Second Circuit Makes it More Difficult for Plaintiffs to Obtain Class Certification in Complex Cases

In a significant decision with potentially wide-ranging implications, on December 5, 2006 the Second Circuit, in In re Initial Public Offering Securities Litigation, No. 05-3349, significantly limited the ability of plaintiffs to certify class actions in large, complex cases, such as those involving securities fraud. Although the Second Circuit, answering a “surprisingly unsettled” question, described its decision as a “clarification” of the Court’s previous holdings, the decision appears to mark a considerable shift in Second Circuit jurisprudence in favor of defendants.