After thirteen years and two trips to the Supreme Court, Halliburton investors won class certification to pursue certain securities-fraud claims in a Dallas district court, signaling the first significant application of the Supreme Court’s companion cases in this circuit. Halliburton, according to the plaintiffs, had initially misrepresented its potential liability in asbestos litigation and its expected revenue from various contracts, which caused the company’s stock to drop when it later made corrective disclosures.

The case’s complex history hinged on several procedural issues: Judge Barbara Lynn initially denied class certification because the plaintiffs had not proved loss causation (a link between misrepresentations and loss). The Supreme Court reversed, holding plaintiffs are not required to show loss causation at the class-certification stage. On remand, Judge Lynn certified the class and declined to consider Halliburton’s argument that it could negate a necessary element (the presumption of reliance) by showing any misrepresentations had not impacted its stock price. The Supreme Court reversed again, holding defendants are entitled to introduce price impact evidence at the class-certification stage.

Judge Lynn’s most-recent opinion, therefore, considered Halliburton’s price impact evidence for the first time. By parsing through dueling experts, the court found no reliable evidence that Halliburton’s corrective disclosures about construction contracts, its swelling asbestos liability exposure, and two adverse jury verdicts—information that had already been reported by the media or partially disclosed by Halliburton—had any impact on its stock price. But the court did find a convincing price impact based on Halliburton’s disclosure of one particular $30 million asbestos verdict and the 40% stock price plunge that day. Judge Lynn therefore certified the class with respect to that disclosure alone. More broadly, the court’s 53-page opinion provides the most thorough roadmap yet for class certification issues under the Supreme Court’s Halliburton rulings.

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