Blackrock Financial Management Inc. v. Segregated Account of AMBAC Assurance Corp.
673 F.3d 169
2d Cir.2012Background
- CAFA provides removal and appellate jurisdiction for class actions and mass actions, but with securities-related carve-outs.
- The Bank of New York Mellon, as trustee, filed an Article 77 proceeding in New York Supreme Court to confirm authority to settle trusts’ claims under PSAs and state-law duties.
- Walnut Place intervened and removed the Article 77 proceeding to federal court as a CAFA mass action removal.
- District court denied remand; petitioners appealed seeking CAFA securities-exception relief and related interlocutory review.
- Court held the action falls within CAFA securities exception, thus lacking jurisdiction; directs remand to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does CAFA §1453(d)(3) apply to remove/remand in this Article 77 proceeding? | Walnut Place contends it does not, avoiding the securities-exception barrier. | Bank of NY Mellon and Institutional Investors contend the proceeding relates to rights, duties under a security. | Yes; the claim relates to rights/duties under securities, triggering the exception. |
| Is the appealable order under CAFA §1453(c)(1) presupposed to have appellate jurisdiction? | Appellants rely on CAFA interlocutory appeal provisions. | Respondents argue the exception deprives appellate jurisdiction because the case involves securities. | We lack appellate jurisdiction; the securities exception removes jurisdiction. |
| Does the petition allege a sole securities-related claim under §1453(d)(3)? | Walnut Place argues the relief sought is broader than enforcement of PSA terms. | Bank of NY Mellon asserts relief seeks construction of PSA and fiduciary duties, i.e., security-related. | Yes; the proceeding solely involves rights/duties under the PSA and related fiduciary duties. |
Key Cases Cited
- Greenwich Fin. Servs. Distressed Mortg. Fund 3 LLC v. Countrywide Fin. Corp., 603 F.3d 23 (2d Cir. 2010) (CAFA securities exception applies where relief concerns instrument terms and related duties)
- Cardarelli v. GF Ins. Co., 527 F.3d 25 (2d Cir. 2008) (enforcement rests on rights arising from security terms or duties of those who administer them)
- Lincoln Nat. Life Ins. Co. v. Bezich, 610 F.3d 448 (7th Cir. 2010) (bright-line considerations for securities-related claims)
- Ring v. AXA Fin., Inc., 483 F.3d 95 (2d Cir. 2007) (interpretation of what constitutes a 'security' for CAFA purposes)
- U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18 (Supreme Court 1994) (removal/remand standards under CAFA general principles)
- In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 488 F.3d 112 (2d Cir. 2007) (collateral-order review limitations and CAFA remand considerations)