On February 27, 2013, the Supreme Court issued its decision in Amgen, Inc. v. Connecticut Retirement Plans. Justice Ginsburg authored the 6-3 majority opinion affirming the Ninth Circuit’s holding that a securities fraud plaintiff need only plausibly allege — not prove — that the alleged misrepresentations or omissions at issue are material to obtain certification of an investor class. Justice Alito wrote a short concurrence. Justice Thomas wrote the principal dissent, joined by Justice Kennedy and (in large part) Justice Scalia. Justice Scalia also wrote a separate dissent. While the Court removed yet another lower-court-created barrier to class certification, Amgen signals other important defenses to class certification in securities class actions. Although the opinion is limited to the securities fraud context, it highlights the precarious balance at the Supreme Court regarding how stringently to apply Rule 23 in all class actions.

Plaintiff Connecticut Retirement Plans brought a putative class action against Amgen and its officers under §10(b) of the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10b-5. It alleged that defendants misled investors about the safety, efficacy, and marketing of two of its flagship drugs, causing investors losses when the truth about these drugs came to light. After defendants’ motion to dismiss was denied, plaintiff moved for class certification. Defendants opposed class certification, arguing that a plaintiff must prove the materiality of the alleged misrepresentations to qualify for the class-wide presumption of reliance under the fraud-on-the-market theory to avoid the predominance of individual issues. The district court disagreed, granted plaintiff’s motion, and the Ninth Circuit affirmed.