On May 16, in Merrill Lynch v. Manning, the U.S. Supreme Court affirmed the Court of Appeals for the Third Circuit’s remand of the litigation to New Jersey Superior Court despite allegations in the complaint of violations of federal securities regulations and the exclusive federal jurisdiction clause of the Securities Exchange Act of 1934. The opinion, which resolved a Circuit split, certainly will directly impact plaintiffs’ strategic decisions in choosing to file in federal or state forums and how they plead their causes of action. It also could prove to substantially impact litigations involving other federally-regulated industries, such as energy and natural gas.
In Merrill Lynch, the Supreme Court was asked to determine what standard courts must apply when determining whether an action falls within section 27 of the Exchange Act’s exclusive jurisdiction clause, which states “The district courts of the United States … shall have exclusive jurisdiction of violations of [the Exchange Act] or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by [the Exchange Act] or the rules and regulations thereunder.” 15 U.S.C. §78aa(a).
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