Last week, I reported here on Merrill Lynch, Pierce, Fenner & Smith v. Dabit, 547 U.S. ___ (Mar. 21, 2006), in which the U.S. Supreme Court held that the Securities Litigation Uniform Standards Act of 1998 ("SLUSA") rather drastically limits state-law securities class actions. Since then, a reader suggested to me that while the new decision might impact fraud-based state law securities class actions, it doesn't seem to impact non-fraud claims. There may be an arguable window for negligent failure to act claims that do not allege or coincide with fraud. Of course, UCL claims don't need to allege either fraud or negligence; they're based on strict liability. Nonetheless, to the extent the securities-based UCL claim can be couched in terms of negligence rather than fraud, it might fit through the very narrow window Dabit may have left open. Dabit also has no impact on individual actions or actions with fewer than 50 plaintiff class members.
The reader also pointed out that a follow-on case, Kircher v. Putnam Funds, no. 05-409, is still pending before the Supreme Court and will be argued on April 24. That case involves the jurisdictional question of whether a SLUSA remand order is appealable. Under 28 U.S.C. section 1447(d), remand orders are usually not appealable, but in Kircher v. Putnam Funds Trust, 373 F.3d 847 (7th Cir. 2004), the Seventh Circuit held that SLUSA remand orders are. The Supreme Court could take the opportunity to provide additional clarification on SLUSA's substantive reach. (SCOTUSblog has more on the cert. grant in Kircher here, and the petitioner's brief is accessible here.)
UPDATE: On June 15, 2006, the Supreme Court issued its opinion in Kircher v. Putnam Funds Trust (no. 05-409). The Court did not expand on its substantive analysis in Dabit, but held that SLUSA remand orders are not appealable.