Opinion
2:21-cv-1769-NR
09-21-2022
RAJESH PATEL, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. VIATRIS, INC., PFIZER INC., MICHAEL GOETTLER, SANJEEV NARULA, BRYAN SUPRAN, MARGARET M. MADDEN, DOUGLAS E. GIORDANO, ROBERT J. COURY, IAN READ, and JAMES KILTS, Defendants.
MEMORANDUM ORDER
J. NICHOLAS RANJAN, UNITED STATES DISTRICT JUDGE.
Plaintiff Rajesh Patel filed this putative class action asserting claims exclusively under the federal Securities Act of 1933, 15 U.S.C. § 77a, et seq. These claims arise out of the November 2020 stock-for-stock transaction through which Pfizer Inc.'s subsidiary UpJohn Inc. was spun off and merged with Mylan N.V., to form the company now known as Viatris, Inc. ECF 1-1, ¶¶ 2, 7, 33. The claims concern the roughly 560 million new shares of Viatris common stock issued directly to former Mylan shareholders pursuant to the Merger Registration Statement. Id. at ¶ 33. Mr. Patel's core allegations are that the Merger Registration Statement was materially false and misleading, violated affirmative duties, and omitted material facts. Id. at ¶¶ 52-68.
Mr. Patel commenced this action on October 28, 2021, in the Court of Common Pleas of Allegheny County, Pennsylvania. Defendants then promptly removed the case to this Court under the provisions of the Class Action Fairness Act, 28 U.S.C. § 1332(d), et seq. ECF 1. In response, Mr. Patel moved to remand, arguing that removal was barred under the Securities Act and that an exception to CAFA removal applied. ECF 3; ECF 4. That motion is presently before the Court.
As the Court was in the process of finalizing its order on the pending motion, the United States District Court for the Southern District of New York granted a motion to remand in a similar case, Williams v. Bristol-Myers Squibb Co., No. 21-cv-9998, 2022 WL 4345564 (S.D.N.Y. Sept. 19, 2022) (Furman, J.). There, like here, the parties “spill[ed] considerable ink on who bears the burden on [the motion to remand] and whether or when a later statute (here, CAFA) can override an earlier one (here, the 1933 Act).” Id. at *1. The Court agrees with Judge Furman's well-reasoned analysis, and similarly finds that these “disputes are irrelevant for the simple reason that the premise of all Defendants' arguments-that CAFA provided for removal-is wrong.” Id.
That's because although the case meets the requirements for removal of certain class actions under Section 1332(d)(2), another provision states that Section 1332(d)(2) “shall not apply to any class action that solely involves a claim.. .concerning a covered security[.]” 28 U.S.C. § 1332(d)(9)(A). “A ‘covered security' is one traded nationally and listed on a regulated national exchange.” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 83 (2006). The security at issue in this case was the “newly issued VTRS common stock traded nationally on the NASDAQ stock exchange.” ECF 4, p. 13 (citing ECF 1-1, ¶¶ 4, 20). Thus, by the clear language of the statute, this case falls within the covered security exception and removal under CAFA was improper. See, e.g., Williams, 2022 WL 4345564, at *1 (“The CVRs at issue here plainly fall within the scope of this definition, as they were traded publicly on the New York Stock Exchange. It follows that the ‘covered security' exception applies and that Defendants cannot claim federal jurisdiction under CAFA.”); Vanbecelaere v. YayYo, Inc., No. 20-7997, 2020 WL 5362696, at *2 (C.D. Cal. Sept. 8, 2020) (actions “assert[ing] only 1933 Act claims concerning covered securities” are “not removable under CAFA”); Rubin v. Mercer Ins. Grp., Inc., No. 10-6816, 2011 WL 677466, at *3 (D.N.J. Feb. 15, 2011) (“Section 1332(d)(9)(A) applies here because it is undisputed that Mercer stock is traded on the NASDAQ stock market.” (citations omitted)).
Despite this straightforward application of the statutory language, Defendants still argue that the Court should reject such a supposedly “expansive interpretation” of the covered security exception. ECF 7, pp. 12-13. Swimming against the strong current of the plain language, Defendants selectively point to certain aspects of the legislative history and the purported purposes of CAFA to argue that Congress did not actually intend to carve out any claim concerning covered securities, but only state-law fraud claims concerning covered securities. Id. at p. 13. But the Supreme Court has “explained many times over many years that, when the meaning of the statute's terms is plain, [a court's] job is at an end.” Bostock v. Clayton Cnty., Ga., 140 S.Ct. 1731, 1749 (2020). Given that fact, “courts must presume that a legislature says in a statute what it means and means in a statute what it says[.]” Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1992). The language of CAFA is clear, and so “Defendants' reliance on legislative history and purpose is misplaced.” Williams, 2022 WL 4345564, at *2.
The Court also does not agree with Defendants that the legislative history clearly supports their position, for all the same reasons explained by Judge Furman in Williams. 2022 WL 4345564, at *2.
The cases cited by Defendants to bolster their arguments provide no quarter. The backbone of Defendants' support is dicta from the Second Circuit in Estate of Pew v. Cardarelli, 527 F.3d 25 (2d Cir. 2008). In that case, while analyzing a separate exception to CAFA removal, the court observed that “Subsection (A) of § 1332(d)(9) carves out class actions for which jurisdiction exists elsewhere under federal law, such as under the Securities Litigation Uniform Standards Act (‘SLUSA'), i.e., state-law fraud claims in connection with the purchase or sale of securities traded on a national stock exchange.” Id. at 30. Even if the Court were to adopt that observation, it “cannot be read to hold that the exception is limited to SLUSA class actions, as the [c]ourt's own language (‘such as') makes plain that SLUSA is merely cited as an example.” Williams, 2022 WL 4345564, at *2. “Meanwhile, the other cases cited by Defendants are easily distinguished because they either did not involve ‘covered securities' within the meaning of the statutory language, or they did not ‘solely involve[]' claims concerning a covered security.” Id. (distinguishing the same cases cited by Defendants); see also YayYo, Inc., 2020 WL 5362696, at *3 (same).
CAFA, by its terms, does not provide this Court subject-matter jurisdiction over this case. Since “Viatris removed this action under CAFA” (ECF 7, p.13), the case must be remanded to the state court where Mr. Patel originally filed it.
The Court denies Mr. Patel's request for counsel fees and costs. ECF 4, p. 20. Such fees and costs should be awarded only if “the removing party lacked an objectively reasonable basis for seeking removal.” Martin v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). That is not the case here. Defendants' removal of this case was “colorable” because the case did meet the statutory requirements for removability and there is no binding authority interpreting the applicable exception. See Roxbury Condo. Ass'n v. Anthony S. Cupo Agency, 316 F.3d 224, 228 (3d Cir. 2003).
* * *
For these reasons, this 21st day of September, 2022, it is hereby ORDERED that Mr. Patel's motion to remand (ECF 3) is GRANTED and this case is REMANDED FORTHWITH to the Court of Common Pleas of Allegheny County, Pennsylvania, Case No. GD-21-13314, for all further proceedings. The Clerk of Court is directed to mark this case CLOSED.