Ohio Public Employees Retirement System v. General Reinsurance Corp.
689 F.3d 229
| 2d Cir. | 2012Background
- This is a securities-fraud class action involving AIG and Gen Re regarding a sham reinsurance transaction disclosed later in 2004–2005.
- The district court denied certification of a Gen Re settlement class under Rule 23(b)(3) on predominance due to Stoneridge’s impact on fraud-on-the-market applicability.
- Gen Re and Lead Plaintiffs settled for $72 million while litigation continued against Gen Re; the district court stayed proceedings and later denied preliminary approval of the Gen Re settlement.
- In 2010 the district court denied class certification for Gen Re, citing that the fraud-on-the-market presumption did not apply. The court also granted judgment on the pleadings to Gen Re and entered partial final judgment under Rule 54(b).
- On appeal, the Second Circuit vacated the district court’s class-certification ruling and judgment on the pleadings, remanding for proceedings consistent with this opinion, and clarified the role of settlement class certification under Amchem.
- The court emphasized that settlement classes may proceed even if the fraud-on-the-market presumption cannot be invoked, and that state-law variations and potential conflicts may require further consideration on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Predominance in settlement class without fraud-on-the-market presumption | Gen Re settlement class could be certified despite no Basic presumption | Stoneridge bars reliance, undermining predominance | Predominance not barred by lack of presumption; remand for further Rule 23 analysis |
| Impact of Stoneridge on settlement-class certification | Stoneridge does not govern settlement classes in same way | Stoneridge controls whether fraud-on-the-market can be applied | Stoneridge impact limited; settlement context allows certification if otherwise satisfy Rule 23 |
| Adequacy of representation and state-law variations | Variations in state law could affect adequacy and predominance | No current conflicts identified; requires further objector input on remand | Court remands to assess adequacy and potential subclasses if conflicts arise |
Key Cases Cited
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (settlement classes require heightened scrutiny to protect absentees)
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (fraud-on-the-market presumption facilitates class reliance)
- Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 146 (U.S. 2008) (presumption may not apply where deceptive acts were not communicated to the public)
- In re Salomon Analyst Metromedia Ltdgtion, 544 F.3d 474 (2d Cir. 2008) (presumption applicability governs predominance in litigation class; not controlling for settlement classes)
- In re IPO Securities Litig., 471 F.3d 24 (2d Cir. 2006) (necessity of determining predominance with overlap of merits and Rule 23)