Deloitte & Touche LLP et al. v. The RGH Liquidating Trust

Case Updates

NCLC urged the U.S. Supreme Court to review a decision by the New York Court of Appeals to decide whether a state-law securities fraud claim brought by a liquidating trust on behalf of more than 50 parties constitutes a “covered class action” that is therefore preempted by the federal Securities Litigation Uniform Standards Act (SLUSA). In this case, the RGH Liquidating Trust brought New York common law fraud claims as assignee and on behalf of hundreds of bondholders of Reliance Group Holdings (“RGH”), against RGH’s former outside auditor in connection with the bondholders’ purchase or holding of the bonds prior to RGH's bankruptcy. In its amicus brief, NCLC argued that the New York Court of Appeals erroneously ruled that the Trust qualified for a “single entity exemption” under SLUSA, and that the lawsuit was therefore not precluded by SLUSA. NCLC argued that the New York court’s decision erodes SLUSA’s intended protection against abusive class action litigation, and presents a blueprint for the securities plaintiffs’ bar to bring similar lawsuits in plaintiff-friendly state courts.