A group of pension funds and other institutional shareholders can pursue a class-action lawsuit against Halliburton Co., a U.S. District Court in Dallas ordered July 27.
After two trips to the Supreme Court over the issue of whether loss causation and other factors affecting stock prices had to be shown at the class certification stage, the case — Erica P. John Fund Inc. vs. Halliburton Co. — is back before District Judge Barbara Lynn.
Ms. Lynn denied the plaintiffs’ motion for class certification on five Halliburton corrective disclosures that they claimed caused the stock price to drop, but allowed a class action to proceed on one disclosure that followed the Dec. 7, 2001, settlement of a Baltimore asbestos lawsuit against Halliburton affiliate Dresser, that caused a one-day stock drop of 40%.
“At this stage of the proceedings, the court concludes that the asserted misrepresentations were, in fact, misrepresentations,” Ms. Lynn wrote. “Halliburton has not met its burden of showing lack of price impact with respect to the announcement of the Baltimore verdict on Dec. 7.”
In June 2014, a unanimous Supreme Court largely upheld a 25-year-old legal precedent that allows class actions to go forward on the presumption that stock prices can be negatively affected by corporate actions or misrepresentations, but gave corporate defendants an opening to rebut lawsuits at earlier stages, and sent the case back to the District Court.
An amicus brief in the case was signed by 20 pension funds, including the $301.5 billion California Public Employees' Retirement System, Sacramento; $191.4 billion California State Teachers' Retirement System, West Sacramento; $181.7 billion New York State Common Retirement Fund, Albany; $47.7 billion Colorado Public Employees' Retirement Association, Denver; and the Florida State Board of Administration, Tallahassee, which oversees the $149.3 Florida Retirement System.
