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Baylor Law Review




Litigants spend immense time and money fighting over procedure. That fact is especially true for procedural rules concerning where a case may be heard—which, in the context of class actions, can determine the viability of claims almost regardless of their underlying merit. The potential for class certification, which tends to be greater in state than in federal courts, can transform claims that alone are too small to even justify suing into threats so large that defendants routinely use the words “judicial blackmail” to describe them. This paper focuses on a growing conflict between federal statutory removal provisions that arises in alleged class actions involving the initial sale of securities, like cryptocurrencies, that are not sold on public exchanges. In this category of cases, the Securities Act of 1933 strictly prohibits removal to federal courts, while the Class Action Fairness Act appears to broadly allow it. Thus, courts have determined the two statutes are “irreconcilable.”

This article disagrees with the growing trend to hold CAFA prevails and allows removal, but it first pushes back against the conclusion that the two statutes must be irreconcilable. It illustrates how CAFA could be read to exclude cases alleging claims solely under the 1933 Act, which would avoid the potential for conflict altogether. It then analyzes, in the alternative, why the Supreme Court’s 2018 decision in Cyan Inc. v. Beaver County Employees Retirement Fund1 suggests that the 1933 Act should prevail. After Cyan, filings of securities class actions have increased dramatically, meaning understanding the interplay between these two statutes will become increasingly important.

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Baylor University Law School

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