Plaintiffs frequently seek to certify class actions where the proposed classes contain a significant number of uninjured persons.  The First Circuit recently reversed the certification of such a class in In re Asacol Antitrust Litigation, concluding that a class cannot be certified where the “individual inquiries” necessary to resolve whether each class member has suffered an injury-in-fact “overwhelm common issues.”  When such inquiries are needed to ensure that a defendant’s due process and jury trial rights are honored, a plaintiff cannot satisfy Rule 23(b)(3)’s predominance requirement.  The court also rejected the plaintiff’s proposal to outsource these individualized inquiries to claims administrators.

We discuss the opinion in detail after the jump, but here are key takeaways for busy readers:

  • The decision explains why a proposed damages class likely fails the predominance test—and therefore cannot be certified—if there are more than a negligible number of uninjured class members and there is no administratively feasible way to weed out those uninjured class members without individualized inquiries.
  • The use of affidavits by class members to establish injury (or any other element of their claim) does not suffice to avoid individualized inquiries so long as the defendant plans to contest those affidavits, because a class cannot be certified on the premise that a defendant will not be entitled to challenge a class member’s ability to prove the elements of his or her claim.
  • Policy justifications for consumer class actions cannot relax the requirements of Rule 23 or defendants’ due process and jury trial rights.


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Can a plaintiff who bought a security in one offering bring a class action on behalf of purchasers in other offerings if the plaintiff alleges a misstatement common to all of the offerings? In cases under Sections 11 and 12 of the 1933 Securities Act—particularly those involving mortgage-backed securities—the consensus view had been that a plaintiff lacked standing to assert class claims regarding offerings in which the plaintiff did not buy. On September 6, the Second Circuit rejected that consensus view in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co. (pdf)., creating a split with the First Circuit’s decision in Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp. (pdf), 632 F.3d 762 (1st Cir. 2011). Plaintiffs’ lawyers may seek to use the NECA-IBEW decision to broaden class litigation against securities issuers and underwriters.
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