November 29, 2017 News

Morrison Cohen Lawyers File U.S. Supreme Court Amicus Curiae Brief on Behalf of EuropeanIssuers aisbl

November 29, 2017 – On November 28, 2017, Morrison Cohen LLP Partner Jason Gottlieb and Associate Daniel Isaacs filed a brief with the U.S. Supreme Court on behalf of EuropeanIssuers aisbl, a pan-European industry organization representing some 8,000 publicly quoted companies in 14 European countries, as amicus curiae in support of certiorari in Petroleo Brasileiro S.A.-Petrobras, et al. v. Universities Superannuation Scheme Limited, et al.

One issue presented in the Petrobras case is a question on which the U.S. Courts of Appeals are sharply divided:  whether under Rule 23 of the Federal Rules of Civil Procedure, plaintiffs in a putative class action are required to establish that class membership is ascertainable through administratively feasible means, or whether to be certified, a class must merely be defined clearly with objective criteria. 

The question is of recurrent and significant importance, particularly for foreign securities issuers such as the members of EuropeanIssuers.  If a foreign security is purchased by a foreign citizen on a foreign exchange, under the Supreme Court’s rule in Morrison v. National Australia Bank, 561 U.S. 247 (2010), U.S. courts do not have jurisdiction to hear that investor’s claim.  Where a foreign issuer is sued in a putative class action in the U.S. (such as in the Petrobras case), the Morrison rule might exclude many, and perhaps most, of the class members, making the case much smaller than it may seem.  However, without a practical ascertainability requirement for class certification, foreign securities issuers will have no idea which transactions will be part of a certified class at the end of the litigation, and which transactions should not have been subject to U.S. litigation in the first place.  Accordingly, foreign issuers face what courts describe as “hydraulic pressure” to settle for amounts that – if the class members were identified and the Morrison rule applied – would be vastly disproportional to the claims.  This uncertainty, if left unchecked, will lead to significant additional costs for foreign issuances, and a concomitant negative impact on the U.S. securities markets.

In its amicus curiae brief, EuropeanIssuers urged the Court to grant certiorari to resolve the circuit split, and hold that in order to a certify a Rule 23 class, class membership must be ascertainable at the time of class certification through administratively feasible means.

To read the full amicus curiae brief, click here.