Yet again, Dura has failed to produce for those who predicted it would put an end to many securities class actions. How these predictions came about in light of the fact that Justice Breyer commented in Dura that “it should not prove burdensome for a plaintiff who has suffered an economic loss to provide a defendant with some indication of the loss and the causal connection that the plaintiff has in mind,” is a bit puzzling, but the securities class action bar hadn’t seen a substantive decision from the Supremes in a long time, so it’s perhaps a bit understandable that some got a bit overzealous.
This time, it’s Judge John R. Tunheim (D. Minn.) taking on Defendants’ 12(c) motion for judgment on the pleadings (their 12(b)(6) motion to dismiss had been denied earlier) in the Retek action, where they argued that since Plaintiffs’ complaint says “the plaintiffs purchased stock at artificially inflated prices and were damaged thereby,” that should spell dismissal under Dura. A nice try, but it didn’t work, as Judge Tunheim recognized that “while it is true that plaintiffs use the same boilerplate language as that found insufficient in Dura, it is also clear that defendants are fully aware that plaintiffs claim the… press release as a corrective disclosure and the subsequent fall in stock value as their economic loss.” Indeed, “in contrast to Dura and Compuware, here plaintiffs' allegations include a straightforward scenario perfectly consistent with what Dura requires: an allegedly corrective disclosure followed by a drop in the stock price during the time that plaintiffs owned the securities.”
You can read In re Retek, issued October 21, 2005, at 2005 U.S. Dist. LEXIS 25986.
Nugget: “While the thread of causation may be long and somewhat tortured, at this stage, where the Court must accept as true the allegations in the Amended Complaint, the Court finds that plaintiffs have alleged enough to survive Dura.”