The Securities Litigation Uniform Standards Act of 1998 (SLUSA), which is codified in both the Securities Act of 1933 (at 15 U.S.C. §§77p(b)-(f)) and the Securities Exchange Act of 1934 (at 15 U.S.C. §77bb(f)) has twice been interpreted by the U.S. Supreme Court,1 but continues to be a subject of conflict among the courts of appeal. District courts attempting to ascertain whether removal and dismissal under SLUSA are appropriate have been required to determine issues such as the meaning and scope of “covered class action,” “covered security” and “in connection with” as used in SLUSA. Most often, however, the key issue determinative of whether SLUSA precludes an asserted state law claim is the presence, or absence, of an allegation of “a misrepresentation or omission of a material fact” or the use of “any manipulative or deceptive device or contrivance.” 15 U.S.C. §§77p(b) and 78bb(f)(2).
Once such an allegation is identified (assuming the other SLUSA requirements are present), dismissal would seem to be a certainty. And, in at least one circuit, the Sixth, it is so.2 In the Third Circuit, however, further analysis as to whether the identified allegation is critical to the plaintiff’s claim is required, while the Ninth Circuit adopts an intermediate position, permitting dismissals without prejudice and amendment to cure the SLUSA preclusion problem through deletion of the identified allegation.
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