United States District Court for the Southern District of New York
435 F. Supp. 397 (1975)
Douglas Aircraft Company, Inc. (Douglas) (defendant) sold $75 million in debentures. The plaintiff brought suit based on § 11 of the Securities Act of 1933. The district court agreed with the plaintiff that Douglas had sold the debentures under a prospectus that contained a materially false break-even prediction. For purposes of calculating damages, neither party wanted to value the debentures at market value. The plaintiff argued that the value should be below the debentures’ market price due to a financial crisis Douglas was experiencing. Douglas argued that the value should be above the debentures’ market price due to Douglas’s good prospects of financial recovery. Further, Douglas argued that the court should account for the company’s release of poor third quarter earnings right before the plaintiff filed the lawsuit. Douglas claimed that this report resulted in panic selling, thus depressing the market value of the debentures.
Rule of Law
Holding and Reasoning (Motley, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 220,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,100 briefs, keyed to 189 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.