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From Securities Regulation Daily, June 17, 2015

Comcast does not require a class-wide method of calculating damages

By Rodney F. Tonkovic, J.D.

A district court has granted a motion to expand the class period for fraud claims brought against Las Vegas Sands Corp. The plaintiffs moved to expand the class, which had previously been certified for a period running from February 4, 2008 through November 6, 2008, to encompass a period beginning on August 2, 2007. The court granted the motion after finding that common issues predominated in this case (Fosbre v. Las Vegas Sands Corporation, June 15, 2015, Gordon, A.).

Background. The plaintiffs claimed that they purchased Las Vegas Sands's stock at artificially high prices as a result of the company's false and misleading statements about its development plans, liquidity, and equity offerings. The court had previously granted class certification for a class period extending from February to November 2008, but held that the plaintiffs had not pleaded scienter with sufficient particularity for the period from August 2007 to February 2008. The second amended complaint cured this deficiency, the court held, by including additional alleged misstatements and new factual allegations.

The plaintiffs then moved to expand the class period to start from August 2, 2007, but the parties subsequently requested that the court defer consideration of the issue pending the Supreme Court's decision in Halliburton Co. v. Erica P. John Fund, Inc.. In Halliburton, decided in June 2014, the Court held that the presumption of reliance may be defeated at the class certification stage through evidence that the misrepresentation did not affect the stock price. The plaintiffs then moved to expand the class, and the defendants argued in opposition not only to deny expansion but also to decertify the class entirely.

Comcast. The only issue before the court was whether common issues predominated. Specifically, the parties disputed the application of the Supreme Court's decision in Comcast Corp. v. Behrend, which held that to establish predominance, a plaintiff must show that damages can be calculated on a class-wide basis and in a manner consistent with the theory of liability.

In this case, the defendants argued that Comcast required the plaintiffs to identify a method of calculating class-wide damages. The court disagreed, explaining that Comcast held neither that a class-wide damages model must be used to establish predominance nor that a class cannot be certified where damages cannot be measured on a class-wide basis. The earlier Amgen decision similarly held that plaintiffs seeking certification are not required to show that each element of their claim are susceptible to class-wide proof. The Ninth Circuit and others have also held that Comcast does not categorically require a class-wide method of calculating damages as a prerequisite to certification, the court added.

Predominance. The court then found that common issues predominated. Here, the plaintiffs invoked the Basic presumption of reliance and the defendants made no attempt to rebut it. The plaintiffs thus showed reliance was a common question under the fraud-on-the-market theory, the court said. The issues of falsity, materiality, scienter, and controlling person liability were also common to the class.

Because Comcast does not require a method to determine damages on a class-wide basis as a prerequisite for predominance, and because common issues predominated, the court granted the plaintiffs' motion to expand the class. The class is defined as all persons or entities who purchased or otherwise acquired Las Vegas Sands's common stock from August 2, 2007 through November 5, 2008.

The case is No. 2:10-cv-00765.

Attorneys: Christopher D. Stewart (Robbins Geller Rudman & Dowd LLP) for Frank J. Fosbre, Jr. Adam Murad (Sidley Austin LLP) for Las Vegas Sands Corp.

Companies: Las Vegas Sands Corp.

MainStory: TopStory FraudManipulation NevadaNews

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