A few months ago, I posted about a Second Circuit decision that threatens to open the floodgates to securities class actions, NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012). In that decision, the Second Circuit ruled that even though a plaintiff in an individual action may assert securities claims only as to securities that it purchased, a plaintiff may bring a class action involving securities that it did not purchase. According to the Second Circuit, a plaintiff has “class standing” to bring such claims if it purchased at least one of the securities at issue in the lawsuit and all of the class claims raise a sufficiently similar set of concerns. In October, Goldman Sachs filed a petition for certiorari seeking review of the Second Circuit’s decision. And last week, my colleagues and I submitted an amicus brief (pdf) on behalf of DRI-The Voice of the Defense Bar in support of Goldman’s petition. Our brief argues that the Second Circuit’s ruling contradicts Supreme Court precedent saying that a class action adds nothing to the standing inquiry and that statutory limitations on standing cannot be ignored. We also explain why the Second Circuit’s “class standing” ruling will encourage burdensome and abusive class actions in securities and other cases.
