From In re Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248 (3d Cir. 2009):

This appeal presents the question whether SLUSA [the Securities Litigation Uniform Standards Act of 1998, 15 U.S.C. § 78bb(f)] requires the dismissal of the entire action when the action includes some state law class action claims that clearly may not be maintained under SLUSA as well as other claims that are not so prohibited. We hold that SLUSA does not require such a dismissal. Accordingly we will vacate the dismissal and remand this case for further proceedings. ***

***SLUSA was enacted to prevent the flight of securities cases from federal to state courts, thereby preventing abusive lawsuits and "mak[ing] Federal court the exclusive venue for most securities fraud class action litigation involving nationally traded securities." H.R. Rep. No. 105-803, at 15 (1998) (Conf. Rep.); see also Securities Litigation Uniform Standards Act of 1998, S. 1260, 105th Cong. § 2(5), 112 Stat. 3227. Neither the Supreme Court nor this Court has squarely addressed the issue raised in this appeal: whether the inclusion of a SLUSA pre-empted state-law claim in a complaint, also alleging non-SLUSA pre-empted claims, requires dismissal of the entire action. In considering this issue as a matter of first impression, and mindful of SLUSA's purpose, we conclude that neither the statutory language, the legislative history, nor the relevant case law supports the complete dismissal of such an action.

***

The plain language of SLUSA does not clearly indicate whether Congress intended SLUSA to pre-empt entire actions that include an offending state-law claim. SLUSA provides, "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 . . . ." 15 U.S.C. § 78bb(f)(1) (emphasis added). The term "covered class action," in turn, is defined to include a "single lawsuit" or "group of lawsuits." Id. at § 78bb(f)(5)(B) (emphasis added). ***[T]he terms "no . . . action," "lawsuit," and "group of lawsuits" indeed suggest that SLUSA intends that entire actions, as opposed to particular claims, should fail…. However, the word "action" is modified by the phrase "based upon the statutory or common law of any State." 15 U.S.C. § 78bb(f)(1). The plain language of SLUSA does not refer to actions, such as this one, based in part on state law.

Nor does the legislative history compel us to conclude that SLUSA requires dismissal of the entire action in such a case. The legislative history is silent as to whether Congress intended an action to be dismissed in its entirety when it includes pre-empted claims or whether only the pre-empted claims must be dismissed. We struggle to see how permitting federal claims that do not specifically trigger the SLUSA preemption to proceed would lead to either abusive litigation or to the application of different legal standards to national securities. Failing to dismiss the entire complaint would simply allow class action federal claims, and state law claims that do not trigger the SLUSA preemption, to proceed. Nothing in SLUSA's language or history indicates any intent to eviscerate such claims.

[Footnote 8] In In re Enron Corporation Securities [Litig.], 535 F.3d 325 (5th Cir. 2008), the Court of Appeals for the Fifth Circuit recently suggested that plaintiffs (or, perhaps, their attorneys) faced risk of dismissal pursuant to SLUSA where they chose to pursue pre-empted state law claims in multiple lawsuits each involving fewer than fifty plaintiffs. In In re Enron, the court held that, where the lawsuits were coordinated and nearly identical, ten cases consolidated in multi-district litigation were a "covered class action" for purposes of SLUSA, notwithstanding that prior to removal and consolidation each case might have escaped SLUSA pre-emption based on the number of plaintiffs….

In so doing, the court rejected the plaintiffs' argument that preempting their claims would lead to an absurd result in the context of multi-district litigation, noting, "[T]he . . . plaintiffs brush aside their own contribution to SLUSA preemption: choosing to proceed as a single action. . . . [T]hey must now face the consequences." Id. at 342. "[T]he issue here is not whether [plaintiffs] may avoid SLUSA; the question is whether they did in fact avoid SLUSA." Id. at 342 n.15.

While this language may suggest that SLUSA can have a punitive effect, the Fifth Circuit was not presented with, and therefore did not consider, the issue presented in this case. The question presented here, whether SLUSA requires dismissal of an entire complaint where only some of the claims are pre-empted state law claims, is very different from the question of whether plaintiffs may avoid SLUSA pre-emption altogether by filing multiple lawsuits.

It is entirely consistent with the purposes of SLUSA to require the dismissal of those state law securities claims that are clearly pre-empted by the statute. To require the dismissal of all of the other claims in the same action, in contrast, would not appear to serve those goals and is not supported by the plain language or legislative history. We hold therefore that SLUSA does not mandate dismissal of an action in its entirety where the action includes only some pre-empted claims.