U.S. Supreme Court rules in favor of investors

April 8, 2013 by

Stocks and sharesPlaintiffs alleging companies made material misstatements in securities fraud cases won an important ruling on the requirements for class certification from the U.S. Supreme Court on Wednesday.

The court ruled in a 6-3 decision that plaintiffs in such cases may obtain class certification without having to prove a misrepresentation materially affected the stock price. The opposite approach would “put the cart before the horse,” Justice Ruth Bader Ginsburg wrote for the majority.

Ginburg’s opinion was joined by Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer, Samuel A. Alito Jr., Sonia Sotomayor and Elena Kagan.

The defendant in the case, biotech company Amgen, had claimed materiality must be proven before certification under the dictates of Rule 23(b)(3) of the Federal Rules of Procedure, which requires common questions of law or fact to predominate in class actions. Ginsburg disagreed.

“Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage,” she wrote.

Connecticut Retirement Plans and Trust Funds had sued Amgen for alleged misstatements about two of its flagship drugs. The case is Amgen Inc. v. Connecticut Retirement Plans.

Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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