JYLL BRINK, on her own behalf, and on behalf of those similarly situated, Plaintiff - Appellant,
RAYMOND JAMES & ASSOCIATES, INC., Defendant-Appellee.
from the United States District Court for the Southern
District of Florida D.C. Docket No. 0:15-cv-60334-WPD
JORDAN and JILL PRYOR, Circuit Judges, and REEVES, [*] District Judge.
PRYOR, CIRCUIT JUDGE:
Brink appeals the district court's dismissal of her
putative class action complaint. She argues that the district
court erred in determining that her state law claims for
negligence and breach of contract against Raymond James and
Associates, Inc. ("RJA") were precluded under Title
I of the Securities Litigation Uniform Standards Act of 1998
("SLUSA"), which prohibits class actions alleging
state law causes of action based on conduct that constitutes
federal securities fraud. Specifically, she disputes that her
complaint alleged that RJA made a "misrepresentation . .
. of a material fact in connection with the purchase or sale
of a covered security." 15 U.S.C. § 78bb(f)(1)(A).
After careful review, we reverse the district court's
order and remand for further proceedings consistent with this
alternative to a traditional commission-based investment
account, RJA offered a "Passport Account" program
that charged customers an annual advisory fee based on the
total value of qualifying assets in the account instead of a
commission based on each individual trade. In addition,
Passport Account customers were charged a flat fee per
transaction. In its written agreement with each Passport
Account customer (the "Passport Agreement"), RJA
described this flat fee as a "Processing Fee" for
"transaction execution and clearing services" and
stated that the Processing Fees were "not
commissions." Compl. at 2 (Doc. 1).
published a schedule of the Processing Fees in the Passport
Agreement. Before October 1, 2013, RJA's Processing Fees
ranged from $30.00 to $50.00 per transaction, depending on
the type of security. Beginning October 1, 2013, RJA reduced
the Processing Fees to range from $9.95 to $30.00. But the
actual costs incurred in the execution and clearing of the
transactions were much lower than the Processing Fees
charged, allegedly no more than $5.00 per transaction. RJA
kept as profit any amount above the actual costs associated
with transaction execution and clearing.
filed this putative class action complaint alleging state law
claims for breach of contract and negligence. Brink alleged
that because Passport Account customers had agreed only to
pay for "expenses incurred in facilitating the execution
and clearing" of their trades, RJA's undisclosed
profit built into the Processing Fees breached the Passport
Agreement. Id. at 3. She also claimed that RJA
breached its duty of care owed to its customers, which she
alleged included a duty to charge customers a reasonable fee
for its services.
class certification discovery, Brink moved for class
certification, and RJA moved for summary judgment. While both
of those motions were still pending, RJA filed a motion to
dismiss for lack of subject matter jurisdiction, arguing that
Brink's state law claims were disguised claims for
federal securities fraud. Thus, RJA claimed, Brink's
putative class action was precluded under SLUSA. As relevant
here, SLUSA provides:
covered class action based upon the statutory or common law
of any State or subdivision 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.
15 U.S.C. § 78bb(f)(1)(A). The district court concluded
that Brink's claims were precluded because RJA's
alleged conduct constituted "a misrepresentation or
omission of a material fact in connection with the purchase
or sale of a covered security, " id., and
granted RJA's motion to dismiss. This is Brink's
STANDARD OF REVIEW
review de novo . . . the district court's
conclusion that SLUSA precludes [a plaintiff] from bringing .
. . state law claims." Instituto de Prevision
Militar v. Merrill Lynch, 546 F.3d 1340, 1344 (11th Cir.