The U.S. Supreme Court today reversed a Fifth Circuit decision that required plaintiffs in federal securities cases to prove "loss causation" at the class certification stage. Erica P. John Fund v. Halliburton, Inc., No. 09-1403 (U.S. June 6, 2011).
As Blawgletter noted a couple months ago, the Fifth and Seventh Circuit had split on the issue, with Schleicher v. Wendt, 618 F.3d 679 (7th Cir. 2010), refusing to require plaintiffs to go beyond pleading a claim element (loss causation) despite defendants’ argument that certification analysis must address plaintiffs’ ability to prove the element at trial and Archdiocese of Milwaukee Supporting Fund, Inc. v. Halliburton Co., 597 F.3d 330 (5th Cir. 2010), rev'd sub nom. Erica P. John Fund, requiring the opposite.
In Schleicher v. Wendt, Chief Judge Easterbrook criticized the "fifth circuit" for believing that it had license to "tighten" the requirements for class certification. The Court held, 9-0, that the license has now expired.