The US Supreme Court has backed Amgen shareholders to sue the company as a group without having to demonstrate that misinformation was used to fraudulently inflate its stock price.
The move, backed by a 6-3 vote, breaks the form of recent decisions that had made it harder to sue companies collectively.
The case against Amgen has been led by Connecticut Retirement Plans and Trust Funds, which alleges that between April 2004 and May 2007 the California, US-based company exaggerated the safety of its anti-anaemia drugs, inflating the company’s share price.
Shareholders sought class certification based against a theory dubbed "fraud on the market", backed by the Basic Inc v Levinson Supreme Court case in 1988.
The theory assumes that stock prices reflect public information, with purchases made presumed to be reliant on that information.
The decision upheld a ruling made by the 9th US Circuit Court of Appeals in Pasadena, California in November 2011 that allowed the class action to proceed, with lower courts divided.
The ruling has, however, been met with opposition, particularly by business groups.
The US Chamber of Commerce alleged that the decision encouraged premature class certifications that could pressure defendants into settlements.
Justice Scalia, who dissented from the Supreme Court’s decision, agreed, suggesting that allowing plaintiffs to obtain class certification without demonstrating the misstatement to be material as "unquestionably disastrous."
"Certification of the class is often, if not usually, the prelude to a substantial settlement by the defendant because the costs and risks of litigating further are so high," added Scalia.