Class Certified in IndyMac Mortgage-Backed Securities Litigation

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A federal judge in New York’s Southern District has certified a class of investors alleging that IndyMac MBS, various individual officers and six underwriters failed to disclose the risk attendant to the mortgage-backed securities that were instrumental in the economic meltdown that is generally associated with the September 2008 collapse of Lehman Brothers. See In re: IndyMac Mortgage-Backed Sec. Litig., No. 09-4583 (S.D.N.Y. Aug. 17, 2012) (Memorandum Opinion) (available here).

As is often the case, the issue of predominance proved decisive here, with defendants arguing that the 700-plus potential class members raised far too many individual issues to meet this requirement. The proposed class was indeed diverse, both in terms of their knowledge and status (being comprised of both individual investors with little or no sophistication as well as experienced institutional investors) and the facts surrounding their purchases (differences in timing, notice received, prospectus materials relied upon, liability and damages).

Though U.S. District Judge Lewis A. Kaplan conceded the existence of individual issues, he nonetheless found that common issues predominated, stating, “[t]he Court is convinced that issues subject to generalized proof significantly predominate over any individualized considerations that are likely to arise in this case.” Opinion at 32. Judge Kaplan gave particular emphasis to the link between predominance and superiority, noting that “concentrating this dispute in a class action in a single forum has clear benefits that outweigh any issues raised by defendants.” Opinion at 34.