It's back...

The Dura Pharmaceuticals litigation has found its way on remand back to the District Court and a lot has changed in the securities class action world in the nine years since the case was first filed.

A lot of ink (well pixels mostly - see The 10b5 Daily and The D&O Diary) has been spilled talking about Tellabs, one of the other high profile securities class action Supreme Court cases from the last decade, but the remand of Dura has received, little if any attention.

The reason may be quite simple - Judge Janis L. Sammartino's opinion partially denying and partially granting the motion to dismiss is relatively unremarkable, save for one thing - there is no mention of loss causation (the main issue before the Supreme Court in Dura) - as that issue was decided in a prior motion to dismiss in June 2006. Judge Sammartino's opinion largely addresses the Tellabs issue - whether the facts as plead by plaintiffs give rise to a “strong” inference of scienter after taking into account "plausible opposing inferences.”

The Court found the inference of scienter offered by plaintiffs to be “cogent and compelling,” supported by

the length of time that defendants knew about the problems in the inhaler’s development, the apparent inability of Dura’s product development team to obtain any meaningful improvement in the inhaler performance, the gravity of the problems with the inhaler (including an early return rate more than thirty times the industry standard), the frequency of the product development meetings, Garner’s specific inquiry about the inhaler’s reliability during one such meeting, and the NDA’s failure for the very reasons identified in the Eisele List and discussed during the product development meetings.

But the adequacy of the scienter allegations did not extend to all of the allegations against all of the individual defendants, and certain claims were dismissed.

A copy of Judge Sammartino's opinion can be found here.

Side note - though Dura has actually disappeared, having been swallowed up by Elan Pharmaceuticals, Inc. back in 2000, the Court has chosen not to rename the case, unlike Judge Cote in the Converium litigation, which has been renamed to reflect the change in corporate name and control.

Full disclosure: Once upon a time, the author worked on the Dura Pharmaceuticals litigation, suggesting at least two non-substantive changes to the plaintiffs' opposition to the cert petition.