330px-Supreme_Court_Front_DuskThe Supreme Court will decide before the end of this Term whether to hear any or all of four important cases that raise recurring questions of class action law that have sharply divided the lower courts. These cases address questions that we have blogged about before (e.g., here and here): whether a class full of uninjured members may be certified, and whether plaintiffs may rely on experts and statistics to gloss over individualized differences among class members in order to prove their class claims and damages. These questions strike at the heart of what it means to be a “class,” because class actions generally must be litigated using common evidence to show that each class member has been harmed.
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The Supreme Court will grapple with private securities class actions when it hears oral argument tomorrow in Halliburton v. Erica P. John Fund, Inc. The principal question in the case is the continuing validity of the fraud-on-the-market doctrine, endorsed by the Court twenty-five years ago in Basic Inc. v. Levinson, which relieves plaintiffs asserting claims under Section 10(b) of the Securities Exchange Act of the obligation to prove actual reliance, and permits the reliance element of a securities fraud claim to be satisfied presumptively by proof that the securities at issue traded on an efficient market.

A significant part of the debate in the Halliburton briefs addresses new scholarship contradicting the views of economists who developed the hypothesis underlying fraud-on-the-market. That is precisely what Justice White predicted in his Basic dissent: “[W]hile the economists’ theories which underpin the fraud-on-the-market presumption may have the appeal of mathematical exactitude and scientific certainty, they are—in the end—nothing more than theories which may or may not prove accurate upon further consideration. . . . I doubt we are in much of a position to assess which theories aptly describe the functioning of the securities industry.”

But the defenders of fraud-on-the-market, perhaps recognizing the doctrine’s tenuous status based on the economic learning over the past quarter-century, focus considerable attention on three arguments unrelated to the doctrine’s merits:

  • Principles of stare decisis prevent the Court from overturning Basic;
  • Congress ratified Basic’s endorsement of fraud-on-the-market when it enacted the Private Securities Litigation Reform Act; and
  • Securities class actions benefit investors and, because they would be harder to bring if Basic were overturned, the Court should leave fraud-on-the-market in place.

To spare readers (and myself) an exegesis into economic analysis, this post focuses on these contentions, explaining why a fair appraisal of these arguments in fact demonstrates that the Court is obligated to assess Basic on the merits, and overrule the decision if the fraud-on-the-market presumption can no longer be justified.


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When state attorneys general file suits to seek monetary recoveries based on claimed injuries to private citizens, those lawsuits look like, walk like, and quack like class actions. In fact, in most of these so-called “parens patriae” cases, the same private plaintiffs’ lawyers that bring private class actions are retained to represent states

For the second time in two weeks, the Supreme Court’s denial of certiorari in a class action case—this time, Martin v. Blessing—has garnered significant attention because of a separate statement by a Justice concerning the denial of review.

In Martin, the petitioner challenged the policy of one federal judge in the Southern District

While the U.S. Supreme Court and federal courts of appeals have in recent years demanded rigorous scrutiny before authorizing certification of class actions, the Supreme Court of Canada has charted a different course. In a trio of recent decisions in antitrust class actions, Canada’s high court rejected key U.S. precedents on the scope and nature

Today at the Supreme Court, all eyes, including mine, were on the oral arguments in the Town of Greece prayer case. But the second case—although it will certainly garner less attention—also is of great importance, especially to class-action practitioners. The issue in that case, Mississippi ex rel. Hood v. AU Optronics Corp., is whether

Class-action lawyers on both sides of the “v.” have been debating the impact of the Supreme Court’s decision earlier this year in Comcast Corp. v. Behrend. Last week, the D.C. Circuit delivered its answer in In re Rail Freight Fuel Surcharge Antitrust Litigation, the most significant opinion thus far to address Comcast. As the D.C. Circuit put it in a unanimous opinion by Judge Brown, “[b]efore [Comcast v.] Behrend, the case law was far more accommodating to class certification under Rule 23(b)(3).” But Comcast places that case law in doubt: When class certification rests on expert economic testimony—which is increasingly the case—“[i]t is now clear . . . that Rule 23 not only authorizes a hard look at the soundness of statistical models that purport to show predominance—the rule commands it” (emphasis added). That powerful holding makes the Rail Freight decision especially important for defendants opposing class certification.


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We’ve blogged before about whether parens patriae lawsuits filed by state attorneys’ general to recover money on behalf of state citizens can be removed under the Class Action Fairness Act (CAFA). (CAFA authorizes defendants to remove certain “mass actions” involving “monetary relief claims of 100 or more persons” from state court to federal court. 28

Carlton Fields recently published a survey (pdf) of 368 general counsel and other in-house counsel at major companies across more than 25 industries regarding the class actions they faced in 2012 and their expectations for 2013. A number of the findings were quite interesting:

  • In-house counsel reported that their companies spent $2.1 billion

It’s rare for a court to appoint its own expert in a class action. But Judge Gleeson of the Eastern District of New York is poised to do precisely that in order to help him decide whether to grant final approval to the $7.25 billion proposed class settlement of antitrust claims by retailers challenging Visa’s