In a potential blow to plaintiffs in securities class actions, the U.S. Supreme Court will reconsider one of the bedrock doctrines that has supported the growth of securities litigation.

On Friday, the court announced that it had granted certiorari in Erica P. John Fund v. Halliburton and will review the validity of the fraud-on-the-market theory, which allows plaintiffs to establish the necessary element of reliance at the class certification stage. Established in the 1988 Supreme Court case Basic v. Levinson, the doctrine allows courts to presume that all class plaintiffs relied on an alleged misrepresentation because investors assume that an efficient market reflects all available information.

As we noted earlier in a more detailed discussion of the case, if the court decides to abandon this 25-year-old doctrine, as Halliburton has requested, plaintiffs could struggle to get large classes of investors certified.

The decision is a victory for Baker Botts, which authored Halliburton’s petition for cert. The firm argued that the court should overturn Basic because economists have discredited the fraud-on-the-market presumption. As an alternative to reversing Basic, the firm urged the court to at least modify the ruling and require plaintiffs to prove that an alleged misrepresentation affected the company’s stock price in order to use the fraud-on-the-market presumption. In this case, it claims there’s no evidence that Halliburton’s alleged misrepresentations changed the price of its stock. The plaintiffs claimed in their 2001 lawsuit that Halliburton misled them about its asbestos liability, among other things.

“We are very pleased that the Court has agreed to hear this important case,” said Baker Bott’s Aaron Streett, one of the authors of the brief. ” We look forward to presenting our merits arguments to the court and are confident that we will prevail.”

The plaintiffs, represented by Boies, Schiller & Flexner and Kahn Swick & Foti, filed this opposition to cert, urging the court not to eliminate a “basic cornerstone for modern private securities litigation.” Boies Schiller declined to comment.