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Local 703, I.B. of T. Grocery & Food Employees Welfare Fund v. Regions Fin. Corp.

United States Court of Appeals for the Eleventh Circuit

August 6, 2014, Decided

No. 12-14168

Opinion

 [*1252]  MARTIN, Circuit Judge:

Regions Financial Corporation and the individual defendants (collectively, "Regions") appeal from the District Court's decision to certify a class action based on alleged misrepresentations about Regions's financial health before and during the recent economic recession. Regions argues that the District Court should not have certified the class, and that the class period is not justified. After careful review, and with the benefit of oral argument, we affirm the District Court's well-reasoned order in nearly all respects. But we vacate and remand for further proceedings in light of Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II),     U.S.    , 134 S. Ct. 2398, 189 L. Ed. 2d 339 (2014), to allow consideration of Regions's evidence of price impact  [**3] and for the District Court to review the duration of the class period.

I. BACKGROUND

According to the plaintiffs' amended complaint, Regions made a series of misrepresentations beginning in 2008, in statements to analysts as well as required financial disclosures, about the value of its assets and its financial stability. More specifically, the plaintiffs allege that Regions—which was heavily invested in the real estate market—manipulated the way unhealthy assets were carried on its books to avoid disclosing significant losses that would compromise the company's value. Plaintiffs also allege that senior executives, with full knowledge of Regions's impaired and unstable asset portfolio, repeatedly underreported losses and represented that the company was in good financial health. Plaintiffs say that the failure to accurately represent the company's financial situation resulted in artificially high stock prices for Regions, and allowed it to avoid the precipitous decline of its stock price that would have resulted during the recession, absent the misleading disclosures. On January 20, 2009 Regions made a substantial corrective disclosure, reporting $5.6 billion in losses. That same day,  [**4] Regions stock traded at $4.60 per share, compared to $23 per share on the first day of the proposed class period.

The plaintiffs moved to certify a class comprised of all investors who purchased Regions stock from February 27, 2008, when Regions filed its first allegedly misleading financial disclosure, through January 19, 2009, the last trading day before the corrective disclosure. The District Court found that the proposed class satisfied all the prerequisites for certification under Federal Rule of Civil Procedure 23(a): the class is sufficiently numerous, there are questions of law or fact common to the class, the named representatives have claims and are subject to defenses typical of the class, and the representatives will fairly and adequately protect the class interests. The District Court allowed the class to proceed under Rule 23(b)(3), finding that common questions of law or fact would predominate over individual questions. Based on these findings, the Court certified the class for the period from February 27, 2008 to January 20, 2009.

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762 F.3d 1248 *; 2014 U.S. App. LEXIS 15106 **; Fed. Sec. L. Rep. (CCH) P98,132; 25 Fla. L. Weekly Fed. C 259; 2014 WL 3844070

LOCAL 703, I.B. OF T. GROCERY & FOOD EMPLOYEES WELFARE FUND, individually and on behalf of all others similarly situated, EMPLOYEES' RETIREMENT SYSTEM OF THE VIRGIN ISLANDS, Lead Plaintiff, et al., Plaintiffs-Appellees, PLAINTIFFS' LIAISON COUNSEL, Plaintiff, versus REGIONS FINANCIAL CORPORATION, C. DOWD RITTER, et al., Defendants-Appellants.

Subsequent History: On remand at, Class certification granted by Local 703, I.B. of T. Grocery & Food Emples. Welfare Fund v. Regions Fin. Corp., 2014 U.S. Dist. LEXIS 162403 (N.D. Ala., Nov. 19, 2014)

Prior History:  [**1] Appeal from the United States District Court for the Northern District of Alabama. D.C. Docket No. 2:10-cv-02847-IPJ.

Local 703, I.B. v. Regions Fin. Corp., 282 F.R.D. 607, 2012 U.S. Dist. LEXIS 82135 (N.D. Ala., 2012)

Disposition: AFFIRMED IN PART; VACATED AND REMANDED IN PART.

CORE TERMS

district court, stock, traded, disclosure, class period, factors, misrepresentations, stock price, investors, shares, corrective, quotation, argues, losses, marks, alleged misrepresentation, per se rule, circumstances, predominate, unexpected, purchases, question of law, confirmatory, evidentiary, flexibility, analytical, exchanges, atypical, vacate, rebut