Monday, June 25, 2012

Class Actions and the Merits

For those feeling this term lacked excitement because there were not any class action cases, the Supreme Court has recently granted cert on two cases that address the question of class certification and the merits and another case considering the role of class representative.  

The question presented in Comcast Corp. v. Behrend  (No. 11-864) is whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the class is susceptible to awarding damages on a class-wide basis? 

The question presented in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11-1085) is (1) whether in a misrepresentation case under SEC Rule 10b-5 the district court must require proof of materiality before certifying a class based on the fraud on the market theory and (2) whether in such a case the district court must allow the defendant to present evidence to rebut the applicability of the fraud on the market theory before certifying on that theory. 

Followers of the class action docket will recall that in the banner 2010 term in which the court decided Wal-Mart v. Dukes, the Court also held in Erica P. John Fund Inc. v. Halliburton, 131 S.Ct. 2179 (2011) that plaintiffs in a securities class action need not prove loss causation at class cert.  But hints in the Wal-Mart opinion, particularly Justice Scalia's statement in the majority opinion that Daubert hearings may be appropriate at the class certification stage, indicated that the Halliburton case should not be read broadly.  The grant of certiorari in these two cases indicates that the court will consider whether the plaintiff needs to prove his or her case in tandem with the class certification motion. 

The Court also granted cert on a third class action case, Genesis Healthcare Corp. v. Symczyk (No. 11-1059), in which it will consider whether a named class representative who was given a Rule 68 offer of judgment before class certification has standing to represent the class that would fully satisfy her individual claim.  In other words, should defendants be allowed to pick off class representatives with offers of settlement?   This case has echoes of Evans v. Jeff D., 475 U.S. 717 (1986) in which the Court upheld a  offer of settlement that gave the civil rights plaintiffs everything they wanted in exchange for a waiver of attorney's fees. 


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