Merrill LYNCH, Pierce, Fenner & Smith Inc. v. Shadi Dabit (547 U.S. 71)
U.S. Supreme Court · decided March 21, 2006 · Supreme Court Database (Spaeth)
- Citation
- 547 U.S. 71 · 126 S. Ct. 1503
- Decided
- March 21, 2006
- Term
- October Term 2005
- Vote
- 8–0
- Majority author
- Justice Stevens
- Issue area
- Federalism
- Disposition
- Vacated and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice Stevens delivered the opinion of the Court. Title I of the Securities Litigation Uniform Standards Act of 1998 (SLUSA) provides that “[n]o covered class action” based on state law and alleging “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security” “may be maintained in any State or Federal court by any private party.” § 101(b), 112 Stat. 3230 (codified at 15 U. S. C. § 78bb(f)(l)(A)). In this case the Second Circuit held that SLUSA only pre-empts state-law class-action claims brought by plaintiffs who have a private remedy under federal law. 395 F. 3d 25 (2005). A few months later, the Seventh Circuit ruled to the contrary, holding that the statute also pre-empts state-law class-action claims for which federal law provides no private remedy. Kircher v. Putnam Funds Trust, 403 F. 3d 478 (2005). The background, the text, and the purpose of SLUSA’s preemption provision all support the broader interpretation adopted by the Seventh Circuit. I Petitioner Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch) is an investment banking firm that offers research and brokerage services to investors. Suspicious that the firm’s loyalties to its investment banking clients had produced biased investment advice, the New York attorney general in 2002 instituted a formal investigation into Merrill Lynch’s practices. The…
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