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Keywords

plaintiffdefendantdamagesnegligenceappealmalpractice
tortplaintiffdefendantnegligenceappeal

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Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP, 336 Or. 329, 83 P.3d 322

Facts

Oregon Steel Mills, Inc. retained Coopers & Lybrand, LLP for accounting services and reported a $12.3 million gain from a stock transaction based on the firm's advice. When the company planned a public offering of its stock, Coopers & Lybrand informed them that the previous accounting treatment was incorrect, leading to a delay in the offering. As a result, the stock was sold at a lower price than anticipated, prompting Oregon Steel Mills to sue for the difference in expected revenue.

Plaintiff Oregon Steel Mills, Inc., a company whose stock is traded on the New York Stock Exchange, retained defendant Coopers & Lybrand, LLP, for many years to provide accounting and auditing services.

Issue

Whether the accounting firm can be held liable for the decline in market value of the stock due to a delay in the sale caused by the firm's negligent conduct.

This case requires us to consider once again difficult issues of causation and foreseeability in tort law.

Rule

A defendant in a professional malpractice case may not be held liable for economic damages caused by market forces unrelated to the defendant's wrongful conduct, and the plaintiff must prove that the defendant's conduct was a substantial factor in causing the damages.

Defendant argued that, even if its negligent conduct had caused the delay in plaintiff's offering, defendant could not be liable for any 'loss' resulting from plaintiff's stock being sold at $13.50 per share rather than at $16 per share because that 'loss' was due to market factors unrelated to defendant's negligent conduct.

Analysis

The court analyzed the relationship between the accounting firm's negligent conduct and the market fluctuations affecting the stock price. It concluded that while the firm's actions caused a delay in the stock offering, the subsequent decline in stock price was due to market forces unrelated to the firm's negligence. Therefore, the court found that the decline in stock price was not a reasonably foreseeable consequence of the firm's actions.

The court analyzed the relationship between the accounting firm's negligent conduct and the market fluctuations affecting the stock price. It concluded that while the firm's actions caused a delay in the stock offering, the subsequent decline in stock price was due to market forces unrelated to the firm's negligence.

Conclusion

The Supreme Court reversed the Court of Appeals' decision and affirmed the Circuit Court's judgment, concluding that the accounting firm was not liable for the losses incurred by Oregon Steel Mills due to market fluctuations.

The Supreme Court reversed the Court of Appeals' decision and affirmed the Circuit Court's judgment, concluding that the accounting firm was not liable for the losses incurred by Oregon Steel Mills due to market fluctuations.

Who won?

Coopers & Lybrand, LLP prevailed in the case because the court determined that the decline in stock price was not a foreseeable result of the firm's negligent conduct.

Coopers & Lybrand, LLP prevailed in the case because the court determined that the decline in stock price was not a foreseeable result of the firm's negligent conduct.

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