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Class Action

: The PSLRA Nugget

Posner Prose

By Christopher S. Jones

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Classic Judge Posner. Just classic. I never get tired of reading his opinions, and believe you me I get tired of many of them quick. So, listen to this from yesterday?s Seventh Circuit opinion in the AT&T/Georgeson class action. You see, as he puts it, ?after you buy a car and drive away with your new possession, much can happen to affect the value of your purchase. If what happens is traceable to something that occurred before the sale was complete, such as a defective engine block, you may be able to undo the sale on the basis that that something happened ?in connection with? the sale. But if something happens after the transaction is complete to make it less worthwhile to you, such as the dealer's replacing a tire that has worn out with one that is the wrong size, it is a separate wrong, not anything connected with the original sale unless the wrong is a breach of warranty.?

But ?of course there is a literal sense in which anything that happens that would not have happened but for some prior event is connected to that event. In that sense the fraud of which the plaintiff complains is connected to the merger, without which there would not have been such a fraud against the plaintiff and her class. But in the same sense the fraud is connected to the Big Bang, without which there would never have been a MediaOne or even an AT&T.?

There?s more where that came from, so if you like Posner (Yeah!), or you really can?t wait to read another SLUSA case (until now, always a big Zzzzz), you can read the opinion or listen to the oral argument in Gavin v. AT&T & Georgeson, issued September 6, 2006, right here.

Nugget: ?Georgeson's lawyer told us that the defendants had not sought removal on the alternative ground of diversity because they were certain there was jurisdiction under SLUSA. That was a mistake, but he added that he doubted that the plaintiff's complaint satisfied the requirement that the amount in controversy exceed $ 75,000. That was another mistake.?

Full post as published by The PSLRA Nugget on September 07, 2006 (boomark / email).