Pillsbury Securities Litigation Partners Comment on Halliburton Decision

Good told The Recorder that if the court had reversed its earlier Basic v. Levinson decision then “plaintiffs would have stopped filing securities fraud class actions. An entire legal industry that sprang up beginning in 1988 would have come to a close. The court's decision will not cause significant change to the way that securities fraud class actions have been litigated. Instead, it will result in smaller changes.”

Good, who is based in San Francisco, said that “class certification motions will require expert testimony concerning whether or not there was any ‘price impact’ concerning purported misstatements. Boom times will ensue for both parties’ experts, who now will be brought into more cases, and those cases will be at an even earlier stage. This, in turn, will drive up the costs for the parties in terms of fees paid to experts and more attorney hours involved in briefing and hearing the class certification motions.”

In his comments to Law360, Bruce Ericson, the co-leader of the firm’s securities litigation practice in San Francisco, agreed that the ruling would make “class certification motions in 10b-5 cases more expert-driven and more costly.

“Whether it will change the result in many cases remains to be seen,” Ericson added. “It may have some effect on marginal cases, where the evidence of price impact is weak, but little effect otherwise, except on litigation budgets. The real winners may be the economists who prepare event studies; for them, the opinion is unambiguously good news. Halliburton also may cause plaintiffs’ counsel … to rely more on alleged omissions and less on alleged misstatements, in hopes of avoiding Basic altogether in favor of the different presumption created by Affiliated Ute Citizens of Utah v. U.S. — a case not mentioned today in either the court’s opinion or the concurring opinions.”