Today, the Ninth Circuit reversed the dismissal of a securities fraud complaint for failure to plead "loss causation" adequately under Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005). The putative class of Gilead Sciences shareholders alleged that a decline in sales growth resulted from issuance of a Food and Drug Administration "warning letter" and that disclosure of the drop three months later pushed down the market price of Gilead Sciences shares.
Under Bell Atl. Co. v. Twombly, 127 S. Ct. 1955 (2007), the Ninth Circuit observed in reversing, "[a] limited temporal gap between the time a misrepresentation is publicly revealed and the subsequent decline in stock value does not render a plaintiff’s theory of loss causation per se implausible." Hartman v. Gilead Sciences, Inc. (In re Gilead Scences Securities Litig.), No. 06-16185 (9th Cir. Aug. 11, 2008).
