U.S. Sup. Ct.
11-1085
To recover damages in a private securities-fraud action under §10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b5, a plaintiff must prove, among other things, reliance on a material misrepresentation or omission made by the defendant. Matrixx Initiatives, Inc. v. Siracusano, 563 U. S. ___, ___. Requiring proof of direct reliance would place an unnecessarily unrealistic evidentiary burden on [a] plaintiff who has traded on an impersonal market. Basic Inc. v. Levinson, 485 U. S. 224, 245. Thus, this Court has endorsed a fraud-on-the-market theory, which permits securities-fraud plaintiffs to invoke a rebuttable presumption of reliance on public, material misrepresentations regarding securities traded in an efficient market. Id., at 241249. The fraud-on-themarket theory facilitates the certification of securities-fraud class actions by permitting reliance to be proved on a classwide basis. Invoking the fraud-on-the-market theory, respondent Connecticut Retirement Plans and Trust Funds (Connecticut Retirement) sought certification of a securities-fraud class action under Federal Rule of Civil Procedure 23(b)(3) against biotechnology company Amgen Inc. and several of its officers (collectively, Amgen). The District Court certified the class, and the Ninth Circuit affirmed. The Ninth Circuit rejected Amgens argument that Connecticut Retirement was required to prove the materiality of Amgens alleged misrepresentations and omissions before class certification in order to satisfy Rule 23(b)(3)s requirement that questions of law or fact common to class members predominate over any questions affecting only individual members. The Ninth Circuit also held that the District Court did not err in refusing to consider rebuttal evidence that Amgen had presented on the issue of materiality at the class-certification stage.
