Fifth Circuit Issues Opinion on Loss Causation

In Lormand v. US Unwired, Inc. (5th Cir. 4/09/09), the Fifth Circuit considered the issue of loss causation in partially affirming, partially reversing the district court's ruling on a MTD.  Plaintiffs were able to establish loss causation as to alleged misrepresentations about a phone company's subprime program, in part because of facts showing that defendants understood adoption of the program (forced on them by Sprint) would be disastrous to the company.  This strengthened the loss causation link between the misrepresentations and stock price decline.