While Defense Failed to Timely Remove Class Action to Federal Court Thereby Necessitating Remand of the Class Action Complaint to State Court, the Class Action Claims are Precluded by SLUSA (Securities Litigation Uniform Standards Act) thus Entitling Defense to Judgment in State Court Illinois District Court Holds
Plaintiff filed a putative class action in Illinois state court against securities brokerage firm Citigroup, as successor in interest to Salomon Smith Barney, seeking damages because it allegedly “disseminated misleading research concerning the value of shares in certain Internet and telecommunications companies, thereby inducing Smith Barney customers like [plaintiff] to hold the shares.” Disher v. Citigroup Global Markets, Inc., 487 F.Supp.2d 1009, 1012 (S.D. Ill. 2007). Defense attorneys removed the class action federal court under the Securities Litigation Uniform Standards Act (SLUSA), but the district court remanded the matter to state court, id. On appeal, the Seventh Circuit reversed, holding that SLUSA applied and required dismissal of the class action complaint, id., at 1012-13 (see Disher v. Citigroup Global Markets, Inc., 419 F.3d 649 (7th Cir. 2005)). The Supreme Court granted certiorari and reversed, holding that district court remand orders of class actions removed under SLUSA are not reviewable on appeal, see Disher v. Citigroup Global Markets, Inc., ___ U.S. ___, 126 S.Ct. 2964 (2006), causing the class action to wind its way back to state court, id., at 1013. Once there, defense attorneys again removed the class action to federal court, and the plaintiff again sought remand, id. The district court granted the motion finding “procedural defects in removal,” id., at 1012, but essentially hands defense victory on the merits by holding that the class action claims are barred by SLUSA and declaring that holding to be law of the case.
After discussing the general rules governing removal, including the burden placed on the party seeking removal to establish federal jurisdiction and the general rule that removal must be sought within 30 days of service of the initial pleading, see Disher, at 1014-15, the district court turned to whether an amended pleading created a basis to support defense removal of the class action, id., at 1015. Defense attorneys “point[ed] to numerous purported orders or other papers supposedly authorizing removal of the claims” in the class action complaint, id., but the district court found each pleading insufficient to support the delayed filing of the notice of removal including (1) that the motions and orders filed in state court authorized removal, see id., at 1015-17; (2) that plaintiff’s amended class action complaint did not trigger a right of removal because even though “the claims alleged in both [plaintiff’s] original complaint and his amended complaint are precluded by SLUSA,” id., at 1018, the fact remained that the defense failed to timely file its notice of removal and the amended class action complaint did not revive the right to remove because it did not alter the basic nature of the allegations, id., at 1019-22; and (3) that the appellate proceedings did not authorize removal of the action to federal court, id., at 1022. Accordingly, the federal court remanded the putative class action to state court, id., at 1023-24.
But while the district court denied the defense effort to maintain the class action federal court, it nonetheless handed the defense a victory on the merits. The federal court concluded at pages 1022 and 1023,
Continue reading "SLUSA Class Action Defense Cases-Disher v. Citigroup: Illinois Federal Court Holds Securities Class Action Must Remanded To State Court But Holds Further That SLUSA Bars Prosecution Of Class Action Claims" »