Overcoming Adversity

It’s not over until it’s over. Last September, it certainly looked bleak for the defendants in the Oracle securities class action pending in the N.D. of California. The court found that the defendants had improperly withheld evidence and, as a result, the plaintiffs were entitled to adverse inference instructions with regard to the CEO’s knowledge of the corporate problems Oracle allegedly failed to disclose.

Last week, however, the court granted summary judgment in favor of the defendants. See In re Oracle Corp. Sec. Litig., 2009 WL 1709050 (N.D. Cal. June 19, 2009). Although the court took the adverse inferences into account in its decision, the plaintiffs failed to demonstrate a genuine issue for trial on other elements of their causes of action. Most notably, the court concluded that the plaintiffs failed to identify sufficient evidence as to loss causation for their non-forecasting claims.

Holding: Defendants’ summary judgment motion granted.

Quote of note: “[T]here is an absence of evidence that on March 1 [2001], Oracle revealed previously concealed information about Suite 11i or that analyst reports about the March 1 announcement linked the miss in Oracle’s applications earnings to previously disclosed deficiencies with Suite 11i. Plaintiffs’ only possible theory for loss causation is that the earnings miss itself revealed the truth about Suite 11i to the market, but plaintiffs cite no case in which an earnings miss alone was sufficient to prove loss causation.”

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