Southern District Judge Jed S. Rakoff has issued an opinion explaining his rationale for a June order granting class certification in a massive class action by investors in Merrill Lynch residential mortgage-backed securities. Judge Rakoff swiftly dispensed with any notion that the U.S. Supreme Court’s June 20 ruling in the employment discrimination case Wal-Mart v. Dukes, 131 S. Ct. 2541, should affect his case. “The Court finds that Wal-Mart has little to no bearing on the issues before the Court and certainly does not change its June 15, 2011, ruling in any respect,” he said. “The common questions presented by this case—essentially, whether the offering documents were false or misleading in one or more respects—are clearly susceptible to common answers,” he wrote in Public Employment Retirement System of Mississippi v. Merrill Lynch, 08 civ. 10841.

The judge also rejected Southern District Judge Harold Baer’s argument earlier this year in New Jersey Carpenters Health Fund v. Residential Capital, 272 FRD 160, that the sophistication of the investors in another MBS case weighed against certification. Merrill Lynch’s lead attorney, Jay Kasner of Skadden, Arps, Slate, Meagher & Flom, had stressed in this motion opposing class certification that purported class members included “leading players in the MBS markets that had knowledge of the lending practices of mortgage originators and knew about problems with property appraisals, inflated ratings, and loan underwriting practices.”

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