United States District Court, N.D. California, San Jose Division
ORDER GRANTING PLAINTIFF'S MOTIONS TO REMAND AND
DENYING DEFENDANTS' MOTIONS TO STAY RE: DKT. NOS. 15, 18
RE: DKT. NOS. 20, 25
J. DAVILA United States District Judge
these two related actions, Plaintiffs Christopher Book and
Timothy Gallas bring securities claims against Defendant
ProNAi Therapeutics, Inc. and its officers, its directors,
and the underwriters of its initial public offering
(“IPO”). Defendants removed these actions from
state court in California. Plaintiffs move to
remand. Defendants move to stay until the U.S.
Supreme Court decides whether to resolve questions about how
to interpret jurisdictional provisions of the 1933 Securities
Act. Plaintiffs' motions to remand will be GRANTED and
Defendants' motions to stay will be DENIED.
filed these securities class actions in California Superior
Court. They allege violations of §§ 11 and 15 of
the federal Securities Act of 1933 arising from their
purchase of shares during ProNAi's IPO in 2015.
Defendants removed to this Court.
may be removed to federal court if it (1) raises a federal
question or (2) is between citizens of different states and
the amount in controversy exceeds $75, 000. 28 U.S.C.
§§ 1441, 1332. Defendants have the burden of
showing that removal was proper. Gaus v. Miles,
Inc., 980 F.2d 564, 566 (9th Cir. 1992). Courts must
strictly construe the removal statute against removal.
Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393
(9th Cir. 1988). Cases should be remanded if there is any
doubt about the existence of federal jurisdiction.
Gaus, 980 F.2d at 566.
Motion to Remand
to a federal court is allowed “[e]xcept as otherwise
expressly provided by Act of Congress.” 28 U.S.C.
§ 1441(a). Here, Plaintiffs argue that removal is barred
under § 77v(a) of the Securities Act, which states that
district courts of the United States and the United States
courts of any Territory shall have jurisdiction of offenses
and violations under [the 1933 Act] . . . and, concurrent
with State and Territorial courts, except as provided in
section 77p of this title with respect to covered class
actions, of all suits in equity and actions at law brought to
enforce any liability or duty created by [the 1933 Act]. . .
. Except as provided in section 77p(c) of this title, no case
arising under [the 1933 Act] and brought in any State court
of competent jurisdiction shall be removed to any court of
the United States.
15 U.S.C. § 77v(a); Pls.' Mot. to Remand
(“Mot.”) 3, Dkt. No. 18. Because the “sole
claims in this case are for violations of the Securities Act,
” Plaintiffs argue, “Section 77v(a) bars
removal.” Mot. 5.
respond that removal is proper because § 77v(a) should
be interpreted to mean that federal courts have exclusive
jurisdiction to hear “covered class actions” that
raise claims under the 1933 Securities Act. Notice of Removal
4-8, Dkt. No. 1.
Court addressed this very question of statutory
interpretation in Young v. Pac. Biosciences of Cal.,
Inc., Nos. 5:11-cv-05668-EJD, 5:11-cv-05669-EJD, 2012 WL
851509 (N.D. Cal. Mar. 13, 2012). This Court held that class
actions that allege claims only under the 1993 Act cannot be
removed from state court. Id. at *4. Most courts in
this district have adopted the same interpretation. See,
e.g., Rivera v. Fitbit, Inc., No.
16-CV-02890-SI, 2016 WL 4013504, at *2 (N.D. Cal. July 27,
2016) (“nearly every court within this district that
has addressed this issue since 2012 has remanded this type of
case back to state court, ruling that the Securities Act
explicitly bars removal of securities class actions asserting
only federal claims”); Rajasekaran v. CytRx
Corp., No. CV 14-3406-GHK PJWX, 2014 WL 4330787, at *2
(C.D. Cal. Aug. 21, 2014) (“The Securities Act of 1933
contains an express removal bar that falls within the
exception to § 1441(a).”); Mot. 2 n.3 (collecting
a dozen cases from this district that have reached the same
point out that some courts read the statute differently.
See, e.g., Hung v. iDreamSky Tech. Ltd., No.
15-CV-2514 (JPO), 2016 WL 299034, at *4 (S.D.N.Y. Jan. 25,
2016) (“[T]he Court adopts Defendants'
interpretation of § 77v(a), and New York state courts
lack jurisdiction over this covered class action. Because the
New York court is not a court of competent jurisdiction under
§ 77v(a), the bar on removal does not apply, and the
case is removable.”); Lapin v. Facebook, Inc.,
No. C-12-3195 MMC, 2012 WL 3647409, at *2 (N.D. Cal. Aug. 23,
2012) (“federal courts alone have jurisdiction to hear
covered class actions raising 1933 Act claims” (quoting
Knox v. Agria Corp., 613 F.Supp. 419, 425 (S.D.N.Y.
2009))). Defendants ...