Judicial review of class certification applications - the compelling case for a merits-based gate-keeper analysis

In this time of economic crisis and challenge to corporate America, more than ever the defeat of class action certification applications is a critical and strategic imperative. While class action legislation has had some impact, the fact of the matter is that class action filings will test corporate legal departments and their defense lawyers over the next several years as plaintiffs' counsel look for new and innovative ways to aggregate claims. For over thirty years, certain dicta in the Supreme Court's decision in Eisen v. Carlisle & Jacquelin, has served as a barrier to considering the substantive factual and legal merits at the class certification stage of the litigation. In Eisen, the plaintiff filed suit against several brokerage firms alleging violations of securities and antitrust laws. Plaintiffs' counsel regularly argued that courts must accept the allegations as pled and certify the class based on the allegations as long as they met the Rule 23 criteria, and everything else could be resolved at a later time.