Answering Halliburton II's Unanswered Question: Burdens of Production and Persuasion on Price Impact at Class Certification
Securities Regulation Law Journal, Vol. 43, p. 167, 2015
23 Pages Posted: 20 Dec 2014 Last revised: 2 Sep 2015
Date Written: December 18, 2014
In Halliburton Co. v. Erica P. John Fund, Inc. (“Halliburton II”), 134 S. Ct. 2398, 2407 (2014), the Supreme Court held that a defendant can rebut the fraud-on-the-market presumption of reliance at class certification by showing the absence of price impact. Left unanswered by the Court is the allocation of the burdens of production and persuasion with respect to price impact at class certification. This Essay seeks to answer this question, drawing from (1) the Court’s guidance in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551-52 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013), on the merits inquiry required at class certification and (2) Federal Rule of Evidence 301’s allocation of burdens of production and persuasion with respect to presumptions, which the Court has explained in the context of the McDonnell Douglas framework for proving intentional discrimination. Ultimately, this Essay proposes a step-by-step analytical pathway to guide courts and litigants as they engage in a merits inquiry about price impact at the class certification stage.
Keywords: Securities Litigation, Class Actions, Fraud-on-the-Market Presumption of Reliance, Price Impact, Halliburton, Wal-Mart, Federal Rule of Evidence 301, McDonnell Douglas
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