Earlier this week, the U.S. Supreme Court issued its opinion in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (slip opinion).  In a 6-3 decision, the Court held that, in a securities fraud class action under Section 10(b) and Rule 10b-5, the plaintiff need not prove materiality as a prerequisite to class certification.  Justice Ginsburg’s opinion for the Court reasoned that: (1) materiality is an objective question and a common question that can be proven with classwide evidence; and (2) regardless of how the issue of materiality is decided, it will not prevent common issues from predominating under Rule 23(b)(3), because if materiality can be proven that will be accomplished with classwide evidence, and if materiality cannot be proven then the case will end (given that the named plaintiffs’ individual claims will also fail).  (Slip op. at 11.)  In reaching this result, the Court also clarified the extent to which an inquiry on the merits is appropriate in deciding class certification:

Rule 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.  (Id. at 9.)

Where might this opinion have an impact beyond the securities fraud context, such as in insurance class actions?  Here are some thoughts: 

  1. At class certification, both sides and the court likely will focus more intently on elements of the substantive cause of action that are not clearly capable of proof with common evidence.  There was no dispute in Amgen that materiality could be proven with common evidence; rather, the dispute was over whether the plaintiffs could establish materiality.  In many putative class actions, the question of whether certain elements can be proven with classwide evidence or will require individual adjudication is hotly contested, while other questions concededly could be established with common evidence if that evidence is sufficient.  Amgen will require the district courts and the parties to focus on issues that potentially “give rise to [a] prospect of individual questions overwhelming common ones . . . .”  (Id. at 18.)  But given that every plaintiffs’ lawyer who brings a class action believes that they can prove everything with common evidence, how will that play out?  Where will courts draw the line?  And what will happen when the defendant disputes the admissibility of the classwide evidence?  On the evidentiary question, we’ll need to wait for the Court’s opinion in Comcast v. Behrend which is expected to shed light on that question (see my November 9, 2012 blog post for more on that case). 
  2. Amgen might make bifurcation of discovery easier.  It often makes sense to phase discovery in class actions so that the parties focus on discovery pertinent to class certification issues until class certification is decided, and then do merits discovery thereafter.  District courts sometimes struggle with where to draw the line.  Amgen now provides a potential framework to aid in drawing that line where appropriate:  Does the discovery relate to a question that is the subject of a reasonable debate over whether it can be established with classwide evidence?  Does it relate to a question on which all claims would necessarily fail (individual and class) if the “common” evidence does not persuade the finder of fact?    
  3. Early summary judgment motions may be a good defense strategy in some cases.  The Court noted that the defendant’s contention that materiality could not be established would be “properly addressed at trial or in a ruling on a summary-judgment motion.”  (Slip op. at 14.)  When a key dispute in a putative class action focuses on materiality or another similar element of a cause of action, and a defendant is concerned that the issue will not be appropriate for resolution on a class certification motion in light of Amgen, one approach that potentially can be taken, where appropriate, is to move for summary judgment on that issue early in the case, before class certification.  If the plaintiff objects to resolution of the summary judgment motion at that time, the defendant will have to convince the district court that taking up such a motion makes good sense as a matter of case management.  But many times it does – why should the parties and the court go through class certification proceedings if there is a key threshold issue that can be resolved on summary judgment and would defeat the entire case?  If the issue requires discovery, however, that discovery could not be postponed, so this would need to be considered in formulating any plan for phased discovery.
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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.