The opinion of the court was delivered by: Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants' joint motion to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) . Because Plaintiff's lawsuit is precluded by the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), 15 U.S.C. § 77p(b) and § 78bb(f)(1), Defendants' motion  is granted.
Plaintiff Russell Bourrienne ("Plaintiff") filed this action in the Circuit Court of Cook County, Illinois on behalf of a class comprised of common shareholders of the Calamos Convertible Opportunities and Income Fund (the "Fund"). ¶ 1. Defendants removed the case to this Court and then moved to dismiss, arguing that SLUSA permits the removal of, and precludes, Plaintiff's claim. . Plaintiff disputes the applicability of SLUSA.*fn2
The Fund is an investment company that issued both common shares and a number of series of securities called auction market preferred shares ("AMPS"). ¶¶ 1, 2, 23, 24. Plaintiff alleges that the AMPS provided certain advantages not only to the holders of those shares, but also to the holders of the Fund's common shares, in that the AMPS provided the Fund with financing at favorable terms. ¶¶ 2; 25 (a)--(d). The terms of the AMPS financing were "favorable to the Fund's common shareholders" for at least four reasons. First, the AMPS financing was "perpetual, i.e., AMPS need not ever be repaid." ¶ 25(a). This aspect of the AMPS assured the Fund that funds for investing would always be available, even in poor economic conditions. Id. Second, especially following the financial turmoil in the beginning of 2008, the AMPS allowed the Fund to borrow money at low interest rates and with low dividends required to be paid to the AMPS holders, resulting in lower borrowing costs for the common shareholders. ¶¶ 3, 25(b). Third, the AMPS allowed the Fund to borrow without having to offer up any collateral. ¶ 25(c). And fourth, "[a]nother advantage of the Fund important to its common shareholders was its 'Ability to Put Leverage to Work,' as described in a number of the Funds SEC filings." ¶ 25(d). According to the complaint, the AMPS allowed the Fund to attain a degree of leverage by allowing it to borrow at a low cost and "invest the proceeds in higher rates of return." Id.
The complaint alleges that the Fund publicly touted the benefits afforded by the AMPS in its filings with the Securities Exchange Commission ("SEC") and elsewhere. For instance, the Fund discussed the beneficial nature of its AMPS financing in its Form N-CSR filed with the SEC on June 26, 2008. ¶ 25. In that filing, the Fund reported that "'[o]verall, common shareholders benefitted from the Fund's use of AMPS * * * [W]hile the auction failures caused the rates of AMPS to rise above short-term benchmarks, the cost of leverage actually came down during the reporting period.'" ¶ 25(b) (quoting the June 26, 2008 N-CSR at 3) (ellipses and bracket in original)). The "perpetual" term of the AMPS was alleged to be "very favorable to the Fund," and Defendants discussed this aspect of the AMPS in the June 26, 2008 SEC filing. ¶ 25(a). And as noted above, the Fund's "Ability to Put Leverage to Work" strategy (which was based on the terms of the AMPS) was discussed in the June 26, 2008 N-CSR. ¶ 25(d). Plaintiff alleges that this strategy was "important to [the Fund's] common shareholders" and that the "impact of this leverage was reflected in the Fund's regular cash distributions to common shareholders and described in its regular reports to its shareholders." Id.; see also ¶ 47 ("[T]he ability to earn positive returns on leverage is one of the key elements of an investment in the common stock of the Fund.").
The financial meltdown of 2008 caused the auction mechanism that had previously provided liquidity to the AMPS to fail. ¶ 33. As a result, the holders of the AMPS became concerned about their investments. ¶¶ 33; 36. Some of these investors "sought to hold the investment banks and brokers who recommended investing in [auction rate securities]*fn3 responsible for the illiquidity of those investments." ¶ 36. Further, a number of government agencies began to investigate the marketing of auction rate securities like the AMPS to investors and "many investment banks and brokers entered into settlements, which required them to purchase [auction rate securities] from their clients." Id. The complaint alleges that the Fund was not obligated to take such an action because the terms of the AMPS specifically warned investors of the risk of failure of the auctions. ¶ 34.
As discussed briefly above, the auction failures and resultant
illiquidity of the AMPS actually benefited the Fund's common
shareholders by allowing the Fund to borrow money at low interest
rates and with "extremely low" dividends required to be paid to the
AMPS holders. See ¶ 3. Notwithstanding its prior representations about
the value of the AMPS to the Fund and to the common shareholders,
between June of 2008 and August of 2009, Defendants caused the Fund to
redeem the outstanding AMPS and to replace them with financing that
was far less advantageous for the common shareholders. ¶¶ 4; 36-50.
The complaint alleges that the Fund had no valid business reason to
redeem the AMPS. Instead, Defendants decided to redeem the AMPS "to
provide liquidity to the holders of the AMPS" and to "further the
business interests of the Calamos Sponsorship Group*fn4
by responding to the concerns of investment banks and brokers
facing illiquidity in the [auction rate securities]
market."*fn5 ¶ 38. While Defendants were able to
placate the wealthy investors who purchased the AMPS (see ¶ 26), and
the Fund's business partners in the investment banking world,
Defendants did so to the detriment of the common shareholders. See ¶¶
39-50. Among other things, the complaint alleges that the redemption
of the AMPS raised borrowing costs for the Fund and "defeat[ed] an
important aspect of the investment rationale for the common
shareholders, i.e., that the Fund could 'put leverage to work' to
provide cash flow for distribution to the common shareholders." ¶
The complaint alleges that Defendants breached their fiduciary duty to the Fund's common shareholders, and were unjustly enriched, by causing the Fund to redeem the AMPS in a manner that unfairly benefited the preferred shareholders (who held the AMPS) at the expense of the common shareholders. The complaint is pleaded in three counts. Count I of the Complaint asserts a claim against the Individual Defendants, each of whom is a trustee of the Fund, for alleged breach of fiduciary duty. Count II of the complaint asserts a claim against Calamos Advisers LLC and Calamos Asset Management, Inc. for aiding and abetting the asserted breach of fiduciary duty alleged in Count I. Count III asserts a claim against Calamos Advisors LLC and Calamos Asset Management, Inc. for unjust enrichment (in the form of additional fees and other revenues that those Defendants received from the sale of the AMPS and the securing of the replacement financing).*fn6
II. Legal Standard for Rule 12(b)(6) Motions to Dismiss
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555, 569 n.14). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 562. The Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See Barnes v. Briley, 420 F.3d 673, 677 (7th Cir. 2005).
Congress enacted SLUSA to remediate an "unintended consequence" of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), which was a spike in previously rare state-court litigation of class actions involving nationally traded securities. Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 82 (2006). The goal of the PSLRA was to curb nuisance suits and other perceived abuses of securities class actions. Id. at 81-82. But rather than stem the tide of such suits, the PSLRA prompted some plaintiffs (or rather their lawyers) to avoid the PSLRA's stringent pleading requirements and other provisions designed to ward off meritless suits by simply reformulating their claims as state law ...