Fourth Circuit Holds that Class Action Not Superior Method Under Rule 23(b)(3) Compared to Adversarial Bankruptcy Proceeding

BNA’s Class Action Litigation (Volume 07 Number 06, Fri., Mar. 24, 2006, Page 184, ISSN 1529-8000) is reporting on Gregory v. Finova Capital Corp., --- F.3d ----, 2006 WL 619063 (4th Cir. Mar. 14, 2006):

A class of noteholders alleging securities law violations against the principal lender to the now-bankrupt note issuer should not have been certified. . . .

The suit does not meet Fed. R. Civ. P. 23(b)(3)'s requirement that a class action be the "superior method for the fair and efficient adjudication of the controversy," . . . because the securities fraud issues will have to be decided in a pending adversary proceeding in the issuer's bankruptcy.

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