Presumptions generally make the legal process more efficient by allowing a party to meet its burden with reduced effort. Since Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), however, certain presumptions afforded securities fraud plaintiffs on a motion for class certification may no longer minimize the plaintiffs’ burden. While the Supreme Court reaffirmed the “fraud-on-the-market” theory as a basis for a presumption of reliance in Erica P. John Fund, Inc. v. Halliburton, 131 S.Ct. 2179 (2011), Justice Scalia’s opinion in Wal-Mart subjects securities’ plaintiffs to a “rigorous analysis” of whether the misrepresentations were publicly known, the defendant’s stock traded in an efficient market, and the plaintiffs’ transactions took place during the relevant period before they may invoke the presumption. As highlighted by Mark A. Chavez’s prescient article, “Raising the Class-Certification Hurdle,” in the CADS Report’s Winter 2011 issue, plaintiffs now face a riskier and more expensive class-certification process.
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