Narrowly construing the judicial notice rule in Federal Rule of Evidence 201 and the judicial doctrine of incorporation-by-reference, a federal appellate court in Khoja v. Orexigen Therapeutics, Inc. reversed a district court’s dismissal of a securities fraud action.
The circuit court determined that the district court improperly considered documents outside the plaintiff’s complaint in granting dismissal. Given the heightened pleading requirement in securities fraud actions, some ABA Section of Litigation leaders believe Khoja may be a step too far.
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