§ 77p. — Additional remedies; limitation on remedies.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC77p]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2A--SECURITIES AND TRUST INDENTURES
SUBCHAPTER I--DOMESTIC SECURITIES
Sec. 77p. Additional remedies; limitation on remedies
(a) Remedies additional
Except as provided in subsection (b) of this section, the rights and
remedies provided by this subchapter shall be in addition to any and all
other rights and remedies that may exist at law or in equity.
(b) Class action limitations
No covered class action based upon the statutory or common law of
any State or subdivision thereof may be maintained in any State or
Federal court by any private party alleging--
(1) an untrue statement or omission of a material fact in
connection with the purchase or sale of a covered security; or
(2) that the defendant used or employed any manipulative or
deceptive device or contrivance in connection with the purchase or
sale of a covered security.
(c) Removal of covered class actions
Any covered class action brought in any State court involving a
covered security, as set forth in subsection (b) of this section, shall
be removable to the Federal district court for the district in which the
action is pending, and shall be subject to subsection (b) of this
section.
(d) Preservation of certain actions
(1) Actions under State law of State of incorporation
(A) Actions preserved
Notwithstanding subsection (b) or (c) of this section, a
covered class action described in subparagraph (B) of this
paragraph that is based upon the statutory or common law of the
State in which the issuer is incorporated (in the case of a
corporation) or organized (in the case of any other entity) may
be maintained in a State or Federal court by a private party.
(B) Permissible actions
A covered class action is described in this subparagraph if
it involves--
(i) the purchase or sale of securities by the issuer or
an affiliate of the issuer exclusively from or to holders of
equity securities of the issuer; or
(ii) any recommendation, position, or other
communication with respect to the sale of securities of the
issuer that--
(I) is made by or on behalf of the issuer or an
affiliate of the issuer to holders of equity securities
of the issuer; and
(II) concerns decisions of those equity holders with
respect to voting their securities, acting in response
to a tender or exchange offer, or exercising dissenters'
or appraisal rights.
(2) State actions
(A) In general
Notwithstanding any other provision of this section, nothing
in this section may be construed to preclude a State or
political subdivision thereof or a State pension plan from
bringing an action involving a covered security on its own
behalf, or as a member of a class comprised solely of other
States, political subdivisions, or State pension plans that are
named plaintiffs, and that have authorized participation, in
such action.
(B) ``State pension plan'' defined
For purposes of this paragraph, the term ``State pension
plan'' means a pension plan established and maintained for its
employees by the government of the State or political
subdivision thereof, or by any agency or instrumentality
thereof.
(3) Actions under contractual agreements between issuers and
indenture trustees
Notwithstanding subsection (b) or (c) of this section, a covered
class action that seeks to enforce a contractual agreement between
an issuer and an indenture trustee may be maintained in a State or
Federal court by a party to the agreement or a successor to such
party.
(4) Remand of removed actions
In an action that has been removed from a State court pursuant
to subsection (c) of this section, if the Federal court determines
that the action may be maintained in State court pursuant to this
subsection, the Federal court shall remand such action to such State
court.
(e) Preservation of State jurisdiction
The securities commission (or any agency or office performing like
functions) of any State shall retain jurisdiction under the laws of such
State to investigate and bring enforcement actions.
(f) Definitions
For purposes of this section, the following definitions shall apply:
(1) Affiliate of the issuer
The term ``affiliate of the issuer'' means a person that
directly or indirectly, through one or more intermediaries, controls
or is controlled by or is under common control with, the issuer.
(2) Covered class action
(A) In general
The term ``covered class action'' means--
(i) any single lawsuit in which--
(I) damages are sought on behalf of more than 50
persons or prospective class members, and questions of
law or fact common to those persons or members of the
prospective class, without reference to issues of
individualized reliance on an alleged misstatement or
omission, predominate over any questions affecting only
individual persons or members; or
(II) one or more named parties seek to recover
damages on a representative basis on behalf of
themselves and other unnamed parties similarly situated,
and questions of law or fact common to those persons or
members of the prospective class predominate over any
questions affecting only individual persons or members;
or
(ii) any group of lawsuits filed in or pending in the
same court and involving common questions of law or fact, in
which--
(I) damages are sought on behalf of more than 50
persons; and
(II) the lawsuits are joined, consolidated, or
otherwise proceed as a single action for any purpose.
(B) Exception for derivative actions
Notwithstanding subparagraph (A), the term ``covered class
action'' does not include an exclusively derivative action
brought by one or more shareholders on behalf of a corporation.
(C) Counting of certain class members
For purposes of this paragraph, a corporation, investment
company, pension plan, partnership, or other entity, shall be
treated as one person or prospective class member, but only if
the entity is not established for the purpose of participating
in the action.
(D) Rule of construction
Nothing in this paragraph shall be construed to affect the
discretion of a State court in determining whether actions filed
in such court should be joined, consolidated, or otherwise
allowed to proceed as a single action.
(3) Covered security
The term ``covered security'' means a security that satisfies
the standards for a covered security specified in paragraph (1) or
(2) of section 77r(b) of this title at the time during which it is
alleged that the misrepresentation, omission, or manipulative or
deceptive conduct occurred, except that such term shall not include
any debt security that is exempt from registration under this
subchapter pursuant to rules issued by the Commission under section
77d(2) of this title.
(May 27, 1933, ch. 38, title I, Sec. 16, 48 Stat. 84; Pub. L. 105-353,
title I, Sec. 101(a)(1), Nov. 3, 1998, 112 Stat. 3227.)
Amendments
1998--Pub. L. 105-353 amended section catchline and text generally.
Prior to amendment, text read as follows: ``The rights and remedies
provided by this subchapter shall be in addition to any and all other
rights and remedies that may exist at law or in equity.''
Effective Date of 1998 Amendment
Pub. L. 105-353, title I, Sec. 101(c), Nov. 3, 1998, 112 Stat. 3233,
provided that: ``The amendments made by this section [amending this
section and sections 77v, 77z-1, 78u-4, and 78bb of this title] shall
not affect or apply to any action commenced before and pending on the
date of enactment of this Act [Nov. 3, 1998].''
Section Referred to in Other Sections
This section is referred to in section 77v of this title.
