Amgen Inc. v. Connecticut Retirement Plans and Trust Funds

PETITIONER: Amgen Inc, Kevin W. Sharer, Richard D. Nanula, Roger M. Perlmutter, George J. Morrow
RESPONDENT: Connecticut Retirement Plans and Trust Funds
LOCATION: Amgen Headquarters

DOCKET NO.: 11-1085
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 568 US (2013)
GRANTED: Jun 11, 2012
ARGUED: Nov 05, 2012
DECIDED: Feb 27, 2013

David C. Frederick - for the respondent
Melissa Arbus Sherry - Assistant to the Solicitor General, Department of Justice, for the United States as amicus curiae supporting the respondent
Seth P. Waxman - for the petitioners

Facts of the case

Amgen, Inc. is an American pharmaceutical corporation. The Food and Drug Administration (FDA) 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 & Trust Funds brought an action against Amgen alleging four counts of misrepresentation. Connecticut Retirement Plans specifically alleged that Amgen misrepresented the nature of several FDA committee meetings to shareholders. It sought to certify a class of persons who purchased Amgen stock between April 22, 2004 and May 10, 2007, the dates when two of the meetings in question occurred. On May 10, 2007, Amgen's stock value dropped by more than nine percent.

To certify a class under Rule 23 of the Federal Rules of Civil Procedure, a plaintiff must show that there are questions of law or fact common to the class, and that these questions predominate over questions affecting only individual members. Amgen opposed the class certification, arguing that the that the misrepresentations did not have any impact on the price of Amgen stock. The district court rejected Amgen's arguments and granted the class certification. The United States Court of Appeals, Ninth Circuit, affirmed, rejecting Amgen's argument that a plaintiff must give proof that the misrepresentations were material at the class certification stage.


1. Must the district court require proof of materiality before certifying a class action based on the fraud-upon-the-market theory in a misrepresentation case?

2. Must the district court allow Amgen, Inc. to present evidence rebutting the applicability of the fraud-upon-the-market theory before certifying the plaintiff class

Media for Amgen Inc. v. Connecticut Retirement Plans and Trust Funds

Audio Transcription for Oral Argument - November 05, 2012 in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds

Audio Transcription for Opinion Announcement - February 27, 2013 in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds

John G. Roberts, Jr.:

Justice Ginsburg has our opinion this morning in case 11-1085, Amgen versus CT Retirement Plans & Trust Funds.

Ruth Bader Ginsburg:

This case involves a securities-fraud complaint filed by Connecticut Retirement Plans against Biotechnology Company, Amgen and several of Amgen's officers.

To gain class-action certification on the Federal Rule of Civil Procedure 23, Connecticut Retirement invoked the "fraud-on-the-market" doctrine endorsed by This Court in a 1988 decision, Basic v. Levinson and recognized most recently in the 2011 decision Erica P. John Fund v. Halliburton.

The fraud-on-the-market premise is if the price of a security treated in an efficient market will reflect all publicly available information about a company.

Accordingly, a buyer of the security maybe presumed to have relied on that information in purchasing the security.

Amgen has conceded the efficiency of the market for the securities had issued and has not contested the public character of the fraudulent statements alleged in Connecticut Retirement's complaint.

Nor does Amgen hear dispute that Connecticut Retirement meets all four of the class-action prerequisites stated in Rule 23 (a).

Rule 23 (b)(3) states an additional requirement for class-action certification in a suit for damages.

That requirement is center stage in this case.

It reads, “The questions of law or fact common to the class members must predominate over any questions affecting only individual members.”

To meet this predominance requirement, Amgen contends, “Connecticut Retirement must do more than plausibly plead that Amgen's misrepresentations materially affected the price of Amgen's stock.”

“Certification must be denied,” Amgen asserts, unless Connecticut Retirement actually proves materiality at the threshold stage of the case.

The District Court affirmed by the Court of Appeals to the Ninth Circuit rejected the argument.

A proof of materiality must be made prior to class-action certification.

We intern affirm the Ninth Circuit's judgment.

Connecticut Retirement must have caused prove materiality in order to prevail on the merits of its securities-fraud suit, but that proof need not be made prior to class-action certification.

Rule 23 (b)(3) says that questions common to the class must predominate.

It does not require that those questions be answered on the merits in favor of the class.

Materiality is judged according to an objective standard.

It can be proved by evidence common to the class.

Therefore, materiality presents a common question within the meaning of Rule 23 (b)(3).

If the class representative, hear Connecticut Retirement, fails to show materiality at the merit stage, that hardly means that individual questions will predominate instead because materiality is an essential element of the securities-fraud claim, the suit will fail and its entirety.

In short, the class is highly cohesive, its members will succeed or lose unison and no event will the individual circumstances of particular class members matter.

Essentially, Amgen would have us put the Court before the course before certifying a securities-fraud class-action under Rule 23 (b)(3), Amgen argues.

A District Court must first determine whether the class will win the fray.

But the office of Rule 23 (b)(3) is not to get the case adjudicated rather it is to select the method best suited for adjudication of the controversy fairly and efficiently.

Here, that method is the class-action Connecticut Retirement seeks demand.

Justice Alito has filed a concurring opinion.

There are two dissenting opinions, one by Justice Scalia and the other by Justice Thomas with whom Justice Kennedy joins in full and Justice Scalia joins in all by Part 1-B.