Banks v. Northern Trust Corp., No. 17-56025 (9th Cir. 2019) Annotate this Case

Justia Opinion Summary The Ninth Circuit reversed the district court's dismissal of a putative class action against Northern Trust, alleging violations of state law involving breaches of fiduciary duty by a trustee. The district court determined that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) barred the case from proceeding in federal court.



The panel held that SLUSA did not preclude plaintiffs' imprudent investment claims, because these claims did not meet the "in connection with' requirement for SLUSA preclusion. The panel also held that SLUSA did not preclude plaintiffs' fee-related claims, as well as plaintiffs' elder abuse claims and claims against NT Corp. The panel remanded for further proceedings. Read more

Court Description: Securities Litigation Uniform Standards Act of 1998. The panel reversed the district court’s dismissal, as barred by the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), of a putative class action brought against Northern Trust alleging violations of state law involving breaches of fiduciary duty by a trustee. SLUSA deprives a federal court of jurisdiction to hear certain state-law class actions. The panel held that SLUSA did not preclude plaintiffs’ imprudent investment claims. Specifically, the panel held that SLUSA’s “in connection” requirement did not preclude claims brought by an irrevocable trust beneficiary – who has no control over the trustee – alleging imprudent investments by that trustee. Here, the district court’s dismissal relied entirely on its conclusion that Northern was an agent of the trusts’ beneficiaries, a conclusion unsupported by the moving papers and First Amended Complaint. The panel held that the district court erred in dismissing plaintiffs’ fee-related tax preparation and overcharging claims on SLUSA-preclusion grounds. The panel also held that plaintiffs’ fee-related claims survive a Fed. R. Civ. P. 12(b)(6) motion to dismiss.