Class action plaintiffs received an unsurprising win last week when the U.S Supreme Court held in Amgen v. Connecticut Retirement Plans and Trust Funds that plaintiffs do not have to prove that a company’s misstatements were material before a judge can certify the class.
The case involved a lawsuit brought by Connecticut Retirement Plans and Trust Funds which alleged, on behalf of similarly-situated investors, that Amgen had violated securities law by making misrepresentations and misleading omissions regarding the safety, efficacy, and marketing of two of its drugs.
A class action lawsuit is one in which there are a large number of plaintiffs with similar allegations and claims. Typically there is one plaintiff, who acts as a representative for the large group of plaintiffs. Individuals who agree to be part of the plaintiff class typically relinquish their rights to independently sue the same entity.
In order for the proposed class to be certified it, generally, must meet the following requirements:
- The class is so large that individual suits are impractical;
- Common legal or factual claims exist;
- The claims or defenses are typical of the plaintiffs or defendants; and
- The representative parties adequately protect the interests of the class.
Securities and investment fraud class action lawsuits, like the one brought against Amgem, are brought by a group of investors that have been financially injured by a company’s improper conduct. Examples of securities and investment fraud include:
- Misstating earnings for stockholders
- Misrepresenting risk for investors
- Fraudulent stock manipulation
- Violations of securities laws
What the Decision Means to Plaintiffs in Investment Class Actions
The decision came as no surprise to many securities lawyers who didn’t expect the court to expand on Rule 23 certification requirements. While the decision does not require plaintiffs to provide materiality as part of the class certification analysis, materiality still remains an essential part of a fraud-on-the-market claim that plaintiffs will need to prove in order to successfully convince the court to rule in their favor.
The Chicago class action lawyers at Ankin Law Office, LLC represent plaintiffs in a wide variety of class action lawsuits, including investment class actions and consumer protection lawsuits. If you would like more information about this case or class action lawsuits, contact the Chicago class action attorneys at Ankin Law Offices at (312) 600-0000 to schedule a free consultation to discuss class certification requirements.