North Sound Capital LLC v. Merck & Co Inc ( 2019 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
Nos. 18-2317
_______________
NORTH SOUND CAPITAL LLC; NORTH SOUND
LEGACY INTERNATIONAL; NORTH SOUND LEGACY
INSTITUTIONAL; UNITED FOOD COMMERCIAL
WORKERS LOCAL 500 PENSION FUND; COLONIAL
FIRST STATE INVESTMENTS LTD.; CFSIL-CFS
WHOLESALE INDEXED GLOBAL SHARE FUND;
CFSIL-COMMONWEALTH GLOBAL SHARES FUND 4;
CFSIL-COMMONWEALTH SPECIALIST FUND 13;
CFSIL WHOLESALE GEARED GLOBAL SHARED
FUND; CFSIL ATF CMLA INTERNATIONAL SHARE
FUND; CFSIL-COMMONWEALTH GLOBAL SHARES
FUND 6; CFSIL COMMONWEALTH SHARES FUND 2;
CFSIL-CFS WHOLESALE ACADIAN GLOBAL EQUITY
FUND; CFSIL-CFS WHOLESALE GLOBAL HEALTH &
BIOTECHNOLOGY FUND; CFSIL-CFS WHOLESALE
GLOBAL SHARE FUND,
Appellants
v.
MERCK & CO., INC. formerly known as SCHERING-
PLOUGH CORPORATION; MERCK SCHERING-
PLOUGH PHARMACEUTICALS; MSP DISTRIBUTION
SERVICES (C) LLC.; MSP SINGAPORE COMPANY LLC;
FRED HASSAN; CARRIE S. COX
On Appeal from the United States District Court
for the District of New Jersey
(D.N.J. No. 3-13-cv-07240)
Honorable Freda L. Wolfson, U.S. District Judge
_______________
No. 18-2318
GIC PRIVATE LIMITED,
Appellant
v.
MERCK & CO., INC. formerly known as SCHERING-
PLOUGH CORPORATION;
MERCK/SCHERING PLOUGH PHARMACEUTICALS;
MSP DISTRIBUTION
SERVICES (C) LLC; MSP SINGAPORE COMPANY LLC;
FRED HASSAN; CARRIE S. COX
On Appeal from the United States District Court
for the District of New Jersey
(D.N.J. No. 3-13-cv-07241)
Honorable Freda L. Wolfson, U.S. District Judge
_______________
No. 18-2319
2
GIC PRIVATE LIMITED,
Appellant
v.
MERCK & CO., INC.; MERCK/SCHERING-PLOUGH
PHARMACEUTICALS;
MSP DISTRIBUTION SERVICES (C) LLC; MSP
SINGAPORE COMPANY LLC;
RICHARD T. CLARK; DEEPAK KHANNA
On Appeal from the United States District Court
for the District of New Jersey
(D.N.J. No. 3-14-cv-00241)
Honorable Freda L. Wolfson, U.S. District Judge
_______________
No. 18-2320
NORTH SOUND CAPITAL LLC; NORTH SOUND
LEGACY INTERNATIONAL;
NORTH SOUND LEGACY INSTITUTIONAL; UNITED
FOOD COMMERCIAL
WORKERS LOCAL 1500 PENSION FUND,
Appellants
v.
MERCK & CO., INC.; MERCK/SCHERING-PLOUGH
3
PHARMACEUTICALS;
MSP DISTRIBUTION SERVICES (C) LLC; MSP
SINGAPORE COMPANY LLC;
RICHARD T. CLARK; DEEPAK KHANNA
On Appeal from the United States District Court
for the District of New Jersey
(D.N.J. No. 3-14-cv-00242)
Honorable Freda L. Wolfson, U.S. District Judge
_______________
Argued: March 20, 2019
Before: SHWARTZ, KRAUSE, and BIBAS, Circuit Judges
(Opinion Filed: September 12, 2019)
Daniel Hume [ARGUED]
Karina Kosharskyy
Ira M. Press
Meghan J. Summers
Kirby McInerney
250 Park Avenue
Suite 820
New York, NY 10177
Counsel for Appellants
Daniel J. Juceam
Daniel J. Kramer [ARGUED]
Theodore V. Wells, Jr.
4
Paul Weiss Rifkind Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Counsel for Appellees
_______________
OPINION OF THE COURT
_______________
KRAUSE, Circuit Judge.
In these consolidated appeals, we consider whether the
Securities Litigation Uniform Standards Act (SLUSA)
prohibits investors from bringing individual actions under
state law if they exercise their constitutionally protected right
to opt out of a class action. Hewing to SLUSA’s text, we
conclude that these opt-out suits and the class actions from
which these plaintiffs excluded themselves were not “joined,
consolidated, or otherwise proceed[ing] as a single action for
any purpose.” 15 U.S.C. § 78bb(f)(5)(B)(ii)(II). Accordingly,
we will reverse the District Court’s dismissal of these suits
and remand for further proceedings.
I. Background
This long-running dispute concerns allegations that
two pharmaceutical manufacturers, Merck and Schering-
Plough, stalled the release of damaging clinical trial results
for their blockbuster drugs Vytorin and Zetia for years, tried
to change the endpoint of the study to produce more favorable
5
results, and then concealed their role in pushing for the
change.1 During this time, Merck and Schering-Plough
allegedly made numerous statements touting the efficacy and
commercial viability of Vytorin and Zetia. Plaintiffs allege
that the delay allowed Schering-Plough to raise $4.08 billion
through a public offering in August 2007, which the company
then used to purchase another pharmaceutical company that
would lessen its reliance on Vytorin and Zetia.
Amid several critical press reports and an incipient
congressional investigation, Merck and Schering-Plough
finally released the clinical trial results in January and March
2008. The data showed that “[i]n no subgroup, in no
segment, was there any added benefit” from taking Vytorin,
raising the possibility that the active-ingredient ezetimibe
amounted to an “expensive placebo.” App. 165–66. Based
on the results, the New England Journal of Medicine, along
with several leading cardiologists, recommended that doctors
prescribe Vytorin and Zetia only if other classes of drugs
failed to control a patient’s cholesterol.
The devastating results for these popular anti-
cholesterol drugs allegedly caused Merck’s and Schering-
Plough’s stock price to plummet. Between December 11,
2007 and March 31, 2008, Schering-Plough’s common-stock
price declined 52%, eliminating $23.63 billion in market
1
Vytorin and Zetia are anti-cholesterol drugs that
operate differently than the leading treatment for high
cholesterol, a class of drugs called statins. Statins reduce the
synthesis of low-density lipoprotein in the liver, while Zetia
inhibits the absorption of cholesterol in the small intestines.
Vytorin combines Zetia with a statin manufactured by Merck
called Zocor.
6
capitalization. And Merck’s stock price dropped 38%,
amounting to around a $48 billion loss in market
capitalization.
A. Investors File Putative Class Actions Against
Merck and Schering-Plough
Faced with enormous losses, investors soon filed
separate putative class actions in the District of New Jersey
against Merck and Schering-Plough, alleging each made
numerous material misrepresentations about Vytorin and
Zetia. Over a year later, in September 2009, the District
Court denied defendants’ motions to dismiss under the
Private Securities Litigation Reform Act’s (PSLRA)
heightened pleading standard. Three years after that, the
District Court denied defendants’ motion for summary
judgment and granted class certification.
The District Court then directed—as Rule 23(c)(2)
requires—that investors receive notice of their right to opt out
of the class actions. The court-approved notices provided
investors with 45 days (that is, until March 1, 2013) to
exclude themselves from the class actions. If they did so, the
notices assured them, “you will not be bound by any
judgment in this Action” and “will retain any right you have
to individually pursue any legal rights that you have against
any Defendants.” In re Merck & Co., Inc. Vytorin/ZETIA
Sec. Litig., No. 2:08-cv-02177, ECF No. 266–1 at 11 (Dec.
19, 2012); In re Schering-Plough Corp. / ENHANCE Sec.
Litig., No. 2:08-cv-00397, ECF No. 331–1 at 11 (Dec. 19,
2012).
After the opt-out period ended, the District Court
approved the settlement agreements the class-action plaintiffs
7
reached with Merck and Schering-Plough. At the parties’
request, the District Court declined to provide class members
with a second opportunity to opt out, but did offer opt-out
investors 45 days to join the class actions and share in the
recovery. In preliminarily approving the settlement
agreements, the District Court reiterated that opt-outs “shall
not be bound by the terms of the Settlement, the Stipulation,
or any other orders or judgments in the Action.” In re
Schering-Plough Corp. / ENHANCE Sec. Litig., Case No.
2:08-cv-00397, ECF No. 421 ¶ 11 (June 7, 2013); In re Merck
& Co., Inc. Vytorin/ZETIA Sec. Litig., Case No. 2:08-cv-
02177, ECF 330 ¶ 11 (June 7, 2013). In October 2013, the
District Court gave final approval to the class-action
settlements and entered separate final judgments dismissing
class members’ claims with prejudice.
B. Opt-Out Investors Then File These
Individual Lawsuits
The sixteen plaintiffs in these consolidated appeals fell
within the class definition alleged and eventually certified in
the class actions against Merck and Schering-Plough. But
they were not named plaintiffs, and neither they nor their
counsel participated in the class-action proceedings. After the
District Court certified the class actions, they opted out on the
last day, March 1, 2013, and declined to opt in to participate
in the settlement agreements.
In November 2013 and January 2014, after the District
Court entered the final judgments in the class-action suits,
these opt-out investors (“Plaintiffs”) brought their own
actions against Merck and Schering-Plough, which had since
merged. Their complaints track, sometimes verbatim, those
filed in the class actions, except they added a fraud claim
8
under New Jersey common law. Along with their complaints,
Plaintiffs identified the class-action suits as “related” on the
civil cover sheet and in a certification, as required by that
District’s Local Rules. See D.N.J. L. Civ. R. 5.1(e), 11.2,
40.1(c). In briefing papers before the District Court,
Plaintiffs asserted in connection with an unrelated argument
that “Defendants have already engaged in lengthy and
expensive discovery in the class cases,” so their suits would
not burden defendants. App. 966. But nothing suggests that
Plaintiffs coordinated their lawsuits with the class actions or
received access to confidential materials therefrom.
In their first motion to dismiss, Merck did not suggest
that SLUSA precluded Plaintiffs’ claims, even though that
posed a threshold jurisdictional issue. See In re Lord Abbett
Mut. Funds Fee Litig., 553 F.3d 248, 254 (3d Cir. 2009).
Instead, Merck contended that their federal claims were
barred by the Securities Exchange Act’s statute of repose and
that their state-law claims failed to plausibly allege actual
reliance. The District Court rejected both arguments, but in
an interlocutory appeal, we reversed the District Court’s
allowance of Plaintiffs’ federal claims after the Supreme
Court held that American Pipe tolling does not extend to
statutes of repose. See N. Sound Capital LLC v. Merck & Co.
Inc., 702 F. App’x 75, 81 (3d Cir. 2017); see also Cal. Pub.
Emps.’ Ret. Sys. v. ANZ Sec., Inc., 137 S. Ct. 2042 (2017).
Our decision left Plaintiffs with only their state-law fraud
claims.
On remand, Merck again moved for dismissal of
Plaintiffs’ state-law claims, arguing for the first time that
SLUSA precluded them because the class actions and the opt-
out suits were “joined, consolidated, or otherwise
proceed[ing] as a single action for any purpose.” 15 U.S.C.
9
§ 78bb(f)(5)(B)(ii)(II).2 In its opinion, the District Court
recognized that Merck’s argument “tests the limits of
SLUSA’s preclusive scope” and “it does not appear that any
prior decision has addressed this issue.” N. Sound Capital
LLC v. Merck & Co., 314 F. Supp. 3d 589, 601, 615 (D.N.J.
2018). Nevertheless, the District Court concluded that
Plaintiffs’ claims were barred under SLUSA because the
“Individual Actions and the Vytorin Class Actions have
proceeded as a single action.” Id. at 619. Considering the
statutory text, the District Court inferred that because
Congress did not explicitly exempt opt-out suits from
SLUSA, it necessarily “envisioned the aggregation of opt-out
suits with related class actions” under SLUSA’s mass-action
provision. Id. at 605, 611. The District Court also concluded
that SLUSA’s legislative history required it to “construe the
definition of a ‘covered class action’ broadly.” Id. at 606
(citation omitted). And it relied on several district court
decisions that, building upon each other, have espoused
increasingly capacious interpretations of the mass-action
provision. Id. at 606–19.
These appeals followed.
2
The full provision states that a “covered class action”
is: “(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.”
§ 78bb(f)(5)(B)(ii).
10
II. Discussion3
In the wake of the Great Depression, Congress sought
to “root out all manner of fraud” in securities by launching its
“first experiment in federal regulation of the securities
industry”—the Securities Act of 1933 and the Securities
Exchange Act of 1934. Lorenzo v. SEC, 139 S. Ct. 1094,
1102, 1104 (2019) (quoting SEC v. Capital Gains Research
Bureau, Inc., 375 U.S. 180, 198 (1963)). At the same time,
Congress left undisturbed private remedies under state
common law and so-called “blue-sky” laws. See Edgar v.
MITE Corp., 457 U.S. 624, 641 (1982); 15 U.S.C. §§ 77p(a),
78bb(a). This dual system of remedies has persisted since
then, allowing aggrieved investors generally to seek redress
under both state and federal law.4
3
We have jurisdiction under 28 U.S.C § 1291, and the
District Court exercised supplemental jurisdiction under
28 U.S.C. § 1367. Because this appeal does not turn on any
jurisdictional fact-finding conducted by the District Court, we
exercise plenary review. See In re Lord Abbett Mut. Funds
Fee Litig., 553 F.3d at 254; White-Squire v. U.S. Postal Serv.,
592 F.3d 453, 456 (3d Cir. 2010).
4
Some of the Securities Act’s and Exchange Act’s
provisions include express private rights of action, see, e.g.,
15 U.S.C. § 77k (Section 11 of the Securities Act), while
federal courts under the “ancien regime” recognized implied
rights of action under others—most notably, section 10(b) of
the Exchange Act, Ziglar v. Abbasi, 137 S. Ct. 1843, 1855
(2017) (citation omitted) (plurality opinion); see Blue Chip
Stamps v. Manor Drug Stores, 421 U.S. 723, 730 (1975).
Although the Court’s approach to implied rights of action has
11
Sixty years later, Congress revisited this dual system
of remedies in the PSLRA, primarily to curb “perceived
abuses of the class-action vehicle in litigation involving
nationally traded securities.” Cyan, Inc. v. Beaver Cty. Emps.
Ret. Fund, 138 S. Ct. 1061, 1066 (2018) (quoting Merrill
Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 81
(2006)). Rather than proscribing private suits under the
securities laws outright, the PSLRA includes a series of
mechanisms to dismiss unsubstantiated suits without
discovery, see 15 U.S.C. § 78u-4(b), impose sanctions for
frivolous actions, see id. § 78u-4(c), create a safe-harbor for
certain forward-looking statements, see id. § 78u-5, and
ensure that responsible stakeholders maintain control over
class-action litigation, see id. § 78u-4(a)(3). These provisions,
however, govern only securities claims brought under federal
law in federal court. 15 U.S.C. §§ 77z-1(a)(1), 78u-4(a)(1).
So, dissatisfied with the PSLRA, some entrepreneurial
plaintiffs began filing putative class actions in state court to
evade the Act’s strictures. Merrill Lynch, 547 U.S. at 82. As
class actions alleging only state-law claims, these suits
generally could not be removed to federal court under the
then-prevailing diversity-jurisdiction rules. See Zahn v. Int’l
Paper Co., 414 U.S. 291, 301 (1973), superseded in part by
since shifted, see Alexander v. Sandoval, 532 U.S. 275, 287
(2001); Cent. Bank of Denver, N.A. v. First Interstate Bank of
Denver, N.A., 511 U.S. 164, 173–78 (1994), it has accepted
these implied causes of action under stare decisis and as
ratified by Congress in the PSLRA, see Halliburton Co. v.
Erica P. John Fund, Inc., 573 U.S. 258, 274–75 (2014);
Stoneridge Inv. Partners, LLC v. Sci.-Atlanta, 552 U.S. 148,
165–66 (2008).
12
28 U.S.C. § 1332(d). To curtail this unprecedented shift of
class-action securities litigation to state courts, Congress
enacted SLUSA. Merrill Lynch, 547 U.S. at 82. But, yet
again, Congress chose a measured approach. SLUSA “does
not deny any individual plaintiff, or indeed any group of
fewer than 50 plaintiffs, the right to enforce any state-law
cause of action that may exist.” Id. at 87. Instead, the
SLUSA simply precludes (with some exceptions) investors
from litigating their state-law claims alleging securities fraud
through a “covered class action.” See 15 U.S.C. § 78bb(f)(1).
SLUSA’s definition of a “covered class action”
comprises two parts. The first part, which all agree does not
apply here, encompasses any lawsuit that seeks to recover
damages for more than 50 persons or on a representational
basis. 15 U.S.C. § 78bb(f)(5)(B)(i). The second part, which
we shall dub the “mass-action provision,” covers lawsuits
that: (1) are “filed in or pending in the same court”; (2)
involve common legal or factual questions; (3) seek damages
for more than 50 persons; and (4) “are joined, consolidated,
or otherwise proceed as a single action for any purpose.”
15 U.S.C. § 78bb(f)(5)(B); accord Instituto De Prevision
Militar v. Merrill Lynch, 546 F.3d 1340, 1346 (11th Cir.
2008).
Because the total number of investors in Plaintiffs’
lawsuits does not exceed fifty, SLUSA’s mass-action
provision does not apply unless their individual opt-out
lawsuits and the settled class actions together satisfy the
statutory definition. On that front, Plaintiffs do not dispute
that the class actions and their individual lawsuits were both
filed in the District of New Jersey and involve substantially
the same facts. Thus, this appeal turns on the fourth prong of
the mass-action provision: whether the class actions and these
13
subsequent opt-out suits were “joined, consolidated, or
otherwise proceed[ed] as a single action for any purpose.”
15 U.S.C. § 78bb(f)(5)(B)(ii)(II).
The opt-out plaintiffs insist that their individual actions
do not satisfy this “single-action” requirement because they
have never proceeded as a single action with the class actions.
They argue both that their suits postdated the resolution of the
class actions and that their suits were never coordinated with
the class actions. By contrast, Merck interprets the single-
action requirement to require a mere “functional relationship”
between two suits, an amorphous standard so “broad[] and
flexibl[e]” that it would seemingly embrace every suit that
happens to share similar substantive allegations. Appellees’
Br. 4.
We conclude Merck’s strained reading contravenes
both the plain text and underlying constitutional principles.
Instead, as we explain below, (A) some actual coordination is
required to constitute a single action, and (B) there was no
such coordination between Plaintiffs’ opt-out suits and the
prior class actions.
A. The Single-Action Requirement Requires
Some Actual Coordination
a. The Phrase “Join[der], Consolidat[ion],
or Otherwise Proceed[ing] as a Single
Action” Plainly Demands Coordination
We begin, as we must, with the mass-action
provision’s text. See Ross v. Blake, 136 S. Ct. 1850, 1856
(2016). To qualify as a mass action, the lawsuits must be
“joined, consolidated, or otherwise proceed as a single action
14
for any purpose.” 15 U.S.C. § 78bb(f)(5)(B)(ii)(II). We first
consider the meaning of “joined” and “consolidated” before
turning to the phrase “otherwise proceed as a single action.”
In law, the verbs “join” and “consolidate” share very
similar meanings. See Consolidation of actions, Black’s Law
Dictionary 309 (1990) (cross-referencing joinder). “Join”
means “to combine or unite in time, effort, action,” Join,
Black’s Law Dictionary 836 (1990), while “consolidate”
means “to unite or unify into one mass or body,” Consolidate,
Black’s Law Dictionary 308 (1990). When used to refer to
the joinder or consolidation of lawsuits, these words typically
connote the “uniting [of] several actions,” sometimes for all
purposes, Consolidation of actions, Black’s Law Dictionary
309 (1990), while other times just for pretrial purposes, see
Fed. R. Civ. P. 42(a); 9A Charles Alan Wright et al., Fed.
Prac. & Proc. § 2382 n.20 (3d ed. 2019). In federal court, the
joinder or consolidation of separate suits is governed by
Federal Rule of Civil Procedure 42, which provides that a
court may “join for hearing or trial any or all matters at issue”
in separate lawsuits or “consolidate the actions.” Fed. R. Civ.
P. 42(a) (emphasis added). In describing this rule, the
Supreme Court has used “joinder” and “consolidation”
interchangeably and observed that joining or consolidating
cases results in the “merger” of “one or many or all of the
phases of the several actions.” Hall v. Hall, 138 S. Ct. 1118,
1125, 1130 (2018) (citation omitted).
We find these authorities instructive in ascertaining
what Congress meant by the phrase “otherwise proceed as a
single action for any purpose.” 15 U.S.C.
§ 78bb(f)(5)(B)(ii)(II). Merck scrounges up a couple of
dictionary definitions defining “proceed” as “to come forth
from a source” or “to continue after pause or interruption.”
15
Appellees’ Br. 32 (quoting Proceed, Merriam-Webster’s
Dictionary (2018)). But we are not persuaded that Congress
meant the word “proceed” in either sense: The “come forth
from a single source” meaning does not fit at all because the
provision neither uses the preposition “from” nor does it
identify any source from which the lawsuits must arise.5 The
“continue after pause or interruption” definition comes closer
to the meaning here, but it too does not naturally relate to a
“single action,” much less joinder or consolidation. Instead,
we conclude Congress intended the legal definition of
“proceed,” which—consistent with the meaning of joinder
and consolidation in Black’s Law Dictionary and Rule
42(a)—means “to carry on a legal action or process,”
Proceed, Webster’s Third New International Dictionary 1807
(1990) [hereinafter Webster’s Third Dictionary]; see also
Proceed, The American Heritage Dictionary 1444 (3d ed.
1992) (“[t]o institute and conduct legal action”).
With this definition of “proceed” in mind, we consider
what Congress meant by the broader phrase “otherwise
proceed as a single action for any purpose.” 15 U.S.C.
§ 78bb(f)(5)(B)(ii)(II). The adjective “single,” when used in
this statute to modify “action,” means “consisting of one as
opposed to or in contrast with many,” while “action” refers to
5
Webster’s Third Dictionary offers, as an example of
the “come forth from a source” definition, a line from Charles
Dickens’s A Tale of Two Cities capturing how Doctor
Manette’s “lips began to form some words, though no sound
proceeded from them.” Proceed, Webster’s Third New
International Dictionary 1807 (1990) (emphasis added).
Merck’s contention that Congress intended this meaning of
proceed leaves us, like Dr. Manette, speechless.
16
a suit. Webster’s Third Dictionary 21, 2123; see also Single,
American Heritage Dictionary 1684 (3d ed. 1992) (“[n]ot
divided; unbroken”). By qualifying “single action” with the
prepositional phrase “for any purpose,” Congress clarified
that the lawsuits need not proceed together for all—or even
most—purposes; a group of lawsuits may satisfy the statutory
requirement even if a court contemplates separate trials,
judgments, or hearings. See Instituto De Prevision Militar,
546 F.3d at 1347. In this respect, SLUSA extends beyond the
Class Action Fairness Act’s mass-action removal provision,
which exempts all pretrial coordination. 28 U.S.C.
§ 1332(d)(11)(B)(ii)(IV). But, at a minimum, suits do not
“proceed as a single action” unless they are somehow
combined for the joint management of a common stage of the
proceedings (such as discovery) or the resolution of a
common question of law or fact.
A corollary of our reading is that, as a general matter,
cases cannot “proceed as a single action” unless they coincide
for some period. If two cases never overlap, a court cannot
combine them for management of a common stage of the
proceedings or for resolution of a common question. Thus,
while we cannot rule out some extraordinary exception, we
are hard-pressed to imagine any scenario in which two cases
that never overlap could function as a single lawsuit on any
dimension, as the mass-action provision requires. To be
clear, we do not read the single action requirement to mean
that cases must be coextensive with one another but rather
that they be at least partially coordinated, which would seem
invariably to require that they coincide for some period. See,
e.g., In re Lehman Bros. Sec. & ERISA Litig., 131 F. Supp. 3d
241, 266–68 (S.D.N.Y. 2015) (mass-action provision satisfied
17
where two cases were combined for discovery for some time,
but one case was later settled and dismissed).
This common-sense interpretation draws further
support from the time-honored canon ejusdem generis, which
teaches that “where general words follow an enumeration of
two or more things,” those successive words refer “only to
persons or things of the same general kind or class
specifically mentioned.” Antonin Scalia & Bryan A. Garner,
Reading Law 199 (2012); see, e.g., Wash. State Dep’t of Soc.
& Health Servs. v. Guardianship Estate of Keffeler, 537 U.S.
371, 384 (2003). For the canon to adhere, the preceding
words in the list must share a “common attribute.” Ali v. Fed.
Bureau of Prisons, 552 U.S. 214, 225 (2008).
The mass-action provision presents a textbook case for
applying ejusdem generis. The preceding verbs “joined” and
“consolidated” are nearly synonymous when used to refer to
the union of lawsuits, and “otherwise” signals a commonality
between those preceding words and the phrase “proceed as a
single action.” See Begay v. United States, 553 U.S. 137,
143–44 (2008), abrogated on other grounds by Johnson v.
United States, 135 S. Ct. 2551 (2015); id. at 151 (Scalia, J.,
concurring in judgment) (agreeing with the majority that “by
using the word ‘otherwise’ the writer draws a substantive
connection between two sets” based on “whatever follows
‘otherwise’”); Bd. of Ed. v. Harris, 444 U.S. 130, 143 (1979)
(accepting that a statute’s use of “otherwise” connotes a link
with a preceding clause). The meaning of join and consolidate
therefore illustrates what Congress meant by the phrase
“otherwise proceed as a single action.”
Confronted with these textual clues, Merck seizes on
the mass-action provision’s use of “any.” Although a statute’s
18
use of the word “any” may favor a broader reading, see, e.g.,
Smith v. Berryhill, 139 S. Ct. 1765, 1774 (2019), its meaning
“necessarily depends on the statutory context,” Nat’l Ass’n of
Mfrs. v. Dep’t of Defense, 138 S. Ct. 617, 629 (2018). Or, as
the Supreme Court quipped in rejecting another strange
interpretation of SLUSA premised on the word “any,” “we do
not read statutes in little bites.” Kircher v. Putnam Funds Tr.,
547 U.S. 633, 643 (2006). Here, “any” modifies “purpose”; it
provides no cause for reading the preceding phrase “proceed
as a single action” “completely out of the statute.” Nat’l
Ass’n of Mfrs., 138 S. Ct. at 629. Nor does “any” preclude
the application of ejusdem generis. See, e.g., Circuit City
Stores, Inc. v. Adams, 532 U.S. 105, 114 (2001) (applying the
canon to the phrase “any other class of workers engaged in . .
. commerce”). Thus, the “word ‘any’ . . . does not bear the
heavy weight” that Merck places on it. Nat’l Ass’n of Mfrs.,
138 S. Ct. at 629.
Merck equally misses the mark in contending that the
single-action requirement must receive a counter-textual
construction to avoid rendering the mass-action provision’s
first prong—the separate requirement that the suits be “filed
in or pending in” the same court, 15 U.S.C.
§ 78bb(f)(5)(B)(ii) (emphasis added)—superfluous. By
reaching suits “filed in or pending in” a court, SLUSA’s
mass-action provision addresses both actions that originate in
a particular court and those that are transferred or removed
there. See In re Enron Corp. Secs., 535 F.3d 325, 334, 341
(5th Cir. 2008) (finding the single-action requirement
satisfied where defendants removed the suits as “related to” a
bankruptcy proceeding under 28 U.S.C. § 1334). If anything,
Merck disregards the canon against superfluity by conflating
the single-action requirement with SLUSA’s second prong—
19
the requirement that the suits share “common questions of
law or fact.” 15 U.S.C. § 78bb(f)(5)(B)(ii).
At bottom, notwithstanding Merck’s linguistic
gymnastics, the single-action requirement cannot be contorted
enough to cover “functional coordination,” as opposed to
actual coordination and, as a general matter, there is no
occasion for actual coordination if suits never overlap in time.
b. SLUSA’s Broad-Construction Principle
Is Unavailing
With so little in the text to support its interpretation,
Merck leans heavily on the premise that SLUSA should
receive “a broad interpretation . . . to ensure the uniform
application of federal fraud standards.” Appellees’ Br. 22
(quoting Rowinski v. Salomon Smith Barney Inc., 398 F.3d
294, 299 (3d Cir. 2005)). This argument is doubly flawed.
First, despite entreaties, Congress has repeatedly
declined the invitation—in the Securities Act, the Exchange
Act, the PSLRA, and SLUSA itself—to broadly preempt
state-law securities claims. In enacting SLUSA, Congress
“simply denie[d] plaintiffs the right to use the class-action
device to vindicate certain claims”; it chose not to “actually
pre-empt any state cause of action.” Merrill Lynch, 547 U.S.
at 87. Merck’s interpretation would upend Congress’s
measured approach. Any serious allegations of securities
fraud will likely prompt the filing of at least one putative
class-action lawsuit. Under Merck’s reading, the mere
existence of a class action would preclude individual
plaintiffs from bringing state-law claims, even if individual
plaintiffs do not participate at all in the class proceedings and,
when presented with the opportunity, opt out of the class
20
action.6 As a result, Merck’s proposed construction would
foster the complete preemption of state-law securities
claims—precisely what Congress chose not to do in adopting
SLUSA. See Merrill Lynch, 547 U.S. at 87.
Second, and more importantly, as the Supreme Court
has recently admonished lower courts, the “broad-
construction” canon does not render SLUSA somehow
magically impervious to traditional tools of statutory
construction. See Cyan, 138 S. Ct. at 1072. Because “[n]o
legislation pursues its purposes at all costs,” courts have “no
license to disregard clear language based on an intuition that
Congress must have intended something broader.” Id. at
1073, 1078 (internal quotation marks and citations omitted).
And consistent with that admonition, we will not read the
mass-action provision “in a most improbable way” just “to
make the world of securities litigation more consistent or
pure.” Id. at 1073. In short, Merck’s insistence that SLUSA
6
Of course, for SLUSA’s mass-action provision to
adhere, the actions would also have to be “filed in or pending
in” the same court, 15 U.S.C. § 78bb(f)(5)(B)(ii), and
defendants could not use SLUSA’s removal provision to
manufacture this prerequisite for preclusion, see Cyan, 138 S.
Ct. at 1076–78; Kircher, 547 U.S. at 644 n.12; see also 28
U.S.C. § 1332(d)(9) (excluding securities suits from the Class
Action Fairness Act’s grant of diversity jurisdiction). But, as
these cases reflect, opt-out plaintiffs often pair state-law
claims with Exchange Act claims, which cannot be brought in
state court. See 15 U.S.C. § 78aa(a). Through simple venue
transfer and multidistrict centralization, then, opt-out lawsuits
will often arrive in the same federal district as class actions.
21
should be broadly interpreted for policy reasons is unavailing
in the face of the statutory text.
c. Merck’s Expansive Reading Raises
Constitutional Concerns
Our reading of the statute also ensures that it comports
with the Constitution, for it would raise serious due process
concerns if Congress conditioned the extinguishment of opt-
out investors’ state-law claims on whether an unaffiliated
party had elected to bring a putative class action. To comport
with the Fifth and Fourteenth Amendments, every absent
class member must “be provided with an opportunity to
remove himself from” a class action seeking predominantly
damages. Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 812
(1985); see also Wal-Mart Stores, Inc. v. Dukes, 564 U.S.
338, 363 (2011). That is, at least where damages are at stake,
the class-action device passes constitutional scrutiny only
because putative class members can easily extricate
themselves from the proceedings. Thus, to the extent that a
policy burdens that opt-out right or, worse yet, saps it of
meaning, it would raise serious constitutional concerns.
Thankfully, at least in this case, the mass-action provision
evinces no intent to press these constitutional boundaries.7
7
This case does not present a circumstance in which a
district court, over an opt-out plaintiff’s objection,
consolidated her action with a class action, thereby
extinguishing her state-law claims. See Instituto De Prevision
Militar, 546 F.3d at 1347 (hypothesizing that an opt-out
plaintiff might avoid the mass-action provision by “argu[ing]
to the district court that consolidation was inappropriate
because the joinder for discovery purposes would result in
22
In sum, we conclude that two suits are not “joined,
consolidated, or otherwise proceed[ing] as a single action for
any purpose,” 15 U.S.C. § 78bb(f)(5)(B)(ii)(II), unless the
actions are somehow combined, in whole or in part, for case
management or for resolution of at least one common issue.
B. Plaintiffs’ Opt-Out Suits Never Proceeded as
a Single Action with the Prior Class Actions
Applying our view of the single-action provision
presents no difficulties. In finding the suits precluded, the
District Court relied on the mere fact that the opt-out
investors happened to meet a class definition, filed complaints
resembling their class counterparts, complied with certain
local rules requiring them to identify the class actions as
related, and predicted that defendants would not have to
duplicate discovery. See N. Sound Capital, 314 F. Supp. 3d
at 610–12. But Plaintiffs’ suits and the prior class actions
never existed at the same time. So it comes as no surprise
that the purported “indicia of coordination,” id. at 612, even
taken together, do not suggest actual coordination.
It is axiomatic that an unnamed class member is not “a
party to the class-action litigation before the class is
certified.” Smith v. Bayer Corp., 564 U.S. 299, 313 (2011)
(emphasis and citation omitted). For class actions seeking
predominantly damages, Rule 23 adds that putative class
members do not become party plaintiffs until the time to opt
SLUSA preclusion”); cf. 15 U.S.C. § 78bb(f)(5)(F) (providing
that SLUSA’s definition of a covered action does not “affect
the discretion of a State court” to join or consolidate actions,
without mentioning federal courts). We therefore leave that
difficult issue for another day.
23
out has elapsed. See Fed. R. Civ. P. 23(c)(2)(B)(v)–(vi),
(3)(B); Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176
(1974); Reppert v. Marvin Lumber & Cedar Co., 359 F.3d 53,
56–57 (1st Cir. 2004). If an absent class member exercises
this right, “she can litigate herself another time—or choose to
not litigate at all.” William B. Rubenstein, 3 Newberg on
Class Actions § 9:38 (5th ed. 2019). By guaranteeing
putative class members an unqualified right to exclude
themselves, Rule 23 honors “our ‘deep-rooted historic
tradition that everyone should have his own day in court.’”
Ortiz v. Fibreboard Corp., 527 U.S. 815, 846 (1999) (quoting
Martin v. Wilks, 490 U.S. 755, 762 (1989)). Thus, if a
plaintiff has timely opted out of a class action, the mere fact
that he satisfies a class definition does not suggest
coordination.
To be sure, despite opting out, an erstwhile class
member turned individual plaintiff may incidentally benefit
from the existence of a class action: Pleadings have been
filed, arguments aired, and perhaps even precedent
established.8 Here, for instance, rather than starting from
8
To this list of potential benefits, Merck adds for the
first time on appeal American Pipe tolling, a rule that tolls the
statute of limitations for individual claims while timely class
claims remain pending. Blake v. JP Morgan Chase Bank NA,
927 F.3d 701, 708–09 (3d Cir. 2019). But the opt-out
investors here likely need not rely on American Pipe, because
their state-law fraud claims enjoy a six-year statute of
limitations, which follows the discovery rule. Cetel v.
Kirwan Fin. Grp., Inc., 460 F.3d 494, 513 (3d Cir. 2006). At
any rate, the possibility of American Pipe tolling
“demonstrate[s] only that a person not a party to a class suit
24
scratch, the opt-out investors undoubtedly considered the
class action complaints in drafting their own. But the statute
does not speak of obtaining a benefit, but of “join[der],
consolidat[ion], or otherwise proceed[ing] as a single action
for any purpose.” 15 U.S.C. § 78bb(f)(5)(B)(ii)(II). The
commonalities in Plaintiffs’ pleadings certainly satisfied
SLUSA’s separate requirement that the suits “involve[e]
common questions of law or fact,” id. § 78bb(f)(5)(B)(ii), and
could have induced a court or the parties themselves to
coordinate the actions had their suits overlapped in time. But
it did not, so that determinative step was never taken.
Merck’s intimation that any benefit satisfies the single-
action requirement—besides lacking a foothold in the
statute—proves too much. Merck places great weight on
parallels between Plaintiffs’ pleading and the class-action
complaints, but Plaintiffs would have received a benefit even
if they had completely rewritten their pleadings or just read
the pleadings once before conducting their own investigation.
Only a hermetically sealed opt-out investor could possibly
escape the all-encompassing sweep of Merck’s proposed
atextual rule.9
may receive certain benefits (such as the tolling of a
limitations period) related to that proceeding,” Smith, 564
U.S. at 313 n.10—not that an individual action and class
action are “joined, consolidated, or otherwise proceed[ing] as
a single action.”
9
Unlike the District Court, we do not believe that the
failure to explicitly carve out opt-out suits suggests anything,
much less “speaks volumes.” N. Sound Capital, 314 F. Supp.
3d at 611, 616. Courts sometimes consider the existence of
25
Finally, neither Plaintiffs’ identification of the class
actions as related nor their statements before the District
Court give us pause. Under the District of New Jersey’s
Local Rules, Plaintiffs had to identify the class actions as
related because their suits involved the same subject matter as
the class actions. See D.N.J. L. Civ. R. 5.1(e), 11.2; 40.1(c).
While such a filing could eventually result in coordination
with another pending action, merely identifying the other
actions as related has no such effect. And the Plaintiffs’
statements before the District Court, made to dissuade it from
certifying its first dismissal order for interlocutory review,
simply played down the burden that their suits would pose;
they did not insinuate that the opt-out plaintiffs had
collaborated with the class-action plaintiffs.
Our conclusion does not conflict with any circuit
decision to have considered the single-action requirement.
See Instituto De Prevision Militar, 546 F.3d at 1347(individual plaintiff agreed to consolidate discovery with
class action); In re Enron Corp. Secs., 535 F.3d at 342 (more
than 50 plaintiffs, represented by the same counsel, filed joint
motions and coordinated discovery); see also Amorosa v.
AOL Time Warner Inc., 409 F. App’x 412, 417 (2d Cir. 2011)
(affirming, in an unpublished summary order, the district
court’s conclusion that a plaintiff’s state-law claims satisfied
the mass-action provision, where he voluntarily agreed to stay
an exemption in construing a general mandate if one
interpretation of the mandate would render the exemption
superfluous. See, e.g., Sayyed v. Wolpoff & Abramson, 485
F.3d 226, 231 (4th Cir. 2007). But we fail to see how the lack
of an exemption can broaden the ordinary meaning of the
mass-action provision.
26
his actions pending the resolution of several motions to
dismiss). Beyond these authorities, the parties devote much
of their briefing on appeal to various district court decisions.
We do not feel compelled to dwell on them, because, as the
District Court recognized, none deemed the single-action
requirement satisfied on such meager facts. But we hasten to
note our concern with one perceptible trend: From a broad
but plausible interpretation of the single-action requirement,
some reasoning in these decisions has become increasingly
unmoored from the statutory text.10 Today, we steer this
jurisprudence towards safer waters.
III. Conclusion
For busy courts presiding over complex securities
litigation, opt-out lawsuits can sometimes seem nettlesome.
But the right to exclude oneself from a class action, even if
not actually exercised by most class members, should not be
10
See, e.g., Discovery Glob. Citizens Master Fund,
Ltd. v. Valeant Pharm. Int’l, Inc., No. 16-cv-7321, 2018 WL
406046, at *6 (D.N.J. Jan. 12, 2018) (noting it was
“unpersuaded by Plaintiffs’ argument that [the individual
actions] are separate and independent from . . . the Class
Action” in part because they “explicitly identified [the Class
Action] on their Civil Cover Sheet” and “rely on the Court’s
decision in the Class Action in connection with [its]
motions”); Kuwait Inv. Office v. Am. Int’l Grp., Inc., 128 F.
Supp. 3d 792, 813 (S.D.N.Y. 2015) (finding the fact that
plaintiffs “assert the same factual and federal legal claims
raised in the Class Action” salient to whether the single action
requirement was satisfied).
27
discounted or derided as “gamesmanship.” By its terms,
SLUSA does not disturb the right to opt out, and we refuse to
abandon traditional tools of statutory interpretation and
common sense to give Merck what Congress has not. We
will therefore reverse the District Court’s dismissal order and
remand for further proceedings consistent with this opinion.11
11
In its renewed motion to dismiss, Merck also urged
the District Court to decline to exercise supplemental
jurisdiction over Plaintiffs’ state-law claims, N. Sound
Capital, 314 F. Supp. 3d at 599; see 28 U.S.C. § 1367(c), and
we recognize it may do so again. We note that these suits
have been pending for more than five years and produced two
appeals to this Court. In the ordinary course, “where the
claim[s] over which the district court has original jurisdiction
[are] dismissed before trial, the district court must decline to
decide the pendent state claims.” Hedges v. Musco, 204 F.3d
109, 123 (3d Cir. 2000) (citation omitted). But it need not do
so where “considerations of judicial economy, convenience,
and fairness to the parties provide an affirmative justification
for doing so.” Id. (citation omitted). We leave this
determination to the discretion of the District Court. See
Charles Alan Wright et al., 13D Fed. Prac. & Proc. § 3567.3
(3d ed. 2019) (observing that the presumption that a district
court should decline to exercise supplemental jurisdiction if it
has dismissed all original-jurisdiction claims “is just that—a
presumption and not a rule”).
28
SHWARTZ, Circuit Judge, dissenting.
Plaintiffs are sixteen institutional investors who
purchased Merck & Co., Inc. (“Merck”) and Merck/Schering
Plough Pharmaceuticals (“Schering”) stock. They appeal the
District Court’s order dismissing their state-law fraud claims
as barred under the Securities Litigation Uniform Standards
Act’s (“SLUSA”) preclusion provision, 15 U.S.C. §
78bb(f)(1). Whether Plaintiffs’ complaints are precluded
depends on whether their cases are part of a “covered class
action” under SLUSA. As explained below, because Plaintiffs,
as class members, participated in and benefited from numerous
pretrial proceedings in the Vytorin Class Action cases, their
opt-out actions functionally proceeded as a single action with
the class actions. I would therefore hold that the District Court
correctly dismissed their complaints under SLUSA’s
preclusion provision.1
1
SLUSA dismissals are jurisdictional because SLUSA
prohibits “covered class actions” from being “maintained” in
“[f]ederal court.” Hampton v. Pac. Inv. Mgmt. Co., 869 F.3d
844, 847 (9th Cir. 2017). As a result, Federal Rule of Civil
Procedure 12(b)(1) applies. See In re Lord Abbett Mut. Funds
Fee Litig., 553 F.3d 248, 254 (3d Cir. 2009). Under Rule
12(b)(1), a defendant may launch a factual challenge to subject
matter jurisdiction. Hartig Drug Co. v. Senju Pharm. Co., 836
F.3d 261, 268 (3d Cir. 2016). In a factual attack, “the court is
free to weigh the evidence and satisfy itself as to the existence
of its power to hear the case, and no presumptive truthfulness
attaches to the plaintiff’s allegations.” Id. (quotation marks
and alteration omitted). Thus, we may consider evidence
outside the pleadings. Id. The plaintiff bears the burden of
proving that jurisdiction exists. Id.1
I reach this conclusion based on SLUSA’s purpose and
text. Congress enacted SLUSA to “prevent certain State
private securities class action lawsuits alleging fraud from
being used to frustrate the objectives of the [Private Securities
Litigation] Reform Act [of 1995] (‘PSLRA’).” Merrill Lynch,
Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 82 (2006)
(citations omitted). The PSLRA sought to “curb abuses in
private class securities litigation” by “implement[ing] a host of
procedural and substantive reforms, including more stringent
pleading requirements to curtail the filing of meritless
lawsuits.” Rowinski v. Salomon Smith Barney Inc., 398 F.3d
294, 298 (3d Cir. 2005) (internal quotation marks omitted).
Securities plaintiffs attempted to avoid PSLRA’s requirements
“by filing private securities class actions in state rather than
federal court.” Id. Congress passed SLUSA “to close this
perceived loophole by authorizing the removal and federal
preemption [or preclusion] of certain state court securities class
actions.” Id.; LaSala v. Bordier et Cie, 519 F.3d 121, 128 (3d
Cir. 2008).
SLUSA contains a provision that precludes “covered
class action[s]” from proceeding in state or federal court. §
78bb(f)(1). This provision provides, in relevant part:
No covered class action based upon the statutory
or common law of any State or subdivision
We construe jurisdictional statutes such as SLUSA’s
preclusion provision “mindful that it is our obligation to
effectuate the intentions of Congress in interpreting those
statutes.” New Rock Asset Partners, L.P. v. Preferred Entity
Advancements, Inc., 101 F.3d 1492, 1510 (3d Cir. 1996).
2
thereof may be maintained in any State or
Federal court by any private party alleging—
(A) a misrepresentation or omission of a
material fact in connection with the
purchase or sale of a covered
security . . . .
Id. SLUSA thus precludes actions that satisfy the following
four elements: (1) “covered class action”; (2) based on state
statutory or common law; (3) concerning a covered security;
and (4) alleging that defendants made a misrepresentation or
omission of a material fact . . . in connection with the purchase
or sale of that security.”2 O’Donnell v. AXA Equitable Life
Ins. Co., 887 F.3d 124, 128 (2d Cir. 2018). Only the first
element is in dispute: whether Plaintiffs’ state-law fraud claims
are part of a “covered class action.”
SLUSA defines “covered class action” as:
(ii) any group of lawsuits filed in or pending in
the same court and involving common questions
of law or fact, in which--
2
Other courts have similarly parsed the preclusion
provision. See Fleming v. Charles Schwab Corp., 878 F.3d
1146, 1152 (9th Cir. 2017); In re Enron Corp. Sec., 535 F.3d
325, 338-39 (5th Cir. 2008); Herndon v. Equitable Variable
Life Ins. Co., 325 F.3d 1252, 1253 (11th Cir. 2003); see also
In re Franklin Mut. Funds Fee Litig., 388 F. Supp. 2d 451, 471
(D.N.J. 2005).
3
(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.3
§ 78bb(f)(5)(B)(ii). The sole question here is whether
Plaintiffs’ individual actions and the Vytorin Class Actions
“otherwise proceed[ed] as a single action for any purpose.”4
Id. § 78bb(f)(5)(B)(ii)(II). To answer this question, we must
decipher the meaning of this phrase.5
3
A “covered class action” also includes certain “single”
lawsuits that are not at issue. See 15 U.S.C. § 78bb(f)(5)(B)(i).
4
Plaintiffs agree that (1) they filed their opt-out suits in
the same court where the Vytorin Class Actions were litigated
and (2) their suits share a common question of law or fact with
the Vytorin Class Actions.
5
Only two Courts of Appeals have addressed this
subject and they support the conclusion here: In re Enron Corp.
Sec., 535 F.3d 325 (5th Cir. 2008), and Amorosa v. AOL Time
Warner Inc., 409 F. App’x 412 (2d Cir. 2011). In Enron, the
Court of Appeals for the Fifth Circuit affirmed dismissal based
on SLUSA’s preclusion provision because plaintiffs filed
“nearly identical complaints” with the MDL; jointly scheduled
discovery with the MDL; filed joint motions; provided “nearly
identical discovery responses”; and used the “same experts and
expert reports” in their individual actions. Enron, 535 F.3d at
342.
In Amorosa, the Court of Appeals for the Second
Circuit also affirmed dismissal based on SLUSA’s preclusion
provision “[f]or substantially the reasons set forth by the
4
I
To determine the phrase’s meaning, we begin with its
language. In re Lord Abbett Mut. Funds Fee Litig, 553 F.3d
248, 254 (3d Cir. 2009). “If the language of the statute
expresses Congress’s intent with sufficient precision, the
inquiry ends there and the statute is enforced according to its
terms.” Id. (citation omitted). If, however, the statute “does
not express Congress’s intent unequivocally,” we refer to its
legislative history “and the atmosphere in which the statute was
enacted . . . to determine the congressional purpose.” Id.(citation omitted).
For Plaintiffs’ lawsuits to be a “covered class action,”
they must “otherwise proceed as a single action for any
purpose.” 15 U.S.C. § 78bb(f)(5)(B)(ii)(II). The clause has
two words that indicate the phrase “covered class action” has a
broad definition: “otherwise” and “any.” The word
“otherwise” is used along with “joined” and “consolidated,” so
the statute’s separate inclusion of these words reveals that the
use of the word “otherwise” seeks to capture actions other than
those that have been actually associated via formal invocation
of the Federal Rules of Civil Procedure. See Otherwise,
Oxford English Dictionary Online,
http://www.oed.com/view/Entry/133247?
redirectedFrom=otherwise#eid (last visited Aug. 25, 2019)
district court in its opinion.” 409 F. App’x at 417. The district
court in Amorosa analyzed several coordinated procedural
events in determining that the plaintiff’s action was a “covered
class action” under SLUSA. See Amorosa v. Ernst & Young
LLP, 682 F. Supp. 2d 351, 375-77 (S.D.N.Y. 2010).
5
(defining “otherwise” as an adverb that means “in another
way”); see also Amorosa v. Ernst & Young LLP, 682 F. Supp.
2d 351, 375 (S.D.N.Y. 2010) (“[T]his Court holds that an
action need not have been formally joined or consolidated with
other actions in order to be a ‘covered class action’ and subject
to SLUSA’s [preclusion] provision.”). Thus, the word
“otherwise” captures a broader swath of litigation activity than
that involving formally joined or consolidated actions.
“[T]he word ‘any’ [also] has an expansive meaning, that
is, ‘one or some indiscriminately of whatever kind.’” United
States v. Gonzales, 520 U.S. 1, 5 (1997) (quoting Webster’s
Third New International Dictionary 97 (1976)). “Any” is
“used to refer to a member of a particular group or class
without distinction or limitation (hence implying every
member of the class or group, since every one may in turn be
taken as a representative).” Any, Oxford English Dictionary
Online, http://www.oed.com/view
/Entry/8973?redirectedFrom=any#eid (last visited Aug. 25,
2019). The word “any” “can and does mean different things
depending upon the setting.” Nixon v. Mo. Mun. League, 541
U.S. 125, 132 (2004); Small v. United States, 544 U.S. 385,
388 (2005) (noting that while the word “any” “demands a
broad interpretation,” it still cannot be “considered alone”). As
a result, we must look to surrounding words to determine what
the word “any” captures. See Flora v. United States, 362 U.S.
145, 149 (1960).
Here, “any” modifies the singular noun “purpose.” See
§ 78bb(f)(5)(B)(ii). The word “purpose,” in turn, is either a
“determined intention or aim” or “[t]he reason for which
something is done or made, or for which it exists.” Purpose,
Oxford English Dictionary Online,
6
http://www.oed.com/view/Entry/154972?rskey=t6Cdij&
result =1#eid (last visited Aug. 25, 2019).
Together, these dictionary definitions reveal that the
phrase “covered class action” has a broad meaning that
includes an action that (1) is not necessarily formally joined or
consolidated with a specific case but (2) still proceeds with that
case “as a single action” for whatever reason.6 See §
78bb(f)(5)(B)(ii); Ali v. Fed. Bureau of Prisons, 552 U.S. 214,
220 (2008) (“Congress’ use of ‘any’ to modify ‘other law
enforcement officer’ is most naturally read to mean law
enforcement officers of whatever kind.”); see also Cyan, Inc.
v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061, 1071 (2018)
(observing that the phrase “covered class action” has a “broad
definition”).
II
Focusing on the phrase “proceed as a single action for
any purpose,” my colleagues entertain accepting Plaintiffs’
invitation to impose a simultaneity requirement so that the
SLUSA-precluded actions must be pending at the same time as
the class action. The Majority appropriately notes that
simultaneity is not an absolute requirement, Maj. Op. at 17,
and, in fact, there are three reasons why such a requirement
does not exist.
First, the word “single” does not inherently involve a
timing component. As an adjective, “single” means “[s]ole,
unaccompanied, individual; separate” or “[i]ndividual, as
6
I agree with the Majority’s interpretation of the words
“proceed” and “action.” Maj. Op. at 16-17.
7
contrasted with larger bodies or number of persons or things.”
Single, Oxford English Dictionary Online,
http://www.oed.com/view/Entry/180129?rskey=IvoNvj&resu
lt= 2&isAdvanced=false#eid (last visited Aug. 25, 2019). My
colleagues similarly note that the adjective “single” means
“consisting of one as opposed to or in contrast with many.”
Maj. Op. at 16. My colleagues also observe that, “[b]y
qualifying ‘single action’ with the prepositional phrase ‘for any
purpose,’ Congress clarified that the lawsuits need not proceed
together” to constitute a single action. Maj. Op. at 17. This
reading makes sense. Although my colleagues require the
cases to be combined for joint management for SLUSA’s
preclusion provision to apply, they recognize that the cases
need not always coincide for some time period. A plain-text
reading shows that their recognition is warranted; the phrase
“any purpose” is broad and not limited to simultaneous events.
In context, it captures suits that “proceed as a single action” for
functional reasons. In other words, lawsuits that functionally
proceed as a single action may fall within SLUSA’s preclusive
scope and need not pend simultaneously.7
Second, principles of statutory interpretation do not
command a simultaneity requirement. The Majority relies on
7
Likewise, the word “proceed” in the preclusion
provision does not have a timing component. The Majority
states that “proceed” means “to carry on a legal action or
process.” Maj. Op. at 16. Even under the Majority’s
interpretation of the word “proceed,” Plaintiffs’ individual
actions proceeded with the Vytorin Class Actions because the
claims in both cases started together, as Plaintiffs pursued their
claims as class members until they opted out.
8
the ejusdem generis canon8 and concludes that, because the
verbs “joined” and “consolidated” share almost identical
meanings and involve contemporaneous lawsuits, so too must
the phrase “proceed as a single action.”9 Maj. Op. at 18.
Ejusdem generis is a “statutory canon” providing that “where
8
Plaintiffs never invoked ejusdem generis before the
District Court, and so the Majority assumes that Plaintiffs did
not forfeit their ejusdem generis argument on appeal. See
Barna v. Bd. of Sch. Dirs. of Panther Valley Sch. Dist., 877
F.3d 136, 146-47 (3d Cir. 2017) (holding that the failure to
timely assert an argument constitutes a forfeiture and that we
“will not reach a forfeited issue in civil cases absent truly
exceptional circumstances” (internal quotation marks
omitted)).
9
In addition, the grammatical structure of the “covered
class action” clause does not lend itself easily to ejusdem
generis. SLUSA’s preclusion provision bars lawsuits that “are
joined, consolidated, or otherwise proceed as a single action
for any purpose.” 15 U.S.C. § 78bb(f)(5)(B). The words
“joined” and “consolidated” are similar because the linking
verb “are” governs their meaning. By contrast, the phrase
“otherwise proceed as a single action for any purpose” has its
own independent verb, “proceed”; the verb “are” does not
affect the phrase “otherwise proceed as a single action for any
purpose.” Congress could have drafted the final part as
“otherwise proceeding as a single action for any purpose” to
maintain the parallel structure but chose not to do so. Thus,
ejusdem generis does not necessarily apply. See United States
v. EME Homer City Generation, L.P., 727 F.3d 274, 293 (3d
Cir. 2013) (observing, in the context of ejusdem generis, that
“general phrases cannot be so narrowly construed that they
become meaningless”).
9
general words follow specific words in a statutory
enumeration, the general words are construed to embrace only
objects similar to those objects enumerated by the preceding
specific words.” Circuit City Stores, Inc. v. Adams, 532 U.S.
105, 114-15 (2001) (internal quotation marks and alteration
omitted). Ejusdem generis “is not a rule of law but merely a
useful tool of construction resorted to in ascertaining
legislative intent.” Waterfront Comm’n of N.Y. Harbor v.
Elizabeth-Newark Shipping, Inc., 164 F.3d 177, 184 (3d Cir.
1998). Because the plain meaning of the words reflects
Congress’ intent, it is unnecessary to apply this canon. Id.(holding that ejusdem generis “should not be employed when
the intention of the legislature is otherwise evident” (citation
omitted)).
Moreover, even when applying ejusdem generis, we
have noted that “Congress does not intend every seemingly
open-ended phrase to be read narrowly.” United States v. EME
Homer City Generation, L.P., 727 F.3d 274, 292 (3d Cir.
2013). “From time to time, a broadly worded statutory term is
intended to be just that—broad.” Id. The words “otherwise”
and “any” in this phrase fall squarely in that category. The
phrase “proceed as a single action for any purpose” is broad
and includes lawsuits that proceed as a single action for
functional reasons, even if they are not pending at the same
time. § 78bb(f)(5)(B)(ii). This reading accords with Congress’
intent of maintaining a “broad interpretation of SLUSA,”
Rowinski, 398 F.3d at 299 (citing S. Rep. No. 105-182, at *8
(1998)), to inhibit circumvention of the PSLRA. Because
SLUSA’s language and its purpose confirm the preclusion
provision’s broad scope, the phrase “otherwise proceed”
10
should not be limited by its more specific predecessors
“joined” and “consolidated.”10
10
The Majority refers to legislative inaction to show
that Congress has “declined . . . to broadly preempt state-law
securities claims,” Maj. Op. at 20, but SLUSA’s legislative
history and the “atmosphere” in which it was enacted support
a broad reading of its preclusive scope, see Lord Abbett, 553
F.3d at 254.
Congress passed SLUSA because plaintiffs were filing
state-law causes of action to avoid the PSLRA’s “more
stringent requirements,” H.R. Rep. No. 105-640, at *10 (1998),
and hence interfered with the establishment of a uniform
standard of liability for nationally traded securities, see S. Rep.
No. 105-182, at *3. To further this uniformity goal, Congress
intended that SLUSA be “interpreted broadly to reach mass
actions and all other procedural devices that might be used to
circumvent the class action definition.” Id. at *8. To this end,
Congress, among other things, (1) provided a “definition of
class action that [was] intended to prevent evasion of the
[PSLRA] bill through the use of so-called ‘mass action’” and
(2) chose the word “covered class action” in SLUSA to reflect
that it was aimed at activity that captured more than a Rule 23
“class action.” Id. at *7.
In addition, even senators who disagreed with SLUSA
recognized that its definition of “covered class action” was
broad, see id. at *19-20, and that it was “broad enough to pick
up individual investors against their will” because “[e]ven if
the lawsuits are brought by separate lawyers, without
coordination . . . they may qualify as a class action and thus be
preempted.” Id.; see also H.R. Rep. No. 105-640, at *45-46
(“[I]ndividuals who bring suits in state court in their own name
may find, if others have brought similar suits, that their claims
11
The doctrine of absurdity also counsels against
imposing a simultaneity requirement. It is a “basic tenet of
statutory construction . . . that courts should interpret a law to
avoid absurd or bizarre results.” In re Kaiser Aluminum Corp.,
456 F.3d 328, 338 (3d Cir. 2006); see also Lamie v. U.S.
Trustee, 540 U.S. 526, 534 (2004). Grafting a simultaneity
requirement onto SLUSA’s “covered class action” provision
would yield an absurd result because it “defies rationality.”
United States v. Fontaine, 697 F.3d 221, 228 (3d Cir. 2012).
Under Plaintiffs’ interpretation, an opt-out action filed thirty
minutes after a class action settles would not be SLUSA-
precluded, but the identical opt-out action filed thirty minutes
before a class action settles would be SLUSA-precluded
simply because such an opt-out action would be pending in a
court contemporaneously with the class action.
are preempted . . . . For instance, if an investment adviser
churns the accounts of or recommends unsuitable securities to
clients in a single state and more than 50 of them seek to
recover in the same court, each filing their own individual
action, they may be forced to constitute a class action and have
to pursue their claims—if possible—in federal court.”). Thus,
Congress did not require actual coordination among plaintiffs
for individual actions to be “covered class actions.” See id.While Congress envisioned that functional coordination is
sufficient, actual coordination occurred here, as demonstrated
by Plaintiffs’ reliance on all of the pretrial activity in the
Vytorin Class Actions. See infra Section III. The strategic
decision to wait to file their individual lawsuits until after the
Vytorin Class Actions settled, even though they opted out
months earlier, was merely an attempt to avoid SLUSA’s bar.
12
Third, the statute’s “covered class action” definition
includes a verb in the past tense, demonstrating that SLUSA
does not demand simultaneity between the individual and class
action. A “covered class action” includes “any group of
lawsuits” that is (1) “filed in or pending in the same court”
and (2) “otherwise proceed as a single action for any purpose.”
§ 78bb(f)(5)(B)(ii). The first part of the definition is phrased
disjunctively, and covers cases that were filed, or that are
pending, at the time of the individual actions. A “filed” action
can be active or closed, and so, when used alone, the word
“filed” is not limited to only ongoing cases. That said, given
the adjacent use of the word “pending” after the disjunctive
“or” (as in “filed or pending”), the word “filed” in the statute
refers to a closed case. Other interpretations could render the
word “pending” surplusage.11 Likewise, to impose a
simultaneity requirement would read out the phrase “filed in,”
as such a view of “covered class actions” would include only
“any group of lawsuits filed in or pending in the same court.”
§ 78bb(f)(5)(B)(ii); see TRW Inc. v. Andrews, 534 U.S. 19, 31
(2001) (“It is a cardinal principle of statutory construction that
a statute ought, upon the whole, to be so construed that, if it
can be prevented, no clause, sentence, or word shall be
superfluous, void, or insignificant.” (quotation marks
omitted)). Thus, the use of the past-tense “filed,” alongside
“pending,” shows that SLUSA can preclude an ongoing opt-
out suit even though the “filed” class action settled. As a result,
the settled Vytorin Class Actions were “filed” actions while
Plaintiffs’ suit against Merck and Schering were “pending.”
11
I acknowledge my colleagues’ point that a transferred
or removed action is not filed in, but could be pending in, a
district court, Maj. Op. at 19, but this does not diminish the
interpretation of “filed” versus “pending” offered herein.
13
See In re Lehman Bros. Sec. & ERISA Litig., 131 F. Supp. 3d
241, 267 (S.D.N.Y. 2015) (holding that settled class actions
“count towards the 50-person SLUSA threshold”).
For these reasons, SLUSA’s text does not impose a
simultaneity requirement that mandates the main class action
and the individual action be simultaneously pending.
III
As discussed above, an action may be a “covered class
action” if it “otherwise proceed[s] as a single action for any
purpose.” § 78bb(f)(5)(B)(ii)(II). One such purpose is case
management. Thus, to determine whether a plaintiff’s
individual action forms part of a SLUSA “covered class
action” for case management purposes, a court must engage in
a fact-specific inquiry that examines both “the parties’ conduct
and the [district court’s] handling” of the cases to determine
whether the activity in a plaintiffs individual case and the class
action were coordinated. Stichting Pensioenfonds ABP v.
Merck & Co., Inc., Civ. No. 05-5060 (SRC), 2012 WL
3235783, at *15 (D.N.J. Aug. 1, 2012); see also Discovery
Global Citizens Master Fund, Ltd. v. Valeant Pharm. Int’l, Inc.,
Civ. Nos. 17-7321, 16-7324, 16-7328, 16-7494, 16-7496, 16-
7497, 2018 WL 406046, at *6 (D.N.J. Jan. 12, 2018) (holding
“that the level of coordination in these related matters . . .
triggers SLUSA preemption”).
Such coordination may be revealed in the parties’
procedural activities. The Honorable Stanley R. Chesler
eloquently labeled such activities as “indicia of coordination.”
Stichting, 2012 WL 3235783, at *15. These indicia include
whether:
14
 the civil cover sheet identifies the individual
action as “related” to the main class action,
Amorosa, 682 F. Supp. 2d at 375-76;
 the individual action’s allegations are similar to
those of the main class action, Kuwait Inv. Office
v. Am. Int’l Grp., Inc., 128 F. Supp. 3d 792, 812
(S.D.N.Y. 2015); Stichting, 2012 WL 3235783,
at *15; Amorosa, 682 F. Supp. 2d at 376;
 a case management order regulates both the
individual action and the class action, Kuwait
Inv. Office, 128 F. Supp. 3d at 812;
 the plaintiff in the individual action seeks to
amend his complaint after motions to dismiss are
filed or decided, see Amorosa, 682 F. Supp. 2d
at 376;
 the plaintiff in the individual action seeks to stay
the individual action after “resolution of the
[main] class action,” id. at 377;
 the plaintiff in the individual action enjoys the
benefit of the main class action, such as
coordinating discovery, Kuwait, 128 F. Supp. 3d
at 812-13; and
 the plaintiff in the individual action has
otherwise coordinated in “other litigation
activity” with the plaintiffs in the main class
action, such as by filing “consolidated and
15
interrelated briefing that frequently [draws] upon
decisions and litigation events in the [c]lass
[a]ction,” Kuwait, 128 F. Supp. 3d at 812-13; In
re Fannie Mae 2008 Sec. Litig., 891 F. Supp. 2d
458, 480 n.15 (S.D.N.Y. 2012).
The activity in the Vytorin Class Actions, along with
Plaintiffs’ actions, reveal many “indicia of coordination,”
Stichting, 2012 WL 3235783, at *15, and show that Plaintiffs’
cases “proceed[ed]” with the Vytorin Class Actions “as a
single action for any purpose,” see § 78bb(f)(5)(B)(ii). Indeed,
even under the Majority’s test for SLUSA preclusion—that an
individual action must “be at least partially coordinated” with
the class action, though the individual action need not
simultaneously pend with the class action, Maj. Op. at 17—
Plaintiffs’ lawsuits fit the bill:
 Plaintiffs’ opt-out complaints were virtually
identical to, and explicitly stated that they were
“predicated upon,” App. 97-98, the Vytorin
Class Action complaints, compare App. 91-96,
with Supp. App. 1-7;
 Plaintiffs’ state-law fraud claims were “virtually
identical” to their federal securities claims that
were the subject of the Vytorin Class Actions,
App. 1146;
 Plaintiffs certified that their complaints were the
“subject” of the Vytorin Class Actions, see, e.g.,
App. 265, 644;
16
 Plaintiffs marked their civil cover sheet as
“related” to the Vytorin Class Actions, see, e.g.,
App. 449;
 as class members, Plaintiffs benefitted from
discovery and told the District Court and our
Court that the discovery in their cases would
largely rely on discovery already obtained in the
Vytorin Class Actions, App. 966, 1043, Supp.
App. 551 n.15, and any additional discovery
would be “minimal” because their cases would
mostly depend on class discovery, App. 985; see
also App. 984 (stating that Plaintiffs’ state-law
fraud claims were “virtually” the same as the
federal securities claims and “will require
virtually identical discovery, as [their] federal
claims”), App. 99312; and
 as class members, Plaintiffs benefited from
various pretrial proceedings, including sealing,
12
On remand following our ruling that Plaintiffs’
federal securities claims were time-barred under California
Public Employees’ Retirement System v. ANZ Securities, Inc.,
137 S. Ct. 2042 (2017), N. Sound Capital LLC v. Merck & Co.
Inc., 702 F. App’x 75, 77-78 (3d Cir. 2017), Plaintiffs
attempted to retreat from their earlier statements about the
status of discovery. At oral argument on the motion to dismiss
their state-law fraud claim, Plaintiffs asserted that the
individual actions did not have “really anything else to do with
the class action,” and in response the District Court astutely
observed that Plaintiffs “were going to use clearly the
discovery,” to which Plaintiffs said, “Maybe so.” 1043a.
17
App. 892 (Dkt. Nos. 319-22); summary
judgment, see App. 892 (Dkt. No. 316), 939
(Dkt. No. 252); in limine and Daubert motions,
App. 893-95 (Dkt. Nos. 340-44, 349);
submission of a final pre-trial order, see, e.g.,
App. 944 (Dkt. No. 298); designation of
deposition excerpts and exhibits for trial, see,
e.g., In re Merck & Co., Inc. Vytorin/ZETIA Sec.
Litig., No. 2:08-cv-02177, Dkt. No. 326 at 38
(Apr. 18, 2013)13; disclosure of witness lists and
lay opinions, id. at 10-23; submission of
proposed voir dire, jury instructions, verdict
sheets, id. at 51-52, and trial memoranda, App.
899-900 (Dkt. Nos. 375, 379), and obtained the
benefit of various stipulations, including those
concerning trial evidence, App. 893 (Dkt. No.
339).
By filing “nearly identical complaints” to those of the
Vytorin Class Actions and enjoying the benefits of the class-
action device to obtain discovery and the fruits of all of the
pretrial activities before opting out, Plaintiffs “created the
13
This pretrial order reflects the public version. The
original proposed pretrial order was filed in February 2013
before Plaintiffs opted out. App. 944 (Dkt. No. 298).
18
foundation” for SLUSA’s bar.14 In re Enron Corp. Sec., 535
F.3d 325, 333, 342 (5th Cir. 2008). In short, Plaintiffs made
“use of a procedural vehicle akin to a class action” by first
being part of the Vytorin Class Actions and then opting out to
pursue individual actions after receiving the benefit of the
coordinated activities in the class action. See LaSala, 519 F.3d
at 128. Thus, the District Court did not err by concluding that
Plaintiffs’ individual actions were part of a “covered class
action,” § 78bb(f)(5)(B), and hence precluded under SLUSA.
IV
For all of these reasons, I respectfully dissent.
14
Because Plaintiffs never raised any constitutional
issues with applying SLUSA before the District Court or on
appeal, and I see none, I would decline to address these
concerns. See Edward J. DeBartolo Corp. v. Fla. Gulf Coast
Bldg. and Constr. Trades Council, 485 U.S. 568, 575 (1988)
(observing that the constitutional avoidance canon “reflects the
prudential concern that constitutional issues [need] not be
needlessly confronted”).
19