November 14, 2008

Incomplete Peace

When only some of the defendants settle a securities class action, the extent to which they can avoid related litigation with non-settling defendants through the imposition of a judicial bar order is limited. In In re Heritage Bond Litig., 2008 WL 4415172 (9th Cir. Oct. 1, 2008), the court, agreeing with Second Circuit precedent, held that a permissible bar order "may only bar claims for contribution and indemnity and claims where the injury is the non-settling defendant's liability to the plaintiff." Non-settling defendants should still be able to bring "genuinely independent" claims against settling defendants, even if the claims arise out of the same facts as those underlying the securities class action.

Holding: Vacated challenged bar orders and remanded to district court for modification.

Posted by Lyle Roberts at November 14, 2008 8:56 PM | TrackBack
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