Connecticut Retirement Plans v. Amgen

In a securities fraud class action suit, a plaintiff using the fraud-on-the-market presumption to show reliance does not need to prove that the alleged misrepresentations were material in order to certify the class.

Connecticut Retirement Plans and Trust Funds sought to certify a class under Federal Rule 23(b)(3) in a securities fraud action against Amgen, Inc., alleging that Amgen failed to disclose safety information about its pharmaceutical products under development. The district court ruled that the plaintiff did not need to prove that the misstatements were material in order to certify the class, but instead needed only to plausibly allege materiality. The district court also ruled that Amgen was not allowed to rebut the presumption of materiality at the class certification stage because it was a trial issue. The Ninth Circuit joined the Third and Seventh Circuits in holding that proof of materiality is not a precondition to class certification but is instead a question on the merits of the fraud claim to be decided at summary judgment or trial. A plaintiff seeking to certify a class using the fraud-on-the-market presumption of reliance must show that the security was traded in an efficient market and that the alleged misrepresentations were public. AFFIRMED.