AST & Science LLC v. Delclaux Partners SA

Section 27 of the Securities Exchange Act confers exclusive federal jurisdiction over claims “brought to enforce any liability or duty created by” the Exchange Act. See 15 U.S.C. § 78aa. In Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 578 U.S. 374 (2016), this Court held that the jurisdictional reach of Section 27 is equivalent to that of 28 U.S.C. § 1331. Accordingly, for state-law claims implicating the Exchange Act, courts must apply the test in Grable & Sons Metal Products, Inc. v. Darue Eng’g & Mfr., 545 U.S. 308 (2005). Justices Thomas and Sotomayor have cautioned that applying the “arising under” test in Section 27 cases could introduce unnecessary complexity and potentially exclude from federal courts lawsuits brought to enforce liabilities or duties created by the Exchange Act. That is what happened here. Both the district court and the Eleventh Circuit acknowledged that Petitioner’s claim necessarily depended on a violation of the Exchange Act. Nevertheless, federal jurisdiction was lacking because the particular duty at issue was not “substantial” under Grable. The question presented is as follows: Whether the Supreme Court’s decision in Manning should be revisited to determine if the “arising under” jurisdictional test should continue to be used for purposes of assessing jurisdiction under Section 27 of the Exchange Act?