Cyan, Inc. v. Beaver County Employees Retirement Fund (15-1439)

argument 15-1439

Cyan, Inc. v. Beaver County Employees Retirement Fund

Supreme Court of the United States 1h 6m 7 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the background of the Cyan, Inc. v. Beaver County case and why is SLUSA relevant?

Antonin Scalia 0:00

We'll hear argument first this morning in Case 15-1439, Scion v. Beaver County Employees Retirement Fund. Mr. Cotill.

Mr. Katyal 0:09

Thank you, Mr. Chief Justice, and may it please the Court. Congress in 1998 reacted to a new problem. After its 1995 Reform Act, which dealt with the crisis of abuse of federal claims in federal court, plaintiffs had responded by shifting their litigation to state court. The upshot was that the pre-'95 abuses were happening and They were just happening in state court. Congress in the Securities Litigation Uniform Standards Act, SLUSA, took three steps. First, it precluded certain causes of action. Second, it modified its anti-removal bar. And third, it eliminated concurrent jurisdiction for many 33-act federal claims in state court. Respondents disagree with this third one, but the text structure and purpose are all against them.

Mr. Katyal 0:54

And the best way of understanding our argument is this. If Beaver County brought the exact same complaint that they did here, alleging a federal 33-act claim, but did one thing differently, they also brought a state law claim, they'd be knocked out of state court. That's their own reading. But, they say, because they didn't bring... their state law account, they are now — the state law claim, they are now entitled to bring their federal claim in state court. That

Ruth Bader Ginsburg 1:20

makes zero sense. Well, one could say, with respect to your argument, that Congress chose a rather obtuse way of saying that federal courts shall have exclusive jurisdiction. It could have simply said, in covered class actions — relating to claims under the 33 Act, federal courts shall have exclusive jurisdiction, period, and that would be clear and everybody would understand and you would prevail. But Congress certainly took an odd route to getting there.

Mr. Katyal 1:56

Justice Ginsburg, we agree with you that this is an obtuse way of getting there. And, you know, this body could have written a much better statute than our friends across the street or so on. But I do think it's the best way of understanding the text. I'll explain why in a moment. And as I was saying a moment before, the anomaly on the other side is far worse. This would then be in no other statute that they point to that I've ever heard of does bringing a state count force you out of state court. But that's their reading. And if Congress is going to do something that strange, you would expect them

Elena Kagan 2:29

to have said so. I thought the whole purpose, the main purpose of solution was just that, to ensure that claims of this particular type were not covered under state law but covered under federal law. If I accept that that was the main purpose of Congress's position, what difference does it make who adjudicates the claims if both courts are going to be bound by federal law.

Mr. Katyal 2:56

Justice Sotomayor, we disagree with the premise and what it eventually leads you to in your question to me in terms of your conclusion. So we disagree that the main purpose was preclusion or state claims. They pointed to nothing saying so. And I'll walk you through the actual statutory findings in the text of the statute, which I think rebel at that. And then even if it were a main purpose to deal with the precluded claims, there's certainly nothing to exclude. And I think there's legislative history and the statute itself is pretty clear that Congress also had in mind the abuse that was going on because these federal claims were being brought to — were being brought in state court. And, you know, the text of the statute itself, Justice

Elena Kagan 3:36

Sotomayor, says that. Doesn't your reading contain an inherent contradiction? If the first clause is supposed to preclude or give — exclusive jurisdiction to the district courts over all covered class actions, which under your reading includes even those that are not federal. Why then have the second accept? Isn't there a tension between the two?

Mr. Katyal 4:10

No, I don't think there's a tension. As our reply brief, you know, I think outlines, it's exactly actually this compromise that was struck in the 34 Exchange Act.

Elena Kagan 4:19

Well, there's an inherent tension in the two except clauses.