After going through a few rounds of motions to dismiss ruled on by Judge Clarence Newcomer (E.D. Pa.), who died of melanoma last August, Defendants in health care giant Cigna’s securities class action asked their new jurist, Judge Michael M. Baylson (E.D. Pa.), to dismiss certain allegations because, they argued, Lead Plaintiff Pennsylvania Employee Retirement System's ("SERS"), “did not have a net loss in its trading in CIGNA stock, and thus, under Dura Pharmaceuticals, SERS cannot plead any economic loss or loss causation.”
Although the Court recognized that even Defendants acknowledged that "there are some instances in which SERS sold some shares at prices lower than the price at which it bought the same shares,” he also said that “there are substantial issues of fact raised by the parties,” “and the Court cannot resolve these issues without a trial or at least an evidentiary hearing of some type.” So, although Dura “contains language that supports the Defendants' interpretation of the requirement of economic loss in the PSLRA, the Defendants' legal position as applied to the facts of this case may require an extension of Dura Pharmaceuticals that is not required by either Supreme Court or Third Circuit precedent at the moment.”
But “because the issues of economic loss and loss causation are so fundamental to the situation of SERS as the present Lead Plaintiff, the Court should require expedited discovery, and possibly expert reports, on this issue - after which, either or both parties may bring a dispositive motion.”
Result? Defendants' Motion to Dismiss on the grounds of economic loss and loss causation denied without prejudice.
You can read In re Cigna, issued December 23, 2005, at 2005 U.S. Dist. LEXIS 35524.
Nugget: “Dura Pharmaceuticals is consistent with the Third Circuit's existing precedent for pleading economic loss and loss causation”