WASHINGTON (Reuters) - The Supreme Court said on Friday it would decide whether a group of investors can pursue a securities fraud lawsuit as a class action against Halliburton Co and its chief executive.
The justices agreed to review a U.S. appeals court ruling that denied class certification in the lawsuit filed in 2007 on behalf of all buyers of Halliburton stock between June 1999 and December 2001.
The lawsuit alleged Halliburton and Chief Executive Officer David Lesar attempted to inflate the stock price by underestimating asbestos liabilities, overstating revenues in its engineering and construction business and overstating the benefits of its merger with Dresser Industries.
The lawsuit by a group of investment funds, retirement plans and individual investors claimed Halliburton eventually made corrective disclosures that caused its stock price to fall.
The appeals court ruled that, for the lawsuit to proceed as a class action, the plaintiffs must first prove at the outset, by a preponderance of the evidence, that the alleged misrepresentations caused the stock price to fall, resulting in investor losses.
The appeals court agreed with the Houston-based oilfield services company’s arguments that the evidence failed to show the alleged misrepresentations had any impact on the stock price. It ruled the suit could not proceed as a class action.
The Obama administration urged the Supreme Court to hear the appeal by the plaintiffs.
Administration attorneys said the appeals court erred by requiring the plaintiffs to prove a significant element of their case at the class-certification stage without the benefit of full discovery of the facts and without consideration of the claims by a jury.
The justices are expected to hear arguments in the case in April, with a ruling due by the end of June.
The Supreme Court case is Erica P. John Fund Inc v. Halliburton, No. 09-1403.
Reporting by James Vicini; editing by Gunna Dickson and Andre Grenon