Some might try to use yesterday’s Fifth Circuit decision affirming a denial of class certification to their advantage, arguing that the Panel held the NASDAQ market inefficient. But they probably wouldn’t get too far, especially if Plaintiffs on the other side take heed of the lessons to be learned from this opinion. You see, Plaintiffs appealed under Rule 23(f) after the Northern District of Texas struck their expert’s report on market efficiency "concluding that his event study was unreliable and purposefully designed to support its market-efficiency conclusion."
The Panel decision, authored by Circuit Judge Jerry E. Smith, and joined by Circuit Judges William Lockhart Garwood and Edith Brown Clement said that "even if competent evidence could be marshaled to make a plausible case that Ascendant common stock traded in an efficient market such that reliance should be presumed for the class, this case comes to us with plaintiffs' expert report excluded and their briefing to the district court devoid of any serious effort to show market efficiency, so plaintiffs have not made that case. Accordingly, because it is their burden to demonstrate that common issues predominate, we find no abuse of discretion in denying class certification." Oh, and don't forget to pick up your Nugget below if you want to learn the fate of these Plaintiffs.
You can read Bell v. Ascendant, issued August 23, 2005, here, or at 2005 U.S. App. LEXIS 18030.
Nugget: "Nor are we persuaded that we should require that they get a second bite at the class certification apple; inadequate briefing on an issue critical to class certification for which a party bears the burden of proof is no basis for us to order a repêchage round."