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VOL. 127 | NO. 217 | Tuesday, November 06, 2012

Limits on Class-Action Lawsuits at Supreme Court

MARK SHERMAN | Associated Press

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WASHINGTON (AP) – The Supreme Court appeared divided Monday in two cases in which businesses are trying to make it harder for customers or investors to band together to sue them.

The justices heard arguments in appeals from biotech company Amgen Inc. and cable provider Comcast Corp. that seek to shut down class-action lawsuits against the businesses.

Amgen is fighting securities fraud claims that misstatements about two of its drugs used to treat anemia artificially inflated its stock price. Comcast is facing a lawsuit from customers who say the company's monopoly in parts of the Philadelphia area allowed it to raise prices unfairly.

Last year, the Supreme Court raised the bar for some class-action suits when it sided with Wal-Mart against up to 1.6 million of its female employees who complained of sex discrimination. In the Wal-Mart case, the court said there were too many women in too many jobs at the nation's largest private employer to wrap into one lawsuit.

Class actions increase pressure on businesses to settle suits because of the cost of defending them and the potential for very large judgments.

Connecticut pension funds that sued Amgen said lower courts correctly ruled that the case could move forward as a class action. The issue at the Supreme Court is whether the pension funds have to show at an early stage of the lawsuit that Amgen's claims about the safety and effectiveness of the drugs Aranesp and Epogen affected the stock price.

Several justices indicated they had no problem with the idea that, unlike in the Wal-Mart case, all the Amgen investors were in the same boat and could clear an early hurdle that tripped up the Wal-Mart employees.

To do otherwise, Justice Elena Kagan said, might subject plaintiffs to an even "higher burden" of proof than they have to show at trial.

But Justice Antonin Scalia said he thinks it is proper to settle such questions early on in the suit. "The reason is the enormous pressure to settle once the class is certified," Scalia said.

Justice Stephen Breyer initially was out of the Amgen case, presumably because his 2011 financial disclosure report showed he owned $15,000 to $50,000 worth of Amgen stock. But the court said in June that Breyer would take part in the case, indicating he had sold his Amgen holdings.

In the Comcast case, the justices also faced the issue of whether to require plaintiffs to prove more of their case earlier in the process. The Comcast subscribers argue that doing so would lead to even more limits on class actions.

The court should decide both cases by June.

The cases are Comcast v. Behrend, 11-864, and Amgen v. Connecticut Retirement Plans and Trust Funds, 11-1085.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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