Amgen, Inc. v. Connecticut Retirement Plans
This case was a securities fraud class action against Amgen based on the claim that false statements Amgen made about the health effects of one of its prescription drugs artificially inflated its stock price, and that investors who bought at those prices lost money when the truth came out. The plaintiffs based their claim on the “fraud in the market” theory, which provides that when securities are traded in an efficient market (like the major stock exchanges), it can be presumed that all investors rely on material false statements. Thus, plaintiffs making a securities fraud claim need not prove that each individual plaintiff relied on the false statements. That, in turn, means that a class action is possible, because common proof will establish the right to recovery of all members of the class. In this case in the U.S. Supreme Court, Amgen argued that the plaintiffs must prove false statements were material before they can have their class action certified. Public Citizen filed a brief as amicus curiae in support of the plaintiffs, arguing that proof of materiality is an issue for trial and need not be proved at the preliminary class certification stage. The Court agreed, holding that proof of materiality is not a prerequisite to certification of a securities-fraud class action seeking money damages for violations of §10(b) and Rule 10b–5.