Presumptions of Reliance: What They Really Mean and How to Defeat Them

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When Henry Stanley posed the famous query, ‘‘Dr. Livingstone, I presume?,’’ he made a deduction based on common sense and probability. His question was amusing not only by virtue of its formality, but also because of the strength of the circumstantial evidence before him: In the Tanzanian village of Ujiji, David Livingstone was probably the only other Caucasian man for a thousand miles in any direction. Despite the strength of the circumstantial evidence, however, Stanley posed the words in the form of a question, not as a statement of fact. He allowed his addressee to verify the presumed fact.

In fraud-based class action litigation, plaintiffs often characterize presumptions of reliance as statements of fact, punctuated with an exclamation point rather than a question mark. Presumptions of reliance, they argue, arise whenever the defendant has misrepresented or omitted a ‘‘material fact.’’ This permits them to dispense with individualized proof that the defendant’s conduct actually duped class members to their detriment.

Originally published in BNA Product Safety & Liability Reporter on January 13, 2014.

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Topics:  Class Action, Fraud, Litigation Strategies, Rebuttable Presumptions

Published In: Business Torts Updates, Civil Procedure Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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