Facts of the Case

Provided by Oyez

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

  1. 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

  1. 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.