In Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (Slip Op. Feb. 27, 2013), the U.S. Supreme Court, in a 6-3 majority opinion (Ginsburg, J.), affirmed the U.S. Court of Appeals for the 9th Circuit’s ruling that a securities class action plaintiff need not prove materiality of alleged misrepresentations or misleading omissions as a prerequisite to class certification under Fed. R. Civ. P. 23. Justices Kennedy, Scalia, and Thomas dissented. Justice Alito concurred with the majority but added a separate and important note (discussed below). The Court’s decision lowers the bar for investors seeking to obtain class certification, which has significant implications for D&O insurers, companies, their Directors and Officers (Ds and Os), and securities fraud plaintiffs alike. The Court’s ruling in Amgen also settles a split among the 2nd, 3rd, 7th, and 9th Circuits. Although the ruling is clearly favorable to securities fraud class action plaintiffs, the four concurring and dissenting justices appear willing to entertain arguments over the continued validity of the fraudon- the-market presumption, which could drastically alter the landscape for securities class actions.

In Amgen, Connecticut Retirement Plans and Trust Funds (CRPTF) filed suit against Amgen and several of its Ds and Os under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 stemming from certain alleged “misrepresentations and misleading omissions regarding the safety, efficacy, and marketing of two of its flagship drugs.” Slip. Op. at 6. CRPTF sought class certification under Rule 23 and invoked the fraud-on-the-market presumption endorsed 25 years ago by the Court in Basic, Inc. v. Levinson, 485 U.S. 224 (1988). The presumption allows plaintiffs to satisfy the reliance element of the § 10(b) private cause of action in class actions without proving that each member of the class actually relied on the alleged misrepresentation or omission.