Class Denied in Fraud-on-Market Securities Action

turning to alleged misstatements about halliburton's accounting announcements. this portion of the december release was therefore confirmatory information affected the market price of the security." alaska elec. pension fund v. putative class, a plaintiff may create a rebuttable presumption of reliance under in flowserve, certain alleged misstatements by the defendant concerned archdiocese of milwaukee supporting fund, 2008 wl 4791492, at *5.36 no. 08-11195 decrease in price following the release of negative information"). dresser industries, and the company's accounting of revenue from cost-overruns otherwise, the misstatements would do little more than "touch upon" the alleged plaintiff relies on three general categories of alleged misstatements by then the district court may properly deny fraud-on-the-market based recovery"). price immediately following the release of positive information, or by showing finally, we find no loss causation evident from the december 21, 2000 reavley, circuit judge: "relevant truth" necessary in an alleged corrective disclosure is such that "the than one factor. when questioned about the report, however, nettesheim opinion of analysts, without supporting study of the market at issue­such as now common use case: 08-11195 document: 00511026584 page: 9 date filed: 02/12/2010 even if it were possible to say that the prior statements were more than no. 08-11195 (or another alleged misstatement) was fraudulent would any loss it caused alaska be similarly, the january 2000 analyst reports indicated that the earnings 5, 2000, october 24, 2000, and december 21, 2000. causes a loss only if the loss follows a corrective statement that specifically reveals the fraud"). case: 08-11195 document: 00511026584 page: 10 date filed: 02/12/2010 makes no argument that halliburton made prior statements about exposure no. 08-11195 negative information. for example, the release informed the market about "the is not to cause a loss"). nettesheim's report shows that she relied for her conclusions on her 8 not related to prior allegedly false reports on the speed of new routers where the disclosure evidence as merely "well-informed speculation."47 id. at 231.30 from claims related to harbison-walker. at most, the release relates to prior38 the district court explicitly recognized the need for plaintiff to establish id.23 probable than not that it was this negative statement, and not other unrelated negative the situation could be different if plaintiff had alleged that halliburton banc or the supreme court."). negative news. in order to obtain class certification on its claims, plaintiff was that a subsequent decline in stock price is due to the revelation of the truth of the market recognized that halliburton's business faced general economic we reach a similar conclusion with respect to the second and third group of `changed economic circumstances, changed investor expectations, new price[.]'"6 were later corrected, are identified, plaintiffs cannot establish loss causation."36 concerning the asbestos litigation a pattern of halliburton keeping the market false statement is consistent with liability in a securities fraud action, where it but flowserve did not eliminate the requirement at class certification that no. 08-11195 industry-wide issues are also impacting the e&c business. despite responsible, and a subsequent corrective disclosure that reveals the truth of the 2000, two analysts reduced their earnings estimates for halliburton after certification decision for an abuse of discretion, but we review de novo the legal basis of a valid securities fraud claim. . . . unless actionable statements, which reduced growth estimate for oilfield spending. although she recognized that the see flowserve, 572 f.3d at 232.40 statement and the price of a stock may be proved either by an increase in stock no such relationship evident in the statements. id.15 claims). the alleged corrective disclosures occurred on october 4, 1999, january merger" and because of reduced expectations for offshore construction and a case: 08-11195 document: 00511026584 page: 6 date filed: 02/12/2010 reserves by $50 million to $60 million, after tax. on august 9, 2001, halliburton (2) halliburton's accounting of revenue in its engineering and construction id.9 flowserve or its characterization of the district court's opinion. 1152, 2008 wl 4791492, at *3 (n.d. tex. nov. 4, 2008) (emphasis in original) (internal of causation, a plaintiff need prove that its loss resulted directly because of the industries and from a former subsidiary of dresser known as harbison-walker a preponderance of all admissible evidence."10 valuable, it cannot establish that its loss was caused by [defendant's] disclosures. it asserts that the allegations of its complaint together with the year 2002. the subsequent alleged corrective disclosures were downward oscar, 487 f.3d at 271 (rejecting as insufficient to show loss causation "the raw47 id. at 230.28 plaintiff contends that the disclosure of the mississippi verdict exposed the falsity43 the falsity of its previous accounting methods when (1) it announced on october quotation marks and citation omitted). no. 08-11195 15 see rubinstein v. collins, 20 f.3d 160, 167­68 (5th cir. 1994) (while not dispositive42 iii. earlier falsehood. plaintiff here relies only on stock price decreases following12 a concern" to the market because some charge was already expected due to prior v. independent reason. a subsequent disclosure that does not correct and reveal truth disclosed must simply make the existence of the actionable fraud more failing to provide empirical data to account for other negative news in the december 4 and 7, 2001, halliburton reported in a sec filing and press release nathenson, 267 f.3d at 419 (citing lasker v. n.y. state elec. & gas corp., 85 f.3d49 of the fraud." similarly, if a company releases multiple items of negative17 movement.46 prior panel in the absence of an intervening contrary or superseding decision by the court en halliburton made during a class period of june 3, 1999, to december 7, 2001. for liability."49 failed to prove this causal relationship. we review the district court's environment that halliburton faced, which plaintiff's expert failed to no. 08-11195 claims. rather than revealing the truth about unapproved claims, the release allegedly corrective statements were made in press releases and sec filings on discussions with company executives. according to plaintiff, the october additional factors revealed then to the market. this requirement that the20 must prove that the complained-of misrepresentation or omission "materially asbestos litigation and the company's stated reserves for such litigation. the see flowserve, 572 f.3d at 230 (holding that "to establish loss causation this disclosed19 united states court of appeals estimates does not reveal that a defendant previously misrepresented those the company's stock has relied on the false information. the stockholder then cover them, when in fact that was not true. instead, plaintiff asks us to draw an inference that the june 28, 2001 press release corrected prior allegedly false simply a negative effect, and that many of the alleged corrective disclosures that "[t]he merger with dresser industries is now behind us" and "[t]he potential 55, 59 (2d cir. 1996) (observing that "broad, general statements" are "precisely the type of million for project specific matters. as with other alleged corrective50 we think the consolidating customer base, increased competition, and other plaintiff contends that our precedent, specifically the requirement of oscar private2 2002­so long as flowserve did not commit fraud. only if flowserve's october 2001 guidance nettesheim's expert opinion that the october 24 disclosure concerned the sec filings and press releases. although halliburton reported a much larger no. 08-11195 efficient market, and (3) the plaintiffs traded shares between the time the reserve estimates were intentionally misleading--the market must learn more see id. (holding that plaintiffs must do more than "simply offer[] evidence of any13 possibility that a series of adverse court rulings could materially impact the and construction business segment; and that the earnings of the energy services statements and revealed deceptive practices in halliburton's accounting evidence that a false, non-confirmatory positive statement caused a positive assumptions. the october 24 press release does not mention fixed price examination of news reports and statements from analysts and the subsequent and was not an actionable corrective disclosure. see greenberg, 364 f.3d at 666. high oil and natural gas prices, spending for engineering and 2 greenberg, 364 f.3d at 665.18 case: 08-11195 document: 00511026584 page: 19 date filed: 02/12/2010 26, 2001, for which halliburton was responsible for $21.3 million. then on is those who affirmatively misrepresent a material fact affecting the stock price see greenberg, 364 f.3d at 665.44 previous positive statements about merging with dresser, particularly no. 08-11195 565 f.3d 228, 256 n.20 (5th cir. 2009).32 archdiocese of milwaukee supporting fund, inc. v. halliburton co., no. 3:02-cv-24 understood loss causation under our precedent and correctly applied the legal statements and corrective disclosures alleged in plaintiff's complaint. 579 f.3d 401, 406 (5th cir. 2009).3 halliburton improperly recognizing revenue from unapproved claims. we see basic inc. v. levinson. it is the response of the market to the correction that1 disclosure reporting problems with third quarter earnings was not related to prior statements attributes a large drop in the group's revenue to a decline in customer spending. 3 (5th cir. 1991) ("in this circuit, one panel may not overrule the decision, right or wrong, of a statements") (discussing nathenson, 267 f.3d at 414); id. at 665 ("to raise an inference 10 causation therefore requires the plaintiff to demonstrate the joinder case: 08-11195 document: 00511026584 page: 1 date filed: 02/12/2010 construction business as a whole, the downgrades to estimates were due to the price received (or paid) by the plaintiff, or his decision to trade at fair market statements, that caused a significant amount of the decline"). construction business. nettesheim makes too great a leap in her conclusion that 267 f.3d 400, 413 (5th cir. 2001) (loss causation is "a direct causal link between the11 (emphasis added). still must prove that the defendant is responsible for the error of the misrepresentation. we no. 08-11195 see nathenson, 267 f.3d at 415 (stating that "where the facts properly considered by16 designed to defraud. as we held in flowserve, "[i]f [plaintiff] cannot prove by a fifth circuit it contends that investors lost money when halliburton issued subsequent walker had previously agreed to assume when it spun off from dresser in 1992. on fixed-price construction and engineering contracts (so-called unapproved the announcements of various jury verdicts were also not actionable that the disclosure "must reflect part of the `relevant truth'­the truth obscured establish loss causation in order to trigger the fraud-on-the-market energy industry customers. as a result of these items, the release then reported no. 08-11195 and sister circuit precedent. plaintiff may not assail oscar as wrongly decided, as we are halliburton announced on october 4, 1999, that it was selling its interest confirmatory because halliburton had previously reported that it would need to see greenberg, 364 f.3d at 665.52 (3) a connection with the purchase or sale of a security; (4) reliance; (5) economic and even for such error to cause investors loss when it was revealed in july and september it is also necessary "that the earlier positive misrepresentation not be movement than alleged culpable disclosures.51 following the october 4, 1999 release was due to the reduction in the earnings examining the alleged corrective disclosures and the evidence, we remain v. crossroads sys., inc. a defendant may rebut the presumption "by `[a]ny5 see greenberg, 364 f.3d at 662 (noting that loss causation may be proved from a20 standards employed by the district court. fener v. operating eng'rs constr. accrual of $92 million ($60 million, after tax)." 485 u.s. 224, 246­47, 108 s. ct. 978, 991­92 (1988).1 fiercely competitive environment), nettesheim failed to provide the necessary share value `depreciate[s].'") (quoting restatement (second) of torts §548a cmt. b) fraud claim under § 10(b) of the securities exchange act and rule 10b-5 requires asbestos-related statements corrected prior misrepresentations or that the report, however, that the $25 million disclosure "does not appear to have been a surprise or case: 08-11195 document: 00511026584 page: 3 date filed: 02/12/2010 differentiate from any allegedly culpable information. appearing in a letter in halliburton's 1999 annual report, is the kind of demonstrated the falsity of former ceo dick cheney's statement about dresser group would be flat or only slightly higher because of low spending levels by nature of the prior positive statements. we have previously explained that the31 contracts, unapproved claims, or the method for recognition of revenue from such id.14 poor near term market outlook for the downstream engineering and construction no. 08-11195 unpersuaded. case: 08-11195 document: 00511026584 page: 2 date filed: 02/12/2010 suggestion that these warnings, which appeared in at least five of halliburton's a plaintiff to show (1) a material misrepresentation (or omission); (2) scienter; fener, 579 f.3d at 407 ("a court can examine loss causation at the pleadings stage, the class see flowserve, 572 f.3d at 230 (rejecting as incorrect defendant's theory that "a fraud26 fraud-on-the market presumption. see nathenson v. zonagen, inc. the court11 announcement and the analyst reports exposed the inaccuracy of halliburton's misstatement and the claimant's economic loss.") (internal quotation marks and citation negative movement in the stock price after release of the alleged "truth" of the mississippi jury had returned a plaintiff's verdict in an asbestos suit on october take advantage of the fraud-on-the-market presumption of reliance, plaintiff actionable."). v. david lesar, the chief operating officer and then ceo during the class period, 6 greenberg, 364 f.3d at 665.45 read the district court's decision to say no more. negative information.48 to an allegedly false, non-confirmatory positive statement made earlier and (2) that it is more joint ventures and other business units of the dresser group. on january 5, company acted with deception. in price is due to the revelation of the truth and not the release of the unrelated case: 08-11195 document: 00511026584 page: 7 date filed: 02/12/2010 first and second quarters). case: 08-11195 document: 00511026584 page: 16 date filed: 02/12/2010 see dura, 544 u.s. at 344, 125 s. ct. at 1632­33 (noting that in private securities21 probable than it would be without that alleged fact (taken as true)." lormand main concern when addressing the fraud-on-the-market presumption of reliance commentary shows reaction only to "the entire bundle of negative information," problems and weak results generally in halliburton's engineering and case: 08-11195 document: 00511026584 page: 5 date filed: 02/12/2010 tax. the august 9, 2001 form 10-q reported, consistent with halliburton's prior confirmatory." confirmatory information is already known to the market and,22 misrepresentation by revealing a previously obscured truth. nowhere in the37 estimates of asbestos reserves merely because those reserves changed. but a projected earnings guidance released in october 2001 for the company's fiscal certification stage. plaintiff asserts that this requirement runs afoul of our 18 not occurred in either of the alleged corrective disclosures. we rejected that27 recent decision in flowserve. we do not agree with the plaintiff's reading of26 falsehoods actually caused the stock price to fall and resulted in the losses.2 here, the parties contest only the alleged misrepresentations and do not defendant argued that the standard for loss causation required plaintiffs to show environment has forced some of halliburton's e&c competition to corrective disclosure must raise an inference that the price was actually affected company is allowed to be proven wrong in its estimates, and we can discern no negative information." this showing of loss causation is a "rigorous process"45 be less than previously expected, due in part to lower than expected profits from loss. misrepresentation to merely "touch upon" a later economic loss because "[t]o `touch upon' a loss misrepresentations were made and the time the truth was revealed." greenberg the court went on to conclude that plaintiff largely failed to identify disclosures business, and (3) the benefits to halliburton of a merger with dresser industries. i. alleging violations of sections 10(b) and 20(a) of the securities exchange act of plaintiff's expert failed to do this. the october 4, 1999 announcement through a decline in stock price that an earlier false, positive statement actually affected a the archdiocese of milwaukee supporting fund, inc, on no. 08-11195 id. at 269. although plaintiff must establish loss causation at the certification stage,10 no. 08-11195 no. 08-11195 halliburton to provide financial assistance for asbestos claims that harbison- 12 case: 08-11195 document: 00511026584 page: 18 date filed: 02/12/2010 court's judgment denying the plaintiff's motion for class certification is with earnings misstatements that inflated the stock price and are actionable. than that halliburton's business was potentially less valuable because of the filings and press releases related directly to and corrected halliburton's that a loss occurred from the decline in stock price because the truth "`ma[de] its difficulties and industry-wide pressures. one reporting service, cibc world indication from the june 28, 2001 press release that halliburton's prior asbestos a "fact-for-fact" disclosure that fully corrected prior misstatements, which had suffers losses if the falsity becomes known and the stock price declines. see information. in this way, the plaintiff must satisfy the court that its loss likely18 that demonstrates a linkage between the culpable disclosure and the stock-price industry-specific or firm-specific facts, conditions,' or other factors independent the june 28, 2001, press release does not correct any specific cost savings of $500 million from the merger. resulted from the specific correction of the fraud and not because of some quarter charge of $120 million as a result of the restructuring. erroneous estimates of asbestos liability. we agree with the district court that40 december 21 release by improperly relying only on evidence of a decrease in equity investments v. allegiance telecom, inc., 487 f.3d 261, 269 (5th cir. 2007), that class economic circumstances and industry-specific facts that are not actionable and securities fraud class action as lead plaintiff against halliburton company and this is a private securities fraud-on-the-market case. under the fraud-on- was not an abuse of discretion. because it incorrectly required plaintiff to prove actual fraud at the class misrepresentations about its business, we may presume that a person who buys information on the same day, the plaintiff must establish a reasonable likelihood neither the announcement of the mississippi verdict nor the verdicts in abreast of asbestos developments as they occurred and its necessary adjustments difficult relationships with certain customers, and some financially stressed case: 08-11195 document: 00511026584 page: 11 date filed: 02/12/2010 and estimates, the district court must decide whether the corrective disclosure unrelated negative statement, that caused the stock price decline." this was24 added burden because it is not enough merely to show that the market declined statement (other than general statements that the phase iii results were `positive')"). 17 securities fraud claim). identified a disclosure specifically revealing fraud. we recognize that a plaintiff need not stock price declined following each of these statements. plaintiff contends that correction to a prior misleading statement; otherwise there would be no have performed a more refined analysis and had done so in other cases. no. 08-11195 related to the statement causing the decrease."). consolidating and financially pressured competitors have intensified disclosure that was also part of the problem with halliburton's engineering and correct a specific prior alleged misstatement. just as merely lowering earnings39 f i l e d confirmatory positive statement made earlier, and (2) that it is more probable after surveying our precedent, the district court correctly summed up flowserve, 572 f.3d at 229 (quoting dura, 544 u.s. at 342­43, 125 s. ct. at 1627).17 statements in july and september 1999 that halliburton expected annualized 572 f.3d 221, 228 (5th cir. 2009) (quotation and citation omitted).7 case: 08-11195 document: 00511026584 page: 17 date filed: 02/12/2010 previously reaffirmed its responsibility for those claims. halliburton reported overruns in construction projects was based on news commentary. but the is whether allegedly false statements actually inflated the company's stock to prove more than is required under law. our review of the district court's defendants-appellees misrepresentations concern the benefits to halliburton of its merger with statement appears to confirm the unexpected nature of a precedent-setting jury verdict. the corrective disclosures to reveal the actionable truth about prior misstatements.35 constituted non-culpable changes in market conditions and the competitive 10-k and 10-q filings, constituted mere boilerplate disclaimers of the risks overruns in fixed-price construction contracts as revenue by misleadingly 9 cut prices and increase competitiveness. 2001 press release was not an actionable corrective disclosure. corrections. as noted by the district court, halliburton actually repeated in a proving loss causation at the class certification stage. therefore, the district in the press release that in response it would need to increase its asbestos 7 inference raised that the original, allegedly false statement caused an inflation court did not apply an incorrect legal standard, and we turn to the specific statements from "news commentary and analysts." we have characterized such fraud actions, which have common-law roots, "a person who `misrepresents the financial plaintiff-appellant having been previously digested by the market, will not affect the stock price.23 september 2002 was not relevant to any prior alleged misrepresentations, and the district court reflect that the information in question did not affect the price of the stock competitors and a fiercely competitive environment." the negative information of alleged public misrepresentations by halliburton. these alleged corrective disclosure causing the decrease in price is related to the false, non- report of its expert, jane nettesheim, demonstrated that those disclosures are we are satisfied that the district court here understood the need for the revisions to the earnings guidance released in july and september 2002. the for the fifth circuit disclosures correcting the false statements and the market declined following the case: 08-11195 document: 00511026584 page: 15 date filed: 02/12/2010 estimates that asbestos reserve levels were adequate generally, but it does not lower guidance on halliburton's third quarter earnings per share. nettesheim and remain optimistic that the asbestos liability will remain under control." see dura, 544 u.s. at 343, 125 s. ct. at 1632 (holding that it is insufficient for a34 company's booking of unapproved claims is also conclusory. she admitted in her 16 following negative news does not prove loss causation. we see in the evidence44 that "suffer[ed] from a lack of required specificity . . . in pin-pointing the particular misleading after a statement reporting negative news. we must bear in mind that the13 new precedents; the size of the award is enormous." however, rather than show that district court's belief that the defendant's revised earnings guidance in july and rewards to our shareholders are vast." we think, however, that this statement, case: 08-11195 document: 00511026584 page: 14 date filed: 02/12/2010 indicated in her expert report that the decline in halliburton's stock price previous misrepresentations that its asbestos reserves were adequate. we find testified that she did not perform any statistical or econometrical analyses of the case: 08-11195 document: 00511026584 page: 4 date filed: 02/12/2010 were approximately $30 million to cover asbestos-related liability. on june 28, case: 08-11195 document: 00511026584 page: 8 date filed: 02/12/2010 by earlier alleged misrepresentations. we therefore require plaintiffs to show16 loss rather than cause the loss.34 constituted confirmatory information. we therefore conclude that the district that being the case, the district court correctly noted that plaintiff has an and consider the district court's application of that framework. a securities reserve estimates but actually did not do so, or if halliburton had previously filed a form 10-q with the sec reporting that its asbestos reserves were $124 subsequent disclosure reveals the defendant's true financial condition. we held28 agreed to pay the additional amount. plaintiff argues that halliburton revealed the customer base for [engineering and construction] is see id. at 232 ("flowserve was free to be wrong in its october 2001 earnings guidance41 must be proven by plaintiff to have played a much lesser role in the stock price to be incurred on several large fixed-fee e&c contracts. . . . general 14 increase its reserves by an additional amount of approximately $60 million, after expected profits; that there had been a decline in the downstream engineering misrepresentations themselves, not the corrective disclosures, which form the plaintiff challenges statements in the district court's decision that plaintiff had not35 19 to the litigation reserves. we think this undermines any conclusion that the affirmed. fener, 579 f.3d at 410­11; see also oscar, 487 f.3d at 271 ("[t]he plaintiffs must, in46 corrective disclosure was more than just present at the scene."). areas of its business: (1) halliburton's potential liability in asbestos litigation, showing that severs the link between the alleged misrepresentation and either in the price to begin with. in other words, the decline in price following a15 plaintiff appeals that order. finding no abuse of discretion by the district court, ii. 13 linkage between the change in stock price and the allegedly culpable information stated it had no exposure from harbison-walker claims and that it would not the archdiocese of milwaukee supporting fund, inc. filed this putative effect on the stock price, plaintiff would have to show "(1) that an alleged announcement, which indicated that the $120 million fourth quarter charge than not that it was this related corrective disclosure, and not any other by the fraudulent statements." the flowserve court found erroneous the29 standard we announced in greenberg. see greenberg, 364 f.3d at 666 (stating that plaintiffs news related to dresser more probably affected the stock price than the other disclosure. of basic principles of econometrics"). nettesheim testified in her deposition that she could plaintiff's contention is that the $25 million is attributed to problems with the50 the truth of the previously misleading statement is insufficient to establish loss id. at 661­62 (quoting basic, 485 u.s. at 248, 108 s. ct. at 992).6 plaintiff fails to show these announcements corrected any prior misleading vi. price. by relying on a decline in price following a corrective disclosure as proof14 the same is true for the august 9, october 30, and december 4­7, 2001 condition of a corporation in order to sell its stock' becomes liable to a relying purchaser `for reports included non-culpable information, especially the decline in oilfield no. 08-11195 order to establish loss causation at this stage, offer some empirically-based showing that the 4 of estimates of asbestos liability in part because one analyst wrote that "[t]his jury award sets preponderance of the evidence that the market learned more than that erroneous expectations, both the october 4, 1999 announcement and the analyst plaintiffs prove loss causation at the class certification stage, is contrary to supreme court the loss' the purchaser sustains `when the facts . . . become generally known' and `as a result' district court noted that another analyst, cited in the report of plaintiff's expert, also also correctly recognized that the causal connection between an allegedly false expected resolution of asbestos claims." we are not moved by plaintiff's more probably than not shows that the original estimates or predictions were charles r. fulbruge iii do so. nettesheim's report indicated that her conclusions were based on construction business (e.g., increased labor costs, consolidated customer base, information must reflect part of the `relevant truth'­the truth obscured by the fraudulent june 28, 2001, august 9, 2001, october 30, 2001, and december 4­7, 2001. supported the perception by the market that the verdict was a surprise rather than a 364 f.3d 657, 661 (5th cir. 2004).5 bound by the panel decision. see soc'y of separationists, inc. v. herman, 939 f.2d 1207, 1211 presumption." and we require this showing "at the class certification stage by9 february 12, 2010 (cost-overruns). plaintiff therefore seeks to prove loss causation from the misstatements . . . ." thus, the truth revealed by the corrective disclosure must33 case: 08-11195 document: 00511026584 page: 13 date filed: 02/12/2010 estimate was reduced because of "less powerful synergies from the dresser the earlier misstatement rather than to the release of the unrelated negative clerk reserve estimates were misleading or deceptive. it follows that the june 28,41 no. 08-11195 1934 and securities exchange commission rule 10(b)-5. the district court 544 u.s. 336, 341­42, 125 s. ct. 1627, 1631 (2005).4 see fener, 579 f.3d at 409; greenberg, 364 f.3d at 666.48 deposition testimony that she did not match the october 24 statements to any associated with litigation.42 would include $25 million for reorganization costs, leaving approximately $95 district court applied an erroneous standard for loss causation and required it business," which halliburton attributed to a "consolidating customer base, flowserve, 572 f.3d at 232.33 no. 08-11195 misstatement "actually moved the market." thus, "we require plaintiffs to8 nettesheim's conclusion that the december 21 disclosure related to cost- 2001, halliburton reported in a press release that harbison-walker had asked no merit to this contention. reserve for the asbestos litigation on august 9, this information was actually disturbances in venezuela and west africa caused significant costs three different pieces of information in the release because she was not asked to halliburton and linked those misrepresentations to partial corrective halliburton's asbestos liability derived from its 1998 merger with dresser order and the evidence leads us to conclude, however, that the district court fully plaintiff argues that the district court misapplied our precedent, however, refractories company. as of may 2001, halliburton reported that its reserves loss; and (6) loss causation. dura pharms., inc. v. broudo. in the case of a4 causation.19 dispute the efficiency of the market or plaintiff's trading activity. in order to other states demonstrated that halliburton's previous estimates of asbestos must prove "(1) that the negative `truthful' information causing the decrease in price is related a causal link between the alleged falsehoods and its losses in order to invoke the for the northern district of texas see greenberg, 364 f.3d at 667 (holding that an allegedly corrective disclosure was38 particular prior misrepresentations by halliburton. in two dresser joint ventures and that it expected its third quarter earnings to allegedly corrective disclosures by halliburton. see greenberg, 364 f.3d at 662.31 behalf of itself and all others similarly situated, the-market theory, it is assumed that in an efficient, well-developed market all stock price following the negative disclosure of a fourth quarter charge.52 revelation of a falsehood. that analyst stated, "[w]e expect a vigorous defense by [halliburton] v. us unwired, inc. when confronted with allegedly false financial predictions32 we first set forth the appropriate framework for a private securities fraud case million. on october 30, 2001, halliburton announced in a press release that a [defendant's] earnings guidance was lower and so its business seemed less the district court correctly stated that "[i]mportantly, it is the additional judgments against dresser in other asbestos cases. halliburton's prove at the class certification stage intentional fraud by the defendant. see flowserve, 572 oscar, 487 f.3d at 265.8 case: 08-11195 document: 00511026584 page: 20 date filed: 02/12/2010 business and (2) it announced on december 21, 2000, that it would take a fourth before discussing the plaintiff's specific allegations against halliburton, in the united states court of appeals `puffery' that this and other circuits have consistently held to be inactionable")). required to prove loss causation, i.e., that the corrected truth of the former construction projects remains depressed. the difficult operating between an earlier false or deceptive statement, for which the defendant was plaintiff also argues generally that several alleged corrective disclosures competition and pricing in the marketplace. as a result, hal is plaintiff has failed to prove loss causation with respect to the december 21, 2000 case: 08-11195 document: 00511026584 page: 12 date filed: 02/12/2010 halliburton's stock price reacted to the negative news, a decline in price standard. as we explain, the district court's decision was well supported and the correct standard.25 spending, nettesheim presented no empirically-based evidence to show that and requires both expert testimony and analytical research or an event study omitted). "demonstrate that there is a reasonable likelihood that the cause of the decline certification stage, on summary judgment, or at trial.") (footnotes omitted). that had a corrective effect linked to a specific misrepresentation, as opposed to plaintiffs must prove the corrective disclosure shows the misleading or deceptive 20 "industry-wide issues," like depressed customer spending, are the kind of see flowserve, 572 f.3d at 230.37 no. 08-11195 stock price movement. but the news reports nettesheim cited discuss only markets, noted the following after the december 21 release: "decrease in price following the revelation of the misleading nature of these [prior] plaintiff contends that it has identified specific misrepresentations by denied the plaintiff's motion for class certification under fed. r. civ. p. 23, and greenberg, 364 f.3d at 666.22 before reavley, clement, and southwick, circuit judges. we affirm the denial of class certification. the first category of statements concerns halliburton's exposure to liability in "makes no reference to increased router speed"); id. at 668 (holding that an alleged corrective material misrepresentations, (2) the defendant's shares were traded in an we therefore reversed the district court's denial of class certification.30 iv. 5 restructuring its company into two operating segments . . . labor previously stated it was including harbison-walker claims in its asbestos stock's price, the plaintiffs must show that the false statement causing the increase was guidance and recognized that the lower guidance in turn was based on more way into the marketplace,'" rather than for some other reason, such as "a result see greenberg, 364 f.3d at 665.12 public information about a company is known to the market and is reflected in per se, cautionary language is relevant to materiality of predictive statements as basis for estimates, merely raising the asbestos reserves does not show that those prior that are held responsible for losses.21 appeal from the united states district court 11 after reviewing the alleged misrepresentations and corrective disclosures, the court may examine the issue at a variety of stages during the course of the litigation. see halliburton co; david j lesar, flowserve corp. in other words, plaintiff must show that an alleged7 series of public filings the warning about "the uncertainties of litigation and the approach, but we also insisted that plaintiffs need to show more than that a the district court's statement of the plaintiff's burden was nearly identical to the25 halliburton's prior false representations about the merger. nettesheim conceded in her related to the misrepresentations and proximately caused its losses. upon see flowserve, 572 f.3d at 229.51 we conclude that plaintiff has failed to meet this court's requirements for id. at 229.27 methodology, plaintiff contends that halliburton improperly recorded cost- the district court denied class certification because it found that plaintiff plaintiff here claims that halliburton made false statements about three because analysts reduced earnings estimates based on weakness in halliburton's statements"). 24, 2000, that it would undertake a massive restructuring of its construction disclosures, the december 21 announcement included clearly non-culpable matter, and that the subsequent loss could not otherwise be explained by some id.29 the stock price. when a company has publicly made material reported that the dresser equipment group was experiencing lower than about first or second quarter earnings where the disclosure made "no reference at all" to the release is there any mention of prior asbestos reserve estimates, and plaintiff liability obscured the relevant truth about the asbestos estimates. while43 statements, that the company "recorded as discontinued operations . . . an proves the effect of the false information and measures the plaintiff stockholder's show that the defendant more likely than not misled or deceived the market "generalized positive statement[] about a company's progress [that is] not a basis the release reported that this was a new development, as harbison-walker had plaintiff cites news reports about the asbestos verdicts and has shown that f.3d at 230. but reading the entirety of the flowserve opinion, we conclude that a plaintiff see, e.g., nathenson, 267 f.3d at 419 (rejecting as inadequate plaintiff's allegations39 deeming the cost-overruns "probable" of collection, even if a customer had not reports contained multiple pieces of negative news. this required plaintiff to dresser integration, and that this disclosure provided corrective information about plaintiff's burden in this case by stating that because plaintiff presented no no. 08-11195 the fraud-on-the-market theory by showing "that (1) the defendant made public indus. & miscellaneous pension fund (local 66). plaintiff contends that the3 halliburton's previous statements obscured the truth about asbestos exposure, this analyst's corrective disclosure reveal something about the deceptive nature of the original including the general downturn in halliburton's construction business. by