Rand-Heart of New York, Inc. v. Dolan, No. 15-1838 (8th Cir. 2016)
Annotate this CaseRand-Heart filed a putative class action on behalf of purchasers of Dolan Company's securities under Sections 10(b) and 20(a) of the Securities Exchange Act, 15 U.S.C. 78j(b), 78t(a). The district court dismissed the complaint for failure to state a claim. The court concluded that the district court erred in dismissing the section 10(b) and Rule 10b-5 claim and thus erred in dismissing the secondary liability claim under section 20(a). In this case, taking the allegations as true, DiscoverReady's financial instability caused by the decline in Bank of America was, at the least, so obvious that defendant must have been aware of it. Further, defendant's statements about "double-digit" growth and "lumpiness" are not protected by the Act's safe-harbor provision where these statements are not meaningfully cautionary and they are not company-specific warnings. Finally, the district court did not err in finding no loss-causation for the time period at issue. The court affirmed in part, reversed in part, and remanded for further proceedings.
Court Description: Benton, Author, with Smith and Bye, Circuit Judges] Civil case - Securities. The district court erred in dismissing this putative class action on the ground that plaintiff failed to allege scienter under Section 10(b) and Rule 10b-5, thereby precluding secondary liability under Section 20(a), as the allegations of the complaint, taken as true established that the company's financial instability was, at least, so obvious that defendant must have been aware of it; defendant's statements about "double digit" growth and "lumpiness" were not protected by the Securities Exchange Act's safe-harbor provisions as the statements about the company's expected performance were material and were not accompanied by meaningful cautionary language; the district court did not err in finding no loss-causation for one period covered by the complaint. [ February 09, 2016
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