According to Justice Stevens and the rest of an 8-0 Court, the Securities Litigation Uniform Standards Act of 1998 applies to purchases, sales, and holds. The unanimous opinion in Merrill Lynch v. Dabit relied heavily on Judge Easterbrook’s 7th Circuit opinion in Kircher v. Putnam Funds Trust.

The Court seized the pithe of real federalism, rejecting a system of “parallel class actions proceeding in state and federal court, with different standards governing claims asserted on identical facts.” Justice Stevens articulated the guiding principle of the decision, “The magnitude of the federal interest in protecting the integrity and efficient operation of the market for nationally traded securities cannot be overstated.”

Five states have filed a complaint directly to the Supreme Court against the Department of Health and Human Services regarding the “clawback” payment in the Medicare “Part D” program, which requires states to pay a portion of Medicare costs and includes a penalty if the states do not pay. The complaint for Texas, Kentucky, Maine, Missouri, and New Jersey presents three questions:

1. Is the “clawback,” an unconstitutional tax against the States in their sovereign capacities?
2. Does the clawback impermissibly commandeer state legislatures to fund the federal Medicare program?
3. Does the clawback violate the Constitution’s Guarantee Clause by improperly usurping control of essential functions of state government?

Ten states have filed an amici brief.