Is The United States Supreme Court Poised To Overrule or Modify Basic Inc. v. Levinson? - Litigation, Mediation & Arbitration - United States

Is The United States Supreme Court Poised To Overrule or Modify Basic Inc. v. Levinson? - Litigation, Mediation & Arbitration - United States: by Eric A. Boden//Schnader Harrison

On November 15, 2013, the U.S. Supreme Court granted a petition for writ of certiorari to Petitioner Halliburton Company ("Halliburton") in the case entitled Halliburton Co. v. Erica P. John Fund, Inc., f/k/a Archdiocese of Milwaukee Supporting Fund, Inc. Halliburton appeals to the Supreme Court from a decision by the U.S. Court of Appeals for the Fifth Circuit affirming the certification of a class in a securities fraud class action and rejecting Halliburton's attempt to introduce price impact evidence at the certification stage to rebut the presumption of reliance afforded by the fraud-on-the-market theory (see fn 1, infra). By granting Halliburton's writ of certiorari, the Supreme Court has agreed for the second time in connection with this class action to revisit its 1988 landmark ruling in the case of Basic Inc. v. Levinson, 485 U.S. 224 (1988) ("Basic"), a decision which eased the obstacles to certification of putative classes in securities class actions.

On appeal, Halliburton presents the Supreme Court with two questions: (i) whether the Court should "overrule or substantially modify [Basic] to the extent that it recognizes a presumption of class wide reliance derived from the fraud-on-the-market theory," and (ii) whether, "in a case where the plaintiff invokes the presumption of reliance to seek class certification, the defendant may rebut the presumption and prevent class certification by introducing evidence that the alleged misrepresentations did not distort the market price of its stock." Halliburton Petition for Writ of Certiorari ("Halliburton Pet."), 2013 WL 4855972 (2013).


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