The Supreme Court heard oral arguments recently in Erica P. John Fund, Inc. v. Halliburton Co., No. 09-1403, a private securities fraud case in which the Court is expected to address whether a class may be certified even where plaintiffs fail to establish that the alleged misstatements had an impact on the price of the securities at issue. The Court’s decision will likely resolve a split concerning whether courts should require plaintiffs to prove loss causation at the time of class certification. The Fifth Circuit in Oscar Private Equity Invs. v. Allegiance Telecom, Inc., 487 F.3d 261 (5th Cir. 2007), has expressly allowed defendants to rebut the fraud-on-the-market presumption by disproving loss causation at the class certification stage. The Third and Seventh Circuits have explicitly rejected the Fifth Circuit’s approach in In re DVI, Inc., Sec. Litig., No. 08-8033, 08-8045, 2011 WL 1125926 (3d Cir. Mar. 29, 2011), and Schleicher v. Wendt, 618 F.3d 679 (7th Cir. 2010), respectively. The Second Circuit also rejected analyzing loss causation as a class certification requirement in In re Salomon Analyst Metromedia Litig., 544 F.3d 474 (2d Cir. 2008).

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