Securities litigation is at the top of the Supreme Court’s docket this fall. On October 7, the first day of the term, the Court will hear three cases – Chadbourne & Parke v. Troice, Proskauer Rose v. Troice, and Willis v. Troice – that have been consolidated for one hour of argument. The topic is the scope of the Securities Litigation Uniform Standards Act (“SLUSA”).
SLUSA precludes certain class actions based upon state law that allege a misrepresentation in connection with the purchase or sale of nationally traded securities. In the three related cases, the Fifth Circuit held that the “best articulation of the ‘coincide’ requirement” is that the fraud allegations must be “more than tangentially related to (real or purported) transactions in covered securities.” The Fifth Circuit then concluded that the relationship between the alleged fraud, which centered around the sale of certificates of deposit, and any transactions in covered securities was too attenuated to trigger SLUSA preclusion. The defendants successfully moved for certification on the grounds that the Fifth Circuit’s “more than tangentially related” standard was in conflict with the standards articulated by other circuits.
The ABA Preview of Supreme Court Cases has all of the briefs, which include amicus briefs from the United States (petitioners), DRI – the Voice of the Defense Bar (petitioners), Occupy the SEC (respondents), and Sixteen Law Professors (respondents). A preview article in The National Law Journal (Sept. 4 issue – subscrip. req’d) focuses on the perceived threat to law firms and other third parties arising from the Fifth Circuit’s decision to allow the state law claims to proceed.
Interestingly, both sides will be represented by prominent Supreme Court advocates: former solicitor general Paul Clement for the defendants (petitioners) and Tom Goldstein for the plaintiffs (respondents).