By Samuel Howard

Law360, New York (May 19, 2011, 7:47 PM ET) -- A California appeals court on Wednesday overturned a judgment that forced investors accusing Countrywide Financial Corp. of misrepresenting the quality of its mortgage-backed securities to litigate their billion-dollar class claims in the federal courts.

The trial court blundered in relinquishing jurisdiction, missing the fact that securities at issue were not listed on a national exchange and therefore do not qualify the case for exception to concurrent jurisdiction under the Securities Litigation Uniform Standards Act of 1998, according to the opinion.

The plaintiffs, individual and institutional investors,...