Dura Pharmaceuticals, Inc. v. Broudo
- Case Date: 9/13/2004
- Project Name: Class Action Reform
On April 17, 2005, the Supreme Court reversed a ruling from the U.S. Court of Appeals for the Ninth Circuit that had allowed a more relaxed pleading standard for attorneys filing securities class action cases against publicly-held companies. The Court's ruling is expected to curb abusive class action cases that often resulted in windfall damage awards and had been particularly damaging to smaller high-tech companies such as those in the life sciences industry. The Court held that while the general pleading requirements are quite liberal, it was insufficient to simply allege that the stock price is artificially inflated because such an allegation does not necessarily mean there is any economic loss. Accordingly, litigants must plead and prove proximate causation that more directly ties the economic loss to the alleged misconduct.
More Information and Downloads:
9/13/2004: Download the Brief
Litigation Update: Supreme Court Curbs Securities Class Action Abuse