Monday, June 26, 2006

Revenge of the Dura

Looks like Plaintiffs’ newly minted complaint in the Dura case is back in the District Court after winding it’s way up to the Supremes and back. In ruling on the motions to dismiss (surprise, surprise, loss causation is the main issue), Judge M. James Lorenz (S.D. Cal.) (Clinton ‘99) commented that, “there is some appeal to requiring a corrective disclosure to occur at the end of the class period,” but such “a rule requiring the corrective disclosure to immediately follow the end of the Class Period would ensure such purchasers' interests are protected. Nevertheless, the Court finds the authority Defendants cite insufficient to impose such a requirement.”

That’s because “when presented with this case, the Supreme Court could have held that as a matter of law Plaintiffs cannot establish loss causation because the corrective disclosures regarding Albuterol Spiros were made several months after the Class Period ended. The Supreme Court did not so hold, and instead only required the Plaintiffs to properly allege a causal connection between the economic losses suffered and the Defendants' misrepresentations.”

Result? Motion to dismiss granted in part and denied in part. Leave to amend granted.

You can read In re Dura, issued June 2, 2006, at 2006 U.S. Dist. LEXIS 41193.

Nugget: “The Supreme Court's decision did not create a heightened pleading standard for loss causation: the Court noted its holding did not affect Rule 8(a)(2)'s applicability.”

No comments: