NU Online News Service, Aug. 14, 12:00 p.m.EDT

A federal court of appeals is sending back to district court a$72 million settlement General Reinsurance Corp. had with investorsto resolve a securities class-action lawsuit.

The U.S. Court of Appeals for the Second Circuit reversedDistrict Court Judge Deborah Batts' 2010 refusal to certify thesettlement class because it could not satisfy a certain“predominance requirement” used to test common versus individualissues in order to determine if the class is cohesive, and whethera class-action is the best way to proceed with a dispute.

In this case, each plaintiff would need to prove that each wasaware of and relied on AIG's false financial statements.

But a trio of appeals judges says a failure to satisfy thisrequirement only presents problems at trial. In this case, the“settlement eliminates the need for trial” so the class does notneed to satisfy the requirement.

“With a settlement class, the manageability concerns posed bynumerous individual questions of reliance disappear,” says theruling.

The case was originally filed in 2007, led byseveral Ohio public pension funds alleging a sham $500million finite reinsurance transaction between Berkshire Hathaway'sGen Re and American International Group Inc. (AIG) in the early2000s was intended to inflate AIG's loss reserves.

The judges say their reversal “should not be taken as anendorsement of the fairness of the proposed settlement—and issue weleave to the district court to address” if it certifies theclass.

Batts last October also preliminarily approved aseparate $725 million settlement agreement toresolve a securities class-action lawsuit AIGand Ohio and Florida public pension planfunds.