and Submitted October 18, 2017 San Francisco, California
from the United States District Court for the Northern
District of California Richard Seeborg, District Judge,
Presiding D.C. Nos. 3:15-cv-02945-RS, 3:15-cv-02074-RS
Love (argued) and Susan K. Alexander, Robbins Geller Rudman
& Dowd LLP, San Francisco, California; Juan Carlos
Sanchez, Ashley M. Price, Benny C. Goodman III, and Andrew J.
Brown, Robbins Geller Rudman & Dowd LLP, San Diego,
California; Gerald L. Rutledge and Alfred G. Yates Jr., Law
Office of Alfred G. Yates Jr. P.C., Pittsburgh, Pennsylvania;
for Plaintiff-Appellant Francis X Fleming Jr.
E. Hurst (argued), Paula R. Brown, Thomas J. O'Reardon
II, and Timothy G. Blood, Blood Hurst & O'Reardon
LLP, San Diego, California; Leonid Kandinov, Ashley R.
Rifkin, Kevin A. Seely, and Brian J. Robbins, Robbins Arroyo
LLP, San Diego, California; David J. Harris Jr., William R.
Restis, and Jeffrey R. Krinks, Finkelstein & Krinsk LLP,
San Diego, California; for Plaintiff-Appellant Louis Lim.
C. Bohan (argued), Patrick M. Smith, Peter G. Wilson, and
Allison M. Freedman, Katten Muchin Rosenman LLP, Chicago,
Illinois, for Defendant-Appellee UBS Securities LLC.
Gilbert R. Serota (argued) and Erica M. Connolly, Arnold
& Porter LLP, San Francisco, California; Lowell Haky and
Mai Klaassen, Charles Schwab & Co. Inc., San Francisco,
California; for Defendants-Appellees The Charles Schwab
Corp., Charles Schwab & Co. Inc., and Walter W. Bettinger
Before: Sandra S. Ikuta and Andrew D. Hurwitz, Circuit
Judges, and Donald W. Molloy, [*] District Judge.
/ Securities Litigation Uniform Standards Act
panel affirmed the district court's dismissal of putative
class actions because the Securities Litigation Uniform
Standards Act ("SLUSA") deprived the court of
subject matter jurisdiction.
are Charles Schwab Corporation retail customers who alleged a
breach by a securities dealer of the "duty of best
execution" in completing trades. Schwab is a financial
services firm that trades securities for its clients, and in
2004 it agreed to route 95% of its "non-directed
trades" to UBS Securities LLC. Plaintiffs alleged that
Schwab breached various state-law duties by routing trades to
bars jurisdiction over any claim that could give rise to
liability under § 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5, even if the alleged conduct also
gives rise to a state-law cause of action.
panel held that the plaintiffs had Article III standing. The
panel held that the complaints alleged both particularized
and concrete injuries - higher execution prices than might
have occurred with a different market center, and thus the
complaints alleged the required injury in fact.
panel held that plaintiffs' claims were barred by SLUSA.
Specifically, the panel held that all of plaintiffs'
pleaded causes of action alleged deceptive conduct actionable
under federal securities law. The panel also held that the
challenged conduct occurred "in connection with the
purchase or sale of" a security. The panel further held
that plaintiff Francis Fleming's claims against UBS
pleaded a "manipulative or deceptive device or
contrivance in connection with the purchase or sale of a
covered security, " and was SLUSA-barred.
HURWITZ, CIRCUIT JUDGE:
issue for decision is whether the Securities Litigation
Uniform Standards Act ("SLUSA"), Pub L. 105-353,
112 Stat. 3227, deprived the district court of subject matter
jurisdiction over complaints alleging a breach by a
securities dealer of the "duty of best execution"
in completing trades. The district court dismissed the
appellants' complaints pursuant to SLUSA. We affirm.
Schwab Corporation is a financial services firm that trades
securities for its clients. In 2004, Schwab agreed to route
95% of its "non-directed trades" (trades for which
clients have not selected another trading venue) to UBS
Securities LLC ("UBS").
Lim and Charles Fleming ("Plaintiffs") are Schwab
retail customers. Their Account Agreements state that
"Schwab routes equity and options orders for execution
to" UBS and note that "Schwab may receive
remuneration . . . from a market center to which orders are
routed." Nonetheless, Plaintiffs alleged in separate
complaints that Schwab breached various state-law duties by
routing trades to UBS. Plaintiffs claimed that Schwab could
have routed trades to many other venues, and that its
arrangement with UBS sometimes resulted in unfavorable
executions, both in terms of price and speed.
8, 2005, Lim filed a putative class action complaint in the
Northern District of California alleging that Schwab's
routing of order executions to UBS (1) violated the
California Unfair Competition Law ("UCL"), Cal.
Bus. & Prof. Code § 17200; (2) breached Schwab's
fiduciary duty to its clients; and (3) unjustly enriched
Schwab. Lim alleged that Schwab's common law "duty
of best execution in routing its clients' orders"
required Schwab to consider numerous factors when routing
client trades, including "execution price, market depth,
order size, ...