Opinion Analysis—Cyan v. Beaver County Employees Retirement Fund

On Tuesday, the Supreme Court decided Cyan, Inc. v. Beaver County Employees Retirement Fund, a case involving the Securities Litigation Uniform Standards Act of 1998 (SLUSA). Beaver County Employees Retirement Fund, along with other pension funds and individual investors, bought shares of Cyan, a telecommunications company, during its initial public offering. When the stock’s value declined, the investors brought a damages class action against Cyan in California court, alleging that Cyan’s offering contained misstatements and therefore violated the Securities Act of 1933. 

Cyan moved to dismiss the case for lack of subject matter jurisdiction, arguing that SLUSA’s “except clause” stripped state courts of jurisdiction over claims in “covered class actions” related to the 1933 Act. The state courts disagreed. They sided the investors, who argued that SLUSA left state courts their jurisdiction over all suits—including “covered class actions”—that allege only 1933 Act claims and denied the motion to dismiss. The Supreme Court took the case to decide whether SLUSA stripped state courts of their jurisdiction of such claims and also to determine whether SLUSA enabled defendants to remove 1933 Act class action suits from state to federal court.

Justice Kagan delivered the opinion for a unanimous Court. The Court held that SLUSA gives state courts and federal courts concurrent jurisdiction of suits alleging only 1933 Act claims, and are not removable to federal court. The Court also found Cyan’s purposivist argument unpersuasive because the Reform Act included sections that protected defendants in suits from plaintiffs’ forum shopping by barring state law class actions and thereby guaranteeing that the Reform Act’s standards would apply in all securities class lawsuits.   

Check out Lexology and JDSUPRA for more analysis of this opinion.


This post was drafted by ISCOTUS Fellow Bridget Flynn, Chicago-Kent Class of 2019, and was edited by ISCOTUS Fellow Matthew Webber, Chicago-Kent Class of 2019, and ISCOTUS Co-Director and Chicago-Kent faculty member Christopher Schmidt.


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