Oregon Steel Mills, Inc. was a publicly-traded company whose financial statements were audited by Coopers & Lybrand, LLP for many years. When Oregon sold the stock in one of its subsidiaries, Coopers advised Oregon—incorrectly and negligently, as it turned out—that the transaction should be reported as a $ 12.3 million gain. 

Two years later, Oregon began a public offering of additional shares of stock for a May 2 sale. Shortly before Oregon filed the stock offering with the SEC, it found out from Coopers that the sale of its subsidiary had been misreported and that it would have to revise its financial statements. As a result, the offering was delayed from May 2 to June 13. During this period of delay, the price of the stock fell from $16 to $13.50.

Oregon sued Coopers for $35 million, the difference between what Oregon actually received for its stock and what it would have received if the offering had occurred on May 2. The trial court granted Coopers motion for summary judgment but the court of appeals reversed. Coopers appealed.

Questions:

1. Did Coopers’ negligence cause the loss to Oregon?

2. Was Coopers negligent in advising Oregon on the gain from the sale of its subsidiary?

3. Did this negligence cause a delay in Oregon’s public offering?

4. Did Oregon receive less money in the public offering because of the delay?

5. Is Coopers liable for this harm that resulted from its negligence?

6. What did cause Oregon’s harm?

7. What caused this decline?

8. I’m still confused. Could you give another example?