Jared Neas


The Supreme Court's holding in Dura Pharmaceuticals, Inc. v. Broudo imposes a heightened pleading requirement for private plaintiffins misrepresentation or omission securities class actions under Rule lOb-5. The Court verified that a plaintiff must adequately plead loss causation in its complaint and rejected the Ninth Circuit's interpretation of the loss causation standard. The Supreme Court held that the plaintif's pleadings in Dura did not meet the loss causation requirement of the Private Securities Litigation Reform Act ("PSLRA'). The Court also rejected the Ninth Circuit's requirement that the alleged misconduct merely "touch upon " the economic loss. Instead, the Supreme Court held that a plaintiff must allege and prove that the misconduct "proximately " caused the subsequent loss. This Note attempts to clarify this area by first outlining the elements required for recovery under l0b-5 class actions and tracing the development of loss causation. This Note then analyzes the Supreme Court's rejection of the Ninth Circuit's interpretation of loss causation in favor of a 'proximate" standard and explains some important considerations and misconceptions of loss causation. Finally, this Note attempts to explain the Court's new pleading requirements for loss causation and suggests an alternate version of that standard