Split Continues with Securities Act Claims Remanded

Further widening the split of authority on whether SLUSA allows defendants to remove covered class actions from state to federal court when the complaint only asserts federal causes of action under the 1933 Act, Judge R. Gary Klausner (C.D. Cal.) has ruled in the Salem Communications Corporation action that he will not permit it. In finding that the "plain meaning" of SLUSA prohibits removal, the court declared that "the language of the 1933 Act clearly states that removal is allowed only for class actions" "based upon the statutory or common law of any State." "Thus, the plain language of the amended 1933 Act allows only for the removal of state claims or for federal claims brought along with state claims."

As for Defendants’ reliance on SLUSA’s legislative history, Judge Klausner recognized that "while some pieces of SLUSA's legislative history might, standing alone, show a desire by Congress to move many security class action claims to federal court, when taken as a whole the legislative history does not show a clearly contrary congressional intent," because "for instance, the Senate and the House stated that SLUSA was designed to limit the conduct of securities class actions under state law," and "these statements are consistent with Plaintiffs' proposed interpretation."

You can read the decision, issued June 28, 2005, at 2005 U.S. Dist. LEXIS 14202.

Nugget: "Two district courts in this Circuit have reached opposite conclusions."