William Hampton v. Pacific Investment Management
2017 U.S. App. LEXIS 16187
| 9th Cir. | 2017Background
- Plaintiff William Hampton sued Pacific Investment Management (PIMCO) in federal court under Massachusetts contract and fiduciary-duty law, alleging securities-related misrepresentations on a classwide basis.
- The district court concluded SLUSA barred the class-action state-law claims and dismissed the complaint with prejudice under Rule 12(b)(6).
- Hampton appealed both the conclusion that SLUSA barred the claims and the district court’s decision to dismiss with prejudice (i.e., on the merits).
- The Ninth Circuit issued a memorandum disposition affirming that the class-action claims were barred by SLUSA, and in this opinion addressed whether SLUSA-based dismissals are jurisdictional.
- The Ninth Circuit held that SLUSA’s bar operates as a jurisdictional limit on federal courts (and state courts for class actions), so dismissals must be for lack of subject-matter jurisdiction under Rule 12(b)(1) and therefore without prejudice.
- The court left open Hampton’s options to replead: he may pursue the same state-law claims individually (or in state court) or bring federal securities claims; the court affirmed the district judge’s narrow ruling that classwide state-law repleading is barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SLUSA’s class-action bar produces a merits dismissal (12(b)(6)) or a jurisdictional dismissal (12(b)(1)) | Hampton argued the dismissal with prejudice was improper; SLUSA should not be treated as stripping jurisdiction | Defendants argued SLUSA bars the class action and dismissal on merits is appropriate | Court held SLUSA’s language that "no covered class action may be maintained in any State or Federal court" is jurisdictional; dismissals are for lack of subject-matter jurisdiction under 12(b)(1) and must be without prejudice |
| Whether Hampton may amend to cure defects or replead | Hampton sought leave to amend to plead claims not barred by SLUSA | Defendants (and district court) argued amendment would be futile for classwide state-law claims | Court affirmed that classwide state-law claims are barred under SLUSA but allowed Hampton to proceed individually or to plead federal claims; classwide repleading under state law remains barred |
Key Cases Cited
- Kircher v. Putnam Funds Trust, 547 U.S. 633 (2006) (statutory rule making state-law claims nonactionable through class-action device is not traditional preemption)
- Bob Jones Univ. v. Simon, 416 U.S. 725 (1974) (statutory language that an action "shall not be maintained" construed as jurisdictional)
- United States v. Dalm, 494 U.S. 596 (1990) (failure to meet statutory conditions for suit deprived courts of jurisdiction)
- Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010) (congressional reuse of jurisdictional language signals similar intent)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (courts must not assume jurisdictional character without analysis)
- Freeman Invs., L.P. v. Pac. Life Ins. Co., 704 F.3d 1110 (9th Cir. 2013) (noting covered class actions should be dismissed without prejudice to individual suits)
- LaSala v. Bordier et Cie, 519 F.3d 121 (3d Cir. 2008) (treating SLUSA dismissal as jurisdictional)
- Brown v. Calamos, 664 F.3d 123 (7th Cir. 2011) (concluding SLUSA dismissal is not jurisdictional)