Skip to Content

Loss Causation Not Necessary For Class Certification: High Court

Posted: June 6, 2011
By: Evan Weinberger
Source: Law360
Practice Areas: Securities Litigation

The U.S. Supreme Court on Monday ruled that investors are not required to prove that corporate misstatements caused their investment losses in order to win class certification, dealing a blow to Halliburton Co. in a shareholder suit.

In a unanimous decision, the high court found that the Fifth Circuit wrongly held that the Erica P. John Fund Inc. was required to prove that misstatements by Halliburton caused it to lose money on its investment with the energy giant. Rather, the plaintiffs merely had to prove that they made their investments in company stock based on false statements made by Halliburton


The Fifth Circuit's ruling would have effectively stopped the lion's share of securities class action litigation had it been allowed to stand, said David Boies, chairman of Boies Schiller & Flexner LLP.

"As the Supreme Court's opinion makes clear, it is important to weed out weak or abusive securities class actions, but it is equally important that valid class actions be permitted to proceed," he said. "This is a victory for effective enforcement of public securities laws, and for individuals and institutions that are injured by securities fraud."

View the full article here.

Amicus Brief

Berger & Montague filed an amicus brief in the U.S. Supreme Court which argued the opinion subsequently adopted by the Court.

The brief was written on behalf of the Public Justice Foundation by Berger & Montague, with assistance from Yael R. May. Additional assistance was provided by Public Justice Attorneys Melanie Hirsch, Paul Bland, and Executive Director Arthur Bryant, as well as Lisa M. Mezzetti and S. Douglas Bunch of Cohen Milstein Sellers & Toll PLLC.

View the amicus brief here.