Year-end lists are funny things. They take a sort-of arbitrary starting and stopping point, and then they cram a bunch of prejudices into a (usually) arbitrary number of items. And then people take them kind of seriously. But they can be handy ways of catching trends one did not see before. And in a year that has seen the beginning of a new debate over the shape of Rule 23, looking at the trends in caselaw can be important. This year’s cases include some pro-plaintiff and some pro-defendant, and some hard to quantify. But most of them are notable … Continue Reading
Earlier this year, it became clear that the Advisory Committee on Civil Rules is considering possible amendments to Rule 23. As Tony Lathrop’s post summarizes, the “front burner” issues at the moment largely concern class action settlements, focusing in on possible limits to cy pres relief and greater clarity on what Rule 23(e)’s “fair, reasonable, and adequate” criteria mean.
I think these are great ideas for possible amendments. I’m certainly on record about the possible problems that arise from cy pres relief, and I’ve also written about the proliferation of settlement standards that arise from Rule 23(e)’s vague … Continue Reading
Merger-challenge class actions have become very popular in the last decade. (For a great source of data, check Cornerstone Research’s surveys on the subject.) They operate similar to traditional securities class actions, but have found a way of resurrecting the sense of urgency that the Private Securities Litigation Reform Act (PSLRA) removed; they do it by litigating deals that are already in progress. Because the litigation threatens to disrupt an otherwise-lucrative deal, it is likely that the parties will pay to settle it quickly.
In general, merger class actions have gained a reputation as “low-hanging fruit” for class action firms … Continue Reading
For some time, academics have been decrying the demise of the class action, arguing that the Supreme Court’s precedent makes it harder than ever to certify a class under Rule 23. And yet, as one practitioner I know observed, plaintiffs keep filing the things. And quite a few courts keep certifying them.
Now, however, at least one federal district court appears to be listening to the academy.
The case, In re Kosmos Energy Ltd. Secs. Litig., No. 3:12-CV-373-B, 2014 U.S. Dist. LEXIS 36365 (N.D. Tex. Mar. 19, 2014), appears to be an unremarkable stock-drop case, the exact kind that … Continue Reading
University of Idaho law professor Wendy Gerwick Couture has published an interesting working paper analyzing a data set of dismissal opinions from securities fraud class actions: Around the World of Securities Fraud in 80 Motions to Dismiss. The paper is a quick read, distilling her data into eight major observations.
Among her most interesting findings:
Scienter is the largest problem for plaintiffs. Most defendants have had an intuition that plaintiffs have difficulty meeting the scienter requirement of the PSLRA. Professor Couture’s data supports that intuition.
… Continue Reading
Failure to plead a strong inference of scienter, as required by the Private
Settlement opinions are often not that interesting. The vast majority of them are by-the-numbers approvals of proposed settlements that offer little insight about how Rule 23 works. This is especially true of preliminary approval opinions. But every once in a while, a court refuses even the preliminary approval of a settlement. When that happens, class action lawyers can usually learn a few things about how not to settle a case.
Better v. YRC Worldwide Inc., No. 11-2072-KHV, 2013 U.S. Dist. LEXIS 163569 (D. Kan. Nov. 18, 2013), is such a case. It was a proposed settlement of a … Continue Reading
In the past few years, Professor Mark Moller of DePaul University Law School has proven to be one of the most thoughtful critics of modern class action law in the legal academy. While most commentators take on class action decisions from either a pro-plaintiff or pro-defendant standpoint, Professor Moller appears intent on evaluating these opinions according to the criteria set out by the arguments they advance. From that standpoint, he pointed out that class action defendants’ "originalist" arguments about due process were influenced heavily by a no-longer-favored line of Supreme Court cases. And now, as he argues in his … Continue Reading
The Madoff Ponzi scheme had far-reaching impact. How far? At least as far as Ireland and Luxembourg, each of which produced a number of plaintiffs in Trezziova v. Kohn (2d Cir. Sep. 17, 2013). In Trezziova, investors in a number of funds (the Thema International Fund PLC , the Herald LUX Fund, and the Primeo Select Fund and Primeo Executive Funds) sued those funds (and their managing banks and investment firms) for placing money with the notorious Bernie Madoff.
While many of their countrymen were filing suit (and dealing with liquidators) in Ireland and Luxembourg, … Continue Reading
It’s an odd quirk of class action practice that an automotive company defending a products-liability class will be quick to invoke the superiority of its regulator (the National Highway Traffic Safety Administration, or NHTSA), while a securities defendant will rarely–if ever–argue that the case is better handled by the SEC. (The difference may be the relationship between the industry and the agency: car companies regularly self-report issues to NHTSA, no one voluntarily brings the SEC down upon themselves.)
Behavioral economics (or, the application of empirical psychology to economics) has been around for more than a decade, and its teachings have begun to influence both policymaking and legal strategy. So it makes sense that at some point, someone would try to apply it to class action practice.
In her article "Behavioral Science and Scienter in Class Action Securities Fraud Litigation," Miami Business professor Ann Morales Olazabal makes a first attempt at applying some of the insights from behavioral economics to securities fraud cases. Her specific concern is what the past decade’s findings say about … Continue Reading