Chadbourne and Parke LLP v. Troice (2013)
- Docket
- 12-79
- Decided
- 2013-01-01
Summary
Question: Does the Securities Litigation Uniform Standards Act (SLUSA) preclude a class action under state securities law that alleges fraud and misrepresentations of securities as SLUSA-covered securities? Conclusion: No. Justice Stephen G. Breyer delivered the opinion for the 7-2 majority. The Court held that the scope of SLUSA does not extend beyond misrepresentations that are material to the purchase or sale of a covered security. Because the focus of SLUSA deals with covered securities, the purchase or sale of uncovered securities is beyond SLUSA's purview. The Court also held that nothing in the language of SLUSA itself or the underlying regulatory statutes suggests that the relevant language should be interpreted more broadly. To do so would prohibit more lawsuits and interfere with state efforts to provide remedies to victims of frauds. In his concurring opinion, Justice Clarence Thomas wrote that, while SLUSA precludes class action cases dealing with fraud "in connection with" covered securities, the connection does not extend to all securities. Justice Anthony M. Kennedy wrote a dissent in which he argued that the majority's opinion unnecessarily narrows and constricts protection from fraud in national securities markets. Justice Kennedy argued that the relevant language must be interpreted broadly in order for SLUSA to accomplish its purpose of protecting the integrity of the markets. If misrepresentations were made relating to covered securities to perpetrate fraud, federal regulation is necessary, and it is this interest that Congress intended SLUSA to protect. Justice Samuel A. Alito, Jr. joined in the dissent.