Opinion ID: 2791707
Heading Depth: 3
Heading Rank: 1

Heading: Mr. Nakkhumpun’s Pleading Burden

Text: To plead loss causation, a plaintiff must allege facts showing a causal connection between the revelation of truth to the marketplace 10 In his reply brief, Mr. Nakkhumpun argues that two additional risks existed: 1. The Vega Area assets were not worth $400 million. 2. Delta needed to sell the assets for a price high enough to avoid bankruptcy. By waiting until the reply brief, Mr. Nakkhumpun waived an appellate argument based on the two additional risks. See United States v. Jenkins, 904 F.2d 549, 554 n.3 (10th Cir. 1990) (stating that an issue is waived when it is raised for the first time in a reply brief). 23 and losses sustained by the plaintiff. In re Williams Sec. Litig.-WCG Subclass, 558 F.3d 1130, 1136-37 (10th Cir. 2009). Under a theory of materialization of a concealed risk, a plaintiff alleges loss causation by showing that the defendant’s misrepresentation concealed a risk that caused a loss for the plaintiff when the risk materialized. Lentell v. Merrill Lynch & Co., 396 F.3d 161, 173 (2d Cir. 2005). We have applied this theory in In re Williams Sec. Litig.-WCG Subclass, where we affirmed award of summary judgment to the defendants because the plaintiff’s expert could not say when the concealed risk had materialized. In re Williams, 558 F.3d at 1138. For loss causation under this theory, a plaintiff must allege two facts: 1. The risk that materialized was within the zone of risk concealed by the misrepresentation (foreseeability). 2. The materialization of the risk caused a negative impact on the value of the securities (causal link). Lentell, 396 F.3d at 173.