Opinion ID: 1267160
Heading Depth: 4
Heading Rank: 2

Heading: Part D Implementation

Text: Plaintiffs allege that Gemunder's statements and predictions concerning Omnicare's transition to Part D were misleading in light of Omnicare's allegedly insufficient and untimely training as well as the difficulties encountered in implementation. The district court dismissed this claim, finding that loss causation had not been adequately pled. We agree with that assessment. In a securities action, the plaintiff bears the burden of proving loss causation, 15 U.S.C. § 78u-4(b)(4), as well as pleading it. See Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 346-48, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005). Loss causation requires `a causal connection between the material misrepresentation and the loss.' Brown, 481 F.3d at 920 (quoting Dura, 544 U.S. at 342, 125 S.Ct. 1627). Price inflation alone is insufficient; rather, a plaintiff must show that an economic loss occurred after the truth behind the misrepresentation or omission became known to the market. See Dura, 544 U.S. at 346-47, 125 S.Ct. 1627. Assuming that Gemunder's statements are otherwise actionable, loss causation is thoroughly lacking in this case. Although a number of allegations relate to Omnicare's alleged Part D shortcomings, none explain how the statements were revealed to be false and thereby caused a drop in the stock price. Indeed, the sole loss causation allegation identified by the Plaintiffs is a fragment of a sentence imbedded in the complaint's block quote of an article from TheStreet.com. The entire sentence reads: The institutional pharmacy [Omnicare] has found itself caught up in two government probes even as it struggles to overcome major glitches associated with the new Medicare Part D drug coverage program.  (emphasis added). Tellingly, this quote does not appear in the section of the complaint dealing with Part D, but rather in a discussion of loss causation relating to various government raids. Further, the complaint fails to explain why this minor problem, as opposed to the raids, caused the ensuing decline in stock value. See Dura, 544 U.S. at 343, 125 S.Ct. 1627 (To `touch upon' a loss is not to cause a loss, and it is the latter that the law requires.); Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475 F.3d 824, 842 (7th Cir.2007) (To plead loss causation, the plaintiff must allege that it was the very facts about which the defendant lied which caused its injuries.). Quite to the contrary, the complaint expressly attributes the decline in share price to the confluence of governmental probes, not the news of Part D difficulties. As a result, we cannot conclude that loss causation has been adequately pled with respect to the implementation of Part D.