On November 15, in a case that could have significant implications for putative federal securities class actions, the Supreme Court granted certiorari in Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317. In its petition for certiorari, Halliburton asked the Court to consider two issues. First, it asked the Court to “overrule or substantially modify” the holding of Basic Inc. v. Levinson, 485 U.S. 224 (1988), at least to the extent Basic establishes a presumption of classwide reliance based on a fraud-on-the market theory. Second, even if the Court is not inclined to revisit its holding in Basic, Halliburton urged the Court to nonetheless hold that a defendant may rebut — at the class certification stage — the presumption of classwide reliance by introducing evidence that any alleged misrepresentations did not distort the market price. The Supreme Court did not limit its consideration to either question.
The claims arise out of alleged misrepresentations made by Halliburton and some of its directors. In the opinion below, the Fifth Circuit affirmed the district court’s certification of the plaintiff class. The panel refused to allow Halliburton to present “market price impact” evidence at the class certification stage as a means to rebut the fraud-on-the-market presumption of reliance.
A date for arguments in the case has yet to be set.
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