NEW YORK (CN) – The 2nd Circuit reversed a remand order for a shareholder class action accusing Agway officers and auditor PricewaterhouseCoopers of hiding Agway’s financial problems from stockholders.
Agway’s former stockholders sought relief under New York’s consumer fraud statute, but the defendants had the case removed to federal court, citing the Class Action Fairness Act, which expands federal jurisdiction over securities cases of national importance.
On an issue of first impression, a circuit panel voted 2-1 that the securities claim does not fall under the Class Action Fairness Act’s exception to “original and appellate jurisdiction” for securities fraud cases.
Judge Jacobs, writing for the majority, concluded that the exception does not apply and reversed the remand order. Judge Pooler dissented.
Agway has been in business since 2000 as a division of Southern States Cooperative. It is a wholesale distributor of lawn, pet, farm and equine supplies.
The estate of Barbara Pew originally filed the suit in 2005 against Donald P. Cardarelli, Peter J. O’Neill and PricewaterhouseCoopers LLP.