In Dura Pharmaceuticals Inc. v. Broudo, the U.S. Supreme Court resolved a circuit split concerning the definition of loss causation for claims arising under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.1 The Supreme Court did not, however, determine whether allegations of loss causation are subject to the heightened pleading standard for fraud set forth in Federal Rule of Civil Procedure 9(b) or only the general notice pleading standard of Federal Rule of Civil Procedure 8(a)(2).
Since Dura, lower courts have split on whether loss causation must be pled with particularity under Rule 9(b) or is subject to the less restrictive “plausibility” standard under Rule 8(a)(2), with a number of courts dodging the issue entirely. This has created substantial uncertainty for both litigants and courts concerning the pleading rules applicable to loss causation and an outright split among the circuit courts that have faced the issue.
