Facts of the Case
A group of Halliburton Co. shareholders, led by the Erica P. John Fund, filed a lawsuit that contends that from 1999 to 2001, the Houston-based company falsified earnings reports, played down estimated asbestos liability and overstated the benefits of a merger. The U.S. District Court for the Northern District of Texas denied the investors' motion for class certification in the case, holding that they couldn't sue as a group because they hadn't established that they lost money as a result of the alleged fraud. The U.S. Court of Appeals for the Fifth Circuit affirmed the lower court order.
Questions
In a securities fraud action, must plaintiffs prove that the alleged fraud caused a drop in stock prices in order to get class certification?
Conclusions
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No. The Supreme Court vacated and remanded the lower court order in a unanimous opinion by Chief Justice John Roberts. "Securities fraud plaintiffs need not prove loss causation in order to obtain class certification," the Chief Justice wrote.
Business Cases and the Roberts Supreme Court
Engage Volume 12, Issue 3, November 2011
The statement that the Supreme Court under Chief Justice Roberts, and more specifically the Court...
