Instead of a trilogy of class action decisions by the U.S. Supreme Court this term, it looks like there will be a “quadrilogy“!
For the fourth time in the October 2010 Term, the Court has granted certiorari in a class action-related case. Today, the Court granted cert in Erica P. John Fund, Inc. v. Halliburton Co., No. 09-1403. The appeal raises issues regarding the burden of proof for class certification in a securities fraud case when the plaintiff intends to prove causation and reliance based on a “fraud on the market” theory.
According to SCOTUS Blog, the specific issues presented for review are:
(1) Whether the Fifth Circuit correctly held 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 when it held that a plaintiff must establish loss causation to invoke the fraud-on-the-market presumption.
(See SCOTUS Blog case file for Case No. 09-1403).
Although Erica P. John Fund, Inc. is a securities case, the Court’s decision may have ramifications in other areas, including consumer class actions. Class action plaintiffs often attempt to employ the “fraud on the market” theory of reliance in consumer fraud cases, with varying success. (See these CAB entries dated April 27, 2009 and February 24, 2008).