In Ford v. TD Ameritrade Holding Corp., 2021 U.S. App. LEXIS 12008 (8th Cir. Apr. 23, 2021), the United States Court of Appeals for the Eighth Circuit reversed a
Continue Reading Eighth Circuit Holds Rule 23(b)(3)’s Predominance Requirement Not Met in Securities Fraud Action Against Brokerage Firm
In Resh v. China Agritech, No. 15-5543, 2017 U.S. App. LEXIS 9029 (9th Cir. May 24, 2017), a Ninth Circuit panel held that a pending putative class action in which class certification is ultimately denied tolls the statute of limitations as to claims that previously absent class members later seek to assert as class claims. The ruling expands a tolling doctrine the U.S. Supreme Court has so far only applied to absent class members’ individual claims. See American Pipe & Construction Co v. Utah, 414 U.S. 538 (1974). It also clarifies Ninth Circuit precedent, which, to the extent it had previously applied American Pipe tolling to absent class members’ class claims, arguably did so only when the earlier class certification denial rested on the named plaintiff’s inadequacy, not on the invalidity of the alleged class itself. Resh applies American Pipe to class claims without qualification. Hence, it opens the door in the Ninth Circuit to new phenomenon: successive class actions based on the same underlying event.
Continue Reading If At First You Don’t Succeed: The Ninth Circuit Invites Successive Class Actions By Extending American Pipe Tolling To Absent Class Members’ Own Class Claims
In IBEW Local 98 Pension Fund v. Best Buy Co., Inc., No. 14-3178 (8th Cir. Apr. 12, 2016), the United States Court of Appeals for the Eighth Circuit held, in a Rule 10b-5 securities fraud action, that the district court incorrectly analyzed the price-impact evidence submitted by defendants to rebut the fraud-on-the-market presumption of reliance that plaintiffs had invoked to satisfy Rule 23(b)(3)’s predominance requirement. Two years ago, the U.S. Supreme Court, in Haliburton Co. v. Erica P. John Fund, Inc., 134 S.Ct. 2398, 2414-16 (2014) (Halliburton II), recognized a defendant’s right to rebut the presumption using price-impact evidence at the class-certification stage. Based on Haliburton II, the majority panel determined that defendants had submitted “overwhelming” evidence that the alleged misstatement caused no stock price inflation. The panel rejected plaintiffs’ theory that the misstatement could nevertheless have “maintained” the stock’s already-inflated price at the allegedly inflated level. The decision importantly limits the fraud-on-the-market presumption to cases in which the alleged misstatement is the independent cause of new or additional stock price inflation.
Continue Reading Eighth Circuit Reverses District Court for Ignoring Price-Impact Evidence That Rebutted the Fraud-on-the-Market Presumption and Defeated Class Certification
The long saga of In re Tobacco Cases II recently produced yet another appellate opinion addressing California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), and the remedies they provide. This time, in In re Tobacco Cases II, 240 Cal. App. 4th 779 (Sept. 28, 2015) (“Tobacco II”), the appellate court considered what “restitution” under the UCL actually means, and how to appropriately calculate it. In doing so, the court provided much needed guidance on these issues and (assuming the decision is affirmed) largely eliminated the “full refund” theory of restitutionary recovery in all but the most extreme UCL and FAL actions.
Continue Reading Plaintiffs’ Full Refund Theory of Restitution Under California’s Unfair Competition Law Goes Up in Smoke in Latest Tobacco II Opinion
In Pulaski & Middleman, LLC v. Google, Inc., No. 12-16752, 2015 U.S. App. LEXIS 16723 (9th Cir. Sept. 21, 2015), a Ninth Circuit panel held that individualized damages (or restitution) calculations cannot alone defeat Rule 23(b)(3)’s predominance element. The opinion is significant because the district court below had determined that an exceedingly high degree of individualized proof would be needed to calculate each putative class member’s restitution award and plaintiffs had failed to propose a “workable method” to reduce this complexity. Notably, the panel also defined the measure of restitution in false advertising cases brought under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) in a manner that plaintiffs will likely argue expands the remedy.
Continue Reading The Ninth Circuit Declares That Individualized Damages Issues Alone Never, Ever Preclude Certification of a Rule 23(b)(3) Class
In Jordan v. Nationstar Mortgage LLC, No. 14-35943 and 15-35113, 2015 WL 1447217 (Apr. 1, 2015 9th Cir.), a Ninth Circuit panel held that cases subject to the Class Action Fairness Act (“CAFA”) become “removable” only when removal under CAFA is first ascertainable even if the initial pleading earlier disclosed a separate non-CAFA basis for removal which the defendant chose not to pursue. This holding changes Ninth Circuit law which ordinarily requires courts to strictly construe removal statutes against removal and to generally treat as untimely any notice of removal filed more than 30 days after receipt of an initial pleading disclosing a removal basis. The panel considered itself no longer bound to this circuit precedent given the U.S. Supreme Court’s recent decision in Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547 (2014), which recognized Congress’s strong preference that federal courts adjudicate certain interstate class actions. A significant Ninth Circuit shift, Jordan opens the door for more lenient and less technical applications of removal requirements in CAFA cases.
Continue Reading Creative Construction: The Ninth Circuit Relaxes Removal Statute’s Timeliness Test in Class Action Fairness Act Cases
In Roach v. T.L. Cannon Corp., No. 13-3070-cv, 2015 WL 528125 (2d Cir. Feb. 10, 2015), the Second Circuit Court of Appeals held that Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), does not require district courts to first find that damages are capable of classwide measurement before certifying classes under Federal Rule of Civil Procedure 23(b)(3). Under existing Second Circuit Rule 23(b)(3) precedent, individualized damages inquiries do not automatically preclude class certification if, in the case as a whole, individual questions do not predominate over any common questions. In Roach, the Second Circuit read Comcast as not overruling this precedent. Roach confirms that, in the Second Circuit, individualized damages issues are not per se dispositive of Rule 23(b)(3)’s predominance test.
Continue Reading The Second Circuit Holds That Comcast Does Not Require Automatic Denial of Rule 23(b)(3) Class Certification in Cases Presenting Individualized Damages Issues
In Romulus v. CVS Pharmacy, Inc., No. 14-1937, 2014 U.S. App. LEXIS 20548 (1st Cir. Oct. 24, 2014), the First Circuit Court of Appeals clarified the conditions triggering a defendant’s 30-day window to remove a case to federal court under the Class Action Fairness Act, 28 U.S.C. § 1332, when the earlier, initial pleading did not disclose a basis for CAFA removal. The First Circuit, in a case of first impression in the circuit, held that this 30-day window begins only when a plaintiff’s “amended pleading, motion . . . or other paper” provides either a clear statement that the damages sought exceed $5 million or information sufficient to allow a defendant to calculate an amount-in-controversy exceeding $5 million.
Continue Reading Removing All Doubt: The First Circuit Clarifies the Conditions Triggering the 30-Day Removal Window When the Earlier, Initial Pleading Does Not Disclose Grounds for Removal
In In re Kosmos Energy Ltd. Securities Litigation, No. 3:12-CV-373-B, 2014 U.S. Dist. LEXIS 36365 (N.D. Tex. Mar. 19, 2014), the United States District Court for the Northern District of Texas (Boyle, J.) denied lead plaintiff’s class certification motion in a consolidated action alleging claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (“1933 Act”), 15 U.S.C. §§ 77k, 77l(a)(2), 77o. The 1933 Act regulates registration and offering statements by holding issuers and other offering participants strictly liable for material misstatements and omissions. Reliance is not an element of the claim. Plaintiff’s class certification motion rested on the notion that 1933 Act claims presumptively deserve class treatment. The district court, however, rejected the continued vitality of this notion in light of the recent “evolution of the case authority on class certification” requiring “a more skeptical view with a more exacting review process.” The district court’s decision recognizes that, as with other substantive areas of law, this “evolution” applies in securities law cases. Hence, historically “pro-plaintiff” approaches to class certification in securities cases (including cases based on 1933 Act claims) must yield to the newly evolved class certification standards.
Continue Reading District Court Cites Recent “Evolution” of Rule 23 Standards to Deny Class Certification Motion in Securities Action Based Upon Allegedly Misleading Registration Statement
In Berger v. Home Depot USA, Inc., Case No. 11-55592, 2014 U.S. App. LEXIS 2059 (9th Cir. Feb. 3, 2014), the Ninth Circuit Court of Appeals affirmed the denial of class certification based largely on evidence that the defendant’s point-of-sale signs and oral statements supplied allegedly withheld information. A proposed class lacks the requisite cohesion where additional information at the point-of-sale place each member’s exposure to the alleged misstatement in doubt.
Continue Reading Ninth Circuit Concludes That Common Issues Do Not Predominate Where Retailer’s In-Store Signs and Oral Sales Statements Place Each Putative Class Member’s Exposure to Misleading Statements in Doubt
In Erica P. John Fund, Inc. v. Halliburton Co., No. 12-10544, 2013 WL 1809760 (5th Cir. Apr. 30, 2013), the United States Court of Appeals for the Fifth Circuit held that a defendant in a securities fraud class action is not entitled to rebut the fraud-on-the-market presumption of reliance at the class certification stage by showing the alleged misstatement caused no market price impact. The Fifth Circuit adopted the same analysis the United States Supreme Court used in Amgen Inc. v. Connecticut Ret. Plans and Trust Funds, 133 S. Ct. 1184 (2013) [blog article here]. There, the Court held that class certification procedures afford securities fraud defendants no right to rebut the presumption through evidence showing the alleged misstatements were not material. The Fifth Circuit’s opinion now extends Amgen by further narrowing the range of rebuttal evidence a district court may consider at the class certification stage.
Continue Reading Fifth Circuit Holds That Securities Fraud Defendants May Not Rebut the Fraud-on-the-Market Presumption at the Class Certification Stage Through Evidence of No Price Impact