FACTA Cases Continue to Present Ideal Targets for <i>Spokeo</i> Challenges—Eleventh Circuit Defendants Take Particular NoticeWe’ve already written about Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), in which the Supreme Court reaffirmed that all federal plaintiffs, even those alleging a statutory violation, must have suffered a real, concrete injury in order to have Article III standing. As we’ve noted in a past blog post, despite Spokeo’s clear guidance that a mere technical statutory violation, divorced from any concrete harm, is not enough to confer Article III standing, lower courts have divided on how to apply Spokeo to federal statutory class actions. Notwithstanding Spokeo’s inconsistent application in other contexts, many have been willing to use Spokeo as a basis to dismiss claims under the Fair and Accurate Credit Transaction Act or FACTA. One recent example is Kirchein v. Pet Supermarket, Inc.

A quick primer: FACTA prohibits the willful printing of more than the last five digits of a consumer’s credit card number on an electronically generated receipt provided at the point of sale. Even though there is basically no evidence suggesting that consumers’ identities are at any material risk if a FACTA violation occurs, FACTA is a severely punitive statute. Damages for each FACTA violation are between $100 and $1,000, either per customer or per receipt—courts are divided on that question—with no classwide statutory damage cap. The combination of high damages, relative ease of proving violations, and availability of class certification creates strong incentives for plaintiffs to bring FACTA claims as class actions. Plaintiffs asserting FACTA claims usually define the class to exclude consumers who have suffered any actual damages.  Those consumers can recover even more individually under the statute, but proving individual damages often precludes class certification. As a result, FACTA cases commonly feature a large number of unharmed class members.

Enter Spokeo. In that case, the Supreme Court held that Congress cannot declare non-injuries to be injuries for purposes of Article III:

Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, [the plaintiff] could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.

Spokeo’s requirement of harm beyond a mere statutory violation has been very difficult for FACTA plaintiffs to overcome. As Judge Moreno of the Southern District of Florida put it, “the Seventh and Second Circuits, as well as multiple district courts, have held that under Spokeo, a plaintiff who has not suffered any actual harm or material risk of harm lacks standing to sue for violations of the Act” (see Tarr v. Burger King Corp.).  A similar case, Gesten v. Burger King Corp., suffered the same fate at the hands of Judge Scola in the Southern District of Florida.

The latest case to join this line is Kirchein, a FACTA case before Judge Scola that the parties had previously preliminarily settled. The defendant discovered through the course of the settlement process that there were more class members than expected, so it moved to vacate preliminary approval of the settlement. While the court did not directly vacate approval of the settlement, it went much further and dismissed the entire case for lack of subject matter jurisdiction. It noted that, even if it was possible that a FACTA violation could give rise to standing, the injury alleged by the plaintiff did not give rise to standing because the plaintiff did not even allege that his personal information had been involuntarily exposed to anyone.

These cases demonstrate that many garden-variety FACTA complaints are exactly what Spokeo forbids. Federal jurisdiction requires more than a pure procedural issue.

We’ll conclude with four takeaways:

  • First, Spokeo’s injury-in-fact requirement is an issue the defendants should continue to press in every class action seeking only statutory damages, notwithstanding the existence of a few less-than-favorable decisions. The Southern District of Florida’s recent FACTA decisions should give defendants renewed hope in their ability to challenge standing because these cases reflect a growing reversal of a trend of finding standing in similar cases.Many of the early post-Spokeo FACTA cases that found jurisdiction did so by relying on pre-Spokeo cases, particularly Hammer Sam’s East, Inc. While the Eleventh Circuit, in an unpublished opinion about the FDCPA, seemed to give Spokeo a narrow reading in Church v. Accretive Health, Inc., the court later upheld dismissals on Spokeo grounds in other statutory damage cases shortly thereafter (see Meeks v. Ocwen Loan Servicing, LLC,  and Nicklaw v. CitiMortgage, Inc.). Courts with FACTA claims had initially found shelter under Church to keep their cases, but time has proven that shelter far from leak proof. For its part, the Southern District of Florida has now recognized that Spokeo has often dispositive implications for FACTA class actions, and that the pre-Spokeo Hammer case is obsolete.
  • Second, on a related point, defendants may benefit from pressing a Spokeo challenge even if outright dismissal is unlikely. Plaintiffs can be forced into making individualized allegations about how they were personally harmed. Those allegations can then be used as a lever to upend class certification on commonality, typicality, and predominance grounds.
  • Third, while FACTA is particularly egregious in penalizing what looks to be harmless conduct, claims seeking statutory damages under other federal and state statutes are also vulnerable to Spokeo Alleged technical violations of notice provisions under the FDCPA can, in some instances, be pure touch fouls with no harm. Other kinds of data breach claims, such as state-law negligence or privacy claims arising from payment card hacking, are another context in which Spokeo may apply when plaintiffs allege nothing more than an increased risk of identity theft.
  • Fourth, watch out for removal issues. While FACTA raises a federal question and an automatic chance to remove a case, a motion under Spokeo can easily result in a remand. Burger King found this out the hard way: After Judge Scola dismissed the Gesten case, the plaintiff re-filed in state court. Burger King removed, but the district court remanded, noting that Burger King had previously successfully argued that federal jurisdiction does not exist.

Must the Rule 23 Predominance Requirement Be Satisfied for Purposes of a Class Settlement? The Ninth Circuit Says, “Yes.”In 2015, the Rule 23 Subcommittee to the Advisory Committee on Civil Rules floated the idea of amending Rule 23 to eliminate the predominance requirement for class certification in the settlement context. The suggestions included amendments to that effect within Rule 23(b)(3) itself, or alternatively creating a new Rule 23(b)(4) providing for settlement class certification:

23(B): A class action may be maintained if Rule 23(a) is satisfied and if:

* * * * * *

(4) the parties to a settlement [in an action to be certified under subdivision (b)(3)] request certification and the court finds that the proposed settlement is superior to other available methods for fairly and efficiently adjudicating the controversy, and that it should be approved under Rule 23(e).

The subcommittee explained the thinking behind this idea in draft official commentary to the possible new rule:

Concerns have emerged about whether it might sometimes be too difficult to obtain certification solely for purposes of settlement….Increasing confidence in the ability of courts to evaluate proposed settlements, and the tools available to them for doing so, provide important support for the addition of subdivision(b)(4)…. Subdivision (b)(4) does not require, however, that common questions predominate in the action. To a significant extent, the predominance requirement, like manageability, focuses on difficulties that would hamper the court’s ability to hold a fair trial of the action. But certification under subdivision (b)(4)assumes that there will be no trial. Subdivision (b)(4) is available only in cases that satisfy the common-question requirements of Rule 23(a)(2), which ensure commonality needed for classwide fairness. Since the Supreme Court’s decision in Amchem, the courts have struggled to determine how predominance should be approached as a factor in the settlement context. This amendment recognizes that it does not have a productive role to play and removes it.

The idea was controversial on both sides of the “v.” Many saw it as furthering the perception that class actions were more about making lawyers rich than protecting the interests of class members. Others, such as DRI, feared that it would cause more frivolous class actions to be filed in hopes of luring the defendant into a class settlement:

While it might make cases easier to settle on a class action basis, that is not a valid goal of the rules of procedure where the case is not otherwise deserving of class treatment. There is no good policy reason for a rule providing that claims which are too individualized to be certified as a class for litigation purposes is nevertheless certifiable as a class for settlement purposes….

By definition, what this proposal seeks to do is to enable the classwide settlement of cases in which individualized issues predominate, and foreclose consideration of those overriding individual differences in the settlement certification process. Such a rule, however, would present serious Constitutional concerns given the United States Supreme Court’s past indications that ignoring individual differences has Constitutional implications….If one assumes that the proposed change achieved its stated goal, and that the predominance of individual issues would then no longer be a concern in certifying settlement classes, then the logical result would be that virtually any claim could be pursued on a class basis. While the purports to maintain the “superiority” requirement for settlement classes, the proposed rule fails to articulate what “superiority” would mean once completely divorced from the traditional predominance inquiry. After all, from the narrow perspective of the convenience of the court and abstract efficiency, any class settlement is superior to the prospect of individual litigation by each member of the class. But if that alone is the effective meaning of superiority under this proposal—and it seems it would have to be if the predominance of individual issues is expressly removed from the equation for purposes of settlement—then superiority effectively becomes a rubber stamp for settlement classes. It is indeed difficult to imagine any putative class action that could not be certified for settlement purposes if the predominance of individual issues is truly no longer a concern. Would common law fraud class actions now be certifiable for settlement purposes despite the necessity of proving individual reliance in litigated individual cases? What about nationwide personal injury class actions? Mental anguish claims? How does the proposal guarantee otherwise?… In what sense is a proposed representative adequate and his or her claims typical if each individual’s claim admittedly turns on predominantly individual and not common facts? In what sense is representation for purposes of settlement “adequate” if the representative would not have the power to assert the claims of absent class members in litigation, and the bargaining leverage that comes with the willingness and ability to use that power?

The 23(b)(4) proposal would in fact create unavoidable perverse incentives on the part of counsel for both sides. Plaintiffs’ counsel would now have undeniable incentives, and indeed implicit permission in Rule 23 itself, to file otherwise uncertifiable class action complaints with the intent and purpose of using the cost and risks of defending them to force a class settlement. This problem already exists to a significant extent under the current version of Rule 23, and has been called the “blackmail effect” of class litigation. The 23(b)(4) proposal would make that problem much worse. The federal courts would surely see substantial increases in class action filings, since by definition it would then be entirely permissible to file suit with the aim and purpose of achieving settlement certification even for an otherwise uncertifiable class. These otherwise admittedly illegitimate class actions would then very frequently result in class settlements simply because it would very often be cheaper for defendants to settle these cases than litigate them. Indeed, once these cases are filed, both plaintiff’s counsel and defense counsel would have clear incentives to disregard individualized variations and differences in favor of a deal that, in the absence of Rule 23(b)(4), would surely have been deemed a collusive settlement. After all, Plaintiffs’ counsel in these cases would have little to bargain with in negotiating settlement of these cases, since the defendant would face no real threat of classwide liability in litigation….The abstract efficiency of settling numerous claims at once is simply not a reason in and of itself to certify a class where the underlying issues, claims and damages are predominantly individualized and varying rather than common. In terms of ensuring that the rights of absent class members are fairly represented in proceedings brought by a self-selected class representative, the fees and classwide release that would make such settlement certifications financially attractive to both would-be class counsel and the defendant are hardly a substitute for the identity of interests that the predominance requirement assures.

Ultimately, the 23(b)(4) settlement-without-predominance proposal was left on the cutting room floor, and does not appear in the Rule 23 amendments currently matriculating toward an effective date as early as late 2018. But lower courts are still struggling with the proper role of predominance in the class settlement context, and a recent case from the Ninth Circuit is a good illustration.

In the case of In re Hyundai & Kia Fuel Efficiency Litig., a nationwide class settlement was proposed in a putative class action alleging fuel efficiency misrepresentations by a car manufacturer. Before any settlement had been reached, the trial court had previously indicated that it would deny contested class certification due, among other things, to the fact that state law variations defeated predominance. But then a nationwide class settlement was reached, and for the trial court at least, these concerns disappeared. The trial court approved the nationwide class settlement without analyzing the choice of law issues and resulting state law variations as part of its predominance inquiry, reasoning that the settlement context mooted any such concerns. The Ninth Circuit vacated the class certification and settlement approval.

In doing so, the Ninth Circuit reminded the lower court of the Supreme Court’s admonition that Rule 23 “does not set forth a mere pleading standard.” Comcast Corp. v. Behrand and the Supreme Court’s specific admonitions about the application of Rule 23’s criteria to a class settlement agreed that:

To be sure, when “[c]onfronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” Amchem [Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)].  But “other specifications of the Rule—those designed to protect absentees by blocking unwarranted or overbroad class definitions—demand undiluted, even heightened, attention in the settlement context.” Id. “Heightened” attention is necessary in part because a court asked to certify a settlement class “will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold.” Id. Indeed, in Amchem itself, the court determined that both factual differences among class members and differences in the state laws applicable to class members’ claims defeated predominance for a single nationwide settlement class. Id. at 624, 117 S.Ct. 2231….

A court may not justify its decision to certify a settlement class on the ground that the proposed settlement is fair to all putative class members. Indeed, federal courts “lack authority to substitute for Rule 23’s certification criteria a standard never adopted—that if a settlement is fair, then certification is proper.” Id. at 622…; see also Ortiz [v. Fibreboard Corp., 527 U.S. 815, 849 (1999)](holding that “a fairness hearing under Rule 23(e) is no substitute for rigorous adherence to those provisions of the Rule designed to protect absentees[.]”) ….

The Ninth Circuit then went on to echo the same concerns DRI had previously voiced about settlement class certification without predominance:

Because the district court made clear that it would be unlikely to certify the same class for litigation purposes, the class representatives were well aware that they would be unlikely to succeed in any efforts to certify a nationwide litigation class. Thus, by “permitting class designation despite the impossibility of litigation, both class counsel and court [were] disarmed.” Id. at 621, 117 S.Ct. 2231. Hyundai and Kia knew that there was little risk that they would face a nationwide litigation class action if they did not reach a settlement agreement. Accordingly, “[c]lass counsel confined to settlement negotiations could not use the threat of litigation to press for a better offer, and the court [faced] a bargain proffered for its approval without benefit of adversarial investigation.”

The majority clearly recognized that when a putative class action that has not been certified is proposed to be certified for settlement purposes, that necessitates two different inquiries: (1) does the proposed class satisfy the requirements for certification of any class under Rule 23(a) and (b), and (2) is the proposed settlement fair, reasonable and adequate under Rule 23(e). Those are two separate inquiries. Both under the plain language of Rule 23 and under binding Supreme Court precedent, they cannot be collapsed into one.

On remand, the district court will have to address predominance once again. It may well be asked to find the predominance requirement satisfied despite the state law variations. The argument would likely be that variation in state law is primarily a manageability problem—one of the considerations that the court normally must examine in assessing predominance and superiority, but one which the Supreme Court said in Amchem is indeed mooted to a large degree in the settlement context. But the trial court will still have to show that despite variations in state law, there remain common issues that are capable of common, classwide answers within the meaning of Wal-Mart Stores, Inc. v. Dukes. And holding courts and parties to that requirement is a good thing. Class certification should not be a judicial goal unto itself. Class actions are and should be a limited exception to the general rule that each individual litigant should have to prove his or her own claim on an individual day in court. And Rule 23(b)(3) class actions, the most “adventuresome” exception of them all, should be available only when proof of liability for one truly would be proof for all. The desire of a court to encourage settlement does not justify ignoring this fundamental due process limitation on the class action device.

This case illustrates another practice pointer as well. As a defendant, if you think you might be interested in settling a class action, you would be well-advised to explore that before filing a motion to strike class allegations or an opposition to class certification. Otherwise, as happened here, your arguments against class certification may be quoted back at you by objectors to your later-proposed settlement.

Last month, in Arkansas Teachers Retirement System v. Goldman Sachs Group, Inc., the Second Circuit vacated the Southern District of New York’s order certifying a class in a Rule 10b-5 securities fraud class action. At issue was whether defendants had rebutted the so-called “fraud on the market” presumption of reliance that applies in securities fraud class actions by showing that the alleged misrepresentations did not have any impact on the price of the defendant company’s stock. In reversing the district court, the Second Circuit held that the district court had improperly required defendants to come forward with evidence that “conclusively” proved the “complete absence” of price impact, when, according to Second Circuit, a “preponderance of the evidence” will do. Moreover, the Second Circuit criticized the district court for failing to consider certain aspects of defendants’ price impact evidence, making clear that the court should have considered any evidence that could sever the link between an alleged misstatement and a stock price movement. In so doing, Goldman is likely to become a helpful tool for defendants challenging class certification in 10b-5 cases.

What is the “fraud on the market” presumption?

Just as it is with common-law fraud claims, reliance is an essential element of a securities fraud claim brought under Rule 10b-5. Plaintiffs must prove that they relied upon an alleged misrepresentation when determining whether to purchase or hold a given security. Without such reliance — in other words, where the evidence shows that the plaintiff would have made the same investment decision even if the alleged misrepresentation had not been made — you cannot say that a plaintiff’s loss is the result of the alleged misrepresentation.

As a general matter, reliance is an inherently individualized inquiry, which is why the run-of-the-mill fraud claim is usually not susceptible to class treatment  (see e.g., McLaughlin v. Am. Tobacco Co., 522 F.3d 215 (2d Cir. 2008). But securities fraud claims under 10b-5 are different.

In Basic Inc. v. Levinson, 485 U.S. 224 (1988), the Supreme Court adopted a presumption that the price of a stock traded in an efficient market reflects all public, material information—including misrepresentations—and that investors rely on the integrity of the market price when they choose to buy or sell stock. Because of the Basic presumption—aptly named the “fraud-on-the-market” presumption—courts may presume that investors relied upon all public, material misrepresentations through their “reliance on the integrity of the price set by the market.” To invoke the Basic presumption, plaintiffs must show that:

  1. The defendant’s stock traded in a generally efficient market.
  2. The alleged misrepresentations were publicly known.
  3. The relevant stock purchase occurred between the time the misrepresentations were made and the truth was revealed.

Although the Supreme Court in Basic also recognized that defendants can rebut the fraud-on-the-market presumption by showing that the alleged misrepresentation did not actually distort the stock price, after Basic, few lower courts actually permitted defendants to make such a showing. Most often, courts found that the question of whether an alleged misrepresentation had impacted the stock price was too closely tied to “merits” issues (such as materiality or loss causation) to be addressed at the class certification stage. As a result, following Basic, class certification became almost a foregone conclusion in securities fraud actions, particularly for cases involving stocks traded on major exchanges such as the NYSE or Nasdaq. (Stocks traded on OTC markets were a different story.)

The altogether unsurprising result of making class certification a fait accompli in most securities fraud suits? An incredible proliferation of securities fraud class actions—and with it, an ever-increasing number of high-dollar settlements following class certification.

In Halliburton II, SCOTUS reaffirmed the “fraud on the market” presumption, but made clear that the presumption can be rebutted.

Over the years, many economists and scholars have disputed the theoretical underpinnings of the presumption—that the stock price in an “efficient” market reflects all public material information or that all (or even most) investors rely upon the integrity of the price. The defense bar took issue with how Basic seemed so out of place with the rest of the Supreme Court’s class action jurisprudence, which generally rejected presumptions. Public companies (and insurers) bemoaned the explosion of often-dubious securities fraud claims and the (unfair) settlement pressure that resulted from rubber-stamp class certifications. But for more than 25 years, the Supreme Court did not revisit Basic.

That changed in 2014 with Halliburton Co. v. Erica P. John Fund, Inc. In that case (commonly called “Halliburton II”), the Supreme Court took up two issues:

  1. Whether to abandon (or modify) Basic’s fraud-on-the-market presumption in securities fraud cases.
  2. Whether (and how) securities fraud defendants can rebut the Basic presumption at the class certification stage.

In taking up the case, the Court was presumably motivated by its decisions just a few years earlier in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Comcast Corp. v. Behrend, 569 U.S. ___ (2013), which clarified that class certification requires a “rigorous analysis” of Rule 23’s requirements, and that this rigorous analysis may overlap with merits issues – arguably at odds with Basic’s presumption of reliance.

On the first issue—whether to jettison the fraud-on-the-market presumption—the Supreme Court decided that Halliburton had not shown “special justification” needed to overcome stare decisis. But on the second issue, the court reaffirmed that defendants may rebut the Basic presumption by showing that the alleged misrepresentations did not actually distort the market price of the company’s stock and clarified that this rebuttal may take place at the class certification stage (thereby defeating class certification). Even though examining a misrepresentation’s price impact may dovetail with questions of materiality and loss causation, the court saw no reason to defer it to a later stage of the case. The court thus rejected numerous decisions—including the Fifth Circuit’s decision below—that had refused to consider price impact evidence at the class certification stage.

Since Halliburton II, lower courts have struggled to determine precisely how a defendant can rebut price impact.

Although making clear that defendants could defeat class certification in 10b-5 cases by showing an absence of price impact, Halliburton II unfortunately did not explain how defendants can make that showing. Among the many issues left unaddressed were the defendants’ burden of proof in rebutting the fraud-on-the-market presumption, as well as the types of evidence that would be admissible (and sufficient) to meet that burden, whatever it may be. Does the defendant bear the burden of persuasion in rebutting the presumption, or does the plaintiff bear that burden in obtaining the presumption?  Would evidence of no statistically significant price movement following the alleged misrepresentation be sufficient, or would a defendant also need evidence of no price movement following the alleged corrective disclosure? Should courts ever consider evidence about the absence of price movements on days other than the alleged misrepresentation and corrective disclosure days, such as on days where the purported truth was first revealed to the market? Should courts consider alternative explanations for a price movement following an alleged misrepresentation or corrective disclosure?

Lower courts have struggled to reach clear, consistent, and coherent answers to these questions; unfortunately, in most cases addressing price impact since Halliburton II, courts have restricted the defendants’ evidence in meaningful ways. For example, in Aranaz v. Catalyst Pharm. Partners, Inc., 302 F.R.D. 657 (S.D. Fla. 2014), the court refused to consider evidence that showed that the market already knew the information that was allegedly misrepresented, even though if the market already knew the “truth,” then the alleged misrepresentation or corrective disclosure could not possibly have added to the total mix of information available to the market and thus could not possibly have impacted the stock price. And in Goldman, the district court rejected evidence about the absence of a price movement when the purported truth was revealed, reasoning that such evidence went to materiality, which, under Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 133 S. Ct. 1184 (2013), is not supposed to be addressed at the class certification stage. With these sorts of evidentiary limitations, it is no wonder that the vast majority of courts that have addressed price impact since Halliburton II have found that the defendants failed to rebut the fraud-on-the-market presumption.

In Goldman, the Second Circuit made clear that courts should consider all evidence that could bear on the price impact of an alleged misrepresentation, even if that evidence is also probative of materiality.

Fortunately for securities fraud defendants, the tide may be starting to turn. On appeal in Goldman, the Second Circuit reversed the district court’s grant of class certification based (in part) on the district court’s refusal to consider evidence about the absence of a price impact when the truth was revealed, even though that evidence also “touche[d] on materiality.” As the court explained, price impact “differs from materiality in a crucial respect”—“[i]f a defendant shows that an ‘alleged misrepresentation did not, for whatever reason, actually affect the market price’ of defendant’s stock, ‘there is no grounding for any contention that the investor indirectly relied on that misrepresentation through his reliance on the integrity of the market price.’” Accordingly, the Second Circuit’s opinion makes clear that district courts should consider all evidence that could bear on price impact, even if that evidence is also potentially probative of materiality. The court was also bothered by the fact that the district court failed to hold an evidentiary hearing or hear oral argument—which was at odds with the district court’s duty under Wal-Mart and Comcast to “rigorously” scrutinize class certification.

Not everything in Goldman was helpful for securities fraud defendants, however. The Second Circuit also agreed with the district court that defendants bear the burden of persuasion to rebut the fraud-on-the-market presumption—which would mean that plaintiffs do not bear the burden of persuasion to invoke the presumption. In so holding, the Second Circuit split from the Eighth, which in IBEW Local 98 Pension Fund v. Best Buy Co., 818 F.3d 775 (8th Cir. 2016), held that under Federal Rule of Evidence 301, defendants merely bear the burden of production in rebutting the Basic presumption—plaintiffs retain the burden of persuasion. The Second Circuit did, however, disagree with the district court’s conclusion that defendants had to meet their burden with “conclusive” proof of the “complete absence of price impact.” Showing the absence of price impact by a mere “preponderance of the evidence” is sufficient, according to the court.

Despite the tension between Goldman and Best Buy, the Second Circuit’s decision is a helpful tool for defendants seeking to defeat class certification in dubious securities fraud cases. The principal takeaway from Goldman is that in opposing class certification in 10b-5 cases, defendants should be prepared to offer any evidence that could potentially sever the link between the alleged misrepresentations and an impact on the stock price—and to use the Goldman decision to convince district courts to consider that evidence. This includes evidence about price movements (or the lack thereof) on days not at issue in the complaint, but that could be probative of the market’s reaction to the revelation of the purported truth that was misrepresented or withheld. This also includes evidence showing plausible alternative explanations for statistically significant price movements following an alleged misrepresentation or corrective disclosure.

Goldman is now back before the district court on remand, where the court is once again considering whether to certify a class. We will continue to monitor the case to see how the district court applies the Second Circuit’s price impact guidance.