Amicus Curiae Brief — Kircher v. Putnam Funds Trust

f { Suoreme Court. US

( ) | FILED

No.05-409 =| MAR 28 2006 |

|

| OFFICE OF THE Cre

IN THE

Supreme Court of the United States

CARL KIRCHER, ef al.,

Petitioners,

v.

PUTNAM FUNDS TRUST, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF AMICI CURIAE OF THE SECURITIES

INDUSTRY ASSOCIATION AND THE BOND

MARKET ASSOCIATION

IN SUPPORT OF PETITIONER

GEORGE R. KRAMER CARTER G. PHILLIPS

SECURITIES INDUSTRY RICHARD D. BERNSTEIN*

ASSOCIATION RUTHANNE M. DEUTSCH

1425 K Street, N.W. SIDLEY AUSTIN LLP

Seventh Floor 1501 K Street, N.W.

Washington D.C. 20005 Washington, D.C. 20005

(202) 216-2000 (202) 736-8000

MARJORIE E. GROSS

THE BOND MARKET

ASSOCIATION

360 Madison Avenue

New York, New York 10017

(646) 637-9200

Counsel for Amici Curiae

March 28, 2006 * Counsel of Record

LE a ET? aT aI TD

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

QUESTION PRESENTED

Whether the court of appeals properly exercised appellate

jurisdiction to review the district court’s remand order, when

the remand order was the result of a substantive decision_

rejecting a federal statutory preemption defense to certain

securities fraud class actions available under the Securities

Litigation Uniform Standards Act of 1998.

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TABLE OF CONTENTS

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INTEREST OF THE AMICI CURIAE ..............:...s0e000000

STATUTORY PROVISIONS INVOLVED ...................

INTRODUCTION AND SUMMARY OF ARGU-

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I A LOWER COURT'S) REJECTION OF

SLUSA’S PREEMPTION DEFENSE IS A

REVIEWABLE MERITS RULING ........0 eee

A. The Language Of The Uniform Act Demon-

strates That SLUSA Provides A Substantive

B. Adjudications Of Substantive Defenses Are

Not Subject To § 1447(d)’s Bar Of Appellate

IY sanccaccctitnnttnscntninapinntinnapanenmpiaieitaienntandinnn

C. Arbaugh v. Y & H Corp. Confirms That A

Ruling Is Not Jurisdictional Simply Because It

Addresses A Threshold, Potentially Disposi-

| EERPAAR IEEE eo Sind wee RGR het CEE ae

INTERPRETATION OF REMOVAL AND

APPEAL PROVISIONS SHOULD SERVE THE

PURPOSE OF THE SPECIFIC SUBSTANTIVE

Fe PET Cae FE8 a i ctctemnenineniecnssnnentmmnitniritepeaieens

A.SLUSA Aims To Ensure That Uniform

National Standards Govern Securities Fraud

UND caceadscitcsaiGiadedininiddesinndenetininnidiiettucinpbaidaniaia

(iii)

Page

iv

TABLE OF CONTENTS -— continued

B. SLUSA’s Purpose Is Undermined By Allow-

ing Preemption Decisions That Result In

Remand To Evade Appellate Review. ................

C. The Lack Of Appellate Review Of Decisions

Rejecting SLUSA Preemption Would Eviscer-

ate SLUSA’s Goal Of National Uniformity .......

CFE Bea ocsicsvevisnsensecciguvitipascseinetiatiiniaitlaatamanbibiaiies

Vv

TABLE OF AUTHORITIES

CASES Pige

Arhaugh v. Y & H Corp., 126 S. Ct. 1235

In re BankAmerica Corp. Sec. Litig., 263 F.3d

I I Id ccetearitticciiarhntadnnatinedanenn 8

Burns v. Prudential Secs., lnc., 116 F. Supp. 2d.

Se ors deresndnatnnsemineiestnienetionmnnesee 18

Breakaway Solutions, Inc. v. Morgan Stanley &

Co., No. CIV. A. 19522, 2004 WL 1949300

(Del. Ch. Aug. 27, 2004), amended on other

grounds, 2005 WL 3488497 (Del. Ch. Dec. 8,

SITET E ichdisthiesitiielidhabiitennenanenetesnnisietannenstibiantunmnntincenetes 6

California Pub. Employees’ Retirement Sys. v.

WorldCom, Inc., 368 F.3d 86 (2nd Cir. 2004),

cert. denied, 534 U.S. 1080 (2005) .........ccccceeeee 12

Cannon v. University of Chi. 441 U.S. 677

SIT itieiinidelilaldlasesintininseeinemnitatedinietiietibetmaetieinendemanen 8

Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343

Ia eheinctiesteleacabaiptitiiaensheeemesidindieneniinmnieatinienemmentessin 8.9

Caterpillar v. Williams, 482 U.S. 386 (1987)......... 1S

In re Cendant Corp. Litig., 264 F.3d 201 (3rd Cir.

ee P cpaticiticindaddianinstninsnnnintnendiaighinienmnananisenpeennnane 8

Central Bank of Denver, N.A. v. First Interstate

Bank of Denver, N.A., 511 U.S. 164 (1994) ........ 16

Dura Pharms., Inc. v. Broudo, 125 §. Ct. 1627

In re Enron Corp. Sec., Derivative & “ERISA”

Litig.. No. MDL-1446, 2002 WL 32107216

eee 19

Feitelberg v. Merrill Lynch & Co., 234 F. Supp.

2d 1043 (N.D. Cal. 2002), aff'd, 353 F.3d 765

GE crncenidereneintnininptrrenpremmmenmnnnnn 19

Gibson v. PS Group Holdings, Inc., No. 0O-CV-

0372, 2000 WL 777818 (S.D. Cal. June 14,

a wiictrsetelesiieniidieniunsinsiatncipsinieidiiiindabtiatestaimesittigtinssingl 19

vi

TABLE OF AUTHORITIES -— continued

Page

Gray v. Seaboard Secs., Inc., 241 F. Supp. 2d 213

(N.D.N.Y. 2003), rev'd in part on other

grounds, 126 F. App’x 14 (2d Cir. 2005)............ 19

Greaves Vv. McAuley, 264 F. Supp. 2d 1078 (N.D.

SEL, UREN D scncassetitcirtanentinersibibinteittiavaliiteicmanianinmiianaiintinn 19

Green Vv. Ameritrade, Inc., 120 F. Supp. 2d 795

(D.Neb. 2000), affd on other grounds, 279

Fee ee ls AIUD ieccncststnetnsniegsniinapemnenannibape 18

Hlelwig v. Vencor, Inc., 251 F.3d 540 (6th Cir.

ITED beciicncinenesiinciiemintndtenieeniingiticnitesianigtianlediaieimniuitiiiiins 8

Howard Gunty Profit Sharing Plan v. Green-

wood, No. 13144043, 2001 WL 1190761 (Cal.

CD, A COUR, Si, SRO Pacriscenesetiinieninanttincliteiastenies 6

Howsam v. Dean Witter Reynolds, Inc., 537 U.S.

CO ee 2

Jefferson County, Ala. y. Acker, 527 U.S. 423

GOP cennsinenciicricnnenisineenegpiaaliaaiidiadnatiaiiiiliiitiatiniaiigin 12

Kircher v. Putnam Funds Trust, 373 F.3d 847

FoR, Gi ee cesvinscsnsinininantieibiliiancns 4, 6, 8,9, 20

Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350 (1991) eee eceeeeeeeeees 2

Magyery v. Transamerica Fin. Advisors, Inc., 315

F. Supp. 2d 954 (N.D. Ind. 2004) 0000.0. 18

Makor Issues & Rights, Ltd. v. Tellabs, Inc., 437

Fee UES Gal, GNIED ctnincncsnessivinaemistiininminpsiiioess 8

Merrill Lynch, Pierce, Fenner & Smith, Inc. v.

Dabit, No. 04-1371, 2006 WL 694137 (U.S.

Ns, ies ME inseietiaserhacerniianniiipcinieaiinstiitiiaiarapiiaiils passim

Quackenbush vy. Allstate Ins. Co., 517 U.S. 706

Gee insiicendcseheapinidnimasctahenievtideaninteapinnindiatiemmaimaaieds:, 7.9

Robbins v. Koger Props., Inc... \16 F.3d 1441

Gs. GP Rcnlaissntiiinsisiinnnincsidstiseintaaieciiapertaiteansaititiie 8

Rodriguez De Quijas v. Shearson/Amer. Express,

eg a ES CN Riectinpiinticinntieniniinins 2

Vil

TABLE OF AUTHORITIES — continued

Page

Shackelford v. Ohio Nat'l Life Ins. Co., No.

D043503, 2004 WL 2074411 (Cal. Ct. App.

SD, Fa, ie eR nceccnnicocenssememonmeniumnmenridecummnns 6

Shaw v. Charles Schwab & Co., 128 F. Supp. 2d

a 18

Shearson/Amer. Express, Inc. v. McMahon, 482

a Ne a ccecececncineitiiatnstindneniniiciieineiagniaanens 2

Tennessee v. Davis, 100 U.S. 257 (1879) ............... 10

Thermtron Prods., Inc. v. Hermansdorfer, 423

U.S. 336 (1976), abrogated in part on other

grounds by Quackenbush v. Allstate Ins. Co..,

ee ertinctcvnncecnnnniviiasincbtitondesnceess 4.7.9

Things Remembered, Inc. v. Petrarca, 516 U.S.

SE cosincerereinentenpresinsigeniiinenitiattimmmentercemest 9

Winne v. Equitable Life Assur. Soc’y of the

United States, 315 F. Supp. 2d 404 (S.D.N.Y.

IE saitinrctieenttesedicaidetnaiicedietipniminieainmnrinmnmampenente 18

In re WorldCom, Inc. Secs. Litig., 308 F. Supp. 2d

I Ee diicttinccccttancninimnccremmnenepinmeine 18

STATUTES

Securities Act of 1933, ch. 38, 48 Stat. 74

(codified as amended at 15 U.S.C. § 77v)........... 11

Securities Exchange Act of 1934. ch. 404, 48

Stat. 881 (codified as amended at 15 U.S.C.

ETE cencstapestiiimaamvescidiiaiennduadiaaiildeansauentssdintetengsinssets 11

Private Securities Litigation Reform Act of 1995,

Pub. L. No. 104-67, 109 Stat. 737 ...............2.000-0 13

Securities Litigation Uniform Standards Act of

1998, Pub. L. No. 105-353, 112 Stat. 3227 ....2, 13, 14

Class Action Fairness Act of 2005, Pub. L. No.

109-2, 119 Stat. 4 (to be codified at 28 U.S.C.

ET eS Lae ea ee Tn 9

i Ee passim

viil

TABLE OF AUTHORITIES — continued

Page

SS PE. FA TD cccccccsssemcenermemnnnenension 15

Ee Sate aciienlatnetitetincintdiontnnessinnbidebiasininniiiis 1S

OD Pep cessasisnnpensiosentiesnnmuapepins 3, 6, 8, 15, 16

Fe ies OF Ie ticecdiscnierccnninintinccennnmcinstneanimsienaine 7

Bp ieeititesinihsipeceenncioncieebeniqescutiadiipesdodaeti 12

ID DONOF sccctaasiniticiuictensitgniacemicnssiiiininiatiivids 3,4,7

LEGISLATIVE HISTORY

Oversight Hearing on Securities Litigation

Abuses Concerning §. 1260, The Securities

Litigation Uniform Standards Act of 1997,

Before the Subcomm. on Sec. of the S§. Comm.

on Banking, Hous., and Urban Affairs, \OS5th

SEEDY Diictinddadrnicenteseoasencanneetingeoasiniemiiaticnem 13,17

ne 16

H.R. Rep. No. 105-803 (1998) (Conf. Rep.)......... 14, 15,

17, 18

143 Cong. Rec. $10475 (daily ed. Oct. 7, 1997),

available at 1997 WL 614735 .......cccccecceceeseeeeees 13,14

SCHOLARLY AUTHORITIES

J. Alexander, Do the Merits Matter? A Study of

Settlements in Securities Class Actions, 43

| een 16

Jennifer O'Hare, Preemption Under the Securities

Litigation Uniform Standards Act: If It Looks

Like a Securities Fraud Claim and Acts Like a

Securities Fraud Claim, Is lt a Securities Fraud

Claim? , 56 Aia. L. Rev. 325 (2004) 0.0.0.0... 20

Jordan A. Costa, Removal of Securities Act of

1933 Claims After SLUSA: What Congress

Changed, and What It Left Alone, 78 St. John’s

Be 0 PP irsinsdasccessasiuntannnenbisbimendpeosiouses 11

ix

TABLE OF AUTHORITIES — continued

OTHER AUTHORITIES Page

Securities Industry Association, at http://www.

sia.com (last visited Mar. 14, 2006)................00+ l

The Bond Market Association, at http://www.

bondmarkets.com (last visited Mar. 14, 2006) .... 2

INTEREST OF THE AMICI CURIAE'

The Securities Industry Association (“SIA”) brings together

the shared interests of approximately 600 securities firms to

accomplish common goals. SIA’s primary mission is to build

and maintain public trust and confidence in the securities

markets. SIA members (including investment banks, broker-

dealers, and mutual fund companies) are active in all U.S. and

foreign markets and in all phases of corporate and public

finance. According to the Bureau of Labor Statistics, the U.S.

securities industry employs nearly 800,000 individuals, and

its personnel manage the accounts of nearly 93 million

investors directly and indirectly through corporate, thrift, and

pension plans. In 2004, the industry generated $236.7 billion

in domestic revenue and an estimated $340 billion in global

revenues. (More information about SIA is available at www.

sia.com.)

The Bond Market Association (“TBMA”) represents

approximately 200 securities firms, banks, and asset

managers that underwrite, sell, trade, and invest in debt

securities and other credit products in the United States and in

international markets. Its members include securities dealers

and brokers that are large multi-product firms and those with

special market niches, as well as asset management firms with

over $9 trillion under management. From its inception in

1976, TBMA has worked with its member firms, Congress.

the Securities Exchange Commission, the Federal Reserve

Board, the Federal Reserve Bank of New York, state

regulators, and self-regulatory organizations to foster

effective. efficient regulation; to enhance the liquidity and

' Pursuant to this Court’s Rule 37.6, amici SIA and TBMA state that no

counsel for any party authored this brief in whole or in part. and no person

or entity other than amici and their members made a monetary

contribution to the preparation or submission of the brief. Counsel of

record for both parties have consented to the filing of this brief, and the

letters of consent have been filed with the Clerk.

2

efficiency of the markets for debt and credit products; to

encourage sound credit and business practices for participants

in such markets; and to promote the highest levels of

professional standards and conduct in such markets. (More

information about TBMA is available at www.bondmarkets.

com.)

The SIA and/or TBMA have previously filed amici briefs

with the Court in cases affecting civil liability and the federal

securities laws. See, e.g., Merrill Lynch, Pierce, Fenner &

Smith, Inc. v. Dabit, No. 04-1371, 2006 WL 694137 (U.S.

Mar. 21, 2006); Dura Pharms., Inc. v. Broudo, 125 S. Ct.

1627 (2005); Howsam v. Dean Witter Reynolds, Inc., 537

U.S. 79 (2002); Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350 (1991); Rodriguez De Quijas v.

Shearson/Amer. Express, Inc., 490 U.S. 477 (1989);

Shearson/Amer. Express, Inc. v. McMahon, 482 U.S. 220

(1987).

The issue raised by this case is whether the courts of

appeals have the authority to review district courts’

interpretations of the various questions of federal law that

arise in determining whether the preemption defense of the

Securities Litigation Uniform Standards Act of 1998, Pub. L.

No. 105-353, sec. 101, § 16, 112 Stat. 3227, 3227-33,

(“SLUSA” or “Uniform Act”) is applicable. This issue is one

of great import to the securities industry and investors in this

era of proliferating securities litigation. It is critically

important to the SIA and TBMA that the effort of Congress to

curb vexatious securities litigation by enacting the uniform

national requirements of SLUSA not fall prey to plaintiffs

who attempt creatively to avoid SLUSA_ preemption.

Uniform standards are critical to the use of U.S. securities

markets by both domestic and foreign issuers. Such national

uniformity requires that the substantive issues of federal law

that arise in determining whether the elements of the SLUSA

preemption defense are satisfied be subject to appellate

review. Amici therefore have a vital interest in the issue

3

presented in this case, and their views and experience can

assist the Court in resolving that issue.

STATUTORY PROVISIONS INVOLVED

Securities Litigation Uniform Standards Act:

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 — (A) a misrepresentation or omission of a

material fact in connection with the purchase or sale of a

covered security; or (B) that the defendant used or

employed any manipulative or deceptive device or

contrivance in connection with the purchase or sale of a

covered security.

IS U.S.C. § 78bb(f)\(1); accord id. § 77p(b).

Any covered class action brought in any State court

involving a covered security, as set forth in paragraph

(1) 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 paragraph (1).

1S U.S.C. § 78bb(f)(2); accord id. § 77pi(c).

General Federal Remand Statute: -

A motion to remand the case on the basis of any defect

other than lack of subject matter jurisdiction must be

made within 30 days after the filing of the notice of

removal .... If at any time before final judgment it

appears that the district court lacks subject matter

jurisdiction, the case shall be remanded.

28 U.S.C. §1447(c).

An order remanding a case to the State court from which

it was removed is not reviewable on appeal or otherwise,

except that an order remanding a case to the State court

4

from which it was removed pursuant to section 1443 of

this title shall be reviewable by appeal or otherwise.

28 U.S.C. § 1447(d).

INTRODUCTION AND SUMMARY OF ARGUMENT

This case presents the question whether the courts of

appeals may review a district court’s adjudication of a

substantive question of federal law — whether the federal

defense of SLUSA preemption applies — when the result of

that adjudication is to remand a removed securities law class

action to State court.

At issue is whether a substantive ruling deciding the merits

of a federal defense by a district court, indisputably vested

with subject matter jurisdiction by Congress to decide exactly

that issue, should receive federal appellate review in

consonance with SLUSA’s purpose of guaranteeing uniform

national standards. As set forth below, a ruling on the merits

of the SLUSA preemption defense is not a determination of

the district court’s subject matter jurisdiction reached before

and divorced from the substantive merits. Rather, a

determination by a district court that the federal defense of

SLUSA preemption is not applicable is a substantive

adjudication by that court of the elements of a federal

substantive defense. Thus, remand determinations based on

such substantive rulings are premised on neither jurisdictional

nor procedural grounds, and therefore are not barred trom

appellate review under the general remand statute, 28 U.S.C.

§ 1447(d). See, e.g., Thermtron Prods., Inc. v. Hermansdor-

fer, 423 U.S. 336, 345 (1976).

Moreover, the Seventh Circuit correctly noted that if

remands of SLUSA claims are deemed non-appealable,

“major substantive issue[s] .. . will escape review.” Kircher

v. Putnam Funds Trust, 373 F.3d 847, 850 (7th Cir. 2004).

For example, if the Seventh Circuit had declined to exercise

appellate review over a SLUSA-based remand in Kircher, it is

5

unlikely that the vital Dabit issue — whether SLUSA preempts

holder class actions — would have been decided by this Court

because there would have been no conflict in the circuits.

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, No. 04-

1371, 2006 WL 694137 (U.S. Mar. 21, 2006). Failure to

provide federal appellate review to SLUSA remands based on

rejection of the preemption defense will result in the

balkanization of federal law governing the scope and meaning

of the preemption defense to securities actions provided by

SLUSA. This would badly undermine the statute’s promise

of providing “uniform standards” to govern national securities

fraud class actions.

ARGUMENT

I. A LOWER COURT’S REJECTION OF SLUSA’S

PREEMPTION DEFENSE IS A REVIEWABLE

MERITS RULING.

The propriety of appellate review follows from three basic

points. First, the text of the Uniform Act demonstrates that

SLUSA provides a substantive federal defense to covered

class actions. A determination that the SLUSA preemption

defense applies is therefore a substantive adjudication of the

merits that fully disposes of the covered state law class

claims. Second, such final merits determinations are subject

to appellate review. Section 1447(d), read in pari materia

with section 1447(c), poses no bar to appellate review of

adjudications of a substantive federal defense. Third, this

Court's recent decision in Arbaugh v. Y & 1 Corp., 1268S. Ct.

1235 (2006), confirms that a ruling is not properly classified

as jurisdictional merely because it addresses a threshold,

potentially dispositive issue.

6

A. The Language Of The Uniform Act Demon-

strates That SLUSA Provides A Substantive

Defense.

The language of the statute makes clear that SLUSA

preemption is a federal defense to securities fraud class

actions — not a jurisdictional provision. As the Seventh

Circuit observed in the decision below, “a federal judge is not

only authorized but also required to decide whether any court

may entertain the litigation” when a SLUSA defense is

presented. Kircher, 373 F.3d at 849 (emphasis added). The

language of the statute is clear that this preemption defense is

applicable in both federal and state court: “No covered class

action... may be maintained in any State or Federal court.”

15 U.S.C. § 78bb(f)(1) (emphasis added); accord id. § 77p(b).

Petitioners themselves effectively acknowledge — that

SLUSA preemption is a merits.issue, going to the elements of

a substantive defense, and not a jurisdictional issue as to

which forum should hear the issue. They do so by conceding

that, absent removal, the exact same preemption defense still

applies in state court. See Pet. Br. at 47. Indeed, state courts

must adjudicate the merits of the SLUSA preemption defense

in instances when the removal provision is not invoked. See,

e.x., Shackelford v. Ohio Nat'l Life. Ins. Co., No. D043503,

2004 WL 2074411 (Cal. Ct. App. Sept. 16, 2004); Howard

Gunty Profit Sharing Plan v. Greenwood, No. B144043, 2001

WL 1190761 (Cal. Ct. App. Oct. 5, 2001); Breakaway

Solutions, Inc. v. Morgan Stanley & Co., No. Civ. A. 19522,

2004 WL 1949300 (Del. Ch. Aug. 27, 2004), amended on

other grounds, 2005 WL 3488497 (Del. Ch. Dec. 8, 2005).

If an adjudication of the SLUSA preemption defense were

purely a matter of federal subject matter jurisdiction, SLUSA

preemption would not be a substantive defense presentable in

state court. State courts generally do not adjudicate questions

that are properly characterized as issues of strictly federal

subject matter jurisdiction. For example, if there is diversity

between a plaintiff and a defendant, but the defendant does

7

not remove, the state court will not address that issue. In

contrast, state courts must address SLUSA preemption when

a defendant does not remove because it is a substantive

defense. Accordingly a federal district court decision that a

class action is not preempted by SLUSA is also a substantive

adjudication of the federal preemption defense.

This is also basic common sense. In a typical federal case,

a ruling that a federal court has subject matter jurisdiction

does not dispose of, indeed has no effect on, the substantive

claims. For example, a ruling that a court has diversity

jurisdiction does nothing to address, much less dispose of, the

underlying state law c’aims. In contrast, a ruling that SLUSA

preemption applies requires final dismissal of the state law

class action claims and those claims cannot be reasserted as

part of a “covered class action” in any federal or state court.

That is a quintessential decision on the merits. — Final

decisions on the merits are classically reviewable on appeal.

See 28 U.S.C. § 1291.

B. Adjudications Of Substantive Defenses Are Not

Subject To § 1447(d)’s Bar Of Appellate Review.

28 U.S.C. § 1447(d) states: “[aJn order remanding a case to

the State court from which it was removed is not reviewable

on appeal or otherwise.” 28 U.S.C. § 1447(d). Because

§ 1447(d) must be read in conjunction with § 1447(c),

appellate review of remand orders is prohibited only where

the district court remands because it lacks subject matter

jurisdiction at the time of removal, or due to a procedural

detect in the removal process itself. Thermtron Prods., 423

U.S. at 345.° Here, the district court did not lack subject

“The essence of the argument made by Amici Curiae in Support of

Petitioners, Law Professors Arthur R. Miller et al., is that the Court

should effectively overrule Thermtron. This argument is made

notwithstanding this Court's application of the Thermtron exception in

later cases, including its endorsement and application by a unanimous

Court in Quackenbush vy. Allstate Insurance Co., 517 U.S. 706 (1996).

8

matter jurisdiction at the time of removal. To the contrary,

SLUSA’s removal provision explicitly vests the federal courts

with the authority to determine the substantive merits of the

Uniform Act’s federal preemption defense. 15 U.S.C.

§ 78bb(f)(2); accord id. § 77 pic). Supra, at 14-17.

The Seventh Circuit correctly characterized SLUSA

remands based on the rejection of the preemption defense to

be the result of substantive determinations by the district

court that “come[] at the end rather than the outset of federal

adjudication.” Kircher, 373 F.3d at 848. Accordingly, the

appeals court properly held that § 1447(d), read in pari

materia with § 1447(c), posed no bar to appellate review of

SLUSA remand decisions based on rejection of the

preemption defense, because such remands do not result from

a lack of subject matter jurisdiction, or a defect in the removal

The Court has not granted certiorari on this issue, nor has briefing been

requested. Moreover, Congress, when enacting SLUSA, was entitled to

rely on the teachings of Thermtron, Quackenbush, and Carnegie-Mellon

University v. Cohill, 484 U.S. 343 (1988), that remand determinations

based on non-jurisdictional grounds were reviewable on appeal. See

Cannon v. University of Chi., 441 U.S. 677, 696-98 (1979) (applying

implied right of action standard in place when the statute was enacted).

Indeed, assuming for the sake of argument, that this Court were

nonetheless to choose to limit Thermtron to its facts, and rule that remand

determinations based on substantive grounds beyond the specific

jurisdictional and procedural grounds set forth in 1447(c) could not be

appealed, such a ruling should apply only prospectively to actions under

new statutes, and not serve as a bar to appellate review of remands based

on rejection of SLUSA preemption.

We also note that in addition to the description of Professor Miller's

academic interests and treatise cited in his amici brief, Professor Miller

also frequently serves as co-counscl to some of the nation’s largest

plaintiffs’ class action firms in securities litigation. See, e.¢g.. Makor

Issues & Rights, Ltd. v. Tellabs, Inc., 437 F.3d S88 (7th Cir. 2006); In re

Cendant Corp. Litig., 264 F.3d 201 (3rd Cir. 2001); In re BankAmerica

Corp. Sec. Litig., 263 F.3d 795 (8th Cir. 2001); Helwig v. Vencor, Inc.,

251 F.3d 540 (6th Cir. 2001) (en banc); Robbins v. Koger Props., Inc., 116

F.3d 1441 (11th Cir, 1997).

9

process, but rather from a substantive rejection of the federal

defense. /d. at 848-49,

The decision of the Seventh Circuit was consistent with this

Court's precedent holding that appellate review of remand

orders is barred only for those grounds specified in § 1447(c).

See, e.g., Quackenbush vy. Allstate Ins. Co., 517 U.S. 706,

711-12 (1996) (§ 1447(d) did not bar review of remand based

on Burfurd abstention); Carnegie-Mellon Univ. v. Cohill, 484

U.S. 343, 347-48 (1988) (discretionary remand of remaining

pendent state law claim after federal claim dismissed is

reviewable on appeal); Thermtron Prods., 423 U.S, at 351

(remand order based on district court’s congested docket

reviewable on appeal because it was not a ground for remand

specified in § 1447(c)). “/Ojnly remands based on grounds

specified in § 1447(c) are immune from review under

-§ 1447(d).” Things Remembered, Inc. v. Petrarca, 516 U.S.

124, 127 (1995) (emphasis added). Section 1447(c) does not

specify that district courts must remand actions upon the

rejection of a federal preemption defense. Accordingly,

§ 1447(d) poses no bar to appellate review of SLUSA-based

remand determinations made on that basis."

‘This does not mean that remands in SLUSA cases would necessarily

be appealable when the basis for remand was something other than

rejection of the SLUSA preemption defense. For example, the remand of

a SLUSA-removed case because of the defect that removal was untimely

under the 30-day rule would be unreviewable under § 1447(d).

* Petitioners argue that the provision of the Class Action Fairness Act

(“CAFA”), which specifically authorizes “an appeal from an order of a

district court granting or denying a motion to remand a class action to the

State court.” Pub. L. No. 109-2, § Sia), 119 Stat. 4, 12 (2005) (to be

codified at 28 U.S.C. § 1453(c)(1)), demonstrates that appellate review of

SLUSA-based remands is prohibited because SLUSA does not have such

a provision. To the contrary, SLUSA does not contain a specific provision

authorizing appellate review of SLUSA-based remands because none ts

required. Remand determinations under SLUSA such as this case are

based on substantive adjudications of the merits of the federal defense and

were thus appealable under Thermtron’s controlling. and twice reaffirmed,

10

C. Arbaugh v. Y & H Corp. Confirms That A Ruling

Is Not Jurisdictional Simply Because It Address-

es A Threshold, Potentially Dispositive Issue.

This Court's recent decision in Arhaugh v. Y & H Corp..

126 S. Ct. 1235 (2006), confirms that it is error to classify a

merits ruling as jurisdictional simply because it addresses a

threshold issue that could dispose of the case. Arhaugh

involved “the distinction between two sometimes confused or

conflated concepts: federal. court ‘subject-matter’ jurisdiction

over a controversy; and the essential ingredients of a federal

claim for relief.” Jd. at 1238. There the context was

whether, following a jury verdict, a Title VII claim was

properly dismissed for a newly-raised issue of lack of subject

matter jurisdiction. The Court held that the employee-

numerosity requirement of Title VII, although a threshold and

potentially dispositive issue, related to the “substantive

adequacy of Arbaugh’s Title VII claim,” and as such did “not

circumscribe federal-court subject-matter jurisdiction.” /d.

Arhaugh teaches that the term jurisdiction is not properly

invoked to describe all threshold, potentially dispositive

rulings. It correctly rejects the category of “drive-by

interpretation of § 1447(d) when SLUSA was enacted in 1998. In

contrast, CAFA requires an express provision to overcome § 1447(d)'s bar

of appellate review because remands under CAFA are made on the basis

of purely procedural and jurisdictional grounds, which fall within the

ambit of § 1447(c), and thus would not be appealable under Thermtron.

* That the substantive elements at issue here are pertinent to a defense

does not negate the fact that the district court. in determining the

applicability of SLUSA, adjudicates the substantive merits of a claim for

relief. See Tennessee v. Davis, 100 U.S. 257, 264 (1879) ("A case

consists of the right of one party as well as the other, and may truly be

said to arise under the Constitution or a law or a treaty of the United States

whenever its correct decision depends upon the construction of either.

Cases arising under the laws of the United States are such as grow out of

the legislation of Congress, whether they constitute the right or privilege,

or claim of protection, or defence of the party, in whole or in part, by

whom they are asserted.) (emphasis added).

jurisdictional rulings” in which courts label threshold merits

dismissals as based on “lack of jurisdiction.” /d. at 1242.

Indeed, if the SLUSA preemption determination by the

district court were ruled to be a matter of jurisdiction, it is

foreseeable that a situation analogous to that presented in

Arbaugh would arise. Imagine that a securities fraud class

action comprising a mix of claims from the Securities Act of

1933 and state law claims was removed from state court to

federal court under SLUSA.° Thereafter, the plaintiffs do not

challenge removal or preemption, litigate their federal claims,

and lose. If a successful SLUSA preemption defense is

jurisdictional, plaintiffs could, at that late stage in the

litigation, assert that the state claims were improperly

preempted and that the entire case should accordingly be

remanded to state court for lack of jurisdiction. Indeed, under

Petitioners’ interpretation of 28 U.S.C. § 1447(d), that end-of-

the-case remand would not be appealable. Interpreting

SLUSA preemption to be jurisdictional would thus enable

class action plaintiffs to game the system, and would result in

“unfairness and waste of judicial resources,” id. at 1245,

exactly what Arbaugh holds is improper.

Il. INTERPRETATION OF REMOVAL AND

APPEAL PROVISIONS SHOULD SERVE THE

PURPOSE OF THE SPECIFIC SUBSTANTIVE

STATUTE AT ISSUE.

Statutory provisions relating to removal should be

construed to serve the purposes of the underlying statute, here

* Absent SLUSA, 1933 Act claims are not removable. Securities Act of

1933, ch. 38, § 22, 48 Stat. 74, 86-87 (codified as amended at 15 U.S.C.

§ 77v): see also Jordan A. Costa, Removal of Securities Act of 1933

Claims After SLUSA: What Congress Changed, and What It Left Alone.

78 St. John’s L. Rev. 1193 (2004). Federal courts have exclusive juris-

diction over civil suits arising under the Securities Exchange Act of 1934,

ch. 404, § 27, 48% Stat. 881, 902-03 (codified as amended at 15 U.S.C.

§ 78aa). Accordingly, when securities plaintiffs sue in state court, they

often combine 1933 Act and state law claims.

12

SLUSA. The interpretation afforded by this Court to the

federal officer removal statute, 28 U.S.C. § 1442, is

illustrative. Under that statute, suits against federal officers

may be removed if a “colorable federal defense” is raised, and

like the provision allowing for removal under SLUSA,

“despite the nonfederal cast of the complaint; the federal-

question is met if the defense depends on federal law.”

Jefferson County, Ala. v. Acker, 527 U.S. 423, 431 (1999). In

construing the colorable federal defense requirement, this

Court has “rejected a ‘narrow, grudging interpretation’ of the

Statute, recognizing that ‘one of the most important reasons

for removal is to have the validity of the defense of official

immunity tried in a federal court.” /d. at 431 (quoting

Willingham v. Morgan, 395 U.S. 402, 407 (1969)). Cf.

California Pub. Employees’ Retirement Sys. v. WorldCom,

Inc. 368 F.3d 86, 103-04 (2nd Cir. 2004) (“[I]n its every

detail, Section 1452(a) [the bankruptcy removal statute] is

designed to further Congress's purpose of centralizing

bankruptcy litigation in a federal forum.”), cert. denied, 534

U.S. 1080 (2005).

Similarly, the SLUSA_ removal provision _ reflects

Congress's intent that the merits of the federal preemption

defense available under SLUSA be evaluated by the federal

courts. SLUSA’s purpose of promoting uniformity of

national standards to govern securities fraud litigation is

furthered by providing federal appellate review to all district

court adjudications of SLUSA preemption. and not only to

pro-preemption rulings that result in dismissal of the claim.

A. SLUSA Aims To Ensure That Uniform National

Standards Govern Securities Fraud Litigation.

“The magnitude of the federal interest in protecting the

integrity and efficient operation of the market for nationally

traded securities cannot be overstated.” Merrill Lynch, No.

04-1371, 2006 WL 694137, at *4. As apparent from its very

title, the purpose of SLUSA is to achieve national “uniform

standards” for “securities litigation.” SLUSA makes the

13

federal antifraud provisions for securities litigation, which are

governed by the Private Securities Litigation Reform Act of

1995 (Reform Act or PSLRA),’ the exclusive national

standard for most securities fraud class actions.

In passing the Uniform Act, Congress paid heed to

testimony that “[nJational [securities] markets should . . . be

governed by national standards.” Oversight Hearing on

Securities Litigation Abuses Concerning §. 1260, The

Securities Litigation Uniform Standards Act of 1997, Before

the Subcomm. on Sec. of the S. Comm. on Banking, Hous.,

and Urban Affairs, \O5th Cong. 67 (1997). “If individual

States are permitted to assert individual jurisdiction over

transactions in national markets, the predictable result is

chaos and mayhem.” /d. at 79. SLUSA sought to protect

businesses from exposure to litigation in each of the fifty

states under fifty different procedural and substantive

standards when such litigation could arise in the event of a

single allegation of fraud in connection with the purchase or

sale of a nationally traded security.

In particular, SLUSA’s legislative history indicates that as

foreign securities markets grow, this makes it increasingly

important to ensure uniformity and certainty in the U.S.

securities markets. 143 Cong. Rec. $10475, $10477 (daily

ed. Oct. 7, 1997), available at 1997 WL 614735 (“[I|f our

markets are to remain ahead of those in London, Frankfurt,

Tokyo or Hong Kong, we must create uniformity and

certainty.”). See also id. (“How can we expect to get foreign

companies to list on our exchanges if we have to explain that

they will face not only our very tough Federal standards on

securities fraud, but also the possibility of 50 constantly

changing State standards”).

Congress explained the reasons behind the enactment of

SLUSA in § 2 of the statute. Pub. L. No. 105-353, § 2, 112

Pub. L. No. 104-67, 109 Stat. 737 (1995) (codified as amended in

scattered sections of 15 U.S.C.)

14

Stat. at 3227. Specifically, Congress found, inter alia, that

“since enactment of [PSLRA], considerable evidence has

been presented to Congress that a number of securities class

action lawsuits have shifted from Federal to State Courts,” id.

§ 2(2), 112 Stat. at 3227; “this shift has prevented [PSLRA]

from fully achieving its objectives,” id. § 2(3), 112 Stat. at

3227; and that

in order to prevent certain State private securities class

action lawsuits alleging fraud from being used to

frustrate the objectives of [PSLRA\], it is appropriate to

enact national standards for securities class action

lawsuits involving nationally traded securities, while

preserving the appropriate enforcement powers of State

securities regulators and not changing the current

treatment of individual lawsuits.

Id. § 2(5), 112 Stat. at 3227 (emphasis added).

The Uniform Act aimed to “prevent plaintiffs from seeking

to evade the protections that Federal law provides against

abusive litigation by filing suit in the State court, rather than

Federal, court.” H.R. Rep. No. 105-803, at 13 (1998) (Conf.

Rep.) The legislation was

designed to protect the interests of shareholders and

employees of public companies that are the target of

meritless “strike” suits [the purpose of which] is to

extract a sizeable settlement from companies that are

forced to settle, regardless of the lack of merits of the

suit, simply to avoid the potentially bankrupting expense

of litigating.

Id.

B. SLUSA’s Purpose Is Undermined By Allowing

Preemption Decisions That Result In Remand To

Evade Appellate Review.

SLUSA guarantees that uniform national standards govern

national securities litigation by making federal courts,

15

applying federal law, the exclusive venue for certain

securities class actions. 15 U.S.C. § 78bb(f)( 1); accord id.

§ 77p(b). Thus, for “covered class actions™ that fall within

the scope of SLUSA’s preemption provision, the sole remedy

available for investors is a federal securities fraud action,

where plaintiffs must comply with the heightened pleading

standards and other procedural safeguards provided by

PSLRA.”

Congress reinforced SLUSA’s guarantee of uniformity for

securities litigation by including a statute-specific removal

provision that vests federal courts with the authority to make

the substantive determinations required to establish SLUSA’s

preemption defense. 15 U.S.C. § 78bb(1)(2); accord id.

§ 77p(c). SLUSA’s removal provision effectively serves as a

statutory exception to the well-pleaded complaint rule, which

would otherwise preclude removal to federal court of a state

law claim when the only basis for removal was assertion of a

federal defense. See Caterpillar v. Williams, 482 U.S. 386,

392 (1987). By providing for removal of securities class

actions, Congress plainly sought to ensure that federal courts

“A “covered class action” is defined as a lawsuit “in which. . .

damages are sought on behalf of more than SO persons or prospective

class members,” 15 U.S.C. § 77p(f(2MAXiML) ~or where “one or more

named parties seek to recover damages on a representative basis on behalf

of themselves and other unnamed parties similarly situated,” id.

§ 77p(fM2KMA)AMED); or “any group of lawsuits filed or pending in the

same court and involving common questions of law or fact in which (1)

damages are sought on behalf of more than SO persons; and (IL) the

lawsuits are joined, consolidated, or otherwise proceed as a single action

for any purpose, id. § 77p(f 2AM).

* For example, under the Reform Act's heightened pleading standards,

plaintiffs are required to “state with particularity facts giving rise to a

strong inference that the defendant acted with the required state of mind.”

1S U.S.C. § 78u-4(b)(2). PSLRA also provides for an automatic stay of

discovery upon the filing of a motion to dismiss. /d. § 78u-4(an(3); accord

id. § 777-1an3).

16

would develop the precedent on the scope of SLUSA’s

preemption defense.

It would be contrary to Congress's plan to bar appellate

review of district court preemption determinations under

SLUSA only where the district court rejects preemption and

permits state law claims to go forward. To disallow appellate

review only for district court decisions that permit state law

claims increases the likelihood of the very balkanization of

securities law standards that SLUSA is designed to prevent.

It further disserves the substantive uniformity that SLUSA

promotes to have a lopsided system where: (a) decisions

favoring preemption are immediately reviewed by a federal

court of appeals, but (b) decisions rejecting preemption will

usually never be subject to appellate review because the vast

majority of remanded cases will settle in the state trial courts

regardless of their legal merits." Such a lopsided system

This Court has repeatedly noted its concem of the effect on securities

markets of settlements that are disproportionate to the legal merits of the

claim. See, e.g., Merrill Lynch, No. 04-1371, 2006 WL 694137, at *5;

Dura Pharms. v. Broudo, 125 $.Ct. 1627, 1634 (2005); Central Bank of

Denver, N.A. vy. First interstate Bank of Denver, N.A., 511 U.S. 164, 189

(1994). As Congress recognized when designing the PSLRA: “If a

defendant cannot win an early dismissal of the case, the economics of

litigation may dictate a settlement even if the defendant is relatively

confident that it would prevail at trial.” S. Rep. No. 104-98, at 7 (1995)

(internal quotation marks omitted); see also J. Alexander, Do the Merits

Matter? A Study of Settlements in Securities Class Actions, 43 Stan. L.

Rev. 497, 578 (1991) (“virtually all cases are settled”). Senator Phil

Gramm described the situation prior to the passage of SLUSA:

|W Je were able to pass a piece of legislation [PSLRA] aimed at doing

something about this problem. We have had many companies,

especially new growth companies, plagued with abusive lawsuits,

often being forced to settle out of court because of the high costs of

proving innocence. We had a system of parasites who were literally

bleeding the life blood out of growth companies in America... .

17

would thwart SLUSA’s central purpose by “evad[ing] the

protections that Federal law provides against abusive

litigation by filing suit in the State court, rather than Federal

court.” H.R. Rep. No. 105-803, at 13.

C. The Lack Of Appellate Review Of Decisions

Rejecting SLUSA Preemption Would Eviscerate

SLUSA’s Goal Of National Uniformity.

Failure to exercise appellate review over SLUSA-based

remand determinations has already resulted in a proliferation

of unreviewed, and often conflicting, district court decisions.

This fragmentation of the case law and the absence of any

controlling precedent eviscerates the “uniform” federal

defense to securities fraud class actions that is promised by

SLUSA.

Except for the Seventh Circuit's decision to exercise

appellate review over a SLUSA-based remand in Kircher, and

the resulting creation of a conflict between the Second and

Seventh Circuits, it is unlikely that the important Dabit

issue — whether SLUSA preempts holder class actions —

would ever have come to the Court’s attention. Merrill

Lynch, No. 04-1371, 2006 WL 694137, at *2. The Dabit

issue is but one of many substantive questions of federal law

that are being adjudicated across the country as district courts

... We discovered . . . that a new loophole was being exploited,

that what was occurring is that there has been a shift of these lawsuits

into State courts.

Oversight Hearing on Securities Litigation Abuses Concerning S. 1260,

The Securities Litigation Uniform Standards Act of 1997, Before the

Subcomm. on Sec. of the §. Comm. on Banking, Hous., and Urban Affairs,

105th Cong. 1-2 (1997) (statement of Senator Phil Gramm). In short,

SLUSA was

designed to protect the interests of shareholders and employees of

public companies that are the target of meritless “strike” suits [the

purpose of which] is to extract a sizeable setthkement trom companies

that are forced to settle, regardless of the lack of merits of the suit,

simply to avoid the potentially bankrupting expense of litigating.

H.R. Rep. No. 105-803, at 13.

18

exercise their jurisdiction in determining whether the

elements of the federal defense provided by SLUSA are

satisfied. If the courts of appeals could not review district

court rejections of SLUSA’s preemption defense, the statute’s

goals of uniformity and consistency in the application of

federal securities law would never be realized.

As one district court judge has lamented, “the district court

cases appear to be all over the map on the issue of what state

law claims are preempted by SLUSA.” Magyery v.

Transamerica Fin. Advisors, Inc., 315 F. Supp. 2d 954, 959

(N.D. Ind. 2004). At issue in Magyery was whether SLUSA-

preemption requires a state law complaint to allege that the

defendants made a misrepresentation or omission of material

fact with scienter. The court chronicled the “clear split

among the courts on the issue of whether the . . . claims must

allege ‘scienter’ for SLUSA preemption to apply.” /d. at 959-

60 (comparing Burns v. Prudential Secs., Inc., 116 F. Supp.

2d 917 (N.D. Ohio 2000) (requiring scienter), and Green v.

Ameritrade, Inc., 120 F. Supp. 2d 795, 798 (D. Neb. 2000)

(same), aff'd on other grounds, 279 F.3d 590 (8th Cir. 2002),

and Shaw v. Charles Schwab & Co., 128 F. Supp. 2d 1270,

1272-73 (C.D. Cal. 2001) (same), with Winne v. Equitable

Life Assur. Soc’y of the United States, 315 F. Supp. 2d 404,

413-15 (S.D.N.Y. 2003) (SLUSA preemption does not

require scienter)).

The district courts are similarly struggling with other

substantive issues that arise in defining the “national

standards for securities class action lawsuits involving

nationally traded securities” promised by SLUSA. H.R. Rep.

No. 105-803, at 2. Such issues include, infer alia:

1) How to arrive at the “SO persons” total for the purposes

of establishing a “covered class action” under 15 U.S.C.

§ 77p(fy(2)(A)ii). Compare In re WorldCom, Inc. Securities

Litigation, 308 F. Supp. 2d 236, 246 (S.D.N.Y. 2004)

(holding ten individual actions collectively brought on behalf

of more than 50 persons that were subsequently consolidated

19

in federal court, and containing the same claims constituted a

“esroup of lawsuits” and was therefore a “covered class

action” and noting that the absence of any indication in

SLUSA that the joined actions be pending in the same state

court), with /n re Enron Corp. Sec., Derivative & “ERISA”

Litig., No. MDL-1446, 2002 WL 32107216, at *5 (S.D. Tex.

Aug. 12, 2002) (holding that conditions for SLUSA

preemption, including consolidation of actions, must exist al

time of removal from state court);

2) Whether SLUSA’s definition of a “covered class action”

encompasses state law actions seeking equitable relief, rather

than traditional damages. See, e.g., Feitelberg v. Merrill

Lynch & Co., 234 F. Supp. 2d 1043 (N.D. Cal. 2002) (holding

that restitution and disgorgement damages sought under state

law qualify as monetary damages for purposes of SLUSA

removal), aff'd, 353 F.3d 765 (9th Cir. 2003) (per curiam);

Gibson v. PS Group Holdings, Inc., No. OO-CV-0372, 2000

WL 777818 (S.D. Cal. June 14, 2000) (holding that class

action plaintiff may not defeat removal by omitting a prayer

for damages);

3) How the Uniform Act’s preemption defense should

apply to complaints that include a mixture of preempted and

non-preempted claims. Compare Greaves v. McAuley, 264 F.

Supp. 2d 1078 (N.D. Ga. 2003) (holding that because certain

claims were excepted from SLUSA preemption under the

“Delaware carve-out,” 15 U.S.C. § 77p(d)(4), entire action

should be remanded), with Gray v. Seaboard Secs., Inc., 241

F. Supp. 2d 213, 219-20 (N.D.N.Y. 2003) (determining

SLUSA preemption as to each separate claim), rev'd in part

on other grounds, 126 F. App’x 14 (2nd Cir. 2005); and

4) How strictly to read complaints in determining whether

the elements of the SLUSA preemption defense are satisfied —

in particular, whether or not district courts should limit

themselves to assessing allegations made on the face of the

complaint and, relatedly, the extent to which plaintiffs should

be allowed to plead around the elements of the SLUSA

20

preemption defense. See generally Jennifer O'Hare,

Preemption Under the _ Securities Litigation Uniform

Standards Act: If It Looks Like a Securities Fraud Claim and

Acts Like a Securities Fraud Claim, Is It a Securities Fraud

Claim?, 56 Ala. L. Rev. 325, 348-68 (2004) (surveying

conflicting case law).

This list is only illustrative of the myriad questions of

federal law, beyond the Dabit issue, that arise in district

courts as they contend with the merits and scope of SLUSA’s

federal preemption defense. Indeed, Petitioners themselves

devote several pages of their brief to chronicling various

substantive issues regarding SLUSA preemption, beyond the

issue this Court has now addressed in Merrill Lynch, Pierce,

Fenner & Smith, Inc. v. Dabit, No. 04-1371, 2006 WL

694137 (U.S. Mar. 21, 1006). See Pet. Br. at 42-45.

It is therefore clear that absent appellate review of district

court rejections of SLUSA preemption, SLUSA’s promise of

uniformity will prove to be merely illusory. In promulgating

the Uniform Act, Congress surely did not intend to allow

erroneous district court interpretations of the reach of

purportedly uniform national standards to remain uncorrected.

Nor did Congress intend for federal appellate courts to be

hamstrung in their role of resolving conflicts between

differing district court interpretations of the scope of the

SLUSA preemption defense. But these will be exactly the

outcomes of a failure to allow appellate review of SLUSA-

based remands. If rejections of SLUSA preemption are

deemed non-appealable, then “major substantive issue[s] . . .

will escape review.” Kircher, 373 F.3d at 850. SLUSA’s

purpose of encouraging capital formation in U.S. markets by

mandating uniform federal standards for securities class

actions can be achieved only if a// district court rulings on the

merits of the federal defense provided by SLUSA, including

those that result in remands to state court, are subject to

federal appellate review.

21

CONCLUSION

For the foregoing reasons, the judgment of the Seventh

Court of Appeals should be affirmed.

Respectfully submitted,

GEORGE R. KRAMER CARTER G. PHILLIPS

SECURITIES INDUSTRY RICHARD D. BERNSTEIN*

ASSOCIATION RUTHANNE M. DEUTSCH

1425 K Street, N.W. SIDLEY AUSTIN LLP

Seventh Floor 1501 K Street, N.W.

Washington D.C. 20005 Washington, D.C. 20005

(202) 216-2000 (202) 736-8000

MARJORIE E. GROSS

THE BOND MARKET

ASSOCIATION

360 Madison Avenue

New York, New York 10017

(646) 637-9200

Counsel for Amici Curiae

March 28, 2006 * Counsel of Record

DC} 8345 38v.2