ORDER

TIMOTHY D. DeGIUSTI, District Judge.

Before the Court is Plaintiffs' Motion to Remand [Doc. No. 54]. Defendants have timely responded to the motion, and Plaintiffs filed a reply.

Background:

In this action, Plaintiffs assert claims based on alleged violations of the Securities Act of 1933 (the "1933 Act"), 15 U.S.C. § § 77k, 77l, and 77o. Plaintiffs seek to represent a putative class consisting of all purchasers of GMX Resources, Inc. ("GMX") common stock pursuant or traceable to GMX's public offerings in July 2008, May 2009, and October 2009. The only claims asserted in the Petition are based on the 1933 Act; no state law claims are alleged. The action was filed in the District Court of Oklahoma County and removed to this Court. In the Notice of Removal, Defendants state this Court has jurisdiction because Plaintiffs' claims are based on federal securities laws, thus conferring federal question jurisdiction pursuant to 28 U.S.C. § 1331.

In the motion to remand, Plaintiffs argue the action was not removable because the federal securities statutes preclude removal of class actions asserting only 1933 Act claims. As more fully discussed herein, Plaintiffs argue that, because their claims are within the scope of the statute prohibiting removal, remand is mandated. Defendants argue that, contrary to Plaintiffs' contention, this action falls within an exception to the statutory prohibition regarding removal of securities actions.

General removal standards:

Because federal courts are courts of limited jurisdiction, there is "a presumption against removal jurisdiction and the party invoking federal jurisdiction bears the burden of proof." Fleming Bldg. Co., Inc. v. Columbia Cas. Co., 751 F.Supp.2d 1218, 1219 (N.D.Okla.2010) (citing Penteco Corp. v. Union Gas System, 929 F.2d 1519, 1521 (10th Cir.1991)). When a party files a motion to remand challenging the removal of an action from state court, the burden is on the removing party "to show jurisdiction by a preponderance of the evidence." Karnes v. Boeing Co., 335 F.3d 1189, 1190 (10th Cir.2003) (citing United States ex rel. Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1160 (10th Cir.1999)). Where, however, "the subject matter of an action qualifies it for removal, the burden is on a plaintiff to find an express exception." Breuer v. Jim's Concrete of Brevard, Inc., 538 U.S. 691, 698, 123 S.Ct. 1882, 155 L.Ed.2d 923 (2003).

Discussion:

Pursuant to 15 U.S.C. § 77v(a), both federal and state courts have original jurisdiction over actions brought pursuant to the 1933 Act.1 The jurisdiction section was amended as a result of the passage of the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"). The effect of several of the SLUSA provisions is the focal point of the instant motion.

In its jurisdiction section, the 1933 Act also contains a provision prohibiting removal of actions commenced in state court except as set forth in § 77p(c), one of the provisions added by SLUSA. Section 77v(a), with the SLUSA amendments shown in italics, provides in relevant part:

15 U.S.C. § 77v(a). Defendants contend this action falls within the exception in § 77p(c),2 and was, therefore, properly removed.

In addition to amended § 77v(a), SLUSA added several other provisions which bear on the issue currently before the Court. They are §§ 77p(b) (class action limitations), 77p(c) (removal of covered class actions), 77p(f)(2) (definition of "covered class action"), and 77p(f)(3) (definition of "covered security").

Section 77p(b) provides:

15 U.S.C. § 77p(b).

Section 77p(c) states:

15 U.S.C. § 77p(c).

The statute defines a "covered class action" in § 77p(f)(2) as follows:

15 U.S.C. § 77p(f)(2)(A).

A "covered security" is defined as a security "listed, or authorized for listing on the New York Stock Exchange or the American Stock Exchange, or listed, or authorized for listing, on the National Market System of the Nasdaq Stock Market (or any successor to such entities)." 15 U.S.C. § 77p(f)(3) (cross-referencing to § 77r(b)(1)).

In this case, Defendants argue the SLUSA provisions authorize removal of Plaintiffs' action to this Court because it satisfies the definition of a "covered class action," and Plaintiffs' claims assert material misrepresentations or omissions with regard to the securities offerings of GMX. Plaintiffs do not dispute that this case involves a "covered class action" and that GMX's stock constitutes "covered securities" as defined by the 1933 Act.

Plaintiffs argue that removal is not authorized because the SLUSA restriction on class actions applies only to claims "based upon the statutory or common law of [a] State," as set forth in § 77p(b) (emphasis added). Plaintiffs contend that, because the removal provision in § 77p(c) contains an express reference to § 77p(b), the two statutes must be read together and interpreted as permitting removal only of securities class actions based on state law. Because Plaintiffs' claims are based only on federal law embodied in the 1933 Act, they contend the § 77p(c) removal provision does not apply to this case. Instead, Plaintiffs argue the 1933 Act's express prohibition of removal applies, and this case must be remanded pursuant to 15 U.S.C. § 77d(4) (a court concluding a class action removed pursuant to § 77p(c) may be maintained in state court "shall remand such action").

Neither the Tenth Circuit3 nor this Court have been presented with the specific question whether the removal statute covers a class action based only on the 1933 Act and not including any state statutory or common law claims. Plaintiffs and Defendants acknowledge that there is a division of authority among the courts which have considered the question.

As Plaintiffs point out, some district courts have interpreted the statute as applicable only to actions based on state law. See Plaintiffs' Motion and Brief, pp. 10-11 and cases cited therein. Under this interpretation of SLUSA, removal of a federal securities class action claim from state court is not permitted, and removal is limited to class actions based on state law. See, e.g., Unschuld v. Tri-S Security Corp., 2007 WL 2729011, at *11 (N.D.Ga. Sept. 14, 2007) (unpublished opinion).

As Defendants suggest, however, other courts have held to the contrary, and have concluded that the removal provisions of § 77p(c) apply to all securities class actions originating in state court, whether or not the actions are based only on state law. See, e.g., Rubin v. Pixelplus Co., 2007 WL 778485 (E.D.N.Y. Mar. 13, 2007) (unpublished opinion), and cases cited in Defendants' Response Brief, p. 1, n. 3.

Although both sides assert that the cases supporting their respective positions represent the greater weight of authority, this Court has been unable to discern from the cases a clear majority position. Similarly, Plaintiffs and Defendants argue that Supreme Court dicta in Kircher v. Putnam Funds Trust, 547 U.S. 633, 126 S.Ct. 2145, 165 L.Ed.2d 92 (2006), militates in their favor. Not surprisingly, district court cases coming down on opposite sides of the question cite to Kircher for support. See, e.g., Unschuld, 2007 WL 2729011 at *10-11, and Rubin, 2007 WL 778485 at *4-5.

A review of SLUSA's legislative history, however, reflects that in enacting SLUSA Congress intended the result advocated by Defendants: that federal court would be "the exclusive venue for most securities class action lawsuits." H.R. Conf. Rep. No. 105-803 at 13 (from the Joint Explanatory Statement of the Committee of Conference). Although some courts have commented that the purpose of Congress in enacting SLUSA is subject to varying interpretations (see, e.g., Unschuld, describing SLUSA's legislative history as "murky"), legislative intent seems clearly stated in the joint House and Senate Explanatory Statement, which further provides: "Under [SLUSA], class actions relating to a `covered security' ... alleging fraud or manipulation must be maintained pursuant to the provisions of Federal securities law, in Federal courts.... `Class actions' that [SLUSA] bars from state court include actions brought on behalf of more than 50 persons, actions brought on behalf of one or more unnamed parties, and so-called `mass actions,' in which a group of lawsuits filed in the same court are joined or otherwise proceed as a single action." Id. (emphasis added).4

A significant weakness of the interpretation advanced by Plaintiffs is that it fails to reconcile SLUSA's amendment to the jurisdictional provision (§ 77v(a)) of the 1933 Act—which carves out "covered class actions" as provided for in § 77p from concurrent state-federal jurisdiction of "offenses and violations under this subchapter" (i.e. violations of the 1933 Act)—with the SLUSA provisions regarding preclusion of state law class actions (§ 77p(b)) and removal of covered class actions (§ 77p(c)). Plaintiffs' interpretation reduces SLUSA's amendment of the jurisdictional provision to mere surplusage: a state law based securities class action cannot amount to a violation "under this subchapter." See, e.g., Alkow v. TXU Corp., 2003 WL 21056750 (N.D.Tex. May 8, 2003) (unpublished opinion). Moreover, use of the utterly unrestricted word "any" in connection with "covered class action" in the removal provision (§ 77p(c)) belies a purported intent of Congress to limit removal to only the precluded state law actions addressed in § 77p(b).

When viewed in light of Congress's broad goal of making federal court the "exclusive venue" for the bulk of securities class actions, the more sensible reading of § 77p(c) and its reference to subsection (b) is that it makes removable any covered class action which includes allegations described in § 77p(b)(1) and (2). To accept Plaintiffs' argument would require this Court to agree that the purpose of SLUSA was to create the anomalous result of making purely state law securities class action suits removable to federal court (where § 77p(b) requires their prompt dismissal), but requiring securities class actions brought in state court and asserting purely federal claims to remain in state court, subject to the diverse procedural regimes of the various states.5 Such a result is directly contrary to the stated intent of Congress.

This Court's natural and commonsense reading of the statutory provisions in question, in light of the clear statements of Congressional intent in connection with the enactment of SLUSA, leads the Court to conclude that the line of cases represented by Rubin and Alkow and relied upon by Defendants is most persuasive. The Court therefore concludes that the present case was properly removed to federal court.

Conclusion:

Accordingly, Plaintiffs' motion to remand [Doc. No. 54] is DENIED. The case will proceed according to the schedule set forth in the Court's Order [Doc. No. 66] entered on July 6, 2011.