Saba Capital Master Fund, LTD. v. BlackRock ESG Capital Allocation Trust

Background

Saba Capital Master Fund, LTD. brought this action against BlackRock ESG Capital Allocation Trust and other defendants. The parties were awaiting rulings on fully briefed dispositive motions—motions intended to resolve some or all of the case.

The Supreme Court had agreed to decide whether Section 47(b) of the Investment Company Act of 1940, 15 U.S.C. § 80a-46(b), creates an implied private right of action. That question concerns whether a private party may bring a lawsuit under the statute even though the statute does not expressly provide that right. The district court stated that the Supreme Court’s decision would control a key threshold issue in this case: whether Saba Capital may bring a private rescission action under Section 47(b).

Arguments and analysis

The defendants asked the district court to stay, or pause, further proceedings until the Supreme Court resolves that question. The defendants argued that the Supreme Court’s decision could potentially dispose of this action. The court applied the general factors governing stays, including the parties’ interests, the burden on defendants, the courts’ interests, the interests of nonparties, and the public interest.

The court concluded that a stay would promote judicial efficiency. Even if the Supreme Court’s decision did not resolve the entire case, the court said it would provide substantial guidance, narrow the disputed issues, and potentially facilitate a resolution. The stay could also avoid duplicative litigation, prolonged proceedings or appeals, and inconsistent outcomes if the district court decided the issue before the Supreme Court did.

The court recognized that the plaintiff would experience delay, but found that the known period of delay would not significantly prejudice the plaintiff when balanced against the benefits of waiting for the Supreme Court’s decision. The court also noted that the defendants requested the stay.

Unresolved Section 47(a) issue

Saba Capital argued that its rescission claim could alternatively proceed under Section 47(a) even if the Supreme Court determines that Section 47(b) does not create a private right of action. The defendants contested that argument. The court declined to decide the Section 47(a) issue at that time, including whether amended pleadings or renewed motion practice might be appropriate after the Supreme Court’s decision.

Ruling and next steps

The court granted the defendants’ motion to stay, and the case is stayed pending the Supreme Court’s decision. Within 14 days after that decision, the parties must submit a joint status letter proposing the next steps. The Clerk of Court was directed to terminate the docket entry for the motion and mark the case stayed.