Last week, NERA Economic Consulting released its latest mid-year report on trends in class-action securities filings. The trend most are mentioning is the decline in the pace of securities settlements, coupled with the fact that settlement amounts remain high. But there are a number of other interesting observations that are worth mentioning. Among them:
Of the cases that settled, 90% had a motion to dismiss filed and 42% had motion for class certification filed.
(Emphasis added.) This makes a degree of sense. A failed motion to dismiss would help the defendant to understand whether a legal theory has merit (or, at least, whether a court will allow a plaintiff to run with a theory others might not). Moeover, the motion to dismiss remains a critical filing in securities class action litigation. While it would be interesting to know how many of those motions for class certification were granted, it is useful to know that slightly fewer than half of the settled cases at least got as far as seeing what plaintiffs' certification theory was. (Securities class actions, of course, often face fewer individualized issues than other class actions.)
The report also notes that merger objection class actions (which had long found homes in Delaware state court) are growing in federal court.
There continued to be a relatively large number of merger and acquisition objection cases (merger objection cases) in recent years. Merger objection cases first represented an important component of federal filings in 2010, when they amounted to 31% of filings..
And the report also observes that forum-shopping remains a common tactic in class-action filings:
"Filings remain concentrated in two circuits: the Second (encompassing New York, Connecticut, and Vermont), and the Ninth (including California, Washington, and certain other Western states and territories). However, in the first half of 2012 the balance between these two circuits was substantially different from that in previous years.
During the first half of this year, filings in the Second Circuit have been made at a higher pace than in any recent year except 2008. Filings in the Ninth Circuit, by contrast, have decreased substantially. At their current pace, there will be only 30 filings in the Ninth Circuit this year, which would be the lowest total since the passage of the PSLRA in 1995."
The decline in Ninth Circuit filings is probably due to a combination of the fallout from Wal-Mart Stores, Inc. v. Dukes, and the recent ruling in Mazza v. American Honda Co., which held that plaintiffs could not file nationwide class actions based solely on California law. While neither of these two holdings has a direct effect on securities class actions, it's been my unscientific impression that the various California district courts in particular have responded by clamping down on class actions in general; it would make sense that plaintiffs might decide to begin filing elsewhere under those circumstances. Nonetheless, it is clear that plaintiffs still far prefer to file in the Second and Ninth Circuits when possible. (Some of this might stem from the fact that the more favorable environment means that the plaintiffs' bar in these two areas is more developed.)
So what's the takeaway from these trends? Plaintiffs remain innovative, and class actions remain far from dead.