More Searching Fact-Based Scrutiny of Proposed Class Actions Reaches Securities and Antitrust Actions

Blackmail settlements,” “in terrorem power” in the hands of class counsel—these are the consequences
of improvident class certification decisions, according to courts that have despaired at lax enforcement of Rule 23 prerequisites. These labels stem from the knowledge that the decision to certify immediately ups the ante in class litigation, placing “hydraulic” pressure on defendants to resolve even unmeritorious claims before trial. Indeed, a Federal Judicial Center study found that settlements resulted in nearly 90% of cases in which the courts had certified a class....