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IBEW Local 98 Pension Fund v. Best Buy Co.

United States Court of Appeals for the Eighth Circuit

October 22, 2015, Submitted; April 12, 2016, Filed

No. 14-3178

Opinion

 [*776]  LOKEN, Circuit Judge.

Best Buy Co., Inc., is a leading retailer of consumer electronic products and services. Plaintiffs sued Best Buy and three of its executives (collectively, "defendants")  [*777]  alleging they violated Rule 10b-5 of the federal securities laws1 by making fraudulent or recklessly misleading public statements. Plaintiffs alleged that statements in a press release and ensuing conference call with securities analysts on September 14, 2010, artificially inflated and maintained Best Buy's publicly traded stock price until the misstatements were disclosed when Best Buy reported its quarterly earnings on December 14. After the district court dismissed claims relating to the press release, plaintiffs moved to certify their claims relating to the conference call as a class action. Plaintiffs relied on the fraud-on-the-market [**3]  presumption to satisfy the Rule 23 requirement that common questions predominate in proving their Rule 10b-5 claim. See Basic, Inc. v. Levinson, 485 U.S. 224, 241-47, 108 S. Ct. 978, 99 L. Ed. 2d 194 (1988). Defendants contended they rebutted the presumption; plaintiffs responded that rebuttal evidence was not admissible at the class certification stage.

The district court stayed the class certification motion until the Supreme Court resolved that issue in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398, 2414-16, 189 L. Ed. 2d 339 (2014) (Halliburton II). The district court then certified a class consisting of all purchasers of Best Buy stock between September 14 and December 14, 2010, concluding that common questions predominate because defendants failed to rebut the Basic presumption by establishing that the challenged statements did not impact Best Buy's publicly-traded stock price. We granted defendants permission to appeal this interlocutory ruling. See Fed. R. Civ. P. 23(f). Addressing an issue of first impression, we conclude the district court misapplied the price impact analysis mandated by Halliburton II and therefore reverse.

I. Factual Background.

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818 F.3d 775 *; 2016 U.S. App. LEXIS 6616 **; Fed. Sec. L. Rep. (CCH) P99,067; 94 Fed. R. Serv. 3d (Callaghan) 592

IBEW Local 98 Pension Fund, et al., Plaintiffs - Appellees v. Best Buy Co., Inc., et al., Defendants - Appellants Securities Industry and Financial Markets Association; Chamber of Commerce of the United States, Amici on Behalf of Appellants

Subsequent History: Rehearing denied by, Rehearing, en banc, denied by IBEW Local 98 Pension Fund v. Best Buy Co., 2016 U.S. App. LEXIS 10003 (8th Cir. Minn., June 1, 2016)

Request denied by, On remand at IBEW Local 98 Pension Fund v. Best Buy Co., 2017 U.S. Dist. LEXIS 97756 (D. Minn., June 23, 2017)

Prior History:  [**1] Appeal from United States District Court for the District of Minnesota - Minneapolis.

IBEW Local 98 Pension Fund v. Best Buy Co., 2014 U.S. Dist. LEXIS 108409 (D. Minn., Aug. 6, 2014)

CORE TERMS

stock, misrepresentation, Buy's, certification, rebut, investor, predominance, fraud-on-the-market, inflated, publicly, track, fraudulently, causation, invoke

Civil Procedure, Special Proceedings, Class Actions, Appellate Review, Securities Law, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Elements of Proof, Prerequisites for Class Action, Predominance, Appeals, Standards of Review, De Novo Review, Elements of Proof, Reliance, Fraud on the Market, Class Actions, Truth on the Market