Monday, August 27, 2012

Securities Act Class Claims Removable to Federal Court

The provision in Securities Act Section 22(a) which states that claims under the act brought in state courts may not be removed “no longer applies to a covered class action” under the Securities Litigation Uniform Standards Act, held a district court. According to the U.S. District Court for the Northern District of California, “federal courts alone have jurisdiction to hear covered class actions raising 1933 Act claims.” The case is the most recent decision to deal with the unsettled question of the removability of class actions based solely on the Securities Act under the Uniform Standards Act.

The U.S. Supreme Court and the federal circuits have not addressed this issue. However, the district court in this case found that the legislative history of the Uniform Standards Act supports the view that state court claims based on the Securities Act are removable because, as stated in a House conference report, “the purpose of this title is to prevent plaintiffs from seeking to evade the protections that Federal law provides against abusive litigation by filing suit in State, rather than in Federal, court.” Lapin v. Facebook, Inc. (ND Cal, Dkt. No. C-12-3195 MMC)

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