Ninth Circuit Reinstates Securities Class Action
An investor filed a class action against a biotechnology firm that developed obesity drugs, and its executives, alleging they violated the Securities Exchange Act by misrepresenting or omitting material facts to conceal the truth or adverse material information about a drug study. Following dismissal, the plaintiffs appealed challenging the oft-used method of introducing extraneous material to support dismissal. The Ninth Circuit reversed, shedding light on what it called a “concerning pattern in securities cases” of overusing doctrines like judicial notice and incorporation by reference doctrines to stop securities litigants in their tracks. The court found the trial court abused its discretion in judicially noticing an investor call transcript and incorporating by reference a blog post that undercut the plaintiffs’ claims.