Susan Nielen-Thomas v. Concorde Investment Services , 914 F.3d 524 ( 2019 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 18-2875
SUSAN NIELEN-THOMAS,
Plaintiff-Appellant,
v.
CONCORDE INVESTMENT SERVICES, LLC, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Western District of Wisconsin.
No. 18-cv-00229 — James D. Peterson, Chief District Judge.
____________________
ARGUED JANUARY 15, 2019 — DECIDED JANUARY 24, 2019
____________________
Before FLAUM, KANNE, and HAMILTON, Circuit Judges.
FLAUM, Circuit Judge. Susan Nielen-Thomas, on behalf of
herself and others similarly situated, filed a complaint in Wis-
consin state court alleging she and other class members were
defrauded by their investment advisor. Defendants removed
the case to federal court. They then argued the action should
be dismissed because it was a “covered class action” pre-
cluded by the Securities Litigation Uniform Standards Act of
1998 (“SLUSA”). See 15 U.S.C. § 78bb(f)(1), (f)(5)(B), amending
2 No. 18-2875
Securities Exchange Act of 1934. 1 According to Nielen-
Thomas, her lawsuit did not meet SLUSA’s “covered class ac-
tion” definition because she alleged a proposed class with
fewer than fifty members. See § 78bb(f)(5)(B)(i)(I). The district
court agreed with defendants that Nielen-Thomas’s suit was
a “covered class action” because she brought her claims in a
representative capacity, see § 78bb(f)(5)(B)(i)(II), and it dis-
missed her claims with prejudice.
We hold that the plain language of SLUSA’s “covered
class action” definition includes any class action brought by a
named plaintiff on a representative basis, regardless of the
proposed class size. Because this includes Nielen-Thomas’s
class action lawsuit and her complaint meets all other statu-
tory requirements, her lawsuit is precluded by SLUSA. We af-
firm the judgment of the district court.
I. Background
On February 5, 2018, plaintiff-appellant Nielen-Thomas
filed a putative class action in Wisconsin state court against
defendants-appellees Concorde Investment Services, LLC,
Fortune Financial Services, Inc., TD Ameritrade, Inc., Wiscon-
sin River Bank, Jeffrey L. Butler, and Wisconsin Investment
Services LLC. The class includes retail clients of Butler and his
investment advisory firm, Wisconsin Investment Services.
According to the complaint, Butler exercised control of his cli-
ents’ accounts and owed them a fiduciary duty to act in their
best interests. Butler allegedly failed to properly manage
these accounts, though, leading to huge losses.
1See also 15 U.S.C. § 77p(b), (f)(2) (amending Securities Act of 1933 in
an identical way). The parties cite solely to the 1934 Act amendments, so
we do the same in this opinion unless otherwise noted.
No. 18-2875 3
Nielen-Thomas identifies two ways Butler mismanaged
accounts. First, Butler promised to create individualized port-
folios for each investor; instead, he subjected his clients to
block trades that lacked asset allocation and diversification
suitable for retail investors. Second, Butler repeatedly pur-
chased and sold on behalf of his clients an exchange-traded
note known as VXX. VXX is an unsecured debt instrument
designed to track the movement of futures on an index that
measures overall market volatility. This note is inherently vol-
atile and risky, and it is designed to be used as a hedge by
sophisticated investors only on a short-term basis. However,
Butler repeatedly purchased and sold VXX on behalf of his
retail clients and let it sit in their accounts for months, even
though such a strategy was practically guaranteed to lose
money.
The other defendants are entities that Nielen-Thomas
claims are also responsible for Butler’s conduct. Butler was a
registered broker with Concorde from March 2012 to May
2015 and with Fortune from July 2015 to December 2016. Con-
corde and Fortune were required to supervise Butler’s invest-
ment advisory activities when he was trading in the accounts
of their customers but allegedly failed to do so. Additionally,
Butler had an agreement with TD Ameritrade through which
Butler could use its online trading platform to execute all
trades in his clients’ accounts. TD Ameritrade also allegedly
failed to properly supervise Butler’s activity. Finally, Wiscon-
sin River Bank referred clients to Butler, who in turn compen-
sated the bank for these referrals. Nielen-Thomas alleges the
bank owed its clients a duty of care in recommending invest-
ment advisors to them, and it breached that duty by recom-
mending Butler.
4 No. 18-2875
In her class-action complaint, Nielen-Thomas brought
nine state-law claims on behalf of the putative class, alleging
breaches of Wisconsin and Nebraska securities laws, breach
of Wisconsin’s “fraudulent representations” statute, and com-
mon law violations under both Wisconsin and Nebraska law
for breach of contract, fraud, negligence, failure to supervise,
and breach of fiduciary duty. 2 According to the complaint,
“[w]hile the exact number of putative Class members cannot
be determined yet, upon information and belief, the putative
Class consists of at least 35, but no more than 49 members.”
On March 30, 2018, defendants removed the case to the
Western District of Wisconsin pursuant to SLUSA, 15 U.S.C.
§ 78bb(f)(2). After removal, defendants Fortune, TD Ameri-
trade, and Concorde 3 moved to dismiss Nielen-Thomas’s
nine state-law claims as barred by the Private Securities Liti-
gation Reform Act of 1995 (“PSLRA”), 15 U.S.C. §§ 77, 78, and
SLUSA. Specifically, defendants argued this suit qualified as
a “covered class action” that was both removable and pre-
cluded by SLUSA. Nielen-Thomas opposed these motions
and sought to remand the case because, she argued, her case
did not fall within SLUSA’s ambit; she claimed that because
her proposed class contained fewer than fifty members, it
could not be a “covered class action” as defined by the statute.
2 Nielen-Thomas also brought a tenth class claim for breach of the Se-
curities Act of 1933. The district court dismissed it with prejudice for fail-
ure to state a claim. Nielen-Thomas does not appeal this aspect of the dis-
trict court’s decision.
3Nielen-Thomas voluntarily dismissed Butler as a defendant. Alt-
hough Butler’s firm, Wisconsin Investment Services, is technically still a
defendant, it has no assets and is not involved with this appeal.
No. 18-2875 5
On July 26, 2018, the district court denied Nielen-
Thomas’s motion to remand and granted defendants’ motion
to dismiss. The court noted that SLUSA’s language was “con-
fusing,” but concluded its “legislative history clears things
up”—the lawsuit was not a covered class action under
15 U.S.C. § 78bb(f)(5)(B)(i)(I) because her proposed class had
fewer than fifty members, but her lawsuit met SLUSA’s defi-
nition of a “covered class action” in 15 U.S.C.
§ 78bb(f)(5)(B)(i)(II) because she brought her action on behalf
of unnamed parties in a representative capacity. SLUSA thus
precluded her state-law claims, and the district court dis-
missed them with prejudice. Nielen-Thomas appeals.
II. Discussion
At issue is the district court’s denial of Nielen-Thomas’s
motion to remand and its grant of defendants’ motions to dis-
miss based on its interpretation of SLUSA’s “covered class ac-
tion” definition. We review the district court’s interpretation
of a statute de novo. United States v. Rosenbohm, 564 F.3d 820,
822 (7th Cir. 2009).
When confronting an issue of statutory interpretation, we
must always begin with the text and “give effect to the clear
meaning of statutes as written.” Star Athletica, L.L.C. v. Varsity
Brands, Inc., 137 S. Ct. 1002, 1010 (2017) (quoting Estate of Cow-
art v. Nicklos Drilling Co., 505 U.S. 469, 476 (1992)). If the text
is clear, we can end our inquiry here as well. Id. We also read
a statute “as a whole” rather than “as a series of unrelated and
isolated provisions.” Arreola-Castillo v. United States, 889 F.3d
378, 386 (7th Cir. 2018) (first quoting King v. St. Vincent’s Hosp.,
502 U.S. 215, 221 (1991), then quoting Gonzales v. Oregon, 546
U.S. 243, 273 (2006)). Words are given “their ordinary and nat-
ural meaning” in the absence of a specific statutory definition.
6 No. 18-2875
CFTC v. Worth Bullion Grp., Inc., 717 F.3d 545, 550 (7th Cir.
2013) (quoting Scherr v. Marriott Int’l, Inc., 703 F.3d 1069, 1077
(7th Cir. 2013)). We must also, if possible, give effect to “every
clause and word” of a statute, taking care not to read words
into the text or to treat any words as surplusage. Duncan v.
Walker, 533 U.S. 167, 174 (2001) (quoting United States v.
Menasche, 348 U.S. 528, 538–39 (1955)); Water Quality Ass’n
Emps.’ Benefit Corp. v. United States, 795 F.2d 1303, 1309 (7th
Cir. 1986).
Regarding SLUSA’s language specifically, “Congress en-
visioned a broad construction” of the statute, which “follows
not only from ordinary principles of statutory construction
but also from the particular concerns that culminated in
SLUSA’s enactment.” Merrill Lynch, Pierce, Fenner & Smith Inc.
v. Dabit, 547 U.S. 71, 86 (2006). SLUSA amends the Securities
Act of 1933 and the Securities Exchange Act of 1934, both of
which regulate federal securities “to promote honest practices
in the securities market.” Cyan, Inc. v. Beaver Cty. Emps. Ret.
Fund, 138 S. Ct. 1061, 1066 (2018). Congress had previously
amended these two laws when it passed the PSLRA in 1995,
“principally to stem ‘perceived abuses of the class-action ve-
hicle in litigation involving nationally traded securities.’” Id.(quoting Dabit, 547 U.S. at 81). Specifically, “nuisance filings,
targeting of deep-pocket defendants, vexatious discovery re-
quests, and manipulation by class action lawyers of the clients
whom they purportedly represent had become rampant,”
such that abusive class-action litigation was injuring “the en-
tire U.S. economy.” Dabit, 547 U.S. at 81 (citation and internal
quotation marks omitted). Congress sought to curb these
abuses through the PSLRA by imposing burdens on plaintiffs
who sought to bring federal securities fraud class actions, in-
cluding by limiting recoverable damages and attorney’s fees
No. 18-2875 7
and by mandating sanctions for frivolous litigation. Id. at 81–
82.
The PSLRA made it harder to bring a federal securities
class action; an unintended consequence of its enactment,
though, was that plaintiffs tried to escape the law’s con-
straints by “bringing class actions under state law, often in
state court,” rather than under federal law in federal court. Id.
at 82. To “prevent plaintiffs from circumventing the [PSLRA]”
in this manner, Cyan, 138 S. Ct. at 1067, Congress enacted the
SLUSA amendments in 1998.
SLUSA precludes specified securities class actions from
proceeding under state law. Specifically, “[n]o covered class
action based upon the statutory or common law of any State
or subdivision thereof may be maintained in any State or Fed-
eral court by any private party” if that party alleges either “a
misrepresentation or omission of a material fact in connection
with the purchase or sale of a covered security” 4 or “that the
defendant used or employed any manipulative or deceptive
device or contrivance in connection with the purchase or sale
of a covered security.” 15 U.S.C. § 78bb(f)(1). Moreover, “[i]f
such a suit is brought in a state court the defendant can re-
move it to federal court and move to dismiss it … [and] the
district judge must grant the motion.” Brown v. Calamos, 664
F.3d 123, 124–25 (7th Cir. 2011) (citing 15 U.S.C. § 78bb(f)(2)). 5
4A “covered security” is “a security traded nationally and listed on a
regulated national exchange.” Brown v. Calamos, 664 F.3d 123, 124 (7th Cir.
2011) (citing 15 U.S.C. § 78bb(f)(5)(E)).
5 Although some case law refers to SLUSA preemption rather than
preclusion, SLUSA “does not itself displace state law with federal law but
8 No. 18-2875
Nielen-Thomas does not dispute that her class action
claims are based on state law, involve a covered security, and
allege misrepresentations “in connection with the purchase or
sale of” that covered security. Instead, she maintains her law-
suit is not precluded by SLUSA because it is not a “covered
class action” as that term is defined.
Under SLUSA, a “single lawsuit” qualifies as a “covered
class action” when (subject to certain exceptions not applica-
ble here):
(I) damages are sought on behalf of more than
50 persons or prospective class members,
and questions of law or fact common to
those persons or members of the prospective
class, without reference to issues of individ-
ualized reliance on an alleged misstatement
or omission, predominate over any ques-
tions affecting only individual persons or
members; or
(II) one or more named parties seek to recover
damages on a representative basis on behalf
of themselves and other unnamed parties
similarly situated, and questions of law or
fact common to those persons or members of
the prospective class predominate over any
questions affecting only individual persons
or members … .
makes some state-law claims nonactionable through the class-action de-
vice in federal as well as state court.” Kircher v. Putnam Funds Tr., 547 U.S.
633, 636 n.1 (2006).
No. 18-2875 9
15 U.S.C. § 78bb(f)(5)(B)(i). 6 Subparagraph (I) and Subpara-
graph (II) in this definition are separated by “or.” An “or” in
a statute is usually disjunctive, see United States v. Woods, 571
U.S. 31, 45 (2013), meaning a lawsuit can satisfy SLUSA’s
“covered class action” requirement via either subparagraph.
Subparagraph (I) provides three criteria for a single law-
suit to qualify as a covered class action: (1) damages are
sought, (2) on behalf of more than fifty “persons or prospec-
tive class members,” and (3) common questions of law or fact
predominate “without reference to issues of individualized
reliance on an alleged misstatement or omission.” Because
this subparagraph includes the “prospective class members”
language, some class actions (as that term is traditionally un-
derstood) must fall within its scope. See, e.g., Class Action,
Black’s Law Dictionary (10th ed. 2014) (“A lawsuit in which
the court authorizes a single person or a small group of people
to represent the interests of a larger group.”); Fed. R. Civ. P.
23(a) (defining class actions as ones where “[o]ne or more
members of a class may sue or be sued as representative par-
ties on behalf of all members”). Specifically, class actions with
more than fifty prospective class members meet this defini-
tion.
Subparagraph (II) also includes three criteria for a single
lawsuit to qualify: (1) damages are sought, (2) by “one or
more named parties” who seek to recover such damages “on
6 SLUSA also includes a definition of “covered class action” that ap-
plies to “any group of lawsuits filed in or pending in the same court” in
which “damages are sought on behalf of more than 50 persons” and “the
lawsuits are joined, consolidated, or otherwise proceed as a single action
for any purpose.” 15 U.S.C. § 78bb(f)(5)(B)(ii).
10 No. 18-2875
a representative basis on behalf of themselves and other un-
named parties similarly situated,” and (3) common questions
of law or fact predominate. This subparagraph must also
reach class actions because its definition includes suits
brought by named parties “on a representative basis.”
Although there is overlap between the two, each subpara-
graph has a separate meaning. Subparagraph (I) includes in
its scope all actions brought by groups of more than fifty “pro-
spective class members,” so class actions of the requisite size
can be covered under this definition. But this subparagraph
also includes single lawsuits brought by groups of more than
fifty “persons” without any “prospective” or “representative”
caveat on their plaintiff status. In other words, a lawsuit may
be treated as a class action even if all plaintiffs are identified
in the complaint and no plaintiff is pursuing claims as a rep-
resentative on behalf of others, if there are more than fifty
such plaintiffs and SLUSA’s other requirements are met. 7
Subparagraph (II)’s language includes all actions in which
one named plaintiff seeks to recover damages “on a repre-
sentative basis on behalf of themselves and other unnamed
parties similarly situated.” By its plain and unambiguous
7 Subparagraph (I) also includes a caveat to its commonality require-
ment: common questions of law or fact must predominate “without refer-
ence to issues of individualized reliance on an alleged misstatement or
omission.” § 78bb(f)(5)(B)(i)(I). If over fifty plaintiffs are identified in an
action, they could attempt to evade treatment as a class action, and SLUSA
preclusion, by pointing to the fact of each plaintiff’s reliance, which would
necessarily require an individualized inquiry. See, e.g., Basic Inc. v. Levin-
son, 485 U.S. 224, 242–43 (1988). But Subparagraph (I) prevents that from
happening by removing the reliance issue from the commonality analysis.
It can therefore reach actions that are not “class actions” in the usual sense.
No. 18-2875 11
terms, it includes any action brought as a putative class action
in the traditional Rule 23 meaning of the term. And because
this subparagraph contains no fifty-person threshold as (I)
does, Subparagraph (II) includes all putative class actions that
otherwise meet the relevant requirements in its scope, regard-
less of this proposed class’s size.
This reading of the “covered class action” definition for
single lawsuits still includes some overlap in the scope of each
subparagraph; a putative class action in which the proposed
class exceeds fifty members could be “covered” under both
Subparagraph (I) and Subparagraph (II). But this redundancy
is not unusual or problematic. See Conn. Nat’l Bank v. Germain,
503 U.S. 249, 253 (1992). More importantly, this reading gives
separate effect to both subparagraphs so that each covers
something the other does not. See Hibbs v. Winn, 542 U.S. 88,
101 (2004) (“A statute should be construed so that effect is
given to all its provisions, so that no part will be inoperative
or superfluous, void or insignificant.” (citation omitted)).
Subparagraph (I) includes lawsuits that, while not “class ac-
tions” in that no plaintiff seeks damages as a representative,
identify more than fifty plaintiffs. And Subparagraph (II) in-
cludes all putative class actions with fifty or fewer proposed
class members. 8
8 No other circuit has directly opined on the difference between Sub-
paragraphs (I) and (II). The Second and Eighth Circuits have, however,
referenced SLUSA’s definition of a covered class action in a way that sup-
ports our interpretation. See In re Kingate Mgmt. Ltd. Litig., 784 F.3d 128,
138 n.16 (2d Cir. 2015) (“‘[C]overed class action’ includes, with certain ex-
ceptions, class actions seeking damages on behalf of unidentified plain-
tiffs, class actions seeking damages on behalf of more than 50 identified
persons, and [group lawsuits].”); Green v. Ameritrade, Inc., 279 F.3d 590,
596 n.4 (8th Cir. 2002) (“A covered class action is any suit brought by a
12 No. 18-2875
While the plain language of each subparagraph of
§ 78bb(f)(5)(B)(i) is clear, such that we do not need to resort to
considering SLUSA’s legislative history to aid in our inquiry,
this history is consistent with our interpretation. See Gustafson
v. Alloyd Co. Inc., 513 U.S. 561, 580 (1995); see also Cyan, 138 S.
Ct. at 1072 (addressing petitioner’s interpretive arguments
based on SLUSA’s legislative history). The House Report ac-
companying SLUSA explains that the “covered class action”
definition includes: “actions brought on behalf of more than
50 persons, actions brought on behalf of one or more un-
named parties, and so-called ‘mass actions,’ in which a group
of lawsuits filed in the same court are joined or otherwise pro-
ceed as a single action.” H.R. Rep. 105-640, at 9 (1998). This
explanation separates the types of “covered class actions” that
SLUSA precludes in a way that mirrors how they appear in
the statute. Actions brought on behalf of more than fifty per-
sons are covered by Subparagraph (I), actions brought on be-
half of unnamed parties are covered by Subparagraph (II),
and actions brought as groups of lawsuits in the same court
are covered by the “group lawsuit” definition in
§ 78bb(f)(5)(B)(ii). See also H.R. Conf. Rep. 105-803, at 13 (1998)
(using identical language to explain the “covered class action”
definition).
The Senate Report also explains the “covered class action”
definition in SLUSA. Regarding Subparagraph (I), it states
that this portion of the definition “provides that any single
class of more than 50 persons, or by one or more named parties acting as
class representatives, and where ‘questions of law or fact common to those
persons or members of the prospective class predominate over any ques-
tions affecting only individual persons or members.’” (quoting 15 U.S.C.
§ 78bb(f)(5)(B)(i)(II))).
No. 18-2875 13
lawsuit is treated as a class action if it seeks damages on behalf
of more than fifty persons and questions of law or fact com-
mon to the prospective class predominate, without regard to
questions of individualized reliance.” S. Rep. 105-182, at 7
(1998) (emphasis added). It also references Subparagraph (II),
noting that it “provides a definition that closely tracks the rel-
evant provisions of Rule 23 of the Federal Rules of Civil Pro-
cedure in which a suit is brought by representative plaintiffs
on behalf of themselves and other unnamed parties.” Id. To-
gether, these explanations of the “covered class action” defi-
nition in SLUSA envision the same distinction between Sub-
paragraphs (I) and (II) that is reflected in the statute’s text.
Applying this interpretation here demonstrates that
Nielen-Thomas cannot proceed with her state-law claims. 9
She calls her filing a “Class Action Complaint” and brings her
claims “individually and on behalf of all others similarly sit-
uated.” She specifically pleads that “common questions of
law and fact exist as to all members of the putative Class and
Sub-Classes,” she seeks damages from defendants, and she
proposes a class of between thirty-five and forty-nine mem-
bers. Because her proposed class contains fewer than fifty per-
sons, her lawsuit is not a covered class action under Subpara-
graph (I). However, because she seeks to recover damages on
a representative basis, her lawsuit is a covered class action un-
der Subparagraph (II). SLUSA therefore precludes her state-
law claims, and the district court was correct to both remove
the case from state court and dismiss the state-law claims.
9 We can assume the truth of Nielen-Thomas’s well-pleaded factual
allegations at this stage without first considering whether a class could be
certified. See Brown, 664 F.3d at 125.
14 No. 18-2875
An obvious implication of our § 78bb(f)(5)(B)(i)(I)–(II) in-
terpretation is that no putative securities class actions that are
based on state law and otherwise meet SLUSA’s requirements
(they involve a covered security, allege a misrepresentation in
connection with that security, etc.) can proceed in either fed-
eral or state court under SLUSA. Nielen-Thomas argues this
sweeps too broadly; she says the legislative history for SLUSA
indicates Congress only intended to preclude “certain” state
actions, but not all of them. See H.R. Conf. Rep. 105-803, at 2
(“[T]o prevent certain State private securities class action law-
suits alleging fraud from being used to frustrate the objectives
of the [PSLRA], it is appropriate to enact national standards
for securities class action lawsuits involving nationally traded
securities.” (emphasis added)). But it makes sense that Con-
gress would preclude all actions brought using the class-ac-
tion device, not just classes alleged to include more than fifty
people, when we again consider SLUSA’s enactment history
and legislative purpose. 10
Congress passed these amendments to combat a specific
problem—litigants were attempting to circumvent the
PSLRA’s barriers to federal securities class actions by filing
their class actions under state law instead. Cyan, 138 S. Ct. at
1067. To that end, SLUSA sought “to limit the conduct of se-
curities class actions under State law.” SLUSA, 112 Stat 3227.
10Furthermore, Congress did create some exceptions to SLUSA’s re-
quirements, in § 78bb(f)(3), so not all class actions are covered. For exam-
ple, SLUSA’s preclusion and removal provisions specifically exclude class
actions comprised solely of states and other political subdivisions. See
15 U.S.C. § 78bb(f)(3)(B). Derivative actions are also excluded. See id.
§ 78bb(f)(5)(C). Certain state securities class actions can go forward under
SLUSA, just not those brought by a private party on a representative basis.
No. 18-2875 15
The Supreme Court has consistently underscored this pur-
pose of the amendments. See, e.g., Cyan, 138 S. Ct. at 1072(SLUSA “preclude[s] certain vexing state-law class actions”
(quoting Kircher v. Putnam Funds Tr., 547 U.S. 633, 645 n.12
(2006))). This purpose could be easily frustrated if plaintiffs
bringing a state-law securities class action could simply allege
that they represented a class of no more than fifty people. If
SLUSA did not bar all putative class actions, such suits could
proceed through the courts until discovery identified the en-
tire class of plaintiffs. At that point, the actual class could in-
clude more than fifty persons, and by that time the abuses that
the PSLRA sought to prevent would have already taken place.
Cf. Holtz v. JPMorgan Chase Bank, N.A., 846 F.3d 928, 930 (7th
Cir. 2017) (SLUSA was designed to prevent “artful pleading”
to “evade limits on securities litigation that are designed to
block frivolous or abusive suits.”). The plain language of
§ 78bb(f)(5)(B)(i) gives effect to SLUSA’s purpose and pre-
vents that from happening by including all putative class ac-
tions, subject to § 78bb(f)(3)’s exceptions, in its covered class
action definition.
Nielen-Thomas also proposes two alternative interpreta-
tions of SLUSA’s “covered class action” definition. Under ei-
ther one, her case would not be included in SLUSA’s preclu-
sive scope because her proposed class is alleged to contain
fewer than fifty members. However, both of these proposed
interpretations run contrary to the statutory text.
First, Nielen-Thomas says Subparagraphs (I) and (II) are
“separate, independent bases for excluding securities class ac-
tions from SLUSA’s proscriptions.” By this reading, if a pro-
posed putative class contains fewer than fifty people, it is ex-
16 No. 18-2875
empted under Subparagraph (I) without the need to go fur-
ther and consider whether Subparagraph (II) might also ap-
ply. This interpretation completely reads Subparagraph (II)
out of the statute, though, and we do not read statutes in ways
that make entire provisions superfluous. See Hibbs, 542 U.S. at
101. As previously discussed, the definition of “covered class
action” for single lawsuits includes two subparagraphs sepa-
rated by a disjunctive “or.” A single lawsuit can therefore be
a covered class action under either section, and our analysis
cannot stop after determining that a lawsuit does not meet the
criteria set out in Subparagraph (I).
Alternatively, Nielen-Thomas claims the fifty-person
threshold identified in Subparagraph (I) must also apply to
Subparagraph (II) to avoid making the former superfluous.
This interpretation is similarly untenable; it attempts to read
words from one part of the statute into another part where
they do not appear, contravening the plain text. See Water
Quality Ass’n, 795 F.2d at 1309. By including the fifty-person
threshold in Subparagraph (I) but omitting it from (II), Con-
gress must have intended that it would only apply to (I). See
Dig. Realty Tr., Inc. v. Somers, 138 S. Ct. 767, 777 (2018)
(“[W]hen Congress includes particular language in one sec-
tion of a statute but omits it in another[,]” we presume “that
Congress intended a difference in meaning.” (alterations in
original) (quoting Loughrin v. United States, 573 U.S. 351, 358
(2014))). Indeed, Congress also included the fifty-person
threshold in the group lawsuit “covered class action” defini-
tion in § 78bb(f)(5)(B)(ii), directly below § 78bb(f)(5)(B)(i),
while excluding it from Subparagraph (II). We cannot rewrite
the statute that Congress has written to impute the fifty-per-
son threshold where it does not appear.
No. 18-2875 17
Nielen-Thomas argues these interpretations find support
in statements by both the Supreme Court and Seventh Circuit
indicating that class actions brought on behalf of fewer than
fifty persons are not covered by SLUSA. See, e.g., Cyan, 138 S.
Ct. at 1067 (“According to SLUSA’s definitions, the term ‘cov-
ered class action’ means a class action in which ‘damages are
sought on behalf of more than 50 persons.’” (quoting 15 U.S.C.
§ 77p(f)(2))); Chadbourne & Parke LLP v. Troice, 571 U.S. 377,
380 (2014) (SLUSA “forbids the bringing of large securities
class actions based upon violations of state law” and “does
not apply to class actions with fewer than 51 ‘persons or pro-
spective class members’” (quoting 15 U.S.C. § 78bb(f)(5)(B));
Dabit, 547 U.S. at 83 (“A ‘covered class action’ is a lawsuit in
which damages are sought on behalf of more than 50 peo-
ple.”); Holtz, 846 F.3d at 934 (stating, near conclusion of opin-
ion, that SLUSA “is limited to ‘covered class actions,’ which
means that [plaintiff] could litigate for herself and as many as
49 other customers”); Brown, 664 F.3d at 124 (SLUSA “prohib-
its securities class actions if the class has more than 50 mem-
bers”).
These statements appear, in isolation, to support Nielen-
Thomas; they reference only the fifty-person threshold from
Subparagraph (I) and suggest that only “sizable” class actions
pursued on a representative basis are within SLUSA’s scope.
But in context, it is clear neither the Supreme Court nor this
Circuit is making any interpretive statement regarding the
scope of the “covered class action” definition because that
was not the issue these cases addressed. See Cyan, 138 S. Ct. at
1066 (issue was whether SLUSA stripped state courts of juris-
diction over class actions involving 1933 Act violations, and
investors did not dispute their class action would be “cov-
ered”); Chadbourne & Parke, 571 U.S. at 381 (Court considered
18 No. 18-2875
whether SLUSA encompassed a class action in which plain-
tiffs alleged they purchased uncovered securities that were
falsely presented to them as “covered” securities); Dabit, 547
U.S. at 83–84 (plaintiff did not dispute the class was covered
under SLUSA, and the issue before the Court involved the “in
connection with” requirement); Holtz, 846 F.3d at 930 (issue
was whether plaintiff’s contract and fiduciary claims neces-
sarily involved an “omission of a material fact” to implicate
SLUSA); Brown, 664 F.3d at 125 (court addressed whether the
plaintiff’s complaint alleged a misrepresentation or omission
of a material fact in connection with the purchase or sale of a
covered security).
The Supreme Court and the Seventh Circuit in these cases
did not have the opportunity or need to opine on the contexts
in which Subparagraphs (I) or (II) could apply. Thus, all of
these statements defining “covered class action” solely in re-
lation to the fifty-person requirement in Subparagraph (I) are
merely dicta rather than an interpretation of SLUSA that we
are bound to follow. Cf. In re Air Crash Disaster Near Chi., Ill.
on May 25, 1979, 701 F.2d 1189, 1196 (7th Cir. 1983) (casual
dicta of a state supreme court, as opposed to considered dicta,
“has little precedential weight”). Instead, the plain text of
SLUSA’s “covered class action” definition governs, and pur-
suant to this unambiguous text, Nielen-Thomas’s lawsuit is a
covered class action.
In sum, SLUSA’s definition of “covered class action” un-
ambiguously precludes Nielen-Thomas’s suit. She is a named
plaintiff seeking to bring claims on a representative basis and
alleges that common questions of law or fact predominate.
Thus, § 78bb(f)(5)(B)(i)(II) applies, the suit is a covered class
No. 18-2875 19
action, and SLUSA precludes it from proceeding in both state
and federal court.
To the extent the identities of any of the other putative
class members are known, and these individuals wish to pur-
sue claims on their own behalf in state court under state law,
nothing in SLUSA prevents them from doing so (provided
there are fewer than fifty such plaintiffs for which common
questions of law or fact predominate). What SLUSA does pre-
clude these individuals from doing is continuing to pursue
their claims in the form of a class action. 11
III. Conclusion
For the foregoing reasons, we AFFIRM the judgment of the
district court.
11 The district court dismissed Nielen-Thomas’s state-law class claims
with prejudice. In her reply brief, Nielen-Thomas argues for the first time
that even if her action is covered under Subparagraph (II), the Court
should still remand with directions to dismiss without prejudice instead
because she should be given the opportunity to join other named plaintiffs
to her own individual claims. Because Nielen-Thomas waited to raise this
challenge until her reply brief, she has waived it. See United States v. Price,
906 F.3d 685, 690 (7th Cir. 2018).