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SUPREME COURT OF THE UNITED STATES
_________________
No. 15–1439
_________________
CYAN, INC., et al., PETITIONERS
v.
BEAVER COUNTY EMPLOYEES RETIREMENT FUND, et al.
on writ of certiorari to the court of appeal
of california, first appellate district
[March 20, 2018]
Justice Kagan delivered the opinion of the
Court.
This case presents two questions about the
Securities Litigation Uniform Standards Act of 1998 (SLUSA),
112Stat. 3227. First, did SLUSA strip state courts of jurisdiction
over class actions alleging violations of only the Securities Act
of 1933 (1933 Act), 48Stat. 74, as amended, 15 U. S. C.
§77a
et seq.? And second, even if not, did SLUSA
empower defendants to remove such actions from state to federal
court? We answer both questions no.
I
A
In the wake of the 1929 stock market crash,
Congress enacted two laws, in successive years, to promote honest
practices in the securities markets. The 1933 Act required
companies offering securities to the public to make “full and fair
disclosure” of relevant information.
Pinter v.
Dahl,
486 U. S. 622, 646 (1988) . And to aid enforcement of those
obligations, the statute created private rights of action. Congress
authorized both federal and state courts to exercise jurisdiction
over those private suits. See §22(a), 48Stat. 86 (“The district
courts of the United States . . . shall have
jurisdiction[,] concurrent with State and Territorial courts, of
all suits in equity and actions at law brought to enforce any
liability or duty created by this title”). More unusually, Congress
also barred the removal of such actions from state to federal
court.
Id., at 87 (“No case arising under this title and
brought in any State court of competent jurisdiction shall be
removed to any court of the United States”). So if a plaintiff
chose to bring a 1933 Act suit in state court, the defendant could
not change the forum.
Congress’s next foray, the Securities Exchange
Act of 1934 (1934 Act), operated differently. See 48Stat. 881, as
amended, 15 U. S. C. §78a
et seq. That
statute regulated not the original issuance of securities but
instead all their subsequent trading, most commonly on national
stock exchanges. See
Blue Chip Stamps v.
Manor Drug
Stores, 421 U. S. 723, 752 (1975) . The 1934 Act, this
Court held, could also be enforced through private rights of
action. See
id., at 730, and n. 4. But Congress
determined that all those suits should fall within the “exclusive
jurisdiction” of the federal courts. §27, 48Stat. 902–903. So a
plaintiff could never go to state court to litigate a 1934 Act
claim.
In 1995, the Private Securities Litigation
Reform Act (Reform Act), 109Stat. 737, amended both the 1933 and
the 1934 statutes in mostly identical ways. Congress passed the
Reform Act principally to stem “perceived abuses of the
class-action vehicle in litigation involving nationally traded
securities.”
Merrill Lynch, Pierce, Fenner & Smith Inc.
v.
Dabit, 547 U. S. 71, 81 (2006) . Some of the Reform
Act’s provisions made substantive changes to the 1933 and 1934
laws, and applied even when a 1933 Act suit was brought in state
court. For instance, the statute created a “safe harbor” from
federal liability for certain “forward-looking statements” made by
company officials. 15 U. S. C. §77z–2 (1933 Act); §78u–5
(1934 Act). Other Reform Act provisions modified the procedures
used in litigating securities actions, and applied only when such a
suit was brought in federal court. To take one example, the statute
required a lead plaintiff in any class action brought under the
Federal Rules of Civil Procedure to file a sworn certification
stating, among other things, that he had not purchased the relevant
security “at the direction of plaintiff’s counsel.”
§77z–1(a)(2)(A)(ii) (1933 Act); §78u–4(a)(2)(A)(ii) (1934 Act).
But the Reform Act fell prey to the law of
“unintended consequence[s].”
Dabit, 547 U. S., at 82.
As this Court previously described the problem: “Rather than face
the obstacles set in their path by the Reform Act, plaintiffs and
their representatives began bringing class actions under state
law.”
Ibid. That “phenomenon was a novel one”—and an
unwelcome one as well.
Ibid. To prevent plaintiffs from
circumventing the Reform Act, Congress again undertook to modify
both securities laws.
The result was SLUSA, whose amendments to the
1933 Act are at issue in this case. Those amendments include, as
relevant here, two operative provisions, two associated
definitions, and two “conforming amendments” to the 1933 law’s
jurisdictional section. 112Stat. 3230. (SLUSA’s amendments to the
1934 Act include essentially the same operative provisions and
definitions. See
Dabit, 547 U. S., at 82, n. 6.
But Congress decided that the 1934 law’s exclusive jurisdiction
provision needed no conforming amendments.) The added material—now
found in §§77p and 77v(a) and set out in full in this opinion’s
appendix—goes as follows.
First, §77p(b) altogether prohibits certain
securities class actions based on state law. That provision—which
we sometimes (and somewhat prosaically) refer to as the state-law
class-action bar—reads:
“No covered class action based upon the
statutory or common law of any State . . . may be
maintained in any State or Federal court by any private party
alleging—
“(1) an untrue statement or omission of a
material fact in connection with the purchase or sale of a covered
security; or
“(2) that the defendant used or employed any
manipulative or deceptive device or contrivance in connection with
the purchase or sale of a covered security.”
According to SLUSA’s definitions, the term
“covered class action” means a class action in which “damages are
sought on behalf of more than 50 persons.” §77p(f)(2). And the term
“covered security” refers to a security listed on a national stock
exchange. §77p(f)(3) (cross-referencing §77r(b)). So taken all in
all, §77p(b) completely disallows (in both state and federal
courts) sizable class actions that are founded on state law and
allege dishonest practices respecting a nationally traded
security’s purchase or sale.
Next, §77p(c) provides for the removal of
certain class actions to federal court, as well as for their
subsequent disposition:
“Any covered class action brought in any
State court involving a covered security, as set forth in
subsection (b) of this section, shall be removable to the Federal
district court for the district in which the action is pending, and
shall be subject to subsection (b) of this section.”
The first chunk of that provision identifies the
removable cases, partly by way of a cross-reference (“as set forth
in subsection (b)”) to the just-described class-action bar. The
final clause of the provision (“and shall be subject to subsection
(b)”) indicates what should happen to a barred class suit
after it has been removed: The “proper course is to dismiss”
the action.
Kircher v.
Putnam Funds Trust, 547
U. S. 633, 644 (2006) . As this Court has explained, §77p(c)
“avails a defendant of a federal forum in contemplation not of
further litigation over the merits of a claim brought in state
court, but of termination of the proceedings altogether.”
Id., at 645, n. 12. The point of providing that option,
everyone here agrees, was to ensure the dismissal of a prohibited
state-law class action even when a state court “would not
adequately enforce” §77p(b)’s bar. Brief for United States as
Amicus Curiae 3; see Brief for Petitioners 7; Brief for
Respondents 20.
Finally, the 1933 Act’s jurisdictional
provision, codified at §77v(a), now includes two new phrases framed
as exemptions—SLUSA’s self-described “conforming amendments.”
112Stat. 3230; see
supra, at 3. The less significant of the
pair, for our purposes, reflects the allowance for removing certain
class actions described above. Against the backdrop of the 1933
Act’s general removal bar, see
supra, at 2, that added
(italicized) material reads:
“Except as provided in section 77p(c)
of this title, no case arising under this subchapter and
brought in any State court of competent jurisdiction shall be
removed to any court of the United States.”
The more important of the conforming amendments
in this case expresses a caveat to the general rule, see
supra, at 1–2, that state and federal courts have concurrent
jurisdiction over all claims to enforce the 1933 Act. As amended
(again, with the new material in italics), the relevant sentence
now reads:
“The district courts of the United States
. . . shall have jurisdiction[,] concurrent with State
and Territorial courts,
except as provided in section 77p of
this title with respect to covered class actions, of all suits
in equity and actions at law brought to enforce any liability or
duty created by this subchapter.”
Throughout this opinion, we refer to the
italicized words just above as the “except clause.” Its meaning is
at the heart of the parties’ dispute in this Court.
B
The petitioners in this case are Cyan, a
telecommunications company, and its officers and directors
(together, Cyan). The respondents are three pension funds and an
individual (together, Investors) who purchased shares of Cyan stock
in an initial public offering. After the stock declined in value,
the Investors brought a damages class action against Cyan in
California Superior Court. Their complaint alleges that Cyan’s
offering documents contained material misstatements, in violation
of the 1933 Act. It does not assert any claims based on state
law.
Cyan moved to dismiss the Investors’ suit for
lack of subject matter jurisdiction. It argued that what we have
termed SLUSA’s “except clause”—
i.e., the amendment made to
§77v(a)’s concurrent-jurisdiction grant—stripped state courts of
power to adjudicate 1933 Act claims in “covered class actions.” The
Investors did not dispute that their suit qualifies as such an
action under SLUSA’s definition, see §77p(f)(2). But they
maintained that SLUSA left intact state courts’ jurisdiction over
all suits—including “covered class actions”—alleging only 1933 Act
claims. The California Superior Court agreed with the Investors and
denied Cyan’s motion to dismiss. See App. to Pet. for Cert. 6a. The
state appellate courts then denied review of that ruling. See
id., at 15a–16a.
We granted Cyan’s petition for certiorari, 581
U. S. ___ (2017), to resolve a split among state and federal
courts about whether SLUSA deprived state courts of jurisdiction
over “covered class actions” asserting only 1933 Act
claims.[
1]
In opposing Cyan’s jurisdictional position here,
the Federal Government as
amicus curiae raised another
question: whether SLUSA enabled defendants to remove 1933 Act class
actions from state to federal court for adjudication. See Brief for
United States as
Amicus Curiae 23–31. That question is not
directly presented because Cyan never attempted to remove the
Investors’ suit. But the removal issue is related to the parties’
jurisdictional arguments, and both Cyan and the Investors addressed
it in briefing and argument. See Brief for Petitioners 39–40; Brief
for Respondents 31–35; Tr. of Arg. 31, 53–56, 74–76, 80.
Accordingly, we consider as well the scope of §77p(c)’s removal
authorization.
II
By its terms, §77v(a)’s “except clause” does
nothing to deprive state courts of their jurisdiction to decide
class actions brought under the 1933 Act. And Cyan’s various
appeals to SLUSA’s purposes and legislative history fail to
overcome the clear statutory language. The statute says what it
says—or perhaps better put here, does not say what it does not say.
State-court jurisdiction over 1933 Act claims thus continues
undisturbed.[
2]
A
SLUSA’s text, read most straightforwardly,
leaves in place state courts’ jurisdiction over 1933 Act claims,
including when brought in class actions. Recall that the background
rule of §77v(a)—in place since the 1933 Act’s passage—gives state
courts concurrent jurisdiction over all suits “brought to enforce
any liability or duty created by” that statute. See
supra,
at 1–2. The except clause—once again, “except as provided in
section 77p of this title with respect to covered class actions”—is
drafted as a limitation on that rule: It ensures that in any case
in which §77v(a) and §77p come into conflict, §77p will control.
The critical question for this case is therefore whether §77p
limits state-court jurisdiction over class actions brought under
the 1933 Act. It does not. As earlier described, §77p bars certain
securities class actions based on
state law. See §77p(b);
supra, at 3–4. And as a corollary of that prohibition, it
authorizes removal of those suits so that a federal court can
dismiss them. See §77p(c);
supra, at 4–5. But the section
says nothing, and so does nothing, to deprive state courts of
jurisdiction over class actions based on
federal law. That
means the background rule of §77v(a)—under which a state court may
hear the Investors’ 1933 Act suit—continues to govern.
Cyan offers an alternative reading, in which one
of SLUSA’s definitional provisions works to alter state-court
jurisdiction. According to Cyan, the except clause’s reference to
“covered class actions” points the reader to, and only to,
§77p(f)(2)’s definition of that term. See Brief for Petitioners 16.
And that definition states that a “covered class action” is a suit
seeking damages on behalf of more than 50 persons—without
mentioning anything about whether the suit is based on state or
federal law. Cyan thus concludes that the except clause exempts all
sizable class actions—including the Investors’ suit—from §77v(a)’s
conferral of jurisdiction on state courts.
But that view cannot be squared with the except
clause’s wording for two independent reasons. To start with, the
except clause points to “section 77p” as a whole—not to paragraph
77p(f)(2). Cyan wants to cherry pick from the material covered by
the statutory cross-reference. But if Congress had intended to
refer to the definition in §77p(f)(2) alone, it presumably would
have done so—just by adding a letter, a number, and a few
parentheticals. As this Court recently explained, “Congress often
drafts statutes with hierarchical schemes—section, subsection,
paragraph, and on down the line.”
NLRB v.
SW General,
Inc., 580 U. S. ___, ___ (2017) (slip op., at 9). And
“[w]hen Congress want[s] to refer only to a particular subsection
or paragraph, it sa[ys] so.”
Ibid. It said no such thing in
the except clause.
In any event, the definitional paragraph on
which Cyan relies cannot be read to “provide[]” an “except[ion]” to
the rule of concurrent jurisdiction, in the way SLUSA’s except
clause requires. A definition does not provide an exception, but
instead gives meaning to a term—and Congress well knows the
difference between those two functions. Thousands of statutory
provisions use the phrase “except as provided in . . .”
followed by a cross-reference in order to indicate that one rule
should prevail over another in any circumstance in which the two
conflict; we count more than 30 such constructions in the 1933 and
1934 Acts alone.[
3] Not one of
those 30-plus provisions cross-references a
definition; nor
has Cyan pointed to a single such example from the whole rest of
the U. S. Code. And the Congress enacting SLUSA had no reason
to attempt that peculiar maneuver for the first time. If Congress
had wanted to deprive state courts of jurisdiction over 1933 Act
class actions, it had an easy way to do so: just insert into §77p
an exclusive federal jurisdiction provision (like the 1934 Act’s)
for such suits. That rule, when combined with the except clause,
would have done the trick because it would have “provided” an
“except[ion]” to §77v(a)’s grant of concurrent jurisdiction; by
contrast, a mere definition of “covered class action” (as a damages
suit on behalf of 50-plus people) does not so provide.
SLUSA’s
other conforming amendment
illustrates the two ways in which Cyan’s construction of the except
clause departs from its language. Recall that §77v(a) includes a
general bar on removal. See
supra, at 2. And recall that
SLUSA appended to that prohibition the phrase “[e]xcept as provided
in section 77p(c)” to reflect the statute’s new permission to
remove certain class actions. See
supra, at 5. In
that “except as provided” phrase—just four sentences down
from the except clause central to this case—Congress pinpointed a
subsection of §77p, rather than citing the entire section for only
one of its parts. Still more, that cross-referenced subsection
contains an operative provision that could limit a rule, rather
than a mere definition of a statutory term. In short, Congress
wrote the removal bar’s except clause in just the way a reader of
legislation would expect—and not in the wholly irregular way Cyan
proposes for the except clause at issue here. Especially given the
two provisions’ “interrelationship and close proximity,”
Commissioner v.
Lundy, 516 U. S. 235, 250 (1996)
, the one conforming amendment highlights how far Cyan seeks to
stretch the text of the other.
Cyan’s interpretation also fits poorly with the
remainder of the statutory scheme. Because Cyan treats the broad
definition of “covered class action” as altering §77v(a)’s
jurisdictional grant, its construction would prevent state courts
from deciding any 1933 Act class suits seeking damages for more
than 50 plaintiffs. That would include suits not involving a
“covered security”—
i.e., a security traded on a national
stock exchange. §77p(f)(3); Brief for Petitioners 29 (conceding
that point). But this Court has emphasized that SLUSA’s operative
provisions (including its state-law class-action bar, see §77p(b))
apply to only “transactions in covered securities”: The statute
“ex- presses no concern” with “transactions in uncovered securi-
ties”—precisely because they are not traded on national markets.
Chadbourne & Parke LLP v.
Troice, 571 U. S.
377 , ___ (2014) (slip. op., at 9); see Brief for United States as
Amicus Curiae 16–17 (SLUSA does not regard suits involving
uncovered securities as “a matter of distinct federal concern”).
Those securities, the Court explained, are “primarily of state
concern,” and SLUSA “maintains state legal authority” to address
them.
Chadbourne, 571 U. S., at ___ (slip op., at 13).
Except that under Cyan’s view, SLUSA would not. Instead, the law
would strip state courts of jurisdiction over suits about
securities raising no particular national interest. That result is
out of line with SLUSA’s overall scope.
And finally, Cyan’s take on the except clause
reads too much into a mere “conforming amendment.” 112Stat. 3230.
The change Cyan claims that clause made to state-court jurisdiction
is the very opposite of a minor tweak. When Congress passed SLUSA,
state courts had for 65 years adjudicated all manner of 1933 Act
cases, including class actions. Indeed, defendants could not even
remove those cases to federal court, as schemes of concurrent
jurisdiction almost always allow. See
supra, at 2. State
courts thus had as much or more power over the 1933 Act’s
enforcement as over any federal statute’s. To think Cyan right, we
would have to believe that Congress upended that entrenched
practice not by any direct means, but instead by way of a
conforming amendment to §77v(a) (linked, in its view, with only a
definition). But Congress does not make “radical—but entirely
implicit—change[s]” through “technical and conforming amendments.”
Director of Revenue of Mo. v.
CoBank ACB, 531
U. S. 316, 324 (2001) (internal quotation marks omitted). Or
to use the more general (and snappier) formulation of that rule,
relevant to all “ancillary provisions,” Congress does not “hide
elephants in mouseholes.”
Whitman v.
American Trucking
Assns., Inc., 531 U. S. 457, 468 (2001) . That is yet one
more reason to reject Cyan’s view of SLUSA’s text.
B
Faced with such recalcitrant statutory
language, Cyan stakes much of its case on legislative purpose and
history. See Brief for Petitioners 20–33, 36–37; Reply Brief 7–11,
17–21. Its claims come in two forms—one relating to the goals of
SLUSA as a whole and the other relating to the aims of the except
clause. Even assuming clear text can ever give way to purpose, Cyan
would need some monster arguments on this score to create doubts
about SLUSA’s meaning. The points Cyan raises come nowhere close to
that level.
1
According to Cyan’s broad purposive argument,
Congress could not “make good on the promise of the Reform
Act”—which was its principal intention in enacting SLUSA—without
divesting state courts of jurisdiction over all sizable 1933 Act
class actions. Brief for Petitioners 20. Remember that the Reform
Act contained a number of procedural measures (for example, a
sworn-certification requirement for lead plaintiffs, see
§77z–1(a)(2)(A)) that apply only in federal court. See
supra, at 2–3. Plaintiffs bringing 1933 Act class actions
could avoid those provisions simply by filing in state court; after
all, those suits were not even removable by defendants. “So,” Cyan
claims, “Congress enacted SLUSA to finish the job”—by shutting down
the state forum and shifting all 1933 Act class actions to the
federal one. Brief for Petitioners 21. In support of that view,
Cyan cites several statements in SLUSA’s legislative reports—in
particular, that SLUSA’s purpose was “to prevent plaintiffs from
seeking to evade the protections that Federal law provides against
abusive litigation by filing suit in State, rather than in Federal,
court.” H. R. Conf. Rep. No. 105–803, p. 13 (1998); see
H. R. Rep. No. 105–640, pp. 8–9 (1998); S. Rep. No.
105–182, p. 3 (1998).
But to begin with, Cyan ignores a different way
in which SLUSA “serve[d] the [Reform Act’s] objectives,” Brief for
Petitioners 11—which our view of the statute fully effects. Recall
that the Reform Act also included substantive sections protecting
defendants (like a safe harbor for forward-looking statements) in
suits brought under the federal securities laws. See §77z–2;
supra, at 2. Plaintiffs could—and did—avoid those provisions
by bringing their complaints of securities misconduct under state
law instead. See
supra, at 3. Hence emerged SLUSA’s bar on
state-law class actions (and its removal provision to ensure their
dismissal)—which guaranteed that the Reform Act’s heightened
substantive standards would govern all future securities class
litigation. SLUSA itself highlights that aim: Its preamble states
that the statute is designed “to limit the conduct of securities
class actions under State law, and for other purposes.” 112Stat.
3227. So too, this Court has underscored, over and over, SLUSA’s
“purpose to preclude certain vexing state-law class actions.”
Kircher, 547 U. S., at 645, n. 12; see
Dabit, 547 U. S., at 82 (SLUSA stopped plaintiffs from
“bringing class actions under state law”);
Amgen Inc. v.
Connecticut Retirement Plans and Trust Funds, 568 U. S.
455, 476 (2013) (SLUSA “curtailed plaintiffs’ ability to evade the
[Reform Act] by bringing class-action suits under state rather than
federal law”). That object—which SLUSA’s text actually
reflects—does not depend on stripping state courts of jurisdiction
over 1933 Act class suits, as Cyan proposes. For wherever those
suits go forward, the Reform Act’s substantive protections
necessarily apply.
Still more, SLUSA ensured that federal courts
would play the principal role in adjudicating securities class
actions by means of its revisions to the
1934 Act. As
explained earlier, SLUSA amended that statute in the same main way
it did the 1933 Act—by adding a state-law class-action bar. See
§78bb(f )(1);
supra, at 3. But there, the change had a
double effect: Because federal courts have exclusive jurisdiction
over 1934 Act claims, forcing plaintiffs to bring class actions
under the 1934 statute instead of state law also forced them to
file in federal court. That meant the bulk of securities class
actions would proceed in federal court—because the 1934 Act
regulates all trading of securities whereas the 1933 Act addresses
only securities offerings. See
Blue Chip Stamps, 421
U. S., at 752 (characterizing the 1933 Act as “a far narrower
statute”). So even without Cyan’s contrived reading of the except
clause, SLUSA largely accomplished the purpose articulated in its
Conference Report: moving securities class actions to federal
court.
To be sure, “largely” does not mean
“entirely”—but then again, we do not generally expect statutes to
fulfill 100% of all of their goals. See,
e.g., Freeman v.
Quicken Loans, Inc., 566 U. S. 624, 637 (2012) (“No
legislation pursues its purposes at all costs” (internal quotation
marks and alterations omitted)). Under our reading of SLUSA, all
covered securities class actions must proceed under federal law;
most (
i.e., those alleging 1934 Act claims) must proceed in
federal court; some (
i.e., those alleging 1933 Act claims)
may proceed in state court. We do not know why Congress declined to
require as well that 1933 Act class actions be brought in federal
court; perhaps it was because of the long and unusually pronounced
tradition of according authority to state courts over 1933 Act
litigation. See
supra, at 11–12. But in any event, we will
not revise that legislative choice, by reading a conforming
amendment and a definition in a most improbable way, in an effort
to make the world of securities litigation more consistent or pure.
This Court has long rejected the notion that “
whatever
furthers the statute’s primary objective must be the law.”
Rodriguez v.
United States, 480 U. S. 522, 526
(1987) (
per curiam). Even if Congress could or should have
done more, still it “wrote the statute it wrote—meaning, a statute
going so far and no further.”
Michigan v.
Bay Mills
Indian Community, 572 U. S. ___, ___ (2014) (slip op., at
11) (internal quotation marks omitted).
2
Yet Cyan has a final argument—that the except
clause would serve no purpose at all unless it works as Cyan says.
See Brief for Petitioners 32–33; Reply Brief 8–11. Here, Cyan
relies on an indubitable puzzle. Section 77v(a), as amended by
SLUSA, gives state courts jurisdiction over
1933 Act suits
“except as provided in §77p.” But §77p provides a bar on only
certain
state-law suits. So, Cyan contends, unless we take
up its invitation to look to §77p(f)(2)’s definition of “covered
class action,” the except clause excepts “exactly nothing.” Reply
Brief 8. (To use an example of our own, it would be as if a parent
told her child “you may have fruit after dinner, except for
lollipops.”) What on earth, Cyan asks, would be the point of such a
provision?
The Investors answer that question with a theory
about why Congress enacted the except clause. In their view, the
clause was meant to deal with “mixed” securities class
actions—containing both claims brought under the 1933 Act and
claims arising under state law. See Brief for Respondents 12–13. If
not for the except clause, the Investors posit, state courts would
have been uncertain about how to handle those suits. Section 77p
clearly instructs courts not to adjudicate the state-law claims;
but (the Investors continue) §77v(a) gives state courts
jurisdiction over entire “actions” brought to enforce the 1933 Act,
even if they include additional state-law claims. What, then, to
do? According to the Investors, the except clause’s purpose was to
resolve that statutory conflict by making clear that §77p trumps
§77v(a)—in other words, that a state court may not entertain
state-law claims precluded by §77p(b) even when they are conjoined
with 1933 Act claims falling within §77v(a)’s grant of
jurisdiction.
Truth be told, we are not sure whether Congress
had that issue in mind. On the one hand (and contrary to what the
Investors say), we doubt that the except clause was really
necessary to address mixed class actions. Even without that clause,
a competent state court faced with such a suit would understand
that §77p requires dismissal of the state-law claims—and that
§77v(a)’s jurisdictional grant over 1933 Act suits is not to the
contrary. But on the other hand (and now supporting the Investors’
principal point), Congress may have thought that class-action
lawyers would still try to circumvent SLUSA by tacking a 1933 Act
claim onto a forbidden state-law class action, on the off chance of
finding an error-prone judge. (After all, the worst that could
happen was that the court would throw out the state-law claims,
leaving the plaintiff with a permissible 1933 Act suit.) To prevent
such gamesmanship—to make clear beyond peradventure that courts
could not entertain the state-law half of mixed class
actions—Congress might have added the except clause.
But even if Congress never specifically
considered mixed suits, it could well have added the except clause
in a more general excess of caution—to safeguard §77p’s
class-action bar come whatever might. This Court has encountered
many examples of Congress legislating in that hyper-vigilant way,
to “remov[e] any doubt” as to things not particularly doubtful in
the first instance.
Marx v.
General Revenue Corp.,
568 U. S. 371 –384 (2013) (citing
Ali v.
Federal
Bureau of Prisons, 552 U. S. 214, 226 (2008) ;
Fort
Stewart Schools v.
FLRA, 495 U. S. 641, 646 (1990)
). (The idea, to return to our prior example, is to make sure that
even if the child thinks orange lollipops count as fruit, she will
not act on that view.) And if ever Congress had reason to legislate
in that fashion, it was in SLUSA—whose very impetus lay in the
success of class-action attorneys in “bypass[ing] . . .
the Reform Act.”
Kircher, 547 U. S., at 636. Heedful of
that history of machinations, Congress may have determined to
eliminate any risk—even if unlikely or at the time unknown—that a
pre-existing grant of power to state courts could be used to
obstruct SLUSA’s new limitation on what they could decide. And so
(this alternative explanation goes) Congress enacted the except
clause—which, in insisting that the limitation prevailed, would
function as the ultimate (though with any luck, unneeded) fail-safe
device.[
4]
But the most important response to this
purposive argument echoes what we have said before about the
weaknesses of Cyan’s own construction of the except clause. In the
end, the uncertainty surrounding Congress’s reasons for drafting
that clause does not matter. Nor does the possibility that the risk
Congress addressed (whether specific or inchoate) did not exist.
Because irrespective of those points, we have no sound basis for
giving the except clause a broader reading than its language can
bear. And that is especially true in light of the dramatic change
such an interpretation would work in the 1933 Act’s jurisdictional
framework. Whatever questions remain as to the except clause’s
precise purpose—and we do not gainsay there are some—they do not
give us permission to devise a statute (and at that, a
transformative one) of our own.
III
Our last task is to address the Federal
Government’s proposed halfway-house position. The Government
rejects Cyan’s view that SLUSA stripped state courts of
jurisdiction over 1933 Act class actions, for roughly the same
reasons we have given. See Brief for United States as
Amicus
Curiae 11–23. But like Cyan, the Government believes that
“Congress would not have been content to leave” such suits “stuck
in state court,” where the Reform Act’s procedural protections do
not apply.
Id., at 15 (internal quotation marks omitted). So
the Government offers a reading of SLUSA—in particular, of
§77p(c)—that would allow defendants to remove 1933 Act class
actions to federal court, as long as they allege the kinds of
misconduct listed in §77p(b) (
e.g., false statements or
deceptive devices in connection with a covered security’s purchase
or sale). See
id., at 24–25.
But most naturally read, §77p(c)—SLUSA’s
exception to the 1933 Act’s general bar on removal—refutes, not
supports, the Government’s view. Once again, see
supra, at
4, §77p(c) reads as follows:
“Any covered class action brought in any
State court involving a covered security, as set forth in
subsection (b) of this section, shall be removable to the Federal
district court for the district in which the action is pending, and
shall be subject to subsection (b) of this section.”
In other words, the covered class actions
described in §77p(b) can be removed to federal court (and, once
there, shall be subject to dismissal because precluded, see
supra, at 5). And which are the covered class actions
described in §77p(b)? By this point, no one should have to be
reminded: They are
state-law class actions alleging
securities misconduct. See §77p(b) (prohibiting “class action[s]
based upon the statutory or common law of any State”). So those
state-law suits are removable. But conversely,
federal-law
suits like this one—alleging only 1933 Act claims—are not “class
action[s] . . . as set forth in subsection (b).” So they
remain subject to the 1933 Act’s removal ban.
In fact, this Court already held as much, by
concluding in
Kircher that §§77p(b) and 77p(c) apply to the
exact same universe of class actions. See 547 U. S., at
643–644.
Kircher involved a securities suit that was
unaffected by §77p(b)’s class-action bar—there, not because it was
based on federal law but because it involved a form of conduct
falling outside that subsection. The Court of Appeals decided that
the suit could be removed under §77p(c) even though it was not
precluded by §77p(b), thinking (as we later put it) that the
removal issue and “the preclusion issue [were] distinct.”
Id., at 638. We flatly rejected that understanding of the
relationship between §77p(b) and §77p(c). The “straightforward
reading” of those two provisions, we explained, is that removal is
“limited to those [actions] precluded by the terms of subsection
(b).”
Id., at 643. And if that were not clear enough, we
said it again: Removal under §77p(c) is “restricted to precluded
actions defined by subsection (b).”
Id., at 643–644. And
just to pound the point home, we said it yet a third time: “A
covered [class] action is removable if it is precluded.”
Id., at 646.
Kircher thus forecloses the Government’s
argument. Section 77p(b) does not preclude federal-law class
actions. So under our decision, §77p(c) does not authorize their
removal.[
5]
The Government responds with a novel way of
understanding §77p(c), which it thinks would allow us to disregard
Kircher when a class action like this one is based on
federal law. In the Government’s view, first presented at oral
argument, see Tr. of Oral Arg. 32–33, the words “as set forth in
subsection (b)” do not modify the entire preceding phrase
(basically, any large class action involving a covered security).
Instead, the Government claims, those words modify only the shorter
phrase “involving a covered security.” To support that view, the
Government invokes the “rule of the last antecedent”—under which
“the limiting clause is most naturally applied to the thing that
comes immediately before it.”
Id., at 36. The Government
then presents a theory of how subsection (b) “set[s] forth” the
“involv[ement]” of a covered security. “[T]o figure out what that
means,” the Government contends, “you look at [§77p](b)(1) and
(b)(2), which talk about certain types of misconduct”—for example,
false statements or deceptive devices in connection with a covered
security’s sale.
Id., at 33–34. As long as conduct of that
kind is implicated in a suit, the Government concludes, it can be
removed—even if it is based on federal law and thus does not fall
within §77p(b) as a whole. That view is consistent with
Kircher’s result because the action there did not involve
the conduct described in §§77p(b)(1) and (2). And as to
Kircher’s rationale . . . well, we should feel
free to ignore it.
But even putting aside respect for precedent,
that argument is in many ways flawed. To start with, the Government
provides no good reason to think that “as set forth in subsection
(b)” modifies only the phrase “involving a covered security.” As
stated above, the most natural way to view the modifier is as
applying to the entire preceding clause—again, “[a]ny covered class
action brought in any State court involving a covered security.”
See
supra, at 19. That is so because that clause hangs
together as a unified whole, referring to a single thing (a type of
class action). Consider the following, grammatically identical
construction: “The woman dressed to the nines carrying an umbrella,
as shown in the picture . . .” Would anyone think that
“as shown in the picture” referred to anything less than the
well-attired and rain-ready
woman? No. And so too here, the
modifier goes back to the beginning of the preceding clause. The
rule of the last antecedent is not to the contrary. We have applied
that rule when the alternative reading would “stretch[] the
modifier too far” by asking it to qualify a remote or otherwise
disconnected phrase.
Jama v.
Immigration and Customs
Enforcement, 543 U. S. 335, 342 (2005) ;
Lockhart
v.
United States, 577 U. S. ___, ___ (2016) (slip op.,
at 4) (using the rule “where it takes more than a little mental
energy to process” a statute’s component parts, “making it a heavy
lift to carry the modifier across them all”).[
6] By contrast, we have not applied the rule when
the modifier directly follows a concise and “integrated” clause.
Jama, 543 U. S., at 344, n. 4. As it does
here.
But let us assume that the rule of the last
antecedent governs: The Government then misapplies it by attaching
the modifier to something
more than the last thing before
it. The rule, correctly used, would insist that “as set forth in
subsection (b)” modifies only “a covered security”—because that is
the closest “noun or noun phrase” that the modifier could
reasonably reference. A. Scalia & B. Garner, Reading Law: The
Interpretation of Legal Texts 144 (2012) (quoting R. Burchfield,
Fowler’s Modern English Usage (3d ed. 1996)). But that standard way
of applying the rule would not aid the Government’s construction,
so it goes back yet another word: It attaches “as set forth in
subsection (b)” to the longer phrase—and a verb phrase at
that—“
involving a covered security.” Tr. of Oral Arg. 35.
That maneuver has no grammatical basis. (It is as if, in the
example offered above, someone claimed that “as shown in the
picture” modified not the woman, nor even the umbrella, but instead
the in-between verb phrase “
carrying an umbrella.”) The
Government is choosing where to start in the sentence (that is,
which words to qualify) based only on what best serves its
argument.
But let us even assume that “as set forth in
subsection (b)” modifies “involving a covered security”: The
language would still fail to explain the Government’s position.
Remember that the Government reads the resulting phrase (again,
“involving a covered security, as set forth in subsection (b)”) to
point only to the forms of wrongful conduct listed in §§77p(b)(1)
and (2)—for example, false statements or deceptive devices in
securities sales. See
supra, at 21. The problem is that no
one would describe those misdeeds with that phrase. If Congress had
meant to refer only to that behavior, rather than to everything in
§77p(b), it would have done two things differently. First, Congress
would have written “as set forth in paragraphs (b)(1) and (b)(2)”
instead of “as set forth in subsection (b)” as a whole. See
supra, at 9 (explaining that when Congress wants to refer
only to a particular subsection or paragraph, it says so). And
second, Congress would have written something like “involving
allegations of misconduct,” rather than “involving a covered
security”—because the latter phrase does not even passably describe
§§77(b)(1) and (2)’s catalog of vices. We will not read “involving
a covered security, as set forth in subsection (b)” to mean
“involving allegations of misconduct, as set forth in paragraphs
(b)(1) and (b)(2)” when Congress did not enact that formulation.
See
Lozano v.
Montoya Alvarez, 572 U. S. 1 , ___
(2014) (slip op., at 14) (“Given that the drafters did not adopt
that alternative, the natural implication is that they did not
intend” to do so).
And (finally, we promise) even if we could put
out of mind all these difficulties, the Government’s position runs
aground on §77p(c)’s last clause, which states that removed class
actions “shall be subject to subsection (b).” That clause, properly
understood, points toward dismissal of a removed action. As we
earlier explained, and the Government concedes, Congress enacted
§77p(c)’s removal provision out of “concern[] that state courts
would not adequately enforce” §77p(b)’s state-law class-action
prohibition. Brief for United States as
Amicus Curiae 3; see
supra, at 5. The idea was to allow removal so that a federal
court could act as a backstop and order a class action’s
dismissal—thereby “subject[ing]” it to §77p(b)’s bar.
Kircher specifically said as much: Section 77p(c) “avails a
defendant of a federal forum in contemplation not of further
litigation over the merits of a claim brought in state court, but
of termination of the proceedings altogether.” 547 U. S., at
645, n. 12; see
supra, at 5. But of course, the
Government contemplates “further litigation”—
not
“termination”—of a removed 1933 Act class action. See Brief for
United States as
Amicus Curiae 25. That decoupling of
§77p(c)’s linkage between removal and dismissal provides the last
reason to reject the Government’s argument.
At bottom, the Government makes the same mistake
as Cyan: It distorts SLUSA’s text because it thinks Congress simply
must have wanted 1933 Act class actions to be litigated in federal
court. But this Court has no license to “disregard clear language”
based on an in- tuition that “Congress must have intended something
broader.”
Bay Mills, 572 U. S., at ___ (slip op., at
11) (internal quotation marks omitted). SLUSA did quite a bit to
“make good on the promise of the Reform Act” (as Cyan puts it).
Brief for Petitioners 20; see
supra, at 12–13. If further
steps are needed, they are up to Congress.
IV
SLUSA did nothing to strip state courts of
their longstanding jurisdiction to adjudicate class actions
alleging only 1933 Act violations. Neither did SLUSA authorize
removing such suits from state to federal court. We accordingly
affirm the judgment below.
It is so ordered.
APPENDIX
“77p. Additional remedies; limitation on
remedies
. . . . .
“(b) Class action limitations
“No covered class action based upon the
statutory or common law of any State or subdivision thereof may be
maintained in any State or Federal court by any private party
alleging—
“(1) an untrue statement or omission of a
material fact in connection with the purchase or sale of a covered
security; or
“(2) that the defendant used or employed any
manipulative or deceptive device or contrivance in connection with
the purchase or sale of a covered security.
“(c) Removal of covered class actions
“Any covered class action brought in any State
court involving a covered security, as set forth in subsection (b)
of this section, shall be removable to the Federal district court
for the district in which the action is pending, and shall be
subject to subsection (b) of this section.
. . . . .
“(f) Definitions
“For purposes of this section, the following
definitions shall apply:
. . . . .
“(2) Covered class action
“(A) In general
“The term “covered class action” means—
“(i) any single lawsuit in which—
“(I) damages are sought on behalf of more than
50 persons or prospective class members, and questions of law or
fact common to those persons or members of the prospective class,
without reference to issues of individualized reliance on an
alleged misstatement or omission, predominate over any questions
affecting only individual persons or members; or
“(II) one or more named parties seek to recover
damages on a representative basis on behalf of themselves and other
unnamed parties similarly situated, and questions of law or fact
common to those persons or members of the prospective class
predominate over any questions affecting only individual persons or
members; or
“(ii) any group of lawsuits filed in or pending
in the same court and involving common questions of law or fact, in
which—
“(I) damages are sought on behalf of more than
50 persons; and
“(II) the lawsuits are joined, consolidated, or
otherwise proceed as a single action for any purpose.
. . . . .
“(3) Covered security
“The term “covered security” means a security
that satisfies the standards for a covered security specified in
paragraph (1) or (2) of section 77r(b) of this title at the time
during which it is alleged that the misrepresentation, omission, or
manipulative or deceptive conduct occurred, except that such term
shall not include any debt security that is exempt from
registration under this subchapter pursuant to rules issued by the
Commission under section 77d(2) of this title.”
“77v. Jurisdiction of offenses and
suits
“(a) Federal and State courts; venue; service
of process; review; removal; costs
“The district courts of the United States and
the United States courts of any Territory shall have jurisdiction
of offenses and violations under this subchapter and under the
rules and regulations promulgated by the Commission in respect
thereto, and, concurrent with State and Territorial courts, except
as provided in section 77p of this title with respect to covered
class actions, of all suits in equity and actions at law brought to
enforce any liability or duty created by this subchapter. Any such
suit or action may be brought in the district wherein the defendant
is found or is an inhabitant or transacts business, or in the
district where the offer or sale took place, if the defendant
participated therein, and process in such cases may be served in
any other district of which the defendant is an inhabitant or
wherever the defendant may be found. In any action or proceeding
instituted by the Commission under this subchapter in a United
States district court for any judicial district, a subpoena issued
to compel the attendance of a witness or the production of
documents or tangible things (or both) at a hearing or trial may be
served at any place within the United States. Rule 45(c)(3)(A)(ii)
of the Federal Rules of Civil Procedure shall not apply to a
subpoena issued under the preceding sentence. Judgments and decrees
so rendered shall be subject to review as provided in sections
1254, 1291, 1292, and 1294 of title 28. Except as provided in
section 77p(c) of this title, no case arising under this subchapter
and brought in any State court of competent jurisdiction shall be
removed to any court of the United States. No costs shall be
assessed for or against the Commission in any proceeding under this
subchapter brought by or against it in the Supreme Court or such
other courts.”