Ninth Circuit Raises Securities Class Action Pleading Standards

The  courts have been split on the standard for pleading loss causation in a securities fraud case. Now, in Oregon Public Employees Retirement Fund v. Apollo Group Inc., the Ninth Circuit Court of Appeals has come down on the side of those who mandate the more strict standard, that the loss must be pled “with particularity.” This is good news for defendants. Pleading standards are especially crucial in securities class action matters, writes attorney Bruce A. Ericson in a Pillsbury client alert about the case, because their outcome is largely a function of what happens when the defendant files a motion to dismiss. “Often such motions are not merely the main event,” he writes,” but the only event: if the defendants do not win the motion, often they pull out their checkbooks and settle.”