Securities Litigation Against Life Sciences Companies: 2025
Securities class actions against life sciences companies are mostly second-order problems. The first-order problem is a business or regulatory setback that, when disclosed by the company or a third party, triggers a stock price decline. Following the decline, plaintiffs’ class action attorneys search the company’s previous public statements and seek to identify inconsistencies between past positive comments and the current negative development. In most cases, plaintiffs’ attorneys then seek to show that any arguable inconsistency amounts to fraud — that is, they will claim that the earlier statement was knowingly or recklessly false or misleading. When the challenged statement appears in a public offering document (that is, a registration statement or prospectus), plaintiffs need only show that the statement was materially false or misleading, not that it was made with scienter or caused their losses.
Eleventh Circuit Loosens Loss Causation in High-Profile Election-Interference Securities Suit
On November 26, 2025, the Eleventh Circuit reversed Judge Aileen Cannon’s dismissal in Jastram v. NextEra Energy, Inc. in a decision that appears to significantly broaden the Circuit’s loss causation standard at the motion-to-dismiss stage.
Delaware Court of Chancery Dismisses Derivative Challenge to The Trade Desk CEO’s Compensation Award Valued at $819 Million for Lack of Demand Futility
In re The Trade Desk, Inc. Derivative Litigation demonstrates the careful analysis the courts will engage in when conducting a Rule 23.1 demand futility challenge to assess both director independence and the likelihood of liability for the claims against the directors. This litigation was filed in 2022, and therefore was not impacted by the amendment of DGCL Section 144 earlier this year, which provided new procedural safe harbors for acts or transactions involving corporations and their directors, officers, controlling stockholders, and control groups. As a result, the court’s ruling and this post do not engage with the amended statute. Nevertheless, the court’s methodical analysis of director independence is informative of the factors that the Court of Chancery has found, and may continue to find, relevant to independence analyses. This ruling was affirmed on November 6, 2025 by the Supreme Court of Delaware on the basis of and for the reasons stated in the Memorandum of Opinion.
