Friday, April 29, 2011
The questions presented in Halliburton are:
(1) Whether the Fifth Circuit correctly held, in direct conflict with the Second Circuit and district courts in seven other circuits and in conflict with the principles of Basic Inc. v. Levinson, 485 U.S. 224 (1988), that plaintiffs in securities fraud actions must satisfy not only the requirements set forth in Basic to trigger a rebuttable presumption of fraud on the market, but must also establish loss causation at class certification by a preponderance of admissible evidence without merits discovery.
(2) Whether the Fifth Circuit improperly considered the merits of the underlying litigation, in violation of both Eisen v. Carlise & Jacquelin, 417 U.S. 156 (1974), and Federal Rule of Civil Procedure 23, when it held that a plaintiff must establish loss causation to invoke the fraud-on-the-market presumption even though reliance and loss causation are separate and distinct elements of security fraud actions and even though proof of loss causation is common to all class members.
As we covered earlier, this second question appears to overlap with issues being considered in Wal-Mart Stores v. Dukes, which was argued before the Supreme Court one month ago and also involves the extent to which a court must consider the merits of class claims at the certification stage.
For some of the coverage of the Halliburton argument, check out BNA’s Class Action Litigation Report (subscription required), JURIST, and SCOTUSblog’s argument recap by Prof. Linda Mullenix (Texas). The Conglomerate has also been hosting a roundtable on the case, which includes analysis of the oral argument.