Amgen Inc.: Supreme Court Rejects Heightened Pleading for Materiality in Major Win for Plaintiffs

In its most important class action ruling since Wal-Mart v. Dukes, the U.S. Supreme Court has affirmed a Ninth Circuit decision holding that securities fraud plaintiffs need only “plausibly allege” the materiality of a misleading statement to satisfy the requirements for class certification. See Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (S. Ct. Feb. 27, 2013). Hoping to build on the animus toward class actions in recent decisions like Dukes and AT&T Wireless v. Concepcion, attorneys for Amgen and their amicus allies had argued for a requirement that materiality be affirmatively proven at the class certification stage.

The Amgen case arose from statements made by the defendant about the safety of two drugs that stimulate red blood cell production ― statements that the plaintiffs contended were materially false and, per the fraud on the market theory, had inflated the company’s stock price. Unlike the Dukes and Concepcion majorities, the 6-3 Amgen decision represents a clear victory for the plaintiffs’ bar.

Justice Ruth Bader Ginsburg authored the majority opinion. The Court’s liberal bloc — Ginsburg and Justices Breyer, Sotomayor, and Kagan — remained unified, and they welcomed defections from conservative members Chief Justice John Roberts and Justice Samuel Alito. Roberts also crossed ideological lines in last year’s “Obamacare” decision, leading some observers to conclude that the Chief Justice is deliberately shaping a legacy of true deliberation rather than reflexively ideological voting. Demonstrating just how fractured the conservative bloc was in deciding this case, Justices Scalia and Thomas wrote dissents, with Justice Kennedy joining in the Thomas dissent.