An “artificially inflated purchase price” is not in and of itself a relevant economic harm.
Dura Pharms., 544 U.S. at 347. In addition to alleging an artificially inflated purchase
price, a plaintiff must also allege a causal connection between the false or misleading
statement and the subsequent decline in share price. Id. Given plaintiff’s burden of
proof as to causation, it is incumbent upon plaintiff at the pleading state to “ ‘allege that
the subject of the fraudulent statement or omission was the cause of the actual loss
suffered, i.e., that the misstatement or omission concealed something from the market
that, when disclosed, negatively affected the value of the security.’ ” Edward J.
Goodman Life Income Trust v. Jabil Circuit, Inc., 595 F. Supp. 2d 1253, 1278-79 (M.D.
Fla. 2009) (quoting Lentell, 396 F.3d at 173)).
The Whitney Defendants’ Motion
The Deferred Revenues Theory
Plaintiff says that the Whitney Defendants failed to properly defer revenue by,
inter alia, recording all “educational” packages as revenue despite failure to deliver
services and products; arbitrarily designating “Coaching” services as an immediate
revenue item, while nearly identical services were classified as Deferred Revenues; and
abusing Whitney’s refund policy. CAC at ¶¶57, 74, 124. Plaintiff further says that this
enabled the Company “to prematurely and improperly realize tens of millions of dollars
in additional revenues.” CAC at ¶ 75. Plaintiff also says that the Company’s revenue
recognition practices eventually came to a head on June 28, 2006 when the Company
announced that it would change its revenue recognition practices going back to 2000,