The class action bar eagerly awaited the U.S. Supreme Court’s January opinion in Campbell-Ewald Co. v. Gomez. At issue was what happens when a defendant makes a settlement offer or Rule 68 offer of judgment that would give the lead plaintiff full relief on his or her individual claims, but the lead plaintiff does not accept the offer. Does an unaccepted offer of full relief mean, as the defendant-petitioner argued, that a case or controversy no longer exists concerning the lead plaintiff’s individual claims, thereby divesting the district court of Article III jurisdiction, mooting the case and, in turn, mooting the putative class action? Or does the case simply continue because the court may not force a plaintiff to accept a settlement, as the plaintiff-respondent argued? The court had the potential to clarify a defendant’s ability to dispatch individual and class claims early, even when the lead plaintiff won’t take “yes” for an answer, to use the chief justice’s colorful quip.
In 2013, with financial crisis enforcement cases winding down, the U.S. Securities and Exchange Commission announced a renewed focus on audit, accounting and financial reporting misconduct. (Subscription required.)
The United States and Canada both provide an aggrieved investor with redress for securities violations. In the United States, an investor may attempt to recover money damages under section 10(b) of the Securities Exchange Act of 1934, the general antifraud provision of the federal securities laws. In Canada, until recently, an investor’s main recourse was tort law, principally common-law negligent misrepresentation and fraud causes of action. Statutory causes of action for securities misrepresentations have only recently been enacted and are still evolving.
You represent a defendant in a putative class action in federal court. The lead plaintiff’s potential damages are de minimis, although lead plaintiff’s counsel is seeking millions on behalf of the putative class. You believe that if you can defeat the lead plaintiff’s motion for class certification, the (soon-to-be former) lead plaintiff will lose settlement leverage and quickly settle its claim for a trivial amount. After all, you think, now that class certification has been denied, your client no longer has to worry about classwide damages, right? If only it were that easy.
'Halliburton II,' soon to be decided by the U.S. Supreme Court, has sparked speculation about the future of the "fraud on the market" presumption of reliance in private, civil federal securities fraud cases based on affirmative misrepresentations. Commentators have suggested that if the court dispatches that presumption, plaintiffs might fill the void by invoking the so-called Affiliated Ute presumption of reliance—a rebuttable presumption that arises in cases based on material omissions in breach of a duty to disclose.
NEW YORK CITY BAR ASSOCIATION COMMITTEE ON SECURITIES LITIGATION - The U.S. Supreme Court‟s November 15, 2013 decision granting certiorari in Halliburton Co. and David Lesar v. Erica P. John Fund has captured the imagination of the securities bar and economists alike. (contributing author)