avoid the PSLRA. Fine. But that's not what happened here. Our case was under the Securities Act -- the '33 Act. It was fine in state court before the PSLRA. Congress didn't change that in the PSLRA. It's not an evasion of any existing standard. All the rules that applied to the '33 Act continue to apply to it. So what Congress was concerned about is a body of cases moving out of federal court to state court. These cases have been within the concurrent jurisdiction, non-removable, of the state courts since the day the statute was enacted. That's the compromise.
Samuel A. Alito, Jr.: If a plaintiff files a third -- files a claim in state court under a state law cause of action that mirrors the '33 Act in the -- in the respects that are set out in the statute, the state court can't entertain that. Am I right?
Thomas C. Goldstein: That is correct.
Samuel A. Alito, Jr.: Okay. Now given that, why in the world would Congress want the state court to be able to entertain the real thing, an actual '33 Act?
Thomas C. Goldstein: Because what Congress is targeting is it just doesn't want this resolved under state law. It wants it resolved under the '33 Act. It does want these nationally-traded securities cases to be litigated under federal law.
Samuel A. Alito, Jr.: I thought it -- what it wanted was it to be resolved under federal procedural law?
Thomas C. Goldstein: No, that is not uniformly true. Remember, we're talking about a concern of the evasion of the PSLRA. And Congress quite --
Samuel A. Alito, Jr.: Yeah, they wanted to -- they wanted to resolve in accordance with the PSLRA.
Thomas C. Goldstein: Right. And the PSLRA --
Samuel A. Alito, Jr.: Which wouldn't apply in state court.
Thomas C. Goldstein: Exactly right. And so that's our point and, that is, this is not an evasion of the PSLRA. If Congress wanted to delete the phrase in the PSLRA in cases that are subject to the Federal Rules of Civil Procedure and extend the PSLRA to the state court, or if it wanted to make all these cases removable or if it wanted to refer to a definition, there are 10 different easier ways and more clear ways, rather than to pick up a phrase that is not used in this way in the U.S. Code anywhere at all. I did want to just respond to an anomaly, it's akin to the one that you just described as possible, that my friend talks about. He says this: Look, under the Respondents' view, if what you did was combine a '33 Act claim with a state law claim, then we admit that case would be litigated in federal court. That is not correct. Under 1441, this is what would happen, is that the case would be removed to federal court and under 1441(c) would mandate severing out the prohibited state law claim and the case would be remanded to state court and it would be litigated in state court as a matter of law.
Samuel A. Alito, Jr.: The whole mixed case thing doesn't make the first bit of sense to me, that you've got the federal -- you have the '33 Act claim and you have the prohibited state act claim in state court. So then the state court knows -- has no jurisdiction whatsoever. What's going to happen? The defendant moves to dismiss. The plaintiff says, okay, fine, I dismiss my -- my -- my state act claim.
Thomas C. Goldstein: Right.
Samuel A. Alito, Jr.: Or the judge is going to say, oh, it's too late. You combined them to start out. The whole thing is dismissed. And then, if the statute of limitations hasn't run, the plaintiff can just come back and file the federal -- the '33 Act claim in state court by itself. Right?
Thomas C. Goldstein: Yes, but that's only because of SLUSA because what SLUSA is doing is barring the state law claim. That wouldn't be true if SLUSA didn't exist. And I just think that you just have to -- look, this is a narrow provision, not discussed in the legislative history. You can't ask it to do the world, which is to undo the jurisdiction of the '33 Act that has existed a long time and, that is, it's another anti-evasion principle. I do want to respond as well to my friend's statement that what he -- he says the exact opposite thing. He says his position produces a direct parallel between the '33 and '34 Act, and then to Justice Ginsburg says it treats the '33 and '34 Act wildly differently. It does treat them quite differently, and that is he is pointing to statements in the legislative history that suggest that some members of Congress believe that all securities cases would be litigated in federal court. But he leaves behind all of the non-class actions and he picks up cases that SLUSA clearly was not intended to apply to, and that is non-covered securities. SLUSA is quite clear about this, that it is intended to respond only with respect to the nationally-traded securities that are defined as covered securities. But this reading somehow picks up, according to the Petitioners, all of the covered class actions, even if it's not a nationally-traded security at all. And it would be incredibly weird to write a statute that says, except as provided in 77p with respect to covered securities, and to do something radically different from what 77p does with respect to covered securities. What it does is it causes them to be dismissed, not removed, and it applies only with respect to those that involve nationally-traded securities. And their reading doesn't. It is really, really obtuse. It is an extraordinarily unusual way to accomplish this result, which is a big result. Mr. Katyal believes the statute does something quite important. It changes how the '33 Act functions with respect to a large body of cases. And you just don't -- your jurisprudence helpfully tells the Congress, if you want to do something like that, do it the simple way. Say as defined in or say it's removable or say it's within the exclusive jurisdiction. If you find out that -- if you believe, Justice Gorsuch and Justice Alito, that this -- our reading would produce -- would apply to a null set, which we disagree with, nonetheless, it is the case that we do give meaning to the phrase, it wouldn't pick up any cases, but their reading is not -- the words that Congress used aren't nearly clear enough to accomplish that result. If there are no further questions.
Sonia Sotomayor: I have one. What do you think -- what would be the null set if you read the government's reading of the removal -- the involving -- if you read it --
Thomas C. Goldstein: Its reading -- its reading today in argument?
Sonia Sotomayor: Its reading today.
Thomas C. Goldstein: Okay.
Sonia Sotomayor: I assume you understand it.
Thomas C. Goldstein: Yes.
Sonia Sotomayor: All right. If we read it the government's way --
Thomas C. Goldstein: Yeah.
Sonia Sotomayor: -- what would we make -- what would be left of the second "except" clause in -- in 77v(a)?
Thomas C. Goldstein: The removal except clause?
Sonia Sotomayor: Yes.
Thomas C. Goldstein: So --
Sonia Sotomayor: Second "except" clause.
Thomas C. Goldstein: So the second "except" clause, just to walk this through, says basically whatever we're doing in 77p(c) controls.
Sonia Sotomayor: Right.
Thomas C. Goldstein: Okay? And I do think it's very useful that, except as provided and should be read the same way in 77v(a), so it does, you know, tell you to look somewhere else.
Sonia Sotomayor: If you read this the way the government does --
Thomas C. Goldstein: Right. Yeah.
Sonia Sotomayor: -- it says you can't remove these cases in (a) --
Thomas C. Goldstein: Yeah.
Sonia Sotomayor: -- right, so you can't remove them, but (c) says you can remove them. So is there anything then that is not removable? Why write the second "except" clause at all?
Thomas C. Goldstein: Well, it is the case that it would be completely unnecessary because (c) controls. I do think that probably in the -- a point in the government's favor that ultimately is in our favor is that there are parts of v that don't do anything. Okay? And the -- the removal provision is an example of that. If you didn't have the amendment to the removal provision, you would still know that you could remove under p(c). They're just closing doors, locking them, crossing T's and dotting I's a couple of times. That's how this provision works. Don't ask it to do more than it was intended. Thank you.
Elena Kagan: Could I ask you, Mr. -- Mr. Goldstein, also on this (c) provision, and -- and this really ought to be a question for Mr. Kedem, but he sat down. But I don't want you to agree with me just for the sake of --
Thomas C. Goldstein: Okay.
Elena Kagan: -- agreeing with me. But if I understand what he said, it's these class actions with this last antecedent principle, you're only referring to (1) and (2), so now you -- you make those class actions removable. But the way this provision works -- and you think kind of that makes sense, right? We would want those -- those actions to be removable, be consistent with Congress's other purposes --
Thomas C. Goldstein: No, but --
Elena Kagan: -- but -- I'm sorry?
Thomas C. Goldstein: I -- I don't think that, but you might.
Elena Kagan: Okay. I'm -- I'm saying what --
Thomas C. Goldstein: Hypothetically.
Elena Kagan: -- in his view, right?
Thomas C. Goldstein: Okay.
Elena Kagan: But then it says "and shall be subject to subsection (b)." And all that subsection (b) does, the way this (c) provision works is it makes a category of cases removable only so that a court can dismiss them. That's the point of subsection (c). It's like they were worried that state courts wouldn't just dismiss these actions, so it made them removable to be dismissed. But then you're getting those cases up there. You say, okay, we'll get them removable because these cases really ought to be in federal court, but under (c), now they have to be dismissed.
Thomas C. Goldstein: That's right. I will say -- I -- I'll give you the answer that I think he might, and that is what he would say is, okay, subject it to subsection (b) and some of them get dismissed, and the rest of them aren't subject to it. That's just not the structure of this statute. And that's not what Kircher says. Kircher says that this is a anti-recalcitrant -- recalcitrance -- whatever -- provision. (Laughter.)
Thomas C. Goldstein: That if state courts just aren't obeying the statute. There isn't any indication that it was intended to pick up a set of cases and deposit them in federal court to litigate --
Stephen G. Breyer: There has to be. There has to be, because the mixed case ends up in part being in federal court.
Thomas C. Goldstein: It does not because under 1441(c) it gets remanded. The federal part of the case, as a matter of law, gets cleaved off and gets sent back to state court. It does not stay and get litigated in federal court.
Sonia Sotomayor: I'm sorry --
Thomas C. Goldstein: Mr. Katyal was just wrong about that.
Sonia Sotomayor: -- what provision are you citing?
Thomas C. Goldstein: 14 -- 28 U.S.C. 1441(c), it's the removal provision. So what happens is if you have a mixed case, the combined federal and state cases that are subject to p(b), it gets removed. And federal law, 1441(c), says if you have a otherwise non-removable provision combined -- claim combined with a removable claim, that what you do is you break them in half and you send the non-removable case back -- claim back. And so this --
Stephen G. Breyer: No, so that's -- that's major.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: I mean, either on the one hand, your view, this is designed just to get rid of the state actions.
Thomas C. Goldstein: Yes.
Stephen G. Breyer: On their view, it is designed to do two things. One is to remove the fed part to the feds, and also to get rid of the state.
Thomas C. Goldstein: Right. And so if you just --
Stephen G. Breyer: Is there any history?
Thomas C. Goldstein: Not -- not about the amendment to v, there's no history, and we don't think there's any history that suggests moving the cases to federal court. Thank you.
John G. Roberts, Jr.: Thank you, counsel. Four minutes, Mr. Katyal.
Neal Kumar Katyal: Thank you. Four -- four points. First, Congress took the affirmative step of modifying the preexisting concurrent jurisdiction provision in Section 22. We're the only ones who give that some meaning. Justice Gorsuch, this is not about surplusage, the canon of surplusage. This is obliteration. They can't give you an explanation for what Congress did when it added those 12 words. And that's why my friend says, oh, there's some canon against doing -- a canon that you have to do things a simple way. There is no such canon in this Court's jurisprudence. The closest, as Justice Sotomayor said, is the presumption about concurrent jurisdiction, but that presumption has never been held to apply when a statute isn't silent. Those are only when the Congress is silent. This is one in which Congress has affirmatively taken the step to remove 12 words -- to -- to remove some subset of what was preexisting jurisdiction in the state courts. And, in addition, as this Court in Kircher said, when you don't have a long history of state court adjudication in the area, presumptions about preemption don't apply -- indeed, presumptions about preemptions, Justice Breyer, your opinion in Geier says they don't apply when you have an express statute that deals with preemption. And I think the same analogy is true here. You have a specific statute that deals with -- you know, which deals with the amount of jurisdiction. So, I don't think this Court could apply the presumption about concurrent jurisdiction. Second, Justice Breyer, you asked about the legislative history. And, Justice Alito, you asked who do you think -- do -- do you think the person who wrote this statute set out to do what you think you're saying it did? And we're the only ones who are telling you a story that is in the legislative history itself. The first line of the conference report: "Title 1 of SLUSA makes federal court the exclusive venue for most securities class action lawsuits." The manager in the Senate, Senator D'Amato, and the chair: "There shall be a uniform standard and there should be a uniform procedure, and that's why you move these nationally-traded securities to a federal forum." President Clinton's signing statement: "Since the uniform standards provided by this legislation state that class actions generally can only be brought in federal court, will be governed by federal law, clarity on the federal law to be applied is particularly important." There is nothing in there saying this is only about the '34 Act. This is my friend on the other side's invention. Congress affirmatively took the step to modify the '33 Act jurisdictional provision, not just the '34 Act. Justice Kennedy, this is my third point, you asked about removal and whether or not if you didn't accept our view of 22(a), would that mean that, you know, we'd effectively be out of luck. And I think you shouldn't reserve that question because of the reasons that my colleague from the Solicitor General's Office said, and indeed it may take years for another case to come up precisely because there's a bar on interlocutory appeals from removal decisions, as this Court in Kircher made clear. And, in addition, the Ninth Circuit in a case called Rea versus Michaels Stores in 2014 said, when this Court, the Supreme Court, makes removal available for the first time, then we as litigants can go and seek that removal. There's a lot of precedent which barred us from seeking removal before, but, obviously, we would do that if this Court were to accept the alternative reading. And last and finally, ultimately you are left with Justice Alito's question: What sense does their statutory reading make? Why would bringing a state court count oust a plaintiff out of state court when a mixed one would not? And Justice Ginsburg asked why would Congress, when they're so concerned about procedure and things like abusive litigation and serial plaintiffs and massive attorneys' fees, and took all these steps to regulate that in the federal court context, why would they just leave the back door gaping and wide open? That is not the way to read a statute. I understand the statute is a hard one to read, but we're the only ones giving it a reading that, A, makes sense; and that is, B, consistent with the legislative history; and, C, most importantly, is textual. We give effect to those 12 words. They obliterate them.
John G. Roberts, Jr.: Thank you, counsel. The case is submitted.