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Federal Preemption Of State Payment Requirements In Securities Class Actions

Law360 (July 18, 2006, 12:00 AM EDT) -- Class actions are unique in litigation because “the client is the class.” This is one reason that judges must approve all settlements as well as lawyers’ fees—a requirement not ordinarily imposed in litigation. Likewise, under the Federal Rules of Civil Procedure, a plaintiff who serves as representative of a class must “fairly and adequately protect the interests of the class.”

Defendants in securities actions have occasionally argued that an investor does not satisfy this requirement if the investor does not agree to pay the costs of...
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