Overview
On October 2, 2024, Cohen Milstein’s Laura Posner and Carol V. Gilden; and counsel from Schnapper-Cateras PLLC, Levi & Korsinsky, LLP, and Wolf Haldenstein Adler Freeman & Herz LLP submitted a brief for amici curiae, distinguished scholars on economics, accounting, statistics, data science, and forensic analysis in support of respondent in Nvidia Corp., et al. v. E. Ohman J:or Fonder AB, et al. (No. 23-970), before the Supreme Court.
Amici & Purpose of the Brief
Amici are leading scholars on economics, accounting, statistics, data science, and forensic analysis who have served as consultants and experts for a variety of clients, including the U.S. Department of Justice and the Securities and Exchange Commission (SEC), as well as both defense- and plaintiff-side law firms. They have each participated in expert analysis that has helped inform the filing of complaints, for example, on issues of stock price movements, industry pricing, market manipulation, insider trading, accounting fraud, and the results of pharmaceutical drug trials. They respectfully offer their professional views about the useful role that data science, and analysis of data-intensive and data-complex topics, can play at the complaint stage, as well as their practical experiences having served as experts themselves.
Amici curiae are:
- David Madigan: Provost and Senior Vice President of Academic Affairs at Northeastern University, as well as Professor in the College of Computer Sciences.
- Joshua Mitts: David J. Greenwald Professor of Law at Columbia Law School.
- Daniel Taylor: Arthur Andersen Chaired Professor at The Wharton School, and Director of the Wharton Forensic Analytics Lab.
Summary of Argument
The second Question Presented, as framed by Petitioners, presupposes that plaintiffs rely on expert opinions to “substitute for particularized allegations of fact.” (emphasis added). That core assumption about the role of experts is fundamentally mistaken and does not reflect the practices of experts and data scientists in a range of securities law cases.
In reality, experts can and do play a vital and appropriate role in cases at the pre-filing stage by analyzing data to inform, supplement, and corroborate – but not to substitute for – particularized allegations, including through quantitative analysis. Quantitative experts (like amici) can apply statistics and data science to distill complex and/or voluminous data for plaintiffs and courts alike. Quantitative experts play a key role in securities law cases by, for example, assessing whether a stock price drop was statistically significant, whether a given share was traceable to a registration statement, or whether stock option backdating or market manipulation have occurred.
More broadly, the involvement of pre-trial experts can promote judicial efficiency by ensuring that complaints are well-pled, well-vetted, and as detailed as possible. For instance, explaining the complex nuances of drug trial results, engineering concepts,
Generally Accepted Accounting Principles, and various other technical standards that lawyers lack necessary training and expertise to understand. As numerous scholars and courts have recognized, encouraging the parties to consult with experts early in litigation incentivizes more thorough evaluation and preparation of claims before filing a complaint.
Involving quantitative experts in these ways is fully consistent with – and, indeed, encouraged by – the judicial policy of vigorous, early evaluation of claims under the Private Securities Litigation Reform Act (PSLRA).
Finally, two of Petitioners’ amici appear to misunderstand the common functions of experts and therefore propose an unusually limited role for them in securities law cases. One amicus brief from the Chamber of Commerce suggests that experts should not be allowed to use publicly available information and should only rely on internal company documents.
But that argument cannot be right: plaintiffs (and investors) rely on public data all the time (and courts regularly take judicial notice of such information). A contrary rule could incentivize the theft or leaking of corporate information. A second amicus brief from the Atlantic Legal Foundation argues that courts must apply Federal Rule of Evidence 702 at the complaint stage to assess the reliability of experts involved. The Rules of Evidence govern the admissibility of evidence at trial and in certain evidentiary hearings, not all proceedings or pleadings. Moreover, neither the Rules of Evidence nor the Federal Rules of Civil Procedure provide any support for requiring some new form of a Daubert hearing at the pleading stage.
Overall, amici respectfully stress that it is important to clarify that the central assumption of the second Question Presented does not accurately capture the practice of experts in a range of securities law cases. Furthermore, this Court should be careful to resolve the case at bar in a way that does not inadvertently limit this important and widespread practice.