April 24, 2023

On April 20, Willkie filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit on behalf of several former SEC officials and law professors in support of Defendant FirstEnergy Corporation’s and Certain Individual Defendants’ petition for permission to appeal in the In re: FirstEnergy Corp., et al. securities case – one of the most high-profile securities cases pending in the country.

The brief argues that in granting class certification for plaintiffs, the lower court impermissibly expanded the Affiliated Ute presumption of reliance, which has historically been limited only to class actions alleging pure omissions, i.e. failure a disclose notwithstanding a legal duty to speak.  Despite that limitation, the lower court applied the Affiliated Ute presumption in this case, even though plaintiffs primarily alleged “half-truths,” which courts in other circuits have consistently treated as affirmative misstatements.  The brief discusses the potential far-reaching consequences of the district court’s decision on securities class action practice in the Sixth Circuit, including the Affiliated Ute presumption applying in nearly every securities case, the effective abandonment of the much more common and more stringent Basic presumption of reliance, and public companies’ exposure to near-automatic class certification as a result. 

The brief also argues that the lower court erred in holding that the class-wide damages requirement under Comcast was satisfied, even though plaintiffs’ expert merely proposed vague and unspecific damages methodologies, and assured the court it would articulate a sufficient damages methodology at a later stage.  The brief emphasizes that without specifically articulating a reliable, Daubert-compliant methodology, plaintiffs cannot meet the standard set forth in Comcast.

The Willkie team was led by partner Todd Cosenza, along with partner Charles Cording and associates Madeleine Tayer and Amanda Payne.