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A recent decision by the Second Circuit, welcomed by the defense bar, heightens the evidentiary standard plaintiffs must satisfy in order for a court to certify a putative class of investors. While this ruling appears to be a victory for the defense bar, some plaintiff's lawyers have noted a potential silver lining: Because class certification is becoming entwined with the merits, plaintiffs now feel justified in asking for — and possibly getting — merit-based discovery in connection with their class certification motions. "This may benefit plaintiffs who get to delve into fact discovery sooner, but means that decision on class certification will likely be pushed out later in the life of the litigation," says Lanier Saperstein, a senior associate in the Corporate and Commercial Litigation Practice Group at Allen & Overy LLP (New York). He continues, "Indeed, anecdotal evidence from pending class actions suggest that class certification and summary judgment motions are heading towards being decided roughly at the same time, which is often years into the litigation." This lengthening trend contributes to and exacerbates the problems caused by a parallel trend in class actions, namely, investors increasingly opting out after class certification or settlement and instituting their own actions. Because class certification motions are being pushed out further into the life of litigation, the costs associated with any eventual opt outs increase significantly. Therefore, while plaintiffs and defendants may argue for years about who is the beneficiary of the IPO decision, one thing appears to be clear: The lengthening trend caused by the merging of fact and class discovery will lead to problems caused by the opt out trend, ultimately negatively impact the class action system. Saperstein is available to write an article outlining the details of this decision and its impact on the judicial system. [02/14/2008]
Channel: Jaffe Legal News Service - Articles for Publication
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