Strategy: Amicus briefs are your friends.
In this case, Lara Grillo filed an amicus brief on behalf of a national organization in support of the Respondent seeking affirmance of the lower court’s decision in its favor. Respondents were victims of an international Ponzi scheme in which brokers induced the Respondents to invest in certain certificates of deposit based on false promises of above market returns and misrepresentations that the bank issuing the CDs was a secure company invested in safe, liquid investments. The CDs were not safe investments and did not yield the promised returns. Amicus argued in support of Respondents that the Fifth Circuit had correctly held the Securities Litigation Uniform Standards Act of 1998 (SLUSA), which bars certain state law class actions alleging misrepresentation in connection with the purchase or sale of a covered security, was inapplicable because the fraudulently induced transactions did not involve the purchase or sale of covered securities. The client organization submitted the amicus brief out of concern that an overly restrictive application of SLUSA would limit the ability of bankruptcy trustees to exercise their fiduciary duties, particularly when serving as liquidating trustees. They argued that Petitioner’s interpretation of SLUSA did not advance the statute’s purpose of preventing plaintiffs from evading the protections that federal law provides against abusive litigation by filing securities fraud class actions in state, rather than federal court, because it would apply SLUSA to actions concerning non-covered investments based on remote or tangential connections to a covered securities transaction. The United States Supreme Court agreed, ultimately affirming the Fifth Circuit’s decision and holding that Respondent’s claims did not implicate SLUSA’s preclusion provision.
