Sunday, September 30, 2012
On November 5, 2012, the U.S. Supreme Court will hear oral argument in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds (No. 11-1085), in which plaintiff brought a Rule 10b-5 class action alleging material misstatements about the safety of two products used to treat anemia. In this appeal from the 9th Circuit, the defendants assert that at the class certification stage plaintiff must prove materiality and defendants must be allowed to present evidence rebutting the applicability of the fraud on the market theory. The courts of appeals have split on this issue.
This week an amicus brief in support of plaintiff was filed by a group of law professors who teach civil procedure or securities regulation. The brief agrees with the plaintiff that proof of materiality is neither required nor appropriate at the class certification stage, either to assure that common questions predominate under F.R.C.P. 23(b)(3) or to invoke the fraud on the market presumption under Basic. The brief sets forth the history of Rule 23(b)(3) to show that the drafters had securities fraud class actions in mind. It also sets forth the underlying principles of market manipulation that were familar to the drafters of section 10(b). (Download No. 11-1085 bsac Civil Procedure and Securities Law Professors)