Court Opinion

ID: 9786254
Source: CourtListenerOpinion
Date Created: 2023-08-30 23:51:48.169363+00
Date Added: 2024-06-11T07:36:43.397861
License: Public Domain

Hardesty, J., with whom Douglas, J.,
agrees, concurring in part and dissenting in part:
The majority correctly determines that no field preemption exists in the general area of securities regulation and the specific area *381of clearing and settling securities transactions. I agree, moreover, with much of the majority’s analysis regarding conflict preemption, which, as the majority notes, generally examines whether a party’s compliance with both state and federal requirements is impossible or whether, in light of the federal law’s purpose and intended effects, state law poses an obstacle to congressional objectives.1 But in concluding, in light of such an examination, that all of appellants’ state law causes of action conflict with federal law for a national system of clearing and settling securities transactions, the majority mischaracterizes appellants’ allegation that the NSCC, in its rules and procedures, misrepresents that it complies with a buying broker’s notification — i.e., buy-in request — to cure a selling broker’s failure to deliver shares by purchasing them in the open market, when instead, the NSCC utilizes the Stock Borrow Program. Thus, although I agree with the majority that federal law preempts most of appellants’ claims, I would reverse the district court’s order with respect to appellants’ four causes of action based on that alleged misrepresentation and remand this matter for further proceedings.
The majority characterizes appellants’ buy-in-request-based allegation as attacking the language of an NSCC, Commission-approved rule, which, if that characterization were accurate, unquestionably would be preempted. But that characterization is not accurate. Appellants specifically allege that respondents “misrepresented” to them that unsatisfied share delivery commitments would, on a broker’s buy-in request, be cured by purchasing the necessary shares on the open market, when in fact, those unfulfilled obligations are “actually cured by borrowing shares from lending [brokers] through the Stock Borrow Program.” In that allegation, appellants are not directly challenging any NSCC rule’s language, but rather that respondents represent that they satisfy buy-in requests by purchasing shares in the open market, while instead using the Stock Borrow Program to satisfy buy-in requests. Determining whether respondents are liable on state law grounds for inaccurately representing how they executed buying brokers’ notifications to purchase shares on the open market is not inconsistent with the Commission’s approval of the Stock Borrow Program or the NSCC’s rules, even if it indirectly causes respondents to choose whether to change those rules or face potential additional lawsuits.2
Indeed, it does not appear impossible for respondents to comply with Nevada’s misrepresentation jurisprudence by accurately stat*382ing how notifications to purchase shares on the open market are executed while simultaneously complying with federal law controlling a national system for clearing and settling securities transactions. Nor does any such compliance appear to frustrate the accomplishment of Congress’s objectives with respect to that regulatory scheme.
Therefore, as appellants’ buy-in-request-based allegation does not conflict with federal law controlling a national system for clearing and settling securities transactions, I would reverse the district court’s order with respect to appellants’ causes of action based on that allegation and remand this matter for further proceedings.

 Crosby v. National Foreign Trade Council, 530 U.S. 363, 372-73 (2000).

 See Bates v. Dow Agrosciences LLC, 544 U.S. 431, 445 (2005) (providing that “[a] requirement is a rule of law that must be obeyed; an event. . . that merely motivates an optional decision is not a requirement”).