Standards of review on appeal have sometimes appeared to me to be mostly for show. Certainly they are pliable, often seeming to depend on whether the reviewing judges would have had a tough time deciding the issue themselves if they’d been deciding it below. For many appellate judges, there aren’t that many close calls, especially on issues they’ve thought about many times before.

For the judges on a Ninth Circuit panel that recently reviewed a denial of class certification in an investors’ action, however, the standard of review was worth fighting over even though they agreed as to the result for the parties. In Desai v. Deutsche Bank Securities Ltd., 573 F.3d 931 (2009), no judge dissented from the per curiam opinion holding that the district court did not abuse its discretion in denying certification because individual issues did not predominate under Federal Rule of Civil Procedure 23(b)(3).  (Rule of the decision on Spindle.)   In competing concurrences, though, Judges O’Scannlain and Graber disputed whether the Court of Appeals was required to decide that the denial was required as a matter of law.  (Topic on Spindle.)

The underlying issue was plaintiffs’ theory that in a manipulation claim under Rule 10b-5 reliance can be presumed on the ground that investors typically rely on the integrity of the market, which was undermined by the alleged manipulative conduct. In other words, the plaintiffs proposed an analog to the fraud-on-the-market presumption of reliance in actions based on misstatements or omissions. (They also argued, and the district court and appellate court rejected, a presumption of reliance theory based on material omissions under Affiliated Ute Citizens v. United States, 406 U.S. 128, 153–54 (1972).  (Rule on Spindle.) Judge O’Scannlain, who wanted to decide the issue as a matter of law, argued that the theory was either legally valid or not, regardless of the facts weighing for or against predominance. Judge Graber’s retort was that the question before the court was only whether the district court was required to recognize the novel presumption.  Judge Noonan, who didn’t express himself personally, evidently agreed with Judge Graber. As a result, another district court may yet recognize the presumption, and another panel may yet hold that the presumption is not legally invalid.