Court Opinion

ID: 9632433
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:14:47.524104+00
Date Added: 2024-06-11T12:38:07.732318
License: Public Domain

GRABER, Circuit Judge,
concurring:
I concur fully in the court’s opinion but write to respond to Judge O’Scannlain’s assertion that we must decide definitively, one way or the other, whether Investors are entitled to plead a novel “integrity of the market” presumption. Concurrence at 942-43. Neither logic nor precedent requires us to reach that question in the circumstances presented here.
The district court denied class certification because individual questions, rather than class-wide questions, predominated within the meaning of Rule 23(b). The court reached that conclusion by analyzing the two existing exceptions to the requirement to prove individual reliance and by declining to recognize a third proposed exception. We review for abuse of discretion, Dunleavy v. Nadler (In re Mego Fin. Corp. Sec. Litig.), 213 F.3d 454, 461 (9th Cir.2000), so the only question we must answer is whether the district court’s refusal to recognize a new exception amounted to an abuse of discretion. The district court did not abuse its discretion even if the third exception turns out to be valid, so long as existing law did not compel the court to recognize the third exception in this case.
The presumption of reliance under Affiliated Ute Citizens v. United States, 406 U.S. 128, 153-54, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972), does not apply because it is limited to cases that “can be characterized as ... primarily alleging] omissions.” Binder v. Gillespie, 184 F.3d 1059, 1064 (9th Cir.1999). The complaint primarily alleges acts (manipulation) rather than omissions. The fraud-on-the-market presumption does not apply because it establishes reliance “when the statements at issue become public” and the “public information is reflected in the market price of the security.” Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 128 S.Ct. 761, 769, 169 L.Ed.2d 627 (2008). As Investors acknowledge in their bid to create a new exception, those conditions do not exist here.
The reason why the new exception is not compelled by existing law can be found quite simply in the Supreme Court’s cautionary statement that “the § 10(b) private right should not be extended beyond its present boundaries.” Id. at 773. We need *947say no more than that to hold that the district court permissibly denied class certification.
To summarize, the district court declined as a matter of law to recognize a new version of the fraud-on-the market presumption, which we refer to as an “integrity of the market” presumption. All we have to decide is whether the district court had to recognize that new theory. If so, then the court made a mistake of law (and hence abused its discretion, see Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996) (“A district court by definition abuses its discretion when it makes an error of law.”)). But if the court did not have to recognize the investors’ proposed new theory, there is no abuse of discretion; that result could occur either because there is no such theory as a matter of law or because it is unclear whether such a theory ought to be recognized or not. We properly have opted for the final formulation and have found no abuse of discretion.