|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Second Circuit Review; The Second Circuit's Rigorous Class-Certification Criteria
Martin Flumenbaum and Brad S. Karp
New York Law Journal. December 28, 2006
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EXCERPT: In Miles, et al. v. Merrill Lynch & Co., et al. (Miles), [FN2] a unanimous and strongly worded opinion by Judge Jon O. Newman and joined by Judges Sonia Sotomayor and Peter W. Hall, the court candidly acknowledged that the law of class certification in the Second Circuit was 'surprisingly unsettled' [FN3] and out of line with the law that had developed in other circuits. The Second Circuit in Miles reversed the district court's order certifying a broad class and held that, in the future, district courts must make factual determinations when considering class certification, even if those determinations overlap with merits issues. The decision will have far-reaching implications for all class action litigation as district judges will now be required to determine that each requirement of Rule 23 has been met and plaintiffs can no longer simply rely on the lenient 'some showing' of evidence standard to certify a class. Beyond substantially toughening the standard for granting motions for class certification, the court also indicated that the 'fraud on the market' doctrine -- announced by the Supreme Court in Basic v. Levinson [FN4] and a doctrine that enables plaintiffs to presume reliance across a class -- should not extend beyond issuer misstatements. |
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