Dura Pharmaceuticals, Inc., et al. v. Michael Broudo et al. (544 U.S. 336)
U.S. Supreme Court · decided April 19, 2005 · Supreme Court Database (Spaeth)
- Citation
- 544 U.S. 336 · 125 S. Ct. 1627
- Decided
- April 19, 2005
- Term
- October Term 2004
- Vote
- 9–0
- Majority author
- Justice Breyer
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Breyer delivered the opinion of the Court. A private plaintiff who claims securities fraud must prove that the defendant’s fraud caused an economic loss. 109 Stat. 747,15 U. S. C. § 78u-4(b)(4). We consider a Ninth Circuit holding that a plaintiff can satisfy this requirement— a requirement that courts call “loss causation” — simply by alleging in the complaint and subsequently establishing that “the price” of the security “on the date of purchase was inflated because of the misrepresentation.” 339 F. 3d 933, 938 (2003) (internal quotation marks omitted). In our view, the Ninth Circuit is wrong, both in respect to what a plaintiff must prove and in respect to what the plaintiffs’ complaint here must allege. I. Respondents are individuals who bought stock in Dura Pharmaceuticals, Inc., on the public securities market between April 15, 1997, and February 24, 1998. They have brought this securities fraud class action against Dura and some of its managers and directors (hereinafter Dura) in federal court. In respect to the question before us, their detailed amended (181 paragraph) complaint makes substantially the following allegations: (1) Before and during the purchase period, Dura (or its officials) made false statements concerning both Dura’s drug profits and future Food and Drug Administration (FDA) approval of a new asthmatic spray device. See, e. g., App. 45a, 55a,…
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