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

Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel on an amicus brief in support of the respondent in this case.

Holding: Investors can recover damages in a private securities fraud action only if they prove that they relied on the defendant's misrepresentation in deciding to buy or sell a company's stock. In Basic Inc. v. Levinson, the Supreme Court held that investors could satisfy this reliance requirement by invoking a presumption that the price of stock traded in an efficient market reflects all public, material information-including material misstatements. Halliburton has failed to provide the “special justification” necessary to overrule that presumption. However, even if plaintiffs do not need to directly prove that the misrepresentation affected the stock price to invoke the Basic presumption, defendants can defeat the presumption at the class certification stage through evidence that the misrepresentation did not in fact affect the stock price.

Judgment: Vacated and remanded, 9-0, in an opinion by Chief Justice Roberts on June 23, 2014.