Ninth Circuit Decision on Say-on-Pay

In Assad v. Hart (, the Ninth Circuit addressed jurisdiction and other issues relating to the Dodd-Frank Act's "say on pay" rules.  Dodd-Frank requires public companies to hold a shareholder vote on executive compensation every three years. In Assad, the issuer, Pico Holdings, Inc., did so and received a negative response.  Certain shareholders then brought a shareholder derivative suit in state court, asserting only state court claims but making substantial reference to the Dodd-Frank federally imposed shareholder vote.   Defendants removed to federal court, arguing that the rules relating to the shareholder vote -- and specifically the federal rules stating that the vote is non-binding and creates no fiduciary obligations -- created a federal question and/or federal preemption justifying federal court jurisdiction.  The Ninth Circuit disagreed and held that removal of the complaint was improper because only state law claims were pled and no federal question was presented.  The Ninth Circuit did indicate that defendants might have a federal preemption defense, but that that defense was insufficient to justify removal and should be decided by the state court.