On November 5, 2012, the United States Supreme Court heard oral arguments in the case of Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds. Amgen, Inc. is a large pharmaceutical corporation based in California. The Food and Drug Administration approved two Amgen products that stimulate production of red blood cells and reduce the need for blood transfusions in anemic patients. Amgen allegedly made misrepresentations to the FDA about the safety of these products. Connecticut Retirement Plans and Trust Funds brought an action against Amgen alleging misrepresentation on the part of the corporation and certain officers.
Specifically, the Trust alleged that Amgen and certain officers misrepresented the nature of several FDA Committee meetings to shareholders and that when certain facts became public, it caused a dramatic decrease in the stock price for Amgen. On May 10, 2007, when certain information became public, Amgen stock value dropped by more than nine percent.
Amgen opposed the class certification, arguing that the misrepresentations allegedly made did not have any impact on Amgen stock. The district court rejected Amgen’s arguments and granted the Trust’s motion for class certification. The Ninth Circuit Court of Appeals affirmed, rejecting Amgen’s argument that a Plaintiff must give proof that the misrepresentations were material at the class certification stage rather than only at the trial.
The two questions to be decided by the Supreme Court are whether the district court must require proof of materiality before certifying the class action based on the fraud-upon-the-market theory in a misrepresentation case; and whether the district court must allow Amgen to present evidence rebutting the applicability of the fraud-upon-the-market theory before certifying the class. The thrust of this case is really what facts need to be decided before a class action certification decision may be made. Whatever the ruling, the Court will probably make an important statement about the role of factual inquiry and proof for class certification. A decision is not expected before the end of the year. If you need more information on this case or on securities litigation generally, contact Bill Hopkins, a lawyer in our firm who handles securities and class action litigation, at 800-898-2034 or by email at Bill.Hopkins@beasleyallen.com.
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