On May 31, 2022, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of a putative class action asserting claims under Georgia state law for breach of fiduciary duty against a brokerage firm and its parent company. Cochran v. Penn Mut. Life Ins., No. 20-13477 (11th Cir. May 31, 2022). Plaintiff alleged that the brokerage firm breached a fiduciary duty when it advised plaintiff to use funds in a retirement account to invest in a variable annuity, a product that allegedly resulted in higher fees for the broker and no benefit to plaintiff because his retirement account was already tax-advantaged. The district court dismissed the class action allegations and the Eleventh Circuit affirmed, holding that the Securities Litigation Uniform Standards Act (“SLUSA”) precludes bringing such claims as a class action.
Because the parties did not dispute that the claims at issue were brought pursuant to state law and involved the purchase of “covered securities” under SLUSA, the Court’s analysis was limited to one disputed element of SLUSA—whether the claims alleged misrepresentations in connection with the purchase of the securities. Slip op. at 8-9. The Court observed that, as articulated by other circuit courts, whether a complaint alleges misrepresentations within the meaning of SLUSA depends on the substance of the allegations, not on whether the complaint uses the labels “fraud” or “misrepresentation.” Id. at 9-10.
The Court determined that the...
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