Source: cases/15usc78j/us-544-336-dura-v-broudo.case
Case source: https://www.neochart.com/catalog/cases/us/volume_544/0336_01/index.html
Normally, in cases such as this one (i. e., fraud-on-the-market cases), an inflated purchase price will not itself constitute or proximately cause the relevant economic loss.
For reasons set forth in Part II-A, supra, however, the “artificially inflated purchase price” is not itself a relevant economic loss.
To “touch upon” a loss is not to cause a loss, and it is the latter that the law requires.
And the complaint nowhere else provides the defendants with notice of what the relevant economic loss might be or of what the causal connection might be between that loss and the misrepresentation concerning Dura’s “spray device.”
casedsl 1 case /us/544/0336-01 name Dura Pharmaceuticals, Inc. v. Broudo cite 544 U.S. 336 (2005) court Supreme Court of the United States date 2005-04-19 url catalog/cases/us/volume_544/0336_01/index.html source ir/caselaw/us_544.jsonl sha1=9db60b085220cd253b3e7d84d6542913f6422e3d chars=18487 law 15usc78j role applied posture private damages; Rule 12(b)(6); review limited to spray-device misrepresentation and pleaded economic loss/causation result claimant-lost element economic-loss : not-satisfied [pleaded] count spray-device claim variant purchase-inflation/spray-device fact @2000..2143 [cuts-against] | (6) About eight months later (in November 1998), Dura announced that the FDA would not approve Dura’s new asthmatic spray device. Id., at 110a. fact @2144..2254 [cuts-against] | (7) The next day Dura’s share price temporarily fell but almost fully recovered within one week. Id., at 156a. fact @2255..2629 [supports] | Most importantly, the complaint says the following (and nothing significantly more than the following) about economic losses attributable to the spray device misstatement: “In reliance on the integrity of the market, [the plaintiffs] . . . paid artificially inflated prices for Dura securities” and the plaintiffs suffered “damagefs]” thereby. Id., at 139a (emphasis added). rule @6860..7034 | Normally, in cases such as this one (i. e., fraud-on-the-market cases), an inflated purchase price will not itself constitute or proximately cause the relevant economic loss. held @16499..16633 | For reasons set forth in Part II-A, supra, however, the “artificially inflated purchase price” is not itself a relevant economic loss. gloss Inflation is plaintiffs' asserted injury, hence supports polarity for that allegation; the Court rejects its legal sufficiency. The temporary price drop followed by recovery is counterevidence, not an allegation of lasting loss. element loss-causation : not-satisfied [pleaded] count spray-device claim variant purchase-inflation/no-loss-link fact @1710..1884 [cuts-against] | (4) On the last day of the purchase period, February 24, 1998, Dura announced that its earnings would be lower than expected, principally due to slow drug sales. Id., at 51a. fact @1885..1999 [cuts-against] | (5) The next day Dura’s shares lost almost half their value (falling from about $39 per share to about $21). Ibid. fact @16237..16442 [cuts-against absent] | The complaint’s failure to claim that Dura’s share price fell significantly after the truth became known suggests that the plaintiffs considered the allegation of purchase price inflation alone sufficient. rule @8927..9017 | To “touch upon” a loss is not to cause a loss, and it is the latter that the law requires. held @16634..16864 | And the complaint nowhere else provides the defendants with notice of what the relevant economic loss might be or of what the causal connection might be between that loss and the misrepresentation concerning Dura’s “spray device.” gloss The large February decline concerned earnings/drug sales; the November spray-device disclosure was different. Neither purchase inflation alone nor the unrelated earnings decline pleads the necessary causal loss. misfit The Court assumes ordinary Rule 8 for argument and resolves the allegations; it does not announce an exclusive corrective-disclosure model or reach the separate drug-profitability scienter claim.