I like Barbara’s outline for a Halliburton opinion both as prediction and, to some extent, as prescription as well. There is much to be said for narrow holdings that don’t reach out to rewrite areas of law on issues that have not been fully briefed. In that spirit of making small bites, let me throw out a few thoughts.
First, Dura provides an interesting miniature case study in the unexpected implications of cases. Although when the case came out, it did not seem like a victory for plaintiffs, it helped cement a distinction between loss causation and other elements of a 10b-5 claim. This distinction makes it difficult in Halliburton to defend attempts to smush requirements that loss causation be proved into requirements for proving reliance. Supreme Court opinions, even ones that do not seem earth shattering, can have unexpected consequences. Perhaps one can see some glints of the rule of law even in judicial grains of sand.
By the same token, Judge Easterbrook’s very persuasive opinion in Schleicher v. Wendt, in which he criticized the 5th Circuit approach that resulted in Halliburton, is worthy of note. Easterbrook, well respected in law & economics and securities law circles, offers a blue print for analysis for the Supreme Court. As Don Langevoort notes in his Basic at Twenty article, Easterbrook has been involved in shaping the use of market efficiency theory and evidence in securities litigation for two decades. Part of Easterbrook’s motivation, Langevoort asserts, is that market efficiency can discipline securities litigation. We can see this in Easterbrook’s Schleicher opinion when he touts the truth-on-the-market defense. So market efficiency like legal principles is not necessarily skewed towards either plaintiffs or defendants.
Now it is possible that modesty will not carry the day when the Halliburton opinion comes down. As I noted in my introductory post, Halliburton is being decided in the same term as the Wal-Mart v. Dukes class action case. But, at least in Halliburton, I doubt that the Court will go the route of the 5th Circuit in Halliburton and Oscar and be motivated by policy concerns about class actions in general. The Federal Rules of Civil Procedure have to have some meaning and can't be rewritten in the middle of cases. And, Congress demonstrated with the PSLRA that it can act if it is concerned about securities class actions.
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