The US Supreme Court’s decision in Halliburton Co. v. Erica P. John Fund, Inc., Slip op., No. 13-317 (Jun. 23, 2014), unanimously held that before certifying a class in a securities fraud case, federal courts must allow defendants to challenge plaintiffs’ claim that alleged misrepresentations or omissions impacted securities prices. Because proving price impact is a necessary element of a securities action, this ruling, written by Chief Justice Roberts, provides defendants with an important weapon to defeat class certification—a critical milestone in any class action case that generally occurs before the bulk of pre-trial discovery. Thus, after Halliburton, at the class certification stage, parties will not be able to rely solely on legal arguments that class certification elements have been met or rebutted; rather, they must also be prepared to present factual evidence going to the merits of the case through fact and/or expert witnesses.
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