                          RECOMMENDED FOR FULL-TEXT PUBLICATION
                               Pursuant to Sixth Circuit Rule 206
                                       File Name: 09a0336p.06

                  UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT
                                     _________________

                                                   X
                                                    -
 DANIEL J. SEGAL, on behalf of himself, his
                                                    -
 minor children and all others similarly
 situated,                                          -
                            Plaintiff-Appellant, -
                                                         No. 08-3576

                                                    ,
                                                     >
                                                    -
                                                    -
            v.
                                                    -
                                                    -
 FIFTH THIRD BANK, N.A., et al.,
                         Defendants-Appellees. -
                                                   N
                     Appeal from the United States District Court
                    for the Southern District of Ohio at Cincinnati.
                 No. 07-00348—Sandra S. Beckwith, District Judge.
                                      Argued: June 11, 2009
                            Decided and Filed: September 17, 2009
                                                                                             *
             Before: SUTTON and GRIFFIN, Circuit Judges; LIOI, District Judge.

                                       _________________

                                             COUNSEL
ARGUED: David A.P. Brower, LAW OFFICE, New York, New York, for Appellant.
Patrick F. Fischer, KEATING MUETHING & KLEKAMP PLL, Cincinnati, Ohio, for
Appellees. ON BRIEF: David A.P. Brower, LAW OFFICE, New York, New York,
for Appellant. Patrick F. Fischer, Joseph M. Callow, Jr., Rachael A. Rowe, Brian P.
Muething, KEATING MUETHING & KLEKAMP PLL, Cincinnati, Ohio, for
Appellees.
                                       _________________

                                             OPINION
                                       _________________

         SUTTON, Circuit Judge. Daniel Segal challenges the district court’s dismissal
of this class action, premised on state-law claims of breach of fiduciary duty and breach


         *
         The Honorable Sara Lioi, United States District Judge for the Northern District of Ohio, sitting
by designation.


                                                   1
No. 08-3576              Segal v. Fifth Third Bank, et al.                            Page 2


of contract, against Fifth Third Bank and its holding company, Fifth Third Bancorp.
Because the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), Pub. L.
No. 105-353, 112 Stat. 3227, bars Segal’s claims, we affirm.

                                             I.

         Segal is a beneficiary of trust accounts formerly administered by Fifth Third. In
2007, he sued the Bank on behalf of himself, his children and “all beneficiaries of trust,
estate, or other fiduciary accounts for which the Bank . . . acted as a . . . corporate
fiduciary at any time from March 1, 2001 to the present.” Am. Compl. ¶ 57. Fifth Third,
the complaint alleges, breached its fiduciary and contractual duties to the class in three
ways: (1) It invested fiduciary assets in proprietary (and often higher-fee) Fifth Third
mutual funds rather than superior funds operated by the Bank’s competitors; (2) it
promised trust beneficiaries that their fiduciary accounts would receive “individualized”
management and breached that agreement by providing standardized and largely
automated management, Am. Compl. ¶ 87, often by “relatively inexperienced” and “low-
level” employees, Am. Compl. ¶¶ 35(e), 47; and (3) it invested too many of the funds’
assets in low-yielding investments in order to cover the accounts’ near-term tax
liabilities.

         Relying on SLUSA, which prohibits individuals from filing class actions
involving fifty or more people seeking to vindicate state-law securities-related claims,
the district court granted Fifth Third’s motion to dismiss for failure to state a claim. This
appeal followed.

                                             II.

         We give fresh review to a district court’s order to dismiss a claim under Civil
Rule 12(b)(6). Mitchell v. McNeil, 487 F.3d 374, 376 (6th Cir. 2007). We must accept
all allegations in the complaint as true. Id. And we must determine whether the
allegations plausibly state a claim for relief. Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct.
1937, 1949 (2009).
No. 08-3576                Segal v. Fifth Third Bank, et al.                       Page 3


       SLUSA was not enacted in a vacuum. In 1995, Congress passed the Private
Securities Litigation Reform Act (PSLRA), Pub. L. No. 104-67, 109 Stat. 737, which
curbed “perceived abuses” of federal class-action securities litigation by imposing
special requirements and obstacles on claimants filing such actions. Merrill Lynch,
Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71, 81 (2006); see also 15 U.S.C. §§
77z-1, 78u-4. After PSLRA became law, some claimants responded by “avoid[ing] the
federal forum altogether,” bringing “class actions under state law, often in state court”
instead. Dabit, 547 U.S. at 82.

       That apparently was not what Congress had in mind. In 1998, it sought to close
the gap in coverage by enacting SLUSA. To “prevent certain State private securities
class action lawsuits alleging fraud from being used to frustrate the objectives of”
PLSRA, Dabit, 547 U.S. at 82 (quoting SLUSA, § 2), SLUSA expressly prohibits certain
state law class actions:

       (1) Class action limitations.
       No 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)     an untrue statement or omission of a material fact
               in connection with the purchase or sale of a covered
               security; or
               (B)     that the defendant used or employed any
               manipulative or deceptive device or contrivance in
               connection with the purchase or sale of a covered
               security.
15 U.S.C. § 77p(b); accord id. § 78bb(f)(1). SLUSA prohibits a claimant from filing a
class action when four things are true: (1) the class action is “covered,” which means
it involves more than fifty members; (2) the claims are based on state law; (3) the action
involves a “covered security,” which means a nationally listed security; and (4) the
complaint alleges “an untrue statement or omission of a material fact in connection with”
buying or selling a covered security or a “manipulative or deceptive device or
contrivance in connection with” buying or selling a covered security. 15 U.S.C.
No. 08-3576             Segal v. Fifth Third Bank, et al.                           Page 4


§ 77p(b); accord id. § 78bb(f)(1); see also In re Enron Corp. Sec., 535 F.3d 325, 338–39
(5th Cir. 2008).

       The Supreme Court has construed the Act’s expansive language broadly. Dabit,
547 U.S. at 85–86. A former Merrill Lynch stock broker, Dabit filed a state-law class-
action securities claim alleging that his employer fraudulently manipulated stock prices,
causing him, other brokers and their clients to hold onto overvalued stocks. See id. at
75. “A narrow reading of the statute,” the Court concluded, would fail to respect
“ordinary principles of statutory construction,” would “undercut the effectiveness” of
PSLRA and would “run contrary to SLUSA’s stated purpose.” Id. at 86. In holding that
the Act barred Dabit’s claim, the Court thus “presum[ed] that Congress envisioned a
broad construction” of SLUSA’s preclusive reach. Id.

       Today’s parties share some common ground. They agree that this action involves
(1) a “covered class action” because it includes more than fifty class members, (2) state-
law claims and (3) “covered securities,” namely the proprietary Fifth Third mutual
funds. See 15 U.S.C. §§ 78bb(f)(5), 77p(f). That leaves the last question: Does the
amended complaint allege an “untrue statement” or a “material omission” of fact “in
connection with the purchase or sale” of Fifth Third mutual funds or allege that the Bank
used a “manipulative or deceptive device or contrivance in connection with the purchase
or sale” of Fifth Third mutual funds? See 15 U.S.C. §§ 78bb(f)(1), 77p(b). If either one
is true, SLUSA bars the complaint.

       Segal’s amended complaint alleges misrepresentations, material omissions and
manipulation. Consider: it alleges that Fifth Third failed to inform trust beneficiaries
that their trust accounts would be invested in proprietary mutual funds; that the Bank
carried out a “planned corporate scheme” that was “intended to (and did) lure grantors,
testators, and others to designate [Fifth Third as trustee],” Am. Compl. ¶¶ 25, 29; that
the Bank purported to “provide planning ‘advice’ under the guise that the advice was
customized when, in fact, it [was] not,” Am. Compl. ¶ 35; that the Bank “did not deal
honestly, ethically, fairly, and/or in good faith” with the class, Am. Compl. ¶ 6; that the
Bank intentionally and “knowingly overcharged” its trust clients, Am. Compl. ¶ 75; and
No. 08-3576             Segal v. Fifth Third Bank, et al.                           Page 5


that the Bank’s policies amounted to a “scheme.” Am. Compl. ¶¶ 25, 29, 38–39, 49–51,
59, 64, 66–67, 70, 75, 84. The complaint incorporates each allegation and makes them
applicable to all counts of the complaint.

       The amended complaint also alleges that Fifth Third made misrepresentations to
the trust beneficiaries and otherwise manipulated them “in connection with” the sale of
Fifth Third mutual funds, a conclusion that follows from Dabit. See U.S. Mortgage, Inc.
v. Saxton, 494 F.3d 833, 844 (9th Cir. 2007). The “in connection with” clause, Dabit
held, has the same meaning as the same words used in § 10(b) of the Securities
Exchange Act of 1934 and Rule 10(b)(5). See Dabit, 547 U.S. at 85–86; see also 15
U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5(c). Before the passage of SLUSA, courts had
construed the “in connection with” clause “flexibly,” not “technically and restrictively,”
S.E.C. v. Zandford, 535 U.S. 813, 819 (2002) (internal quotation marks omitted),
requiring only that “the fraud alleged coincide with a securities transaction—whether by
the plaintiff or by someone else,” Dabit, 547 U.S. at 85 (internal quotation marks
omitted).   Because Congress could “hardly have been unaware” of this broad
construction when it chose to use the same phrase in SLUSA, Dabit held that the same
meaning applies to both sets of laws. 547 U.S. at 85; see Siepel v. Bank of America, 526
F.3d 1122, 1127 (8th Cir. 2008); Saxton, 494 F.3d at 844.

       The amended complaint satisfies this modest requirement. All of Segal’s
counts—breach of fiduciary duty, unjust enrichment, breach of contract—revolve around
Fifth Third’s decision to buy mutual fund shares. Segal’s allegations do not merely
“coincide” with securities transactions; they depend on them. Cf. Siepel, 526 F.3d at
1124 (concluding that SLUSA prohibits “state-law claims that a trustee breached its
fiduciary duty by failing to disclose conflicts of interest in its selection of nationally-
traded investment securities”). Under these circumstances, the district court properly
concluded that SLUSA requires the dismissal of this complaint.

       Segal first quarrels with the district court on the ground that it failed to respect
the following disclaimer in his amended complaint: “None of the causes of action stated
herein are based upon any misrepresentation or failure to disclose material facts to
No. 08-3576             Segal v. Fifth Third Bank, et al.                            Page 6


plaintiff . . . .” Am. Compl. ¶ 2. How, Segal says, can he be tagged with alleging what
he expressly disclaimed?

        It is not that simple. Courts may look to—they must look to—the substance of
a complaint’s allegations in applying SLUSA. Otherwise, SLUSA enforcement would
reduce to a formalistic search through the pages of the complaint for magic
words—“untrue statement,” “material omission,” “manipulative or deceptive
device”—and nothing more. But a claimant can no more elude SLUSA’s prohibitions
by editing out covered words from the complaint than by disclaiming their presence. For
the same reason a claimant does not have the broader authority to disclaim the
applicability of SLUSA to a complaint, he cannot avoid its application through artful
pleading that removes the covered words from the complaint but leaves in the covered
concepts. See Rowinski v. Salomon Smith Barney Inc., 398 F.3d 294, 300 (3d Cir. 2005);
Miller v. Nationwide Life Ins. Co., 391 F.3d 698, 702 (5th Cir. 2004).

        To do otherwise would “frustrate the objectives” of PSLRA and SLUSA, Dabit,
547 U.S. at 82, and re-open the “‘federal flight’ loophole” SLUSA sought to close.
Spielman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 332 F.3d 116, 123 (2d Cir.
2003). The question under SLUSA is not whether the complaint uses the prohibited
words: “an untrue statement or omission of a material fact” or a “manipulative or
deceptive device or contrivance.” It is whether the complaint covers the prohibited
theories, no matter what words are used (or disclaimed) in explaining them. See
Rowinski, 398 F.3d at 300; Dudek v. Prudential Secs., Inc., 295 F.3d 875, 879–80 (8th
Cir. 2002); Behlen v. Merrill Lynch, 311 F.3d 1087, 1094 (11th Cir. 2002).

        Although Segal disclaims any allegation of “misrepresentation or failure to
disclose material facts,” Am. Compl. ¶ 2, the remainder of the amended complaint shows
otherwise. Four paragraphs after the disclaimer, Segal announces that “[t]he gravamen
of this Complaint is that the defendants did not deal honestly, ethically, fairly, and/or in
good faith with Fifth Third's Beneficiaries.” Am. Compl. ¶ 6. And he corroborates this
“gravamen” of the complaint with allegations of fraud, manipulation and “scheme.”
No. 08-3576             Segal v. Fifth Third Bank, et al.                          Page 7


      Segal persists that this approach “magically transform[s]” his claims from
“garden-variety” state-law claims into federal securities claims. Reply Br. at 12. But
that is not true. SLUSA does not convert state-law claims into federal securities claims.
It says that certain types of state-law claims may not be filed in state court as a class
action if the class includes more than fifty people. Nothing about this procedural
restriction on how Segal vindicates his state-law rights converts his claims into federal
claims.

      Also unavailing is Segal’s contention that the state-law claims do not depend upon
allegations of misrepresentation or manipulation—and thus are not material to them. But
that again is not how SLUSA works. The Act does not ask whether the complaint makes
“material” or “dependent” allegations of misrepresentation in connection with buying
or selling securities. It asks whether the complaint includes these types of allegations,
pure and simple. Recall: “No covered class action may be maintained . . . alleging—an
untrue statement or omission of a material fact . . . or that the defendant used or
employed any manipulative or deceptive device in connection with the purchase or sale
of a covered security.” 15 U.S.C. § 77p(b); accord 15 U.S.C. § 77bb(f)(1). Add to this
the Supreme Court’s admonition that SLUSA’s prohibitions must be “broad[ly]”
construed, Dabit, 547 U.S. at 86, and it becomes clear that we have no license to draw
a line between SLUSA-covered claims that must be dismissed and SLUSA-covered
claims that must not be.

      In his reply brief, Segal brings to our attention a decision from the Third Circuit
that appears to provide some support for his position on this point. “While it may be
unwise . . . to set out extraneous allegations of misrepresentations in a complaint,” the
court says, “the inclusion of such extraneous allegations does not operate to require that
the complaint must be dismissed under SLUSA.” LaSala v. Bordier et Cie, 519 F.3d
121, 141 (3d Cir. 2008). But this language from LaSala is not only dicta—the court had
already resolved the issues at hand—it also contradicts an earlier decision from the Third
Circuit.   In Rowinski, 398 F.3d at 300, the court held that whether an alleged
misrepresentation is “an essential legal element” is “immaterial under [SLUSA].” We
No. 08-3576              Segal v. Fifth Third Bank, et al.                         Page 8


agree—with Rowinski, that is. The terms of SLUSA do not speak to “material,”
“dependent” or “extraneous” allegations; they speak to covered allegations. A “broad”
interpretation of the Act leaves no room for this inquiry—a difficult one at that to
implement—which is why we reject it and why (we presume) Rowinski rejected any
such suggestion earlier.

       A similar flaw undermines Segal’s argument that SLUSA prohibits claims only
if the underlying factual allegations would otherwise give rise to an actionable claim
under federal securities laws. That is not what the Act says. And Dabit, at any rate, held
that SLUSA precludes even state law claims that would not meet the “policy”-based
standing limitations the Court has attached to Rule 10b-5, 547 U.S. at 84, which explains
why several other circuits have rejected this narrow interpretation. See, e.g., Anderson
v. Merrill Lynch Pierce Fenner & Smith, Inc., 521 F.3d 1278, 1285–86 (10th Cir. 2008)
(collecting cases).

       Segal claims that this approach allows SLUSA to “eliminate[] any remedy against
an unfaithful fiduciary” short of removing the trustee. Appellant’s Letter Br. at 8.
“Congress,” Segal adds, “could not have intended to prevent trust beneficiaries from
pursuing damage claims for mismanagement against trust fiduciaries.” Id. Yet Congress
has done nothing of the sort. “The Act does not deny any individual plaintiff, or indeed
any group of fewer than 50 plaintiffs, the right to enforce any state-law cause of action
that may exist.” Dabit, 547 U.S. at 87. SLUSA leaves open many avenues for claimants
like Segal to vindicate their rights.

       Segal is right that “the plaintiff is the master of the complaint,” Appellant’s Br.
at 10, but that is why he must take responsibility for the allegations included in it.
SLUSA may be unforgiving when it applies, but it details in clear language when that
is so. It puts claimants to a choice. Here, for example, Segal could have filed an
identical complaint on behalf of himself and up to forty-eight others and avoided SLUSA
preclusion. Or he could have filed a complaint on behalf of a large class of plaintiffs,
so long as he complied with the requirements of PSLRA. Or he might have been able
to press some class action counts—perhaps the breach of contract claim—in a complaint
No. 08-3576             Segal v. Fifth Third Bank, et al.                         Page 9


that included no covered allegations. But where, as here, a complaint meets the
relatively straightforward requirements of 15 U.S.C. §§ 77p(b), 78bb(f)(1), we must
dismiss the action. This approach accords with the “broad construction” presumption
in Dabit, 547 U.S. at 86, and follows the example of several of our sister circuits. See,
e.g., Anderson, 521 F.3d at 1286 (10th); Rowinski, 398 F.3d at 300 (3d); Miller, 391 F.3d
at 702 (5th); Dudek, 295 F.3d at 879–80 (8th). We also note that Segal may yet bring
his individual claims against Fifth Third in state court, as the district court dismissed
those claims without prejudice.

                                           III.

       For these reasons, we affirm.
