Defendants litigating securities cases historically faced long odds in defeating class certification. This stems in part from the US Supreme Court's 1988 decision in Basic v. Levinson, which created a rebuttable presumption of classwide reliance on a defendant's alleged misrepresentations.
For years, Basic's presumption was rebuttable in name only. That paradigm began to shift with the Supreme Court's 2014 decision in Halliburton Co. v. Erica P. John Fund Inc., which allowed defendants to present evidence that the alleged misrepresentations did not affect the issuer's stock price.
The true seeds of a course correction, though, came four years ago in the Supreme Court case of Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System, or GSG, which identified the type of price impact evidence courts should consider at the class certification stage.
The US Court of Appeals for the Second Circuit's August 2023 decision in Arkansas Teacher Retirement System v. Goldman Sachs Group Inc., or ATRS, sharpened GSG's application to reinvigorate the rebuttable aspect of Basic's presumption. While ATRS creates a blueprint for defeating class certification, as the US Court of Appeals for the Third Circuit recently made clear in its July 30 decision in San Diego County Employees Retirement Association v. Johnson & Johnson, ATRS's framework is not a one-size-fits-all defense.
An examination of cases post-ATRS illustrates how its successful application turns on the evidence in each case.
“Rebutting Price Impact In Securities Class Actions,” Law360, September 16, 2025
* Jessica Violone, Katten summer associate, contributed to this article.
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