Revisiting Fraud-on-the-Market After Goldman: J&J’s Petition and the Future of Price Impact at Class Certification

Johnson & Johnson (“J&J”) filed a petition for a writ of certiorari with the Supreme Court of the United States (“SCOTUS”) on February 4, 2026, asking the court to review a Third Circuit decision concerning class certification for investors who purchased J&J stock allegedly in reliance on defendants’ false and misleading statements about its talc products.[1]

Initially, the proposed class sought certification, arguing that it had “established, and [that] Defendants ha[d] failed to rebut, the fraud-on-the-market presumption of reliance” required for class certification because four corrective disclosures—consisting of articles reporting that its products contained asbestos— “revealed new information as to the seriousness and extent of the alleged fraud which could not have been previously reflected in the stock price.”[2]

At the district court level, the court granted class certification, finding that although the stock price decline did not meet the traditional standard for statistical significance, the decline, when considered alongside the alleged corrective disclosure and the absence of an alternative explanation offered by defendants, was sufficient to support price impact.

J&J appealed, arguing that it had rebutted the presumption of reliance by demonstrating that the alleged misrepresentations had no price impact.  However, the Third Circuit disagreed with J&J and affirmed the class certification order.  J&J swiftly petitioned for a rehearing of this decision, which the Third Circuit denied.

Now, J&J has made one final plea—this time to SCOTUS—to reverse the Third Circuit’s decision, calling it “plainly wrong.” Specifically, J&J argues that the Third Circuit’s ruling that the “misrepresentation and corrective disclosure [need only] concern the same general ‘subject matter,’ i.e., talc safety,” to plead the price impact necessary for class-wide reliance “erases the limits Goldman[3] imposed and distorts the logical underpinning in Basic.”[4]

If SCOTUS takes the case, it has the potential to significantly narrow the path to class certification by raising the bar for what qualifies as a corrective disclosure, much as Goldman did a few years ago.

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[1]              Hall v. Johnson & Johnson, No. 18-1833 (ZNQ) (TJB), 2023 WL 9017023, at *13 (D.N.J. Dec. 29, 2023), aff’d sub nom., San Diego Cnty. Emps. Ret. Ass’n v. Johnson & Johnson, No. 24-1409, 2025 WL 2159093 (3d Cir. July 30, 2025), revised and superseded, No. 24-1409, 2025 WL 2176586 (3d Cir. July 30, 2025), and aff’d sub nom., San Diego Cnty. Emps. Ret. Ass’n v. Johnson & Johnson, No. 24-1409, 2025 WL 2176586 (3d Cir. July 30, 2025).

[2]               Id. at 9

[3]               In Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System, 594 U.S. 113, 125 (2021), the Supreme Court found that defendants bear the burden of persuasion to prove a lack of price impact by a preponderance of the evidence at class certification and may do so if they “show that the misrepresentation in fact did not lead to a distortion of price” and make “any showing that severs the link between the alleged misrepresentation and … the price received (or paid) by the plaintiff.”

[4]              Johnson & Johnson v. San Diego Cnty. Emps. Ret. Ass’n, Petition for a Writ of Certiorari 4-6, No. 25-977 (U.S. Feb. 4, 2026).