In November 2007, a nine-person jury returned a unanimous defense verdict in what is perhaps the largest federal securities fraud class action jury trial, In re JDS Uniphase Corporation Securities Litigation. Plaintiffs sought approximately $20 billion in damages based on their allegations that JDSU’s executives had misled investors and engaged in insider trading. Plaintiffs did not challenge the verdict, and they did not appeal. It was a clean and complete defense victory.
Four years later, we observed that JDSU remained unique. After JDSU, only a handful of securities class actions had gone to trial. Not one of those trials resulted in a clean victory for either party. Nor did trial mark the end of any of those cases. Instead, litigation continued to grind on for years after the jury reached its verdict. Based on the trends observed in those cases, we predicted that, “future clean victories for either side will remain elusive.”
So far, that prediction has held up. In the past decade, there have been only two trials of federal securities fraud class actions. Both cases reached a jury verdict. Neither of those verdicts, however, represented a clear win for either party, and neither trial ended the case. Once again, the jury’s verdicts were the prelude to further rounds of litigation. That post-trial litigation had significant implications for plaintiffs’ anticipated recovery, and it ultimately led the parties in both matters to settle. Below, we summarize those two recent cases and note three key takeaways based on those trials.
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