Commercial Litigation and Arbitration

SLUSA Removal ≠ Complete Preemption — Removal Requires Only Consent of, Not Signatures from, All Defendants (Circuit Split) — After Dismissing SLUSA-Precluded Claim, Remand Appropriate — Quasi-Appraisal — Good Quote

From Proctor v. Vishay Intertechnology, Inc., 2009 U.S. App. LEXIS 22254 (9th Cir. 2009):


"Quasi-appraisal" is a term of art under Delaware corporations law....

Where the statutory appraisal remedy will not make a plaintiff whole—for example, when a plaintiff has been "wrongfully deprived, even indirectly, of the statutory remedy of appraisal" under 8 Delaware Code § 262—Delaware courts fashion an equitable remedy of quasi-appraisal. Gilliland, 873 A.2d at 311. "Quasi-appraisal originated . . . as a non-statutory remedy for minority stockholders who, by tendering their shares on a materially uninformed basis, were prevented from seeking appraisal. The doctrine was later expanded to include situations in which minority stockholders may have been prevented from demanding appraisal due to a failure to comply fully with the notice provisions of the appraisal statute itself." Id. (internal citations omitted); see also Weinberger v. UOP, Inc., 457 A.2d 701, 714-15 (Del. 1983) (creating the quasi-appraisal remedy). ***

[SLUSA Removal ≠ Complete Preemption]

This court had suggested that SLUSA completely preempts state law claims and therefore falls under the complete preemption exception to the well-pleaded complaint rule of 28 U.S.C. § 1331....

After these cases were decided, however, the Supreme Court made clear in Kircher v. Putnam Funds Trust, 547 U.S. 633, 636 n.1 (2006), that SLUSA "does not itself displace state law with federal law but makes some state-law claims nonactionable through the class action device in federal as well as state court." In other words, SLUSA does not provide a federal rule of decision in lieu of a state one, but instead provides a federal defense precluding certain state law actions from going forward. Thus, what we termed complete preemption in pre-Kircher cases, by which we are no longer bound on this issue given the Supreme Court's more recent pronouncement..., is actually a federal preclusion defense, and would not fall under the complete preemption exception to § 1331's well-pleaded complaint rule. ***

[Removal Requires Only Consent of, Not Signatures from, All Defendants (Circuit Split)]

The circuits are divided as to what form a co-defendant's joinder in removal must take. We have not yet decided the matter. The Sixth Circuit requires only that "at least one attorney of record" sign the notice and certify that the remaining defendants consent to removal; it does not insist that each defendant submit written notice of such consent. See Harper v. AutoAlliance Int'l, Inc., 392 F.3d 195, 201-02 (6th Cir. 2004). In contrast, the Fifth, Seventh, and Eighth Circuits have adopted the more demanding requirement that each co-defendant must submit a timely, written notice of consent to joinder. See Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1262 n.11 (5th Cir. 1988); Roe v. O'Donohue, 38 F.3d 298, 301 (7th Cir. 1994), abrogated on other grounds by Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999); Pritchett v. Cottrell, Inc., 512 F.3d 1057, 1062 (8th Cir. 2008).

We adopt the Sixth Circuit's position as fully sufficient to implement the unanimous joinder rule....

[W]e conclude that the filing of a notice of removal can be effective without individual consent documents on behalf of each defendant. One defendant's timely removal notice containing an averment of the other defendants' consent and signed by an attorney of record is sufficient. Ernst & Young submitted such an averment under threat of sanctions pursuant to Rule 11; the other co-defendants were notified of the removal notice and had an opportunity to object to it. These two considerations — the availability of sanctions and of objection — mitigate concerns that one defendant might falsely state the other defendants' consent, or that one defendant might game the system by silently allowing another to remove and, if the federal forum proves disadvantageous, belatedly object that he had not consented....

[After Dismissing SLUSA-Precluded Claim, Remand Appropriate]

SLUSA unquestionably requires the dismissal of the precluded claim (2), but does it require the dismissal of the other, non-precluded claims as well? Our decision in Falkowski assumed that it does not, but "unstated assumptions on non-litigated issues are not precedential holdings binding future decisions," Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d 1285, 1288 (9th Cir. 1985), and our subsequent decision in Saxton treated the issue as an unsettled one.... Other courts of appeals have directly considered the question and held that dismissal of the entire complaint is not required. See In re Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248, 255-56 (3d Cir. 2009) (considering complaint with SLUSA-precluded state law claims and nonprecluded federal claims); Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25, 47 (2d Cir. 2005)..., rev'd on other grounds by 547 U.S. 71 (2006) ... (considering complaint with SLUSA-precluded and non-SLUSA precluded state law claims). Today we, too, clarify that SLUSA does not require the dismissal of non-precluded claims along with precluded claims.

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