Opinion ID: 3039127
Heading Depth: 2
Heading Rank: 5

Heading: Circumventing SLUSA

Text: Permeating the Banks’ briefs is the general argument that allowing these claims to go forward will re-create a loophole for abusive securities litigation that Congress intended, through SLUSA, to close. We find this argument unpersuasive. As to the state-law claims—counts I and II—our ruling is that a group of persons may bring a corporation’s claim for breach of fiduciary duty (or aiding and abetting such a breach) in two circumstances: (1) when the group has been assigned the corporation’s claim, or (2) when the group fulfills all applicable requirements for bringing the claim derivatively. That the latter 30 is no easy task goes without saying; moreover, Congress explicitly excepted it from SLUSA’s purview. As to the former, we have difficulty imagining such assignments occurring outside very special contexts, such as bankruptcy, a context in which Congress clearly intended fiduciary-duty actions to go forward. As to the foreign-law claims, notwithstanding our holding, plaintiffs relying on foreign law must survive two preliminary challenges: (1) ) they must state validly pleaded claims which, under applicable choice-of-law principles, govern their case, and (2) they must show that a United States court is the most convenient forum, which, particularly for foreign-law claims asserted against foreign entities, is rarely an easy task. In other words, foreign-law claims, though not preempted by SLUSA, are only permissible at the confluence of two rarely aligned factors: (1) a foreign country has the most significant interest in having its law apply (the traditional choice-of-law test), and (2) the United States is the most appropriate forum (the traditional forum-non-conveniens test). Nothing in our experience, the legislative history of SLUSA, or the legislative history of the PSLRA suggests that these are hurdles that plaintiffs can routinely overcome. Thus, as Congress intended, manifest strike suits will, expectably, be dismissed on the pleadings, even if the plaintiffs try to plead foreign claims. Only quite unusual cases will survive.26