DURA PHARMACEUTICALS INC. V. BROUDO
544 U.S. 336 (2005)
NATURE OF THE CASE: This was a dispute over whether a plaintiff can satisfy loss of
causation by alleging and establishing that the price of the security on the day of purchase
was inflated.
FACTS: Broudo (Ps) are individuals who bought stock in Dura Pharmaceuticals, Inc. (D), on
the public securities market between April 15, 1997, and February 24, 1998. Ps brought this
securities fraud class action against D and some of its managers and directors. Ps allege
that Ds made false statements to the FDA about approval of a new asthmatic spray device. On
February 24, 1998, D announced that its earnings would be lower than expected, principally
due to slow drug sales. D's shares lost almost half their value (falling from about $39 per
share to about $21). Eight months later D announced that the FDA would not approve its new
asthmatic spray device. Ps claimed that in reliance on the integrity of the market, they
paid artificially inflated prices for D securities' and the plaintiffs suffered 'damage[s]'
thereby. The District Court dismissed the complaint. It held that the complaint failed
adequately to allege an appropriate state of mind, i.e., that Ds had acted knowingly, or the
like. In respect to Ps' spray device claim, it held that the complaint failed adequately to
allege 'loss causation.' The Court of Appeals for the Ninth Circuit reversed. It held that
Ps can establish loss causation if they have shown that the price on the date of purchase
was inflated because of the misrepresentation. The Supreme Court granted certiorari.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
Get
free access to the entire content for Mac, PC or Online
for 2-3 days and free samples
of all kinds of products.
for 2-3 days and free samples of all kinds of products.
https://bsmsphd.com
© 2007-2016 Abn Study Partner
No comments:
Post a Comment