FOR IMMEDIATE RELEASE—December 7, 2006                        Contact:  Brendan LaCivita

National Chamber Litigation Center Applauds Class Action Ruling

WASHINGTON, D.C.—The National Chamber Litigation Center (NCLC) praised a ruling this week by the U.S. Court of Appeals for the Second Circuit that rejected class action status in six securities cases—representing 310 consolidated class actions—and reinstated strict standards for certifying federal class actions. NCLC filed an amicus brief in the case.

"We applaud the Second Circuit for undertaking this major course correction in class action law," said Robin Conrad, NCLC senior vice president. "The lower court's dramatic departure from prevailing legal standards threatened to turn class certification into a rubber stamp."

In In Re Initial Public Offering Securities Litigation, the U.S. District Court for the Southern District of New York granted the class action status based only on "some showing" by the plaintiffs that numerous investment banks and public companies had artificially inflated Internet stock prices during the late 1990's market boom by their alleged use of Initial Public Offering (IPO) allocations. It did so without conducting a "rigorous analysis" of the plaintiffs' class action allegations as required by the Supreme Court and other circuits. On Tuesday, the appellate court disavowed its earlier practice and reversed the lower court's ruling.        
 
"Certifying a massive class of institutional investors with little or no showing that the class met federal requirements is a classic invitation for blackmail settlements," said Conrad.  "Courts have a duty to ensure that litigants—and the courts themselves—are not subjected to frivolous, expensive class actions."

NCLC, the public policy law firm of the U.S. Chamber of Commerce, is a membership organization that advocates fair treatment of business in the courts and before regulatory agencies. The U.S. Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.
 
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