Supreme Court May Impose More Restrictions on Class Actions

12/19/2012 // San Francisco, CA, USA // Keller Grover LLP // San Francisco attorney Carey Been // (press release)

San Francisco, CA — It seems that little by little, consumers are losing their rights when battling companies in courts of law as the United States Supreme Court is set to determine if stricter requirements should be imposed on the certification of class actions in federal courts, reports Carey Been, a San Francisco consumer protection lawyer.

The Supreme Court justices are using two separate cases as platforms to determine whether district judges must use stricter standards when certifying class actions. In one case, Amgen Inc. v. Connecticut Retirement Plans, No. 11-1085, the Court is considering whether plaintiffs should be required to prove that the defendant made material misstatements of fact to investors before, instead of after, a securities fraud class action can be certified. In the other case, Comcast v. Behrend, No. 11-864, the Court is considering whether Daubert standards of admissibility should apply to expert testimony at class certification hearings, reports.

In Wal-Mart Stores v. Dukes, a case in which the Supreme Court overturned the class certification of an employment discrimination lawsuit because the plaintiffs did not have enough common evidence to pursue their claims in a single lawsuit, the Supreme Court foreshadowed the possibility of increasingly strict class certification standards in federal courts. Now in the Amgen and Comcast cases, the Supreme Court will likely expand on the future of how class action certification will be awarded.

In the Amgen Inc. v. Connecticut Retirement Plans case, Amgen was accused of making materially false statements about the safety of two drugs that stimulate red blood cell production, reducing the need for transfusions, which allegedly inflated the Amgen’s stock price. The federal district court and the Ninth Circuit, relying on the “fraud on the market presumption,” agreed that the question of whether the statements were materially false, in other words that the statements affected the stock price, was a question that needed to be decided by the court after class certification at trial. The question for the Supreme Court justices “is whether the class plaintiffs, in order to rely on the so-called fraud-on-the-market presumption, must prove the materiality of the misrepresentations . . . at the certification stage as well as at the merits stage,” The National Law Journal reported.

In the Comcast v. Behrend case, Comcast is accused of engaging in anti-competitive behavior, including acquisition and swaps, that would monopolize the cable market and drive up prices. Comcast requested that the Supreme Court answer the question of how to apply the decision in Wal-Mart to other settings. Instead, the justices changed the question to focus on whether a trial judge must insist on “admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a classwide basis,” the New York Times reported.

Both the Amgen case and the Comcast case have the potential to significantly change how class certification is awarded in federal courts.

At this time it is unknown when the justices will rule.

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