Halliburton: US Supreme Court Resolves Circuit Split on Loss Causation
In Erica P. John Fund, Inc. v. Halliburton Co. (No. 09-1403), the U.S. Supreme Court reversed the Fifth Circuit Court of Appeals and held that a securities fraud plaintiff need not establish “loss causation,” i.e., that the defendant’s alleged misrepresentation caused the plaintiff an economic loss, in order to obtain class certification. In so ruling, the Court resolved a split among the Fifth Circuit and the precedents of other Circuits, several of which had already declined to require securities fraud plaintiffs to prove loss causation at the class certification stage. This decision removes a major hurdle for class action plaintiffs in the Fifth Circuit. In Circuits other than the Fifth Circuit, the Halliburton decision should have little impact on securities fraud class action cases.
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