The court described the statute as follows:
SLUSA preempts certain types of securities class actions and provides that they cannot be maintained in any court in the United States. The purpose of SLUSA was to make federal court the exclusive venue for most securities class actions and 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 (1998). SLUSA precludes a private party from bringing a "covered class action" based on the statutory or common law of any state alleging a misrepresentation or omission of a material fact or the use of any manipulative device or contrivance in connection with the sale of a "covered security." 15 U.S.C. ' 78bb(f)(1).
Generally speaking, a "covered class action" is a class action involving common questions of law or fact brought on behalf of one or more unnamed parties. Id. ' 78bb(f)(5)(B). A "covered security" is a security listed on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market, or a security issued by an investment company that is registered, or for which a registration statement has been filed under the Investment Company Act of 1940. Id. ' 78bb(f)(5)(E) (adopting definition of "covered security" from 15 U.S.C. ' 77r(b)). The parties do not dispute that this action is a "covered class action" involving the "purchase or sale of a covered security."
SLUSA further provides for removal of "covered class actions" from state court to federal district court. 15 U.S.C. ' 78bb(f)(2). The statute reads: "Any covered class action brought in any State court involving a covered security, as set forth in paragraph (1), shall be removable to the Federal district court for the district in which the action is pending, and shall be subject to paragraph (1)." Id.
Notwithstanding the Act's broad limitation on securities class actions, SLUSA also contains a savings clause which preserves certain "covered class actions." Under section 78bb(f)(3), a "covered class action" based upon the statutory or common law of the State in which the issuer is incorporated may be maintained if it involves:
(I) the purchase or sale of securities by the issuer or an affiliate of the issuer exclusively from or to holders of equity securities of the issuer; or
(II) any recommendation, position, or other communication with respect to the sale of securities of an issuer that -
(aa) is made by or on behalf of the issuer or an affiliate of the issuer to holders of equity securities of the issuer; and
(bb) concerns decisions of such equity holders with respect to voting their securities, acting in response to a tender or exchange offer, or exercising dissenters' or appraisal rights.
15 U.S.C. ' 78bb(f)(3)(A)(ii).
If, following removal from state court under section 78bb(f)(2), a federal court determines that the action is preserved under this savings clause, the federal court must remand the action to state court. 15 U.S.C. ' 78bb(f)(3)(D) ("In an action that has been removed from a State court pursuant to paragraph (2), if the Federal court determines that the action may be maintained in State court pursuant to this subsection, the Federal court shall remand such action to such State court.").
Here, the court concluded, the complaint involved "communications over the sale of Access securities that were made by Access's affiliate, HBOC, to Access stockholders in connection with the vote on the merger agreement." The court accordingly held that the complaint "falls within the savings clause of section 78bb(f)(3)(A)(ii) and must be remanded to state court pursuant to section 78bb(f)(3)(D)."
[For a detailed discussion of the SLUSA, see The Securities Litigation Uniform Standards Act Of 1998, Business & Securities Litigator, Dec. 1998, at 1.]