Vol. 48 No. 4 February 18, 2015 LOWER COURT DECISIONS IN THE WAKE OF HALLIBURTON II Following the Supreme Court’s second Halliburton decision, defendants in securities class actions have begun to offer evidence at the class certification stage of a lack of price effect arising from the alleged misrepresentations. In the five-district court cases decided thus far, no defendant has successfully rebutted the presumption of reliance with such evidence. The authors analyze the cases, addressing evidentiary issues surrounding the burden of proof, price increase versus price impact, and the relation of price impact to loss causation. By Maeve L. O’Connor and Elliot Greenfield * If the private securities defense bar did not get the “home run” it had hoped for in the United States Supreme Court’s decision in Halliburton v. Erica P. John Fund (“Halliburton II”),1 the consensus view was that it at least walked away with a respectable single. While declining to do away with the presumption of reliance securities plaintiffs may invoke in an efficient market, the Court did give defendants the opportunity to rebut that presumption at the class certification stage.2 ———————————————————— 1 134 S. Ct. 2398 (2014). 2 The ability to introduce price impact evidence at the class certification stage had already been recognized in the Second and Third Circuits. See In re Salomon Analyst Metromedia Litig., 544 F.3d 474, 483-84 (2d Cir. 2008), abrogated on other grounds by Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, 133 S. Ct. 1184 (2013); In re DVI, Inc. Sec. Litig., 639 F.3d 623, 638 (3d Cir. 2011), abrogated on other grounds by Amgen, 133 S. Ct. 1184. However, in the five district court decisions decided as of the date of this article in the post-Halliburton II era, no defendant has successfully rebutted the presumption.3 While defendants may not always have a strong basis to argue that the statements at issue did not impact the company’s stock price, the results in cases to date appear to be due, at least in part, to that fact that the Supreme Court offered little practical guidance as to how its holding should be applied. What evidence might suffice ———————————————————— 3 Aranaz v. Catalyst Pharmaceutical Partners, Inc., 302 F.R.D. 657 (S.D. Fla. 2014); IBEW Local 98 Pension Fund v. Best Buy Co., Inc., 2014 WL 4746195 (D. Minn. Aug. 6, 2014); Local 703, I.B. of T. Grocery and Food Employees Welfare Fund v. Regions Financial Corp., 2014 WL 6661918 (N.D. Ala. Nov. 19, 2014); McIntire v. China MediaExpress Holdings, Inc., 2014 WL 4049896 (S.D.N.Y. Aug. 15, 2014); Wallace v. IntraLinks, 302 F.R.D. 310 (S.D.N.Y. 2014).  MAEVE L. O’CONNOR is a partner and ELLIOT IN THIS ISSUE GREENFIELD is an associate in the litigation department of Debevoise & Plimpton LLP. Their e-mail addresses are [email protected] and [email protected]. ● LOWER COURT DECISIONS IN THE WAKE OF HALLIBURTON II February 18, 2015 Page 41