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Amgen Inc. v. Conn. Ret. Plans & Tr. Funds - 568 U.S. 455, 133 S. Ct. 1184 (2013)


Although a court’s class-certification analysis must be rigorous and may entail some overlap with the merits of the plaintiffs' underlying claim, Fed. R. Civ. P. 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage. Merits questions may be considered to the extent--but only to the extent--that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.


Invoking the fraud-on-the-market theory, respondent Connecticut Retirement Plans and Trust Funds (“Connecticut Retirement”) sought certification of a securities-fraud class action under Federal Rule of Civil Procedure 23(b)(3) against biotechnology company Amgen Inc. and several of its officers (collectively, “Amgen”). The District Court certified the class, and on appeal, the Ninth Circuit affirmed. The Ninth Circuit rejected Amgen's argument that Connecticut Retirement was required to prove the materiality of Amgen's alleged misrepresentations and omissions before class certification in order to satisfy Rule 23(b)(3)'s requirement that “questions of law or fact common to class members predominate over any questions affecting only individual members.” The Ninth Circuit also held that the District Court did not err in refusing to consider rebuttal evidence that Amgen had presented on the issue of materiality at the class-certification stage. Amgen appealed.


Was proof of materiality a prerequisite to certification of the class of investors in the securities-fraud class action?




Affirming, the Supreme Court of the United States held that proof of materiality was not a prerequisite to certification of the class of investors in the securities-fraud class action. Because materiality was determined according to an objective standard, materiality could be proved through evidence common to the class and thus was a common question for purposes of Rule 23(b). Furthermore, a failure of proof of the common question of materiality would not result in the predominance of individual questions, because materiality was an essential element of the claim of securities fraud and thus the lack of a showing of materiality would end the case rather than simply preventing certification of the class. The Court found that the evidence presented by Amgen in opposing certification related only to the merits of the question of materiality appropriate only to a dispositive motion or trial.

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