By a 6-3 vote, the court allowed shareholders of Amgen Inc to sue the biotechnology company as a group without first having to show that misinformation had materially and fraudulently inflated its stock price.
Shareholders, led by the Connecticut Retirement Plans and Trust Funds, had accused the Thousand Oaks, California-based Amgen of misleading them between April 2004 and May 2007 by exaggerating the safety of its anti-anemia drugs, Aranesp and Epogen.
Writing for the majority, Justice Ruth Bader Ginsburg said early stages of class-action litigation are meant simply to ensure that cases are litigated fairly and efficiently.
Amgen "would have us put the cart before the horse," she wrote. "Congress, we count it significant, has addressed the settlement pressures associated with securities-fraud class actions through means other than requiring proof of materiality at the class-certification stage."
David Frederick, a lawyer for Amgen shareholders, said: "We're very pleased by the court's decision. It's a good day for investors."
Amgen spokeswoman Ashleigh Koss said the company expects the case to return to U.S. District Judge Philip Gutierrez in Los Angeles for further proceedings, and "will vigorously defend itself" when it does.
Wednesday's decision upheld a November 2011 ruling by the 9th U.S. Circuit Court of Appeals in Pasadena, California, that allowed the class action to proceed. Lower courts had been divided on the central issue.
"This is a big win for shareholder plaintiffs," said Jill Fisch, a securities law professor at the University of Pennsylvania. "It doesn't just say you don't have to prove materiality, but the majority slaps down the policy argument that there is too much securities fraud litigation. It says Congress already took care of that."
Some business groups supported Amgen's appeal.
The U.S. Chamber of Commerce said the 9th Circuit decision encouraged premature class certifications that could pressure corporate defendants to settle even "frivolous" cases.
Several former U.S. Securities and Exchange Commission commissioners agreed, saying that securities fraud cases almost always are settled after classes are certified, and that an Amgen loss would "compel settlement of even questionable claims."
Shareholders had sought class certification against the "fraud on the market" theory endorsed by the Supreme Court in a 1988 case, Basic Inc v. Levinson.
This assumes that the price of a stock in an efficient market reflects all public information, and that a purchaser is presumed to have relied on the verity of that information.
Fisch said securities fraud cases could be costly to litigate virtually at the outset because of the need to show a strong inference of fraudulent intent and losses.
"This opinion doesn't change that, but also doesn't require an extra complication - effectively a mini-trial - on materiality," she said.
The decision included an unusual voting lineup.
Chief Justice John Roberts and Justice Samuel Alito, along with the more liberal justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, signed on to Ginsburg's opinion.
Justices Antonin Scalia, Anthony Kennedy and Clarence Thomas dissented. Scalia accused the majority of making it too easy to pursue class actions, expanding the consequences of Basic "from the arguably regrettable to the unquestionably disastrous."
Shares of Amgen rose $1.39, or 1.6 percent, to $90.86 in afternoon trading on the Nasdaq.
Wednesday's decision also breaks a recent trend by the court to narrow class-action litigation.
The April 2011 decision in AT&T Mobility v. Concepcion upheld contracts that required customers to arbitrate disputes individually, and waived their right to pursue class actions.
Two months later, the court decertified a class action of as many as 1.5 million Wal-Mart Stores Inc female workers who accused the world's largest retailer of bias in pay and promotions, saying they raised too many different claims.
But Wednesday's decision "suggests that the court is not going to simply be a lackey of well-capitalized defendants, and make it more difficult than as explicitly required by law for shareholders to recover for economic loss," said Heidi Li Feldman, a professor at Georgetown Law School.
"The class action," she said, "is a perfect tool to prevent someone whose securities trade in a large, impersonal market from committing fraud on everyone else."
On March 25, the Supreme Court will take up class actions again when it hears arguments on whether doctors may arbitrate a dispute over payments with Oxford Health Plans LLC collectively, though the governing agreement did not mention class actions.
Meanwhile, on the same day the Amgen case was argued, the court heard arguments involving cable TV company Comcast Corp over what evidence must be presented before companies can be sued in class actions. A decision has not been issued.
The case is Amgen Inc et al v. Connecticut Retirement Plans and Trust Funds, U.S. Supreme Court, No. 11-1085.
(Reporting by Lawrence Hurley and David Ingram in Washington; and Jonathan Stempel, Bill Berkrot and Ransdell Pierson in New York; Editing by Howard Goller, Gerald E. McCormick, Andrew Hay and Bernadette Baum)