Class certification as an evolving battleground: The Second Circuit's decision in Flag Telecom has given defendants a new weapon.

This paper examines the evolution of class certification as a battleground for defendants in securities litigation. Specifically, it focuses on the Second Circuit's recent decision in In re Flag Telecom Holdings, Ltd Sec. Litig., in which the Court held - for the first time - that plaintiff bear the burden of proving loss causation at the class certification stage. In ruling that the district court erred in certifying a class in a Section 10(b) action that included in-and-out traders who sold their shares before any curative information regarding the alleged fraud was disclosed to the market, the Second Circuit became the first appellate court outside the Fifth Circuit to hold that plaintiff must prove loss causation to certify a class. The paper argues that this decision may increase the size and strength of the arsenal available to defendants seeking to defeat class certification or limit the size of any such class, and explores the implications of this holding on securities class actions. Indeed, applying the reasoning of Flag Telecom, the Second Circuit has opened the doorfor defendants to make any loss causation argument at the class certification stage. The paper also examines a recent district court's application of Flag Telecom in a significant securities class action. [ABSTRACT FROM AUTHOR]