Merrill Lynch v. Manning is a victory for state courts. It’s just complicated to explain how.
Per a general federal court jurisdiction statute, Section 1331, federal courts have jurisdiction over all civil lawsuits “arising under” federal law. Section 27 of the Securities Exchange Act provides federal court jurisdiction for all suits “brought to enforce” the Exchange Act.
In Merrill Lynch v. Manning the Supreme Court held that “arising under” and “brought to enforce” mean the same thing. If a lawsuit, involving violating securities law, such as the one in this case, only includes state law claims that don’t necessarily raise federal issues that lawsuit doesn’t “arise under” federal law. Per the Court’s opinion it also therefore isn’t “brought to enforce” the Exchange Act and must be heard in state court.