Edward D. Jones & Co., L.P., et al. v. Edward Anderson, et al.

The Securities Litigation Uniform Standards Act (“SLUSA”) precludes class actions bringing state-law claims alleging deception “in connection with the purchase or sale of a covered security” (e.g., a federally regulated mutual fund or exchange-listed stock). This Court held in Merrill Lynch, Pierce, Fenner & Smith v. Dabit that SLUSA’s “in connection with” requirement is met when the alleged deception “coincide[s]” with a transaction in a covered security – the same meaning given identical language in the Securities Exchange Act. This Court reaffirmed Dabit’s “coincide” standard in Chadbourne & Parke v. Troice, which addressed claims by plaintiffs who were induced to purchase uncovered securities; this Court held SLUSA did not preclude such claims because the alleged misrepresentations lacked a material connection to the purchase of a covered security. The Courts of Appeals have split as to whether Troice narrowed Dabit’s interpretation of SLUSA’s “in connection with” language to require, even in a case like this one that undisputedly involves covered securities, a direct causal relationship between the alleged deception and an investment decision by someone other than the alleged wrongdoer. The question presented is: Whether the Ninth Circuit, in conflict with other Courts of Appeals, erred in concluding that Troice narrowed Dabit’s interpretation of SLUSA’s “in connection with” prong to require that the alleged deception induce a specific transaction in a particular covered security.