The Supremes & SLUSA - Round I

The Supreme Court has vacated the decision of the Second Circuit in Merrill Lynch v. Dabit, and remanded the case. In an 8-0 decision, Justice Stevens held that SLUSA preempted state law class actions pled on behalf of holders, as to allow such suits would "run contrary to SLUSA's stated purpose." In finding that the federal securities laws reached Dabit's claims, the Court held that "[t]he requisite showing, in other words, is 'deception 'in connection with the purchase or sale of any security,' not deception of an identifiable purchaser or seller."

Noting that the general presumption against Congressional preemption of state law causes of action did not apply, Justice Stevens wrote:

But that presumption carries less force here than in other contexts because SLUSA does not actually pre-empt any state cause of action. It simply denies plaintiffs the right to use the class action device to vindicate certain claims. The Act does not deny any individual plaintiff, or indeed any group of fewer than 50 plaintiffs, the right to enforce any state-law cause of action that may exist.

So gather 48 of your closest friends, and file a holders claim.

Thanks to Gregg Fishbein for sending this one in and to Tom Howe and the good folks at SCOTUSblog for collecting the links.

ADDITION - The 10b-5 Daily and WSJ Law Blog have more on the Dabit decision.