This post was also written by Thomas M. Levinson.
In its ruling on February 27, in Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11-1085), the first of several highly anticipated class action decisions this term, the Supreme Court, in a 6-3 opinion written by Justice Ruth Bader Ginsburg, held that securities fraud plaintiffs need not prove that allegedly misleading statements are material in order to obtain class certification. Ruling in favor of plaintiff Connecticut Retirement Plans and Trust Funds, the Court affirmed the Ninth Circuit, which had held that materiality is a merits question that should not be considered when a court is deciding whether to certify a class. 660 F.3d 1170 (9th Cir. 2011). The Court’s ruling means that a securities fraud plaintiff is obligated to plausibly allege – but not to prove – materiality in order to certify a class under Federal Rule of Civil Procedure 23(b)(3). As the Court put it, “Amgen . . . would have us put the cart before the horse.” The Court went on to explain, “to gain certification under Rule 23(b)(3), [Amgen argues], Connecticut Retirement must first establish that it will win the fray. But the office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the ‘metho[d]’ best suited to adjudication of the controversy ‘fairly and efficiently’.” 568 U.S. ____, _____ (2013) (slip op., at 3). The Court found that Amgen’s position would require mini-trials on the issue of materiality at the class certification stage, a preliminary form of adjudication unanticipated in the Federal Rules.
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