Connecticut Retirement Plans & Trust Funds v. Amgen Inc.
660 F.3d 1170
9th Cir.2011Background
- Connecticut Retirement Plans and Trust Funds filed a 10b-5 securities class action against Amgen and officers alleging four misstatements/omissions about safety information and off-label marketing.
- Plaintiff contends stock price was inflated by false statements; corrective disclosures allegedly caused price declines, causing losses to purchasers.
- The district court certified a class under Rule 23(b)(3), finding common questions including reliance via fraud-on-the-market and that losses were calculable uniformly.
- The district court held the fraud-on-the-market presumption could be invoked if the market was efficient and the misstatements public, with materiality to be proven at trial as a merits issue.
- Amgen appealed under Rule 23(f); the Ninth Circuit granted jurisdiction to review the class certification order.
- The Ninth Circuit ultimately affirmed the district court’s class certification, holding materiality need not be proven at the certification stage to invoke the presumption.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Must materiality be proven at certification to invoke fraud-on-the-market? | Connecticut Retirement argues materiality is not required at certification. | Amgen contends materiality is essential to invoke the presumption. | Materiality not required at certification; plausibility suffices, merits resolve materiality later. |
| What elements are required at certification to invoke fraud-on-the-market? | Plaintiff argues efficient market and public misstatements are enough to invoke presumption. | Defendant argues misstatements must be material to invoke presumption. | Efficient market and public misstatements are required; materiality is a merits issue, not a certification element. |
| May a district court consider or require truth-on-the-market arguments at certification? | No need to decide truth-on-the-market defense at certification; merits issue. | Truth-on-the-market could rebut the presumption if proven. | District court properly declined to entertain truth-on-the-market defense at certification; it is a merits question. |
Key Cases Cited
- Basic Inc. v. Levinson, 485 U.S. 224 (Supreme Court, 1988) (fraud-on-the-market presumption; public material misrepresentation in efficient market)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (Supreme Court, 2005) (merits issue; materiality linked to causation but not required at certification)
- Erica P. John Fund v. Halliburton, 131 S. Ct. 2179 (Supreme Court, 2011) (reaffirmed reliance presumption in fraud-on-the-market; market efficiency required)
- Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010) (class certification focusing on common questions; materiality not necessarily a certification prerequisite)
- In re Salomon Analyst Metromedia Litig., 544 F.3d 474 (2d Cir. 2008) (fraud-on-the-market test and requirements for presumption)
- Schleicher v. Wendt, 618 F.3d 679 (7th Cir. 2010) (materiality not required at certification; merits considerations discussed)
- United Steel, Paper & Forestry, Rubber, Manufacturing Energy, Allied Industrial & Service Workers Int'l Union v. ConocoPhillips Co., 593 F.3d 802 (9th Cir. 2010) (precedes on whether materiality is needed at certification stage; not controlling here)
- Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005) (addressing appellate review of certification decisions)