Securities Fraud Class Certification Fails Due To Critical Question: Did All Class Members Purchase A Security?

A recurring theme here has been the importance in class certification motions of the underlying substantive law. Yet another recent example comes from a securities fraud action in a Nevada federal court.

In Goodman v. Platinum Condominium Development, the court denied class certification based on a Rule 23(b)(3) predominance/superiority analysis. The plaintiffs were purchasers of condominium-hotel units in a Las Vegas resort. After their units experienced a steep drop in value, the purchasers sued the developers, alleging that the sale of the units violated state securities laws. The court found that the proposed class satisfied the class certification requirements of Rule 23(a), but nonetheless held that class certification was inappropriate under Rule 23(b). Specifically, the court rejected the plaintiffs' Rule 23(b)(3) arguments that the common questions of law or fact predominated over individual questions, and that the class action was a superior mechanism