News and Events
Update: U.S. Supreme Court Rejects Potential Obstacle to Certification of Securities Fraud Class Actions Against Public Companies
Monday, June 06, 2011
By Janissa Strabuk
In a unanimous opinion, the United States Supreme Court today held that securities fraud plaintiffs need not prove loss causation for a misrepresentation case to be certified as a class action. While plaintiffs must "demonstrate that the defendant's deceptive conduct caused their claimed economic loss," to prevail on the merits of their case, they need not prove loss causation at the class certification stage, wrote Chief Justice John Roberts for the court in Erica P. John Fund, Inc. v. Halliburton Co., et al. The Court's ruling resolves a split in the federal Circuit courts and removes what had been a potential obstacle to class certification of certain securities fraud lawsuits against public companies.
The plaintiff, Erica P. John Fund, Inc., sued Halliburton on behalf of a proposed class of investors, alleging that Halliburton violated section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by making deliberate false statements about certain potential liabilities in asbestos litigation, expected revenues from construction contracts, and the benefits of a merger with Dresser Industries. The Fund further alleged that after Halliburton issued disclosures correcting the purported false statements, Halliburton's stock price fell causing the investors' losses.
The key question on appeal was whether the Fund met Federal Rule of Civil Procedure 23(b)(3)'s requirements for class certification by demonstrating, among other requirements, that common questions of law and fact predominate over individual issues. Justice Roberts noted that "[w]hether common questions of law and fact predominate in a securities fraud action often turns on the element of reliance." Both the District Court and the Fifth Circuit concluded that the Fund had to prove loss causation to establish that the issue of reliance could be resolved on a class-wide basis. Because the Fund could not prove loss causation, certification was denied. In rejecting that ruling, Roberts wrote that such a requirement was contrary to the high court's prior rulings and that securities fraud plaintiffs need not establish loss causation to obtain class certification.
The case now goes back to the trial court, which, Justice Roberts, noted, said it would certify the class were it not for the "loss causation requirement."
More on Our Attorneys
Other Recent News
Tousley Brain Stephens is investigating claims that glass sunroofs from various manufacturers spontaneously explode, which can shower the occupants with broken glass. Failures can occur at highway speeds or even while parked. Reports of problem appear widespread across manufacturers and models.Read More»
Tousley Brain Stephens is investigating unsolicited prerecorded telemarketing calls, also known as autodials or robocalls, made by Local Lighthouse. The calls claim to be "Kate" or "Sharon" from Google Plus, although we do not believe that Local Lighthouse is affiliated with Google. These calls may violate the federal Telephone Consumer Protection Act (TCPA). Under the TCPA, it is illegal for a person to use an automated telephone system or a prerecorded voice to call another person's telephone without prior consent. Recipients of these unlawful telephone calls can receive $500 for each call and up to $1500 for each call if the caller willfully or knowingly violated the TCPA.Read More»
On November 12, 2014, TBS attorneys Kim Stephens and Jason Dennett secured a $2.375 million settlement from Monsanto Corporation for soft white wheat farmers in Idaho, Oregon, and Washington. The settlement resolves a number of lawsuits related to the May 2013 discovery of genetically modified wheat on a farm in Eastern Oregon and subsequent temporary limits on certain exports of soft white wheat.Read More»
TBS attorney, Kim D. Stephens, with co-counsel, won an appeal before the Washington State Court of Appeals in a trust and estate dispute arising out of the estate of noted real estate developer, J. Thomas Bernard.Read More»
Tousley Brain Stephens PLLC attorneys, Chris Brain, Kim Stephens, and Chase Alvord, were recognized recently as three of the 2015 Best Lawyers in America. Lawyers are chosen for inclusion based solely on the vote of their peers.Read More»