Securities – Class certification – Price impact

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Where a motion for class certification has been filed by shareholders who allege that they were harmed by a series of misrepresentations made by the defendant corporation and its executives during the rollout of an Alzheimer’s drug, the motion should be allowed despite the defendant’s contention that the alleged misrepresentations had no impact on price.

“This is a securities class action lawsuit brought by shareholders who allege that they were harmed by a series of misrepresentations made by Biogen, Inc. and its executives (collectively, ‘Biogen’) during the rollout of Biogen’s Alzheimer’s drug Aduhelm. On May 10, 2024, the plaintiff Oklahoma Firefighters Pension and Retirement System (‘the Firefighters’) moved to certify a class consisting of ‘[a]ll persons and entities who purchased or otherwise acquired common stock of Biogen, Inc. between June 8, 2021, and January 11, 2022,’ with certain exclusions. … After briefing and oral argument, on September 5, 2024 this Court allowed the Firefighters’ motion to certify the class, provided that the class period shall end on July 12, 2021. … On December 9, 2024, after cross-petitions for leave to appeal were brought pursuant to Rule 23(f) of the Federal Rules of Civil Procedure, a panel of the First Circuit Court of Appeals ordered this Court to enter a memorandum reflecting its ‘rigorous analysis’ of the relevant Rule 23 class certification factors within sixty days. … This memorandum sets out the Court’s reasoning for its certification decision. …

“In Basic Inc. v. Levinson, [485 U.S. 224 (1988),] the Supreme Court established that securities fraud class action plaintiffs may invoke a rebuttable presumption of reliance by showing ‘(1) that the alleged misrepresentations were publicly known, (2) that they were material, (3) that the stock traded in an efficient market, and (4) that the plaintiff traded the stock between the time the misrepresentations were made and when the truth was revealed.’ … This is known as the ‘fraud-on-the-market’ theory, which reflects the premise that ‘the market price of shares traded on well-developed markets reflects all publicly available information, and, hence, any material misrepresentations.’ …

“… Biogen invokes its right to undercut the Basic presumption by showing a total lack of price impact. …

“This Court agrees that the Firefighters have carried their burden to show that the Basic factors apply, and thus proceeds to the question whether Biogen has successfully rebutted the premise of price impact that underlies the Basic presumption. For the reasons given below, it concludes that Biogen has not done so. Independent of the predominance issue, however, this Court is compelled to extend the class period no further than the impact of the July 12 corrective disclosure identified by the Firefighters, because that is the date on which the alleged misrepresentations were unambiguously cured. Thus, this Court allowed the motion to certify the class, provided that the class period shall extend no further than July 12, 2021. …

“The requirements of Federal Rule of Civil Procedure 23(a) are satisfied, and because the Firefighters have shown that the Basic factors supporting a presumption of reliance apply here, that Biogen has failed to carry its burden to show no price impact in the class period, and that the Firefighters have adduced an adequate method of calculating class-wide damages, satisfying Federal Rule of Civil Procedure 23(b)(3)’s predominance requirement, this Court allowed the Firefighters’ motion to certify the class. …”

Oklahoma Firefighters Pension and Retirement System v. Biogen, Inc., et al. (Lawyers Weekly No. 02-050-25) (41 pages) (Young, J.) (Civil Action No. 22-10200-WGY) (Feb. 4, 2025).

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