The Supreme Court Considers Challenge to Key Legal Theory in Class Action Securities Litigations
The Supreme Court heard oral arguments yesterday in Halliburton Co. v. Erica P. John Fund, Inc. (13-317), a case with the potential to have major ramifications on the future of private securities fraud class actions. At stake is the continued viability of the rebuttable presumption that all putative class members relied on an alleged misrepresentation when they purchased securities in an efficient market. That presumption is vital for plaintiffs in the majority of class action securities litigations. At oral argument, the Supreme Court justices’ questions indicated that a majority may not be prepared to completely eliminate the presumption. However, there may be enough support to require that plaintiffs make a heightened showing at the class certification stage that the presumption is warranted.