Jury Certification of Federal Securities Fraud Class Actions

The rough equivalence of certification and ultimate outcome is class action dogma. If certification is granted, then the plaintiff “wins” by settlement because the risk of incurring class-wide liability by going to trial is too great. If certification is denied, the defendant “wins” because the case may not be worth litigating without the possibility of a class-wide recovery. This Note is about where the dogma is wrong. There are now cases where a denial of certification, just like a grant, presents to the defendant the risk of incurring class-wide liability at trial. This is because those cases are capable of what I call jury certification. Thanks to recent case law, there are now cases where the jury will decide an issue when it passes on the merits that is the same issue that the judge first decided during certification. The merits and class certification overlap on that issue. That overlap gives the jury’s verdict the power to, in effect, overrule the judge’s decision to deny certification. Thus, a defendant facing a certified class and a defendant facing an uncertified class capable of jury certification are in the same bargaining position—going to trial means risking class-wide liability. Here, I will explain how jury certification could work in federal securities class actions, where the conditions for jury certification are often found.