Eighth Circuit Affirms NovaStar Financial Subprime Securities Suit Dismissal

Eighth Circuit Affirms NovaStar Financial Subprime Securities Suit Dismissal - 9/3/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Eighth Circuit Affirms NovaStar Financial Subprime Securities Suit Dismissal
Kevin LaCroix

The D & O Diary. September 3, 2009
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EXCERPT: […] The Eighth Circuit’s Opinion, written by Judge Raymond Gruender, affirmed the dismissal, but because the Court found that the complaint’s deficiencies alone were sufficient to affirm the district court, the Court did not reach the scienter issue. The plaintiff had argued that the district court erred in concluding that the complaint failed to specify the allegedly misleading statements, citing a thirty-six page section of the complaint that reproduced numerous public statements, press releases and SEC filings during the class period. The Eighth Circuit noted that "absent from this section (and from any other section of the complaint) however, is any indication as to what specific statements within these communications are alleged to be false and misleading." In his appellate brief, the plaintiff had attempted to identify specific statements that allegedly were misleading. But the Eighth Circuit said that "identifying specifically false and misleading statements for the first time on appeal, however, doe not excuse a litigant’s failure to comply with the pleading requirements," concluding that the district court did not err in dismissing the complaint for failure to identify which statements were misleading. The plaintiff also argued that the district court erred in concluding that the complaint failed adequately to allege that the statements were misleading, with respect to which the Eighth Circuit noted "absent an indication of precisely what statements [the plaintiff] alleged to be misleading, it is difficult, if not impossible, to determine whether the complaint adequately specified why each statement was misleading." The Eighth Circuit went on to note that "even if we were able to identify specific statements that were alleged to be misleading," the complaint "does not provide any link between an alleged misleading statement and specific factual allegations demonstrating the reasons why the statement was false and misleading."

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