WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on June 11 agreed to hear an appeal of a Ninth Circuit U.S. Court of Appeals ruling affirming a federal district court's grant of class certification in a securities class action lawsuit against a drug maker and others (Amgen Inc., Kevin W. Sharer, Richard D. Nanula, Roger M. Perlmutter and George J. Morrow v. Connecticut Retirement Plans and Trust Funds, No. 11-1085, U.S. Sup.).
The Supreme Court granted the petition for writ of certiorari filed by drug maker Amgen Inc. and individual defendants Kevin W. Sharer, Richard D. Nanula, Roger M. Perlmutter and George J. Morrow.
Connecticut Retirement Plans and Trust Funds (CRPTF) brought the initial securities class action lawsuit in the U.S. District Court for the Central District of California under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 against Amgen and the individual defendants.
CRPTF alleges that Amgen made misrepresentations regarding the safety of two its products, Aranesp and Epogen, causing the artificial inflation of the market price for Amgen stock. CRPTF moved to certify a class of persons who bought Amgen stock from April 22, 2004, through May 10, 2007. The start of the period corresponds to a public statement by Amgen regarding a May 2004 Food and Drug Administration advisory committee meeting. CRPTF alleges that Amgen misrepresented that the meeting would not focus on the safety of Aranesp. The end of the class period corresponds with a later meeting of the same FDA committee. CRPTF alleges that the meeting constituted a corrective disclosure.
Amgen opposed class certification principally on the ground that CRPTF did not, and could not, establish that the alleged misrepresentations were material. The District Court rejected Amgen's arguments and granted CRPTF's motion for class certification, holding that CRPTF could invoke the presumption of reliance arising from the fraud-on-the-market theory because to trigger the presumption, CRPTF "need only establish that an efficient market exists." Amgen appealed to the Ninth Circuits, which affirmed. The Ninth Circuit rejected Amgen's contention that CRPTF must provide proof of materiality at the class certification stage.
On March 1, the petitioners filed their petition with the Supreme Court.
The petition presented two questions: "Whether, in a misrepresentation case under SEC Rule 10b-5, the district court must require proof of materiality before certifying a plaintiff class based on the fraud-on-the-market theory" and "Whether, in such a case, the district court must allow the defendant to present evidence rebutting the applicability of the fraud-on-the-market theory before certifying a plaintiff class based on that theory."
Several former commissioners and officials of the SEC and several law and finance professors; the Washington Legal Foundation (WLF) and the Allied Educational Foundation (AEF); and the U.S. Chamber of Commerce and the Pharmaceutical Research and Manufacturers of America (PRMA) each filed briefs as amicus curiae on behalf of the petitioners.
The petitioners are represented by Seth P. Waxman, Louis R. Cohen, Andrew N. Vollmer and Weili J. Shaw of Wilmer Cutler Pickering Hale and Dorr in Washington, Noah A. Levine of Wilmer Cutler in New York and Steven O. Kramer, John M. Landry and Jonathan D. Moss of Sheppard, Mullin, Richter & Hampton in Los Angeles.
CRPTF is represented by Jonathan M. Plasse, Christopher J. McDonald and Joshua L. Crowell of Labaton Sucharow in New York.
Amici former SEC commissioners and officials and law and finance professors are represented by Timothy S. Bishop, Joshua D. Yount and David M. Berger of Mayer Brown in Chicago. Amici WLF and AEF are represented by Richard A. Samp of the WLF in Washington. Amici Chamber of Commerce and PRMA are represented by Aaron M. Streett and David D. Sterling of Baker Botts in Houston, Robin S. Conrad and Rachel L. Brand of the National Chamber Litigation Center in Washington and James M. Spears and Melissa B. Kimmel of the PRMA in Washington.
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