Erica P. John Fund, Inc. v. Halliburton Co. (09-1403)
argument 09-1403Erica P. John Fund, Inc. v. Halliburton Co.
Supreme Court of the United States
55 min
5 speakers
8 chapters
transcribed 6 days ago
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What is the legal significance of the efficient‑market presumption in Erica P. John Fund v. Halliburton?
We'll hear argument first this morning in case 09-1403, Erica P. John Fund v. Halliburton Company. Mr. Boyce.
Mr. Chief Justice, may it please the Court. The District Court below found, and it is not disputed here, that the plaintiff fulfilled all the requirements of Rule 23A for class certification. The District Court also found, and the Court of Appeals affirmed, that The plaintiffs demonstrated all the requirements for class certification under 23B.3 except for the Fifth Circuit's loss causation requirement. The Court below recognized that whether or not there was an efficient market was not disputed. It was conceded that we have an efficient market here.
There were no challenges — JUSTICE BREYER. Mr. Boyce, if I could just stop you there. What if that had been disputed? Is that something that can be disputed at the certification stage?
MR. MS. Mr. Boies, what's the difference then? Why could that be disputed at the certification stage but not the question of price impact?
MR. Because the issue of efficient market goes to the presumption of reliance. And if the Court holds at the certification stage that there is no efficient market, then the basis for presuming class-wide reliance is impacted. And so you can have a situation in which the common issues do not predominate over the individualized issues. That cannot happen with respect to loss causation because, as the respondent concedes here, loss
causation is a common issue. JUSTICE GINSBERG. Well, how about materiality? Could you rebut materiality at the certification stage? MR. No, Your Honor, we don't think you can rebut
materiality at the certification stage. that under the Fifth Circuit rule, loss
causation is in addition to materiality. JUSTICE KAGAN. Well, now I'm a little confused, because the efficient market and materiality are all part of the prima facie case, triggering the basic presumption. So why can you rebut one part of that case but not another part of that case?
MR. Because the issue of materiality is something that goes to a class-wide common issue. The issue of reliance can go to whether or not issues predominate or not. Rule 23B3 talks about whether common issues predominate or not. That's the issue at class certification stage. The merits issue is not implicated at class certification.
But common reliance can be rebutted at the certification stage. The basic presumption can be rebutted. Can the basic presumption be rebutted at the certification stage?
The basic presumption of reliance, yes, Your Honor. For example, if you were to take a situation in which you — not present here, but where you disputed whether or not the market was efficient or not, that is something that could be decided at the class
certification. Can it be rebutted by proof other than proof generally disproving the efficiency of the market?
We believe under the Court's decision in BASIC that that is something that is reserved for trial, that
republic. And what is that based on, the footnote in BASIC? Yes, Your Honor. Well, that's pretty thin, isn't it? It's dictum in a footnote in an opinion issued at a time when conditional class certification was permitted. Do you have anything else to support that? I don't
from this Court, Your Honor.
Would you have anything in the rule to support that?
MR. Anything in the rule? MR. No. MR. Well, I think what the rule does is it talks about whether issues of common issue predominate over individualized issue. And since this is something that would be at the class certification stage, not creating individualized issues, We would think that is something that's reserved for trial. JUSTICE GINSBERG. Mr. Boyce, how would it work in your view of the case, that is, you say that the loss — what's been called loss causation is not something to be decided at the certification stage, but at the trial or summary judgment. Well, how would the plaintiff class prove loss causation? Given the reliance hurdle that you have surmounted, now you have your class certified, how does the class prove loss causation?
As this Court indicated in Dura, in order to prove loss causation, you must demonstrate that you had either an increase in the prices — and this assumes that you are
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Chapters
8 chapters
1
What is the legal significance of the efficient‑market presumption in Erica P. John Fund v. Halliburton?
0:02–6:38
2
How does the Court distinguish between disputable issues at the certification stage and merits‑stage issues?
6:38–15:13
3
Why can materiality be rebutted at class certification while loss causation cannot?
15:13–21:54
4
What is the “price‑impact” test and how does it differ from loss‑causation under the Fifth Circuit rule?
21:54–27:39
5
When can the basic presumption of reliance be rebutted, and who bears the burden of proof?
27:39–34:16
6
How does the Court view discovery at the class‑certification stage versus the merits stage?
34:16–41:29
7
What are the consequences of certifying a class when the market efficiency or price impact is uncertain?
41:29–49:00
8
Why does the Court reject treating loss‑causation as a certification‑stage requirement under Rule 23B(3)?
49:00–56:10