United States Supreme Court Holds That Class Action Securities Fraud Plaintiffs Need Not Prove The Materiality Of The Alleged False Statements Or Omissions To Support Certification Of A Class, Resolving Circuit Split

In Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, No. 11-1085, 2013 WL 691001 (U.S. Feb. 27, 2013), the United States Supreme Court affirmed the decision of the United States Court of Appeals for the Ninth Circuit holding that a securities fraud plaintiff need not prove that the alleged false statements made by defendants were material in order to invoke the fraud-on-the-market presumption of reliance established by Basic, Inc. v. Levinson, 485 U.S. 224 (1988), at the class certification stage of the proceedings. The 6-3 majority opinion, written by Justice Ginsburg, resolved a split in the Circuits, which had pitted the First, Second, Fifth and, to a certain extent, Third Circuits against the Seventh and Ninth Circuits on this point. The Supreme Court's decision deprives securities fraud defendants a means of limiting or effectively defeating a securities class action lawsuit at an early stage in the case before the bulk of fact discovery has begun.

Lead plaintiff Connecticut Retirement Plans and Trust Funds alleged that defendant Amgen Inc. (“Amgen”) artificially inflated the market price for Amgen stock by making misrepresentations and misleading omissions regarding the safety of two Amgen products. More specifically, plaintiff alleged that Amgen made misrepresentations and omissions about (1) the subject matter of a May 2004 advisory committee meeting of the Food & Drug Administration (“FDA”), (2) clinical trials involving one of the products, (3) the safety of on-label uses of both products and (4) its marketing of the products. Plaintiff alleged that these purported misrepresentations and omissions constituted securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities & Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder.

Plaintiff sought to represent a class of purchasers of Amgen stock from April 22, 2004, through May 10, 2007. The start of this period corresponded to a public statement by Amgen regarding the May 2004 FDA advisory committee meeting. Plaintiff alleged that Amgen misrepresented that the meeting would not focus on the safety of one of the products at issue. The end of the class period corresponded with a later meeting of the same FDA committee. Plaintiff alleged that this meeting constituted a corrective disclosure, revealing information about the safety of the products.

Plaintiff moved for class certification pursuant...