Filed November 5, 2013
5 None of the cases cited by FGIC are at odds with the Second Circuit’s holding in Lentell that a plaintiff must allege facts sufficient to show that its loss was caused by the defendant’s alleged misstatements as opposed to a market- wide event. In fact, Fogarazzo v. Lehman Brothers, Inc., 341 F. Supp. 2d 274, 285 (S.D.N.Y. 2004), on which FGIC principally relies, was decided prior to Lentell, and did not involve an intervening factor remotely comparable to the market-wide housing collapse at issue here. This Court previously declined to follow Fogarazzo precisely because it pre-dated Lentell.
Filed October 29, 2013
(internal quotation marks omitted); King County v. IKB Deutsche Industriebank AG, 708 F. Supp. 2d 334, 343, 346 (S.D.N.Y. 2010) (“Lentell does not say that the existence of a market- wide phenomenon necessarily eliminates a plausible causal connection between plaintiffs‟ losses and defendants‟ alleged fraud. . . . [E]ven though I am uncertain whether plaintiffs will be able to ultimately prove that any portion of their losses were caused by the defendants‟ conduct as opposed to the credit crisis, that is not their burden at this stage.”); Fogarazzo v. Lehman Bros., Inc., 341 F. Supp. 2d 274, 285 (S.D.N.Y. 2004) (even where it “appear[s] on the face of the pleading that recovery is very remote and unlikely” and it is uncertain “whether a plaintiff is likely to prevail ultimately,” this is “not the test” at the motion to dismiss stage). Case 1:12-cv-07372-RWS Document 27 Filed 10/29/13 Page 18 of 29 15 The SAC‟s loss causation allegations more than satisfy the requirements of Rule 8.
Filed January 23, 2013
Adams, 340 F.3d at 1106. 12 See also Fogarazzo v. Lehman Bros., Inc., 341 F. Supp. 2d 274, 295 (S.D.N.Y. 2004) (“conflicts of interest [raise] strong circumstantial evidence of conscious misbehavior”); Podany v. Robertson Stephens, Inc., 318 F. Supp. 2d 146, 157 (S.D.N.Y. 2004) (allegation of motive is stronger when conflict of interest is not disclosed). Case 5:12-cv-00465-M Document 82 Filed 01/23/13 Page 29 of 38 23 (b) Scienter Against The Remaining Defendants Is Strong The “Remaining Defendants” include Chesapeake’s most senior officers,13 and their positions support the totality of the scienter allegations.
Filed March 2, 2012
Grp., 547 F.3d 406, 425 (2d Cir. 2008). Indeed, defendants asserting a limitations defense have been rebuked for failing to put these types of materials before the Court. Fogarazzo v. Lehman Bros. Inc., 341 F. Supp. 2d 274, 299 (S.D.N.Y. 2004). These materials are not offered for their truth; what matters is the fact—judicially noticeable—that they were published.
Filed August 15, 2011
Therefore, “the disclosure required by the securities laws is measured not by literal truth, but by the ability of the material to accurately inform rather than mislead prospective buyers.” (citing Fogarazzo v. Lehman Bros., 341 F. Supp. 2d 274, 294 (S.D.N.Y. 2004)). [“T”]he statutory language [of Section 11] and well-established case law make clear that once an entity opts to include information in its registration statement … it has a duty to disclose any additional fact” necessary to make the statements contained therein not misleading.
Filed July 19, 2010
In re Initial Public Offering Sec. Litig., 399 F. Supp. 2d 261, 266 (S.D.N.Y. 2005) (quoting Fogarazzo v. Lehman Bros., Inc., 341 F. Supp. 2d 274, 287 (S.D.N.Y. 2004)) (granting motion to dismiss where plaintiffs did not allege required link between alleged misstatements and suffered loss); Lentell v. Merrill Lynch & Co., Inc., 396 F.3d 161, 174-77 (2d Cir. 2005) (same). According to plaintiffs, they surmounted this hurdle because, although the alleged corrective disclosures “are not worded exactly as the alleged material adverse facts alleged in the Complaint, the substance is the same.”
Filed March 22, 2010
Without details of “company-specific” wrongdoing, the various articles do not give rise to storm warnings as a matter of law. See Staehr, 547 F.3d at 428 (“Because nearly all of the stories in the record are devoid of company-specific information, the argument that they constitute ‘storm warnings’ is far from compelling.”); Fogarazzo v. Lehman Bros., Inc., 341 F. Supp. 2d 274, 299–300 (S.D.N.Y. 2004) (media reports of industry-wide misconduct did not trigger inquiry notice because the reports did not specifically mention defendants).44
Filed March 3, 2010
Furthermore, these disclaimers do not protect defendants from liability because they consist of nothing more than boilerplate language that fails to alert plaintiffs to any of the actual risks or misrepresentations associated with the Senior Notes. See Merrill Lynch & Co. v. Allegheny Energy, Inc., 382 F. Supp. 2d 411, 417 (S.D.N.Y. 2003) (citing Caiola v. Citibank, N.A., 295 F.3d 312, 330 (2d Cir. 2002)); see also Hunt v. Alliance N. Am. Gov’t Income Trust, Inc., 159 F.3d 723, 729 (2d Cir. 1998) (“The cautionary language . . . must relate directly to that by which plaintiffs claim to 14 Fogarazzo v. Lehman Bros., Inc., 341 F. Supp. 2d 274 (S.D.N.Y. 2004), another case relied upon by Fitch, actually undermines Fitch’s statute of limitations argument. There, the Court found plaintiffs’ claims were not time-barred because the reports disclosing conflicts did “not disclose the systematic misrepresentations charged in this suit.”
Filed January 21, 2010
DeMarco v. Lehman Bros., Inc., 309 F. Supp. 2d 631 (S.D.N.Y. 2004) (motion to dismiss denied because analyst misrepresented his true opinion about the stock); In re Salomon Analyst Level 3 Litig., 350 F. Supp. 2d 477, 494 (S.D.N.Y. 2004) (same); Swack v. Credit Suisse First Boston, 383 F. Supp. 2d 223 (D. Mass. 2004) (complaint could be fairly read to plead that the analyst did not believe recommendations were justified but issued them as a quid pro quo for continued investment banking business, a portion of which would augment the analyst’s bonus). Both Swack and the fourth case, Fogorazzo v. Lehman Bros. Inc., 341 F. Supp. 2d 274 (S.D.N.Y. 2004), included egregious conflict of interest facts in which analysts explicitly traded a Buy recommendation for investment banking business and profited personally by doing so. Plaintiffs have carefully not alleged any such quid pro quo here.
Filed January 15, 2010
See Demarco v. Lehman Bros., Inc., 309 F. Supp. 2d 631 (S.D.N.Y. 2004) (the analyst reports’ ratings themselves constituted material misrepresentations.); Fogarazzo v. Lehman Bros., Inc., 341 F. Supp. 2d 274 (S.D.N.Y. 2004) (“buy” recommendations in the research reports were misleading statements that satisfied Rule 9(b); In re Salomon Analyst Level 3 Litig., 350 F. Supp. 2d 477, 494 (S.D.N.Y. 2004) (plaintiff adequately pled with falsity with respect to analyst’s “buy” recommendation; Swack v. Credit Suisse First Boston, 383 F. Supp. 2d 223 (D. Mass. 2004) (same). 2. Plaintiff Has Adequately Pled the Failure to Downgrade the Stock Was An Actionable False Statement