On June 23, 2014, the Supreme Court issued its opinion in the second Halliburton appeal in which the Court vacated a prior class certification ruling in favor of requiring more rigorous scrutiny into a plaintiff’s ability to meet the requirements for certification under Rule 23 of the Federal Rules of Civil Procedure. This decision is the latest in a series of opinions in which the Supreme Court has made clear that plaintiffs face significant challenges at class certification, including the need to secure expert testimony to support their class certification motions. Halliburton II is, thus, further proof that the law has evolved beyond the point where plaintiffs may avoid defeat at class certification by simply arguing that the issues raised by defendants overlap with the “merits” and, thus, should be addressed by the court later in the case. Even though Halliburton II dealt with claims brought pursuant to the federal securities laws, this recent decision is helpful to any defendant facing class claims and can be cited as further support for requiring specific proof from plaintiffs that they have satisfied each Rule 23 requirement before granting certification. Halliburton II also makes clear a defendant’s right at class certification to challenge in a meaningful way the evidentiary support, or lack thereof, on which plaintiffs’ certification motion is based.
In Halliburton II, the plaintiffs sought to certify a class of investors in Halliburton’s common stock for claims brought pursuant to Section 10(b) of the Securities Exchange Act of 1934. The 5th Circuit had affirmed the district court’s conclusion that the plaintiff was entitled to invoke a presumption of reliance for purposes of its class certification motion and thereby satisfy Rule 23(b)(3)’s predominance requirement, which directs that a class may not be certified unless issues common to all class members predominate over issues that would require individualized scrutiny of each individual class member. Without the plaintiff’s ability to invoke this presumption of reliance, the law was clear that the proposed investor class in Halliburton II would flunk Rule 23’s predominance test and certification would be denied.