This morning, the Supreme Court handed down its decision in Erica P. John Fund, Inc. v. Halliburton Co., ___ U.S. ___ (Jun. 6, 2010). This is a securities case, but it presented the possibility that the Supreme Court's holding would more broadly impact class action litigation. These were the issues on review as stated in the cert. petition:
(1) Whether the Fifth Circuit correctly held, in direct conflict with the Second Circuit and district courts in seven other circuits and in conflict with the principles of Basic v. Levinson, 485 U.S. 224 (1988), that plaintiffs in securities fraud actions must not only satisfy the requirements to trigger a rebuttable presumption of fraud on the market, but must also establish loss causation at class certification by a preponderance of admissible evidence without merits discovery;
(2) whether the Fifth Circuit improperly considered the merits of the underlying litigation, in violation of both Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974), and Federal Rule of Civil Procedure 23, when it held that a plaintiff must establish loss causation to invoke the fraud-on-the-market presumption.