News & Events

In a rare reversal of certification of a securities class action, the Eighth Circuit reversed certification of a class asserting Rule 10b-5 claims against Simpson Thacher clients Best Buy and certain executives, seeking hundreds of millions of dollars in damages. The Eighth Circuit decision was the first circuit court to address the standards under which defendants may offer evidence of a lack of price impact to rebut the fraud-on-the-market presumption of classwide reliance under the Supreme Court’s Halliburton II decision. The Eighth Circuit noted, “Addressing an issue of first impression, we conclude the district court misapplied the price impact analysis mandated by Halliburton II and therefore reverse.” The Eighth Circuit adopted Defendants’ arguments that they successfully rebutted the presumption of reliance with evidence that Best Buy’s stock price did not move when the alleged misstatements were made. It further held that once the presumption was rebutted, Plaintiffs failed to meet their burden of proving price impact. The decision also breaks a uniform lack of success by defendants nationwide at the district court level on these issues, which threatened to largely neutralize Halliburton II. Some district court decisions had suggested that actually defeating class certification with evidence of a lack of price impact was practically impossible.

The Simpson Thacher team is Joseph M. McLaughlin (who argued the appeal), George S. Wang and Daniel J. Stujenske (Litigation).