Erica P. John Fund, Inc. v. Halliburton Co.

563 U.S. 804 (2011)

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Nature of the Case

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Facts

P is the lead plaintiff in a putative securities fraud class action filed against Halliburton (D) and one of its executives. P alleges that D made various misrepresentations designed to inflate its stock price, in violation of §10(b)and Rule 10b-5. The complaint asserts that D deliberately made false statements about (1) the scope of its potential liability in asbestos litigation, (2) its expected revenue from certain construction contracts, and (3) the benefits of its merger with another company. P sought to have its proposed class certified pursuant to Federal Rule of Civil Procedure 23. P satisfied the general requirements for class actions set out in Rule 23(a): The class was sufficiently numerous, there were common questions of law or fact, the claims of the representative parties were typical, and the representative parties would fairly and adequately protect the interests of the class. Circuit precedent required a securities fraud plaintiff to prove “loss causation” in order to obtain class certification. The District Court concluded that it could not certify the class because P had “failed to establish loss causation with respect to any” of its claims. The Court of Appeals affirmed. The Supreme Court granted certiorari.