WLF Urges Supreme Court to Reverse Ninth Circuit’s Lax Securities Class-Certification Standard

Click here for WLF’s brief.

(Washington, DC)—Yesterday Washington Legal Foundation (WLF) joined a coalition of amici urging the U.S. Supreme Court to grant certiorari and reverse a controversial Ninth Circuit securities decision. The amicus brief contends that the decision below improperly allows class certification based on supposed “corrective” disclosures that share only a general subject with—but do not actually correct—prior alleged misrepresentations. WLF joined the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, and Business Roundtable on the amicus brief.

The case stems from a securities class action alleging that Zillow maintained artificial stock-price inflation through statements about progress on its home-pricing models. Plaintiffs pointed to Zillow’s later decision to close its home-buying business as a “corrective disclosure.” The district court certified the class, and the Ninth Circuit affirmed, holding that mere overlap on Zillow’s home-pricing struggles sufficed.

In its amicus brief, WLF argues that the Ninth Circuit’s rule conflicts with Halliburton and Goldman, which both demand an actual content match before a back-end price drop can prove front-end impact, and splits with the Second Circuit. Because it functionally strips defendants of their right to rebut the Basic presumption, the decision will make the Ninth Circuit a magnet for inflation-maintenance suits.