In re National Instruments Securities Litigation

Background

National Instruments Corporation repurchased stock in 2022. Emerson Electric began making offers to acquire National Instruments in May 2022, including offers of $48 per share, but National Instruments did not disclose those offers while it repurchased shares in August and September. Emerson later made a public $53-per-share offer, and ultimately acquired National Instruments for $60 per share.

The lead plaintiff, Wayne County Employees’ Retirement System, alleges that National Instruments violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 by repurchasing stock without either disclosing Emerson’s offers or refraining from trading. The action also includes control-person claims against Eric Starkloff and Michael McGrath. Earlier in the case, the court dismissed claims based on alleged misleading omissions, leaving the insider-trading claim and related control-person claims.

Class-certification analysis

The lead plaintiff sought certification under Federal Rule of Civil Procedure 23. The court found that the requirements concerning the number of potential class members, shared legal and factual questions, similarity between the lead plaintiff’s claims and the class’s claims, and adequate representation were satisfied. The defendants did not dispute that the proposed class action was the superior method of resolving the dispute or that the class could be identified using objective criteria.

The disputed issue was predominance: whether common questions affecting the class were more important than individual questions. The court held that reliance could be presumed under the Affiliated Ute doctrine because the claims are based on an alleged failure to disclose material information. The court did not decide that the omissions were material or that the class would win; it held only that materiality was a common question suitable for class treatment at this stage.

The court also held that damages could be measured on a classwide basis. The lead plaintiff’s expert proposed using $48 per share as a conservative estimate of the stock’s value if Emerson’s offer had been disclosed, with the difference between that amount and the actual stock price providing a basis for estimating artificial price deflation. The court found this sufficient for class certification and rejected the defendants’ argument that damages had to be limited to their profits gained or losses avoided.

Modified class definition and appointments

The court agreed with the defendants that the proposed class period was too broad because it included sellers who did not trade at the same time as National Instruments’ repurchases. The court therefore certified a class of people who sold National Instruments common stock between August 12 and August 30, 2022, and/or between September 12 and September 28, 2022, inclusive, and were damaged thereby. The stated exclusions cover the defendants, the company’s officers and directors, their immediate family members and legal representatives, heirs, successors, assigns, and entities in which the defendants had or have a controlling interest.

Disposition

The court granted the lead plaintiff’s May 2, 2025 motion for class certification with the modification to the class definition described above. It appointed Wayne County Employees’ Retirement System as class representative and Robbins Geller Rudman & Dowd LLP as class counsel. The order certified the class but did not decide the ultimate liability or damages issues.