Indenture Trustee Cannot Remove Bondholder Class Action to Federal Court
August 17, 2015
Eminence Investors, L.L.L.P. v. Bank of New York Mellon, -- F.3d -- (9th Cir. April 2, 2015)
This decision prevents a trustee sued in its home state by bondholders in a state court class action from removing the case to federal court if the only basis for federal jurisdiction is diversity of citizenship.
The Class Action Fairness Act of 2005 ("CAFA") allows diversity removal of class actions to federal court despite the fact that the defendant is a citizen of the state where the action is brought. Absent CAFA, defendants sued in their home state cannot remove on the basis of diversity of citizenship. However, an exception to CAFA does not permit diversity removal if the case relates to rights, duties (including fiduciary duties) and obligations relating to or created by or under a security as defined in the Securities Act of 1933 Act and regulations. Please click below to view the complete article.