Community Health Systems, Inc., et al. v. New York City Employees’ Retirement System, et al.

To state a claim for federal securities fraud, a private plaintiff must plead “loss causation.” Dura Pharm., Inc. v. Bruodo, 544 U.S. 336 (2005). To do so, most plaintiffs allege that they bought the defendant’s securities at prices inflated by fraud, and then those securities lost value when a “corrective disclosure” revealed to the market the truth (i.e., new facts or information), causing an economic loss. The questions presented are:

1. Did the Sixth Circuit correctly hold, in conflict with other circuits, that (a) the legal sufficiency of an alleged “corrective disclosure” is not subject to any fixed rules concerning the permissible sources of corrective “truth” but instead turns on a case-by-case, totality-of-the-circumstances analysis; and (b) mere allegations made in a civil complaint may constitute a corrective disclosure, so long as those allegations are combined with the release of other information (including from other sources), even if those additional materials revealed no new facts to the market?

2. Did the Sixth Circuit correctly hold, in conflict with other circuits, that Federal Rule of Civil Procedure 15(c)(1) authorizes the “relation back” of otherwise time-barred claims asserted in an amended complaint by new plaintiffs, so long as the underlying case is a class action and the new plaintiffs’ claims satisfy Rule 15(c)(1)(B)’s requirement that they “arose out of the conduct, transaction, or occurrence” set out in the original complaint?