PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 15-2664

_____________

OFI ASSET MANAGEMENT; 

TIMBER HILL LLC, 

individually and on behalf of all others similarly situated,

 Appellants

v.

COOPER TIRE & RUBBER; 

ROY ARMES; 

BRADLEY HUGHES 

_______________

On Appeal from the United States District Court

for the District of Delaware

(D.C. No. 1-14-cv-00068)

District Judge: Hon. Richard G. Andrews

_______________

Argued March 1, 2016

Before: AMBRO, JORDAN, and SCIRICA, Circuit Judges.

(Opinion Filed: August 22, 2016)

_______________
2

Jonathan H. Beemer

Vincent R. Cappucci

Andrew J. Entwistle

Entwistle & Cappucci

299 Park Avenue

20th Floor

New York, NY 10171

James A. Harrod [ARGUED]

Lauren A. Ormsbee

Bernstein Litowitz Berger & Grossmann

1251 Avenue of the Americas 

44th Floor

New York, NY 10020

 Counsel for Appellants
3

Marjorie P. Duffy

Jones Day

325 John H. McConnell Boulevard

Suite 600

P.O. Box 165017

Columbus, OH 43215

Stephen C. Norman

John A. Sensing

Potter, Anderson & Corroon

1313 N. Market Street

6

th Floor

Wilmington, DE 19801

Adrienne F. Mueller

Geoffrey J. Ritts [ARGUED]

Jones Day

901 Lakeside Avenue

North Point

Cleveland, OH 44114

 Counsel for Appellees

_______________

OPINION OF THE COURT

_______________

JORDAN, Circuit Judge.

This suit is what remains from a failed merger between 

Cooper Tire & Rubber Company (“Cooper”) and Apollo 

Tyres Ltd. (“Apollo”). OFI Asset Management and Timber 

Hill LLC – purporting to act for themselves and other
4

similarly situated investors (collectively, “OFI”)

1 – filed this 

securities class action in the United States District Court for 

the District of Delaware against Cooper and two of its 

officers. OFI claims that, during the course of merger 

negotiations between Cooper and Apollo, the defendants 

made material misrepresentations in statements to investors, 

resulting in violations of federal securities laws. The District 

Court dismissed OFI’s complaint in its entirety. OFI now 

appeals, complaining that the District Court improperly

managed the presentation of arguments and wrongly

dismissed the case. Because we conclude that the District 

Court acted within its discretion on case management and was 

correct in its decision that OFI failed to allege sufficient facts 

to support its claims, we will affirm.

I. BACKGROUND

A. FACTUAL BACKGROUND2

Cooper is a one-hundred-year-old tire manufacturer 

based in Findlay, Ohio. The individual defendants, Roy 

Armes and Bradley Hughes, were, respectively, Cooper’s 

Chief Executive Officer and Chief Financial Officer during 

the time relevant to this action. Cooper’s international 

operations included Cooper Chengshan Tire Company, Ltd. 

(“CCT”) in China, a joint venture formed in 2006, 65% of 

 

1 For simplicity, we will refer to OFI in the singular. 

2 We recount the facts in the light most favorable to 

OFI. See Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 

2007). 
5

which was owned by Cooper. Chengshan Group

(“Chengshan”), led by Chairman Che Hongzhi (“Che”),

owned the remaining 35% of CCT. As of mid-2013, CCT 

was Cooper’s most profitable manufacturing facility, 

contributing approximately 25% of Cooper’s revenue and 

profits. 

Cooper’s presence in China was a key motivation 

behind Apollo’s efforts to merge with Cooper. Those efforts

began in August 2012, when Apollo suggested the possibility 

of buying Cooper for $22.75 per share. Flirtation progressed 

to “serious” discussions in January 2013. (J.A. at 55, ¶ 48). 

Between late 2012 and June 2013 (the “negotiation period”), 

Cooper explored merger opportunities with Apollo as well as 

other parties. In January 2013, Chengshan indicated that it, 

with unidentified partners, might submit a bid for Cooper. 

On March 7, 2013, Cooper met with Apollo to discuss 

the details of a potential deal, including Che’s possible 

reaction to the merger. Armes asserted that “Cooper did not 

know how Chairman Che would react” and that his reaction 

could be anything from favorable to antagonistic; it was 

possible he would “really support it,” “sell his 35% stake,” or 

“try to undermine” it. (J.A. at 41, 55-56, ¶¶ 8, 50.) Cooper 

and Apollo also addressed (among other contingencies) the 

possibility that a union representing Cooper employees, the 

United Steelworkers Union (“USW”), would file grievances 

if a transaction were announced. 

On April 10, “Party C,” which allegedly was a 

consortium including Chengshan, communicated that it 

intended to make a proposal to purchase Cooper. While Party 

C was in frequent communication with Cooper during the 
6

negotiation period, it never made a definitive proposal. 

During this period, Apollo and Cooper met with Che, who 

expressed opposition to a merger between Cooper and Apollo

and suggested that he would prefer to “keep things going the 

way that [they] were.” (J.A. at 41, ¶ 8.) 

On June 12, Cooper and Apollo announced that they 

had entered into an agreement whereby Apollo would acquire 

Cooper for approximately $35 per share, a figure amounting 

to some $2.5 billion and representing a 40% premium over 

Cooper’s thirty-day volume-weighted average price. 

The Merger Agreement contained several disclaimers, 

one of which noted that the “representations and warranties 

... set forth herein shall be true and correct in all respects ... 

both when made ... and as of the Closing Date.” (J.A. at 

169.) The SEC Form 8-K that accompanied the Agreement 

warned against reliance on the Agreement, saying “[t]he 

Merger Agreement contains representations and warranties 

made by [Cooper] and the Apollo Parties to, and solely for 

the benefit of, each other. ... You should not rely on the 

representations and warranties in the Merger Agreement as 

characterizations of the actual state of facts about the 

Company or the Apollo Parties.” (Opening Brief in Support 

of Motion to Dismiss, Ex. G, at 3, OFI Risk Arbitrages v. 

Cooper Tire & Rubber Co., No. 14-cv-68-RGA (D. Del.

Dec. 15, 2014), ECF No. 54.)

The Merger Agreement also included an extensive 

series of warranties. Those warranties provided, among other 

things, that Cooper “or one of its Subsidiaries has exclusive 

possession of each Owned Real Property and Leased Real 

Property” referenced in the Agreement (J.A. at 165), that 
7

there was no “pending or ... threatened ... labor strike or 

lock-out or any material dispute, walk-out, work stoppage or 

slow-down involving [Cooper] or any of its Subsidiaries”

(J.A. at 164), and that Cooper maintained “effective”

“internal control over financial reporting” (J.A. at 162). 

The reaction at CCT’s facility to the merger 

announcement was negative. CCT workers went on strike on 

June 21. Although they returned to work on June 28, they 

resumed their strike a few weeks later on July 13. The 

workers finally returned to work on August 17 but they 

denied Cooper officials access to the facility, and they also 

stopped producing Cooper-branded tires. By August 19, CCT

had stopped providing financial information to Cooper. 

Cooper disclosed that fact in its next public filing, the 

August 30 Proxy Statement. In the meantime, on August 9, 

Cooper filed its 10-Q for the quarter ending June 30. That 

document disclosed a “temporary work stoppage” and a 

complaint filed by CCT’s union. Cooper reported no material 

changes to its internal controls during that quarter, but it 

warned that the as-yet “temporary” CCT strike could hurt 

future performance if it persisted. (J.A. at 141.) 

The merger announcement also elicited a labor dispute

in the United States. On August 1, the USW filed grievances 

alleging that the proposed merger violated its collective 

bargaining agreements. Cooper and Apollo sought expedited 

arbitration to preserve the timeline for closing the merger. 

The arbitrator ultimately ruled in favor of the USW and

barred Cooper from selling two of its plants to Apollo,

“unless and until the [USW] ha[s] entered into agreements 

with” Apollo. (J.A. at 149). Cooper disclosed the arbitration 

result to shareholders in an 8-K filing on September 19, 2013, 
8

and it included assurances that it and Apollo were “continuing 

discussions with the [USW] with an aim of reaching an 

amicable resolution quickly to minimize any impact on the 

original closing schedule” and that the two companies 

“remain firmly committed to the strategic rationale for the 

Merger ... and are optimistic that a mutually beneficial 

settlement can be reached.” (J.A. at 149.) As a result of this 

new hurdle, Apollo asked Cooper on September 25 to accept 

a price reduction. Cooper declined. That fact was not 

disclosed to shareholders, even though they were slated to 

vote on the merger five days later. 

On August 30, Cooper issued its Proxy Statement, 

which described its intent to “work toward resolving [the 

CCT labor] issues and returning the facility to full, normal 

operation again as soon as possible.” (J.A. at 201.) Although 

Cooper warned that it could not “assure [investors] that any 

of our expectations ... will be achieved,” the Proxy 

nevertheless concluded that “[n]either the [CCT] strike nor 

the plant slowdown are expected to have an effect on the 

consummation of the merger.” (J.A. 182, 201.) 

The Proxy also detailed the events leading up to the 

Merger Agreement, identifying all suitors other than Apollo 

by pseudonyms. It did not identify Party C as being affiliated 

with Chengshan. The Proxy included projections that Cooper 

had shared with Apollo and other potential purchasers during 

the negotiation period, as well as projections Cooper provided 

to its bankers to form a fairness opinion regarding the merger. 

But the Proxy was explicit that the projections were included 

“only because this information was provided to [Apollo], 

certain other potential purchasers and [Cooper’s] financial 

advisor” during negotiations. (J.A. at 197.) It cautioned that 
9

the projections were based on “assumptions that may now be 

outdated” and instructed that “[y]ou should not regard the 

inclusion of these projections ... as an indication that Cooper 

[or] [Apollo] ... considered or consider the projections to be 

necessarily predictive of actual future events, and you should 

not rely on the projections as such.” (J.A. at 198.) The Proxy 

also stated that the projections were “aspirational ... rather 

than likely projections,” and it was candid that Cooper would 

not “make other projections public in the future.” (Id.) 

On September 30, Cooper stockholders approved the 

merger with Apollo. That approval was announced in an 8-K 

and was accompanied by a statement from Armes describing 

the planned merger as a “compelling transaction” and 

asserting that the resulting company would have a “strong

global footprint that includes a presence in ... the fastest 

growing geographies of India and China.” (J.A. at 110, ¶ 86.) 

The 8-K did not mention Apollo’s continued requests for a 

price reduction. 

Having secured stockholder approval, Cooper reached 

out to Apollo to close the deal. It refused, and Cooper filed 

suit against Apollo on October 4, 2013 in the Delaware 

Chancery Court, seeking to force Apollo to consummate the

deal according to the terms of the Merger Agreement. 

Cooper asserted that Apollo had failed in its duty to use its 

“reasonable best efforts” to reach an agreement with the

USW, as required by the arbitration decision issued the 

previous month, and that, but for that failure, the merger 

could have closed as planned. Cooper Tire & Rubber Co. v. 

Apollo (Mauritius) Holdings Pvt. Ltd., No. CV 8980-VCG, 

2013 WL 5977140, at *1 (Del. Ch. Nov. 9, 2013) (“Cooper

Chancery Case”). Apollo, in response, asserted that Cooper 
10

had not satisfied all of the conditions precedent for the 

closing, citing in particular the inadequate provision of 

financial data. Id. The case generated substantial discovery

and culminated in a three-day trial in early November 2013. 

Id. 

On November 8, following an unsuccessful 

interlocutory appeal, the Court of Chancery denied Cooper’s 

request for specific performance. Id. The Court found that 

Apollo had not, by that point, breached the duty to exercise 

“reasonable best efforts” in negotiating a new agreement with 

the USW, but it instructed that Apollo must continue those 

negotiations as required by the Merger Agreement. Id. 

Having resolved the claim for immediate injunctive relief, the 

Court declined to rule on whether Cooper had, in fact, met the 

conditions precedent for the closing, describing the question 

as “hotly contested.” Id. That question thus remained 

unresolved. 

No significant progress was made toward closing, and 

on December 30, 2013, Cooper formally terminated the 

planned merger, telling investors via webcast that the 

financing for the deal had fallen through and that it was “a 

reality that the [Merger Agreement] both companies signed 

on June 12 [would] not be consummated by Apollo.” (J.A. at 

90, ¶ 134.)

B. PROCEDURAL BACKGROUND

In January 2014, OFI filed this action in the District 

Court. (J.A. at 24.) Its amended complaint (the “Complaint”)

alleges that Cooper violated Sections 10(b), 14(a), and 20(a) 

of the Securities Exchange Act of 1934 (the “’34 Act”), 
11

codified at 15 U.S.C. §§ 78j(b), 78n(a), and 78t(a). Cooper 

moved to dismiss the Complaint for failure to satisfy the 

heightened pleading burden that, under the Private Securities 

Litigation Reform Act of 1995 (the “PSLRA”), applies to

securities fraud claims. Oral argument on the motion to 

dismiss was granted, and, because the claims center on 

allegations that Cooper told falsehoods, the District Court 

ordered OFI to submit a letter “identifying and verbatim 

quoting” the five most compelling examples it could muster 

of false or fraudulent statements by Cooper, with three factual 

allegations demonstrating the falsity of each statement and 

three factual allegations supporting a finding of scienter as to 
12

the making of the statements.

3

 (J.A. at 31 (Docket entry No. 

60).) The Court stated that oral argument would focus on 

OFI’s response. (Id.) 

On March 11, 2015, the District Court heard two hours 

of argument on Cooper’s motion to dismiss and OFI’s 

allegations. During argument, the Court also requested

supplemental information, which the parties subsequently 

provided. 

The District Court ultimately granted Cooper’s motion 

to dismiss, determining that OFI had failed to state a claim

 

3 The order stated: 

Plaintiff is requested to submit a letter by 

March 4 identifying and verbatim quoting its 

five most compelling false or fraudulent 

statements, including the date on which they 

were made, with two paragraphs in support of 

each statement, one identifying no more than 

three factual allegations in support of the falsity, 

with each factual allegation citing the paragraph 

of the amended complaint in which it appears, 

and the second identifying no more than three 

factual allegations as to why at least one of the 

individual defendants knew it was false, again 

with citations to the amended complaint’s 

paragraphs for support. No legal argument. Oral 

argument is to focus on Plaintiff’s letter.

(J.A. at 31.)
13

that satisfied the pleading standard of the PSLRA. The Court 

determined that the statements identified as problematic by 

OFI were either not false or misleading, were “forwardlooking” statements protected by the safe harbor established 

by the PSLRA, lacked a sufficient showing of scienter, or 

suffered from some combination of those infirmities. OFI

Risk Arbitrages v. Cooper Tire & Rubber Co., No. 14-cv-68-

RGA, 2015 WL 4036179 (D. Del. July 1, 2015). OFI timely 

appealed.

II. DISCUSSION4

A. STANDARD OF REVIEW

Our review of the District Court’s dismissal of OFI’s 

Complaint is plenary. See Great W. Mining & Mineral Co. v. 

Fox Rothschild, LLP, 615 F.3d 159, 163 (3d Cir. 2010). 

When ruling on a motion to dismiss under Rule 12(b)(6), a 

court must “accept as true all [factual] allegations in the 

complaint and all reasonable inferences that can be drawn 

therefrom, and view them in the light most favorable to the 

plaintiff.” Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 

2007) (quoting Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 

2005)). Ordinarily, it is sufficient to plead facts that do no 

more than raise an allegation to the level of plausibly 

warranting relief. See Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 570 (2007) (to survive a motion to dismiss, a complaint 

 

4 The District Court had federal question jurisdiction 

under 28 U.S.C. § 1331. We have jurisdiction to review the 

final judgment of the District Court pursuant to 28 U.S.C. 

§ 1291.
14

must contain “enough facts to state a claim to relief that is 

plausible on its face”). But in cases alleging securities fraud, 

plaintiffs must “satisfy the heightened pleading rules codified 

in” the PSLRA. Institutional Inv’rs Grp. v. Avaya, Inc., 564 

F.3d 242, 252 (3d Cir. 2009). 

“[T]o restrict abuses in securities class-action 

litigation,” In re Suprema Specialties, Inc. Secs. Litig., 438 

F.3d 256, 276 n.8 (3d Cir. 2006) (internal quotation marks 

omitted), the PSLRA requires that the complaint must 

“specify each statement alleged to have been misleading, the 

reason or reasons why the statement is misleading, and, if an 

allegation regarding the statement or omission is made on 

information and belief, the complaint shall state with 

particularity all facts on which that belief is formed,” id. at 

276 (quoting 15 U.S.C. § 78u-4(b)(1)(B)). This standard 

“requires plaintiffs to plead the who, what, when, where and 

how: the first paragraph of any newspaper story.” Avaya, 564 

F.3d at 253 (internal quotation marks omitted). A complaint

must also “state with particularity facts giving rise to a strong 

inference that the defendant acted with the required state of 

mind,” U.S.C. § 78u-4(b)(2)(A), specifically “scienter,”

which is defined in this context as a “knowing or reckless”

mental state “embracing intent to deceive, manipulate, or 

defraud.” Avaya, 564 F.3d at 252 (internal quotation marks 

omitted). 

OFI primarily alleges that Cooper made material 

misrepresentations to shareholders in violation of § 10(b) of 

the ’34 Act. “The [Supreme] Court [has] prescribed a threestep process for considering a motion to dismiss in a § 10(b) 

action.” Winer Family Trust v. Queen, 503 F.3d 319, 327 (3d 

Cir. 2007) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd. 
15

551 U.S. 308, 322-23 (2007)). First, as with all motions 

under Rule 12(b)(6), we must “accept all factual allegations 

in the complaint as true.” Tellabs, 551 U.S. at 322. Second, 

we “must consider the complaint in its entirety, as well as 

other sources courts ordinarily examine when ruling on Rule 

12(b)(6) motions to dismiss, in particular, documents 

incorporated into the complaint by reference, and matters of 

which a court may take judicial notice.” Id. Third, “in 

determining whether the pleaded facts give rise to a ‘strong’

inference of scienter, the court must take into account 

plausible opposing inferences.” Id. at 323. Only a complaint 

that provides sufficiently particularized factual pleading and 

gives rise to a strong inference of scienter can survive a 

motion to dismiss. 

In addition to establishing a heightened pleading 

standard, the PSLRA provides a so-called “safe harbor” that 

immunizes certain “forward-looking” statements from §10(b) 

liability. That immunity applies if either the “forwardlooking statement is ... identified as [such], and is 

accompanied by meaningful cautionary statements identifying 

important factors that could cause actual results to differ 

materially from those in the forward-looking statement” or 

the plaintiff fails to prove the forward-looking statement “was 

made with actual knowledge by [the speaker] that the 

statement was false or misleading ... .”

5 15 U.S.C. § 78u5(c)(1).

 

5

“The term ‘forward-looking statement’ is broadly 

defined in the statute ... .” Avaya, 564 F.3d at 255. The 

definition captures a wide range of statements, including 

those 
16

That disjunctive statutory test provides two distinct 

entrances to the safe harbor.

6 The first requires the use of 

“meaningful cautionary statements” regarding the forwardlooking statement. 15 U.S.C. § 78u-5(c)(1)(A)(i). “[A] 

vague or blanket (boilerplate) disclaimer which merely warns 

the reader that the investment has risks will ordinarily be 

inadequate to prevent misinformation. To suffice, the 

 

containing a projection of revenues, income 

(including income loss), earnings (including 

earnings loss) per share, capital expenditures, 

dividends, capital structure, or other financial 

items”; statements of “the plans and objectives 

of management for future operations, including 

plans or objectives relating to the products or 

services of the issuer”; or statements of “future 

economic performance, including any such 

statement contained in a discussion and analysis 

of financial condition by the management or in 

the results of operations included pursuant to 

the rules and regulations of the [SEC]. 

Id. (quoting 15 U.S.C. § 78u-5(i)(1)(A)-(C)).

6 The statute in fact provides a third entrance to the 

safe harbor by immunizing statements that are “immaterial.” 

15 U.S.C. § 78u-5(c)(1)(A)(ii). But, since the regulation 

based on § 10(b) already imposes a materiality requirement, 

17 CFR 240.10b-5, that entrance is not relevant in cases 

claiming a § 10(b) violation. 
17

cautionary statements must be substantive and tailored to the 

specific future projections, estimates or opinions in the 

[documents] which the plaintiffs challenge.” GSC Partners 

CDO Fund v. Washington, 368 F.3d 228, 243 n.3 (3d Cir. 

2004) (internal quotation marks omitted). However, even in 

the absence of such meaningful cautionary language, the 

second entrance to the safe harbor is available to “immunize[]

from liability any forward looking statement [if] ... the 

plaintiff fails to show the statement was made with actual 

knowledge of its falsehood.” Avaya, 564 F.3d at 254. Thus, 

any forward-looking statement is protected if it is either 

accompanied by “substantive and tailored” cautionary 

statements or if the plaintiff fails to show “actual knowledge 

of falsehood.” 

B. SCIENTER AND CASE MANAGEMENT 

Before delving into the details of OFI’s allegations, we 

first address OFI’s broader complaint that the District Court 

mismanaged the debate over the motion to dismiss. OFI 

protests that the District Court erred first by failing to

consider all of the alleged misrepresentations and then by 

failing to consider holistically the allegations of scienter. OFI

attributes both errors, at least in part, to how the Court 

managed the presentation of arguments; in particular, it 

complains of the Court’s order requiring OFI to focus 

argument on only five “artificial[ly] select[ed]” allegations of 

misstatements. (Opening Br. at 24.) 

OFI’s umbrage is unfounded. A District Court enjoys 

substantial discretion in managing complex disputes, 

particularly when, as in this case, the claims become 

unwieldy. See In re Westinghouse Sec. Litig., 90 F.3d 696, 
18

703 (3d Cir. 1996) (confirming that a court acted within its 

discretion in dismissing an “unnecessarily complicated and 

verbose” complaint for failure to adhere to Rule 8 of the 

Federal Rules of Civil Procedure). OFI’s Complaint stretches 

to nearly 100 pages and 245 paragraphs, throughout which it 

interweaves allegations about the factual circumstances 

surrounding the merger with citations to the specific 

statements it avers are misrepresentations. As pled, the 

Complaint presents an extraordinary challenge for application

of the highly particularized pleading standard demanded by 

the PSLRA. This is true not only due to the length of the 

Complaint, but also its lack of clarity. It is difficult to discern 

precisely which statements OFI alleges to be actionable, let 

alone what specific facts are asserted to support each such 

allegation. The District Court rightly demanded that OFI 

make its contentions more clear, and the efficacy of that 

demand is borne out by OFI’s letter in response to that order, 

which is much more comprehensible than the Complaint. 

(See Letter from Andrew J. Entwistle and James A. Harrod 

dated March 4, 2015, OFI Risk Arbitrages v. Cooper Tire & 

Rubber Co., No. 14-cv-68-RGA (D. Del.), ECF No. 61.) OFI 

itself acknowledged during the hearing that its arguments 

“need[ed] to be organized in some way.” (J.A. at 244.) Now 

that OFI has come to us with the same kind of broad 

averments that drove the District Court to demand specificity, 

we find ourselves more than sympathetic to that Court’s 

position. 

OFI contends that, as a result of the District Court’s 

improperly constraining order, there were six additional 

“misrepresented and concealed material facts” and omissions
19

that the Court did not consider:

7 1) statements in the Merger 

Agreement regarding internal controls for financial reporting, 

2) the characterization in the 10-Q of the strike as a 

“temporary work stoppage” by a “unionized workforce,” 3) 

statements in the Proxy Statement regarding internal controls 

for financial reporting, 4) misleading statements in the 

September 19, 2013 8-K filing regarding the effect of the 

USW arbitration decision on the merger, 5) an omission in 

that same 8-K of the fact that Apollo “refus[ed] to close the 

Merger absent a price reduction,” and 6) the characterization 

in the September 30, 2013 8-K of the merger as a 

“compelling transaction” that would create a strong global 

company. (Opening Br. at 29 & n.4.) 

Yet at no point before the District Court did OFI 

protest that these were important issues that required the 

Court’s attention, let alone did OFI point to particularized 

facts to support such an argument.

8

 Its kitchen-sink pleading 

 

7 Though OFI enumerates five such 

misrepresentations, it actually shoehorned a sixth in through a 

footnote. It took the same approach in its letter to the District 

Court, as noted by the Court during the argument on the 

motion to dismiss. (See J.A. at 210 (wherein it refers to OFI’s 

disobedience to its order limiting the number of arguments 

they were to highlight, stating, “I see that [OFI] couldn’t, 

actually, follow my instructions, or they could follow my 

instructions, but decided to add in some stuff of their own.”).)

8 And, in fact, OFI’s briefing before us continues this 

trend. It neglects to address its allegations regarding “internal 

controls” language in the Proxy Statement, and the three 

complaints related to the 8-K filings receive superficial 
20

has been a hindrance at every stage of these proceedings. 

There is some irony, then, to OFI’s criticism of the District 

Court’s effort to bring order to the sweeping denunciations in 

the Complaint. It was OFI’s job to frame a comprehensive 

set of allegations to support its claims for relief. When the 

District Court tried to give OFI an assist by ordering greater 

specificity, the latter in fact did a much better job of framing 

the issues. But here we are now, facing OFI’s objection that 

arguments it did not prioritize when given the chance to do so 

are somehow critical to its case. The reality is that the 

specific allegations considered by the District Court were not 

selected at random, but were the several chosen by OFI. 

They were its best arguments, and the District Court found 

them all unavailing. OFI was permitted to bring its most 

compelling arguments to the table, and, when it did, it made 

no meaningful objection to the limitations imposed by the 

District Court. Under the circumstances, the Court’s 

approach was not problematic.9

 

treatment at best. Only the internal control assertions from 

the Merger Agreement and the characterization of the work 

stoppage in the 10-Q are supported by developed arguments. 

That the treatment OFI gave to ostensibly important 

additional issues was so minimal, and was dwarfed by the 

treatment of the issues that were squarely before and 

addressed by the District Court, only reinforces our 

conclusion that OFI’s complaint that the District Court 

ignored important allegations is without merit. 

9 We should not be misunderstood on this point. It is 

certainly possible for a court to go too far in limiting the 

number or character of arguments it will consider, but the 
21

This is true even though OFI contends that the District 

Court erred by failing to follow Tellabs’s instructions “to 

consider the allegations of scienter holistically,” and that the 

Court instead drew “conclusions concerning scienter [that] 

were limited to specific alleged misstatements and isolated 

allegations rather than the fraudulent scheme as a whole.” 

(Opening Br. at 26.) While we agree that scienter must be 

considered holistically, we are persuaded that the District 

Court did precisely that.10 OFI predicates its claim of error 

on the fact that the Court asked it at oral argument to walk 

through its scienter arguments one at a time and addressed 

them in the same fashion in its opinion. That the Court was 

thorough in explaining why it found scienter lacking as to 

each asserted misrepresentation does not suggest that it did 

not consider the allegations as a whole. To the contrary, it

explicitly cited Tellabs, and its analysis shows that it

understood the full allegations of the amended Complaint and 

yet found OFI’s scienter argument lacking. 

 

District Court did nothing to abuse its broad case 

management discretion in this instance. 

10 Our conclusion here is based on a holistic reading of 

the District Court’s opinion. Because we agree with the 

Court that OFI’s assertions are baseless, its limited 

explication of its scienter analysis suffices. We do note, 

however, that in closer cases than this one the District Court 

would be well served to grapple with the question of scienter 

with more explicit reference to the broader context. 
22

While it would have been helpful for the District 

Court to explicitly note that it had considered all the 

arguments presented by the Complaint and assessed scienter 

holistically, the Court’s opinion persuades us that it did so. 

We perceive no error in the District Court’s conclusion that 

OFI failed to sufficiently plead scienter or in the Court’s 

management of the arguments leading to that conclusion. 
23

C. SECTION 10(B) 

Section § 10(b) of the ’34 Act prohibits the use of “any 

manipulative or deceptive device or contrivance in 

contravention of such rules and regulations as the [Securities 

and Exchange] Commission may prescribe ... .” 15 U.S.C. 

§ 78j(b). The SEC has in turn promulgated Rule 10b-5, 

which makes it unlawful for any person to “make any untrue 

statement of a material fact or to omit to state a material fact 

necessary in order to make the statements made, in the light 

of the circumstances under which they were made, not 

misleading ... in connection with the purchase or sale of any 

security.” 11 17 C.F.R. § 240.10b-5.

To state a claim for securities fraud under § 10(b), a 

plaintiff must plead: (1) a material misrepresentation in 

connection with the purchase or sale of a security; (2) 

scienter, i.e., a wrongful state of mind in the party making the 

representation; (3) reliance by the plaintiff; (4) economic loss; 

and (5) “loss causation, i.e., a causal connection between the 

 

11 The Supreme Court has recently spoken about how 

to determine whether a statement was an “untrue statement of 

material fact” and whether it was “misleading,” at least in the 

context of an alleged violation of § 11 of the Securities Act of 

1933. See Omnicare, Inc. v. Laborers Dist. Council Constr. 

Indus. Pension Fund, 135 S. Ct. 1318 (2015). The parties 

here mentioned that case only in passing, and Cooper noted 

that our Court has yet to determine whether Omnicare applies 

to § 10(b) claims. Given that the parties have not 

meaningfully addressed that question and there is no 

necessity to address it, we leave it for another day. 
24

material misrepresentation and the loss.” Dura Pharm., Inc. v. 

Broudo, 544 U.S. 336, 341-42 (2005) (internal quotation 

marks and original emphasis omitted).

OFI alleges that various communications by Cooper to 

the public contained material misstatements or omissions in 

violation of § 10(b). Those communications include the 

Merger Agreement between Cooper and Apollo published on 

June 12, 2013; Cooper’s 10-Q for the second quarter 

published on August 9, 2013; the Proxy Statement for the 

merger published on August 30, 2013; and two 8-K filings

published on September 19 and 30, 2013. We address OFI’s 

arguments seriatim.

i. The June 12, 2013 Merger Agreement

OFI says that the warranties in the Merger Agreement 

contained three material misrepresentations by Cooper – 1) 

that it had “exclusive possession” of the CCT facilities, 2) 

that it had “effective” “internal control over financial 

reporting” by the CCT joint venture, and 3) that it was not 

aware of any “threatened . . . labor strike or lock-out or any 

material dispute, walk-out, work stoppage or slow-down 

involving the Company or any of its Subsidiaries.” (J.A. at 

66, 102, 162, 164-65.) 

We note first that the Merger Agreement also 

expressed two significant caveats. One was in Section 7.2(a), 

wherein the parties agreed that the “representations and 

warranties ... set forth herein shall be true and correct in all 

respects (without giving effect to any materiality or ‘Material 

Adverse Effect’ qualifications contained therein) both when 

made . . . and as of the Closing Date.” (J.A. at 169.) Cooper 
25

asserts that this provision required that the statements in the

Agreement be true only on the date it was signed, June 12, 

2013, and the date of closing, a date which never occurred 

due to the merger’s failure. 

The second caveat was a lengthy disclaimer that read:

The Merger Agreement contains representations 

and warranties made by the Company and the 

Apollo Parties to, and solely for the benefit of, 

each other. The assertions embodied in the 

representations and warranties contained in the 

Merger Agreement are qualified by information 

in confidential disclosure letters provided by the 

parties to each other in connection with the 

signing of the Merger Agreement. ... You 

should not rely on the representations and 

warranties in the Merger Agreement as 

characterizations of the actual state of facts 

about the Company or the Apollo Parties, since 

they were only made as of the date of the 

Merger Agreement and are modified in 

important part by the underlying disclosure 

letters. Moreover, certain representations and 

warranties in the Merger Agreement were used 

for the purpose of allocating risk between the 

Company and the Apollo Parties rather than 

establishing matters as facts. Finally, 

information concerning the subject matter of the 

representations and warranties may have 

changed since the date of the Merger 

Agreement, which subsequent information may 
26

or may not be fully reflected in the companies’

public disclosures.

(Opening Brief in Support of Motion to Dismiss, 

Exhibit G at 3, OFI Risk Arbitrages v. Cooper Tire & 

Rubber Co., No. 14-cv-68-RGA (D. Del. Dec. 15, 

2014), ECF No. 54 (emphasis added)). With these 

caveats in mind, we turn to the three alleged 

misrepresentations. 

a. “Exclusive Possession”

The first alleged misrepresentation is the Merger 

Agreement’s statement that Cooper “‘or one of its 

Subsidiaries ha[d] exclusive possession of each Owned Real 

Property and Leased Real Property,’ including the CCT 

facilities.” (J.A. at 102, ¶ 163.) OFI asserts that this statement 

was materially misleading because “Chengshan – and not 

Cooper – effectively controlled CCT’s facilities.” (Opening 

Br. at 30.) OFI points principally to three things to support its 

claim of misrepresentation – first, that “at least on[ce] ... in 

the past few years ... Chengshan denied Cooper management 

access to the [CCT] facility,”

12 (J.A. at 65, ¶ 73); second, that 

 

12 OFI contends, at length, that Cooper admitted this to 

be a fact during the Chancery Court litigation. Cooper 

disagrees. Whether there was an admission, however, is 

irrelevant. Even taking the underlying assertion as true and 

admitted, it is insufficiently particular to support OFI’s 

allegation of misrepresentation, as discussed below. 

Consequently, we need not determine if such an admission 

was made. 
27

Chengshan and Che had “deep ties and embedded 

relationships with the Chinese government,” (Opening Br. at 

34); and third, that CCT had independent computer systems 

to which Cooper allegedly had limited access (J.A. at 64, 

¶ 72). OFI claims those allegations were corroborated by 

confidential witnesses13 who said that “Cooper had 

‘apparently very little’ control over CCT,” that “Chengshan 

‘pretty closely controlled CCT,’” and that CCT’s independent 

financial system resulted in Cooper being “closed off” from 

CCT’s financial information.14 (J.A. at 64, ¶¶71-72.) 

 

13 The Complaint included comments from three 

confidential witnesses, all of whom were said to be former 

Cooper employees, identified by their role and tenure (e.g., 

“Confidential Witness[] 1 [was] the Global Manager of 

Internal Audit ... from 2010 through May 2013” (J.A. at 63)). 

The parties vigorously dispute the weight we should accord to 

the statements made by these individuals. Because our 

standard for evaluating confidential witness statements is well 

defined, see Avaya, 564 F.3d at 263, and because the 

statements in this case, even if fully credited, are either 

irrelevant or insufficiently particularized to support OFI’s 

§ 10(b) claims, we make no comment on this disagreement. 

14

 OFI also asserts that the fact that CCT locked 

Cooper out of the facility after the Merger Agreement is 

evidence that they never had control of the facility. Such post 

hoc reasoning is inappropriate when evaluating what Cooper 

knew at the time the merger was announced, and we decline 

OFI’s invitation to engage in it. 
28

These alleged facts, taken together and as true, do not 

show that the identified statement was false. First and 

foremost, we agree with the District Court that the statement 

refers exclusively to the possession of real property. That 

being the case, we similarly agree that all the factual 

assertions regarding computer systems and ties to the Chinese 

government are not relevant, as they provide no reason to 

conclude that Cooper did not possess the CCT facility. 

Thus, the only factual allegations that could suggest 

the identified statement was false are those relating to the 

alleged lock-out of Cooper personnel by CCT at some 

previous date and the testimony of the confidential witnesses 

about the lack of “control” over CCT by Cooper. Neither of 

those allegations is sufficiently particularized to support the 

conclusion upon which OFI insists – that Cooper “never” had 

exclusive control of the CCT facility. OFI’s assertion

regarding the “lock-out,” (Opening Br. at 37), lacks any detail 

as to when the incident occurred, who was kept out, and what 

transpired during the incident and afterward. It does not 

provide any truly useful information about the status of the 

CCT facility and does not support the assertion that OFI 

would ultimately need to prove – that Cooper lacked 

“exclusive possession” of the CCT facility on June 12, 2013. 

Indeed, the high-specificity pleading standard set out by the 

PSLRA is intended to preclude our giving credence to 

allegations such as these, which fail to “plead the who, what, 

when, where and how” of a supposed misrepresentation. 

Avaya, 564 F.3d at 253. The confidential witness testimony, 

in addition to suffering from similarly fatal vagueness, is also 

not sufficiently on point. At best, the confidential witness 

statements demonstrate that Chengshan was the principal 

entity running the CCT joint venture. Even if true, that 
29

conclusion does not mean that Cooper lacked possession of 

the underlying real property on the date in question. The 

District Court thus rightly concluded that the “exclusive 

possession” statement was not actionable.

b. Internal Controls

OFI next alleges falsity in the Merger Agreement’s

statement that Cooper “maintains internal control over 

financial reporting [that is] effective in providing reasonable 

assurance regarding ... prevention or timely detection of 

unauthorized acquisition, use or disposition of the Company’s 

assets that could have a material effect on its financial 

statements.” (J.A. at 162.) OFI’s argument is predicated on 

CCT’s financial system having been independent of

Cooper’s. That undisputed fact meant that Cooper relied on 

CCT to submit its financial data to Cooper’s headquarters on 

a monthly basis to be incorporated into the company’s 

broader financial reporting systems. OFI does not, however, 

allege that Cooper had experienced any difficulty with that 

arrangement in the past, let alone anything that would call 

into question its efficacy in detecting fraud that could 

materially affect Cooper’s financial statements.15 Having 

failed to plead any such facts, OFI relies on general assertions 

about the “illusory” nature of Cooper’s “purported control”

over CCT. (Opening Br. at 36.) Such statements lack the 

 

15 While CCT did ultimately prevent Cooper from 

gaining access to the financial information, there is no 

evidence that it did so until August 19, 2013. That event thus 

has no bearing on the truth or falsity of Cooper’s June 13, 

2013 assertions in the Merger Agreement.
30

necessary particularity required by the PSLRA and add no 

weight to OFI’s argument. 

c. Threatened Strikes 

OFI contends that Cooper’s statement regarding 

threatened or pending labor strikes was a misrepresentation. 

Specifically, it points to the statement in the Merger 

Agreement that there was not “pending or ... threatened, nor 

has there been for the past five years, any labor strike or lockout or any material dispute, walk-out, work stoppage or slowdown involving [Cooper] or any of its Subsidiaries.” (J.A. at 

164.) That statement was materially misleading, OFI argues, 

with respect to both the workers at CCT and Cooperemployed members of the USW. 

Beginning with the CCT labor disruption, OFI points 

to the allegation that Cooper knew that Chengshan would 

oppose the merger, based on a May 15, 2013 meeting at 

which Cooper and Apollo executives spoke with Che. 

Beyond that, OFI relies on general assertions about Che’s 

alleged power over CCT, the same assertions that underpin its 

“exclusive possession” argument, insisting that we should 

infer knowledge on the part of Cooper that, “once the Merger 

Agreement was announced,” Che’s opposition would lead to

“a ‘threatened labor strike.’” (Opening Br. at 37-38.) We 

decline to connect those dots. That is the kind of inferential 

leap the PSLRA’s heightened pleading standard is meant to 

prevent. How Che would react was an unknown. The 

Complaint contains no facts regarding the history of labor 

relations at CCT that show a strike was threatened or that 

Cooper knew a post-announcement strike was likely. In fact, 

the Complaint indicates that Che might have been supportive, 
31

with the allegation that he was willing to go along if 

compensated. That a strike was later initiated at the CCT 

facility after the agreement was announced is of no moment. 

Turning to Cooper’s United States operations, OFI 

also asserts that Cooper “knew [that] the USW would view 

the Merger as a violation of its collective bargaining 

agreement given Cooper’s failure to abide by certain 

successorship clauses in the agreement.” (Opening Br. at 38.) 

As evidence of this knowledge, OFI points to statements by 

Cooper’s and Apollo’s lawyers before the Court of Chancery

that they anticipated the USW would take the position that the 

successorship provision applied to the merger and that they 

would need to devise a solution. OFI also points to testimony 

that the attorneys expected the USW to file grievances on the 

issue and agreed to set up an expedited arbitration procedure 

to ensure that those grievances did not hold up the closing. 

However, OFI acknowledged that all of the actions taken by 

Cooper’s and Apollo’s lawyers were in preparation for the 

possibility that the USW would challenge the merger. The 

Complaint includes a statement by one of Cooper’s lawyers 

that “Cooper executives believed” that they ought to “‘try to 

convince the Steelworkers that the [successorship] provision 

did not apply’” to the merger. (J.A. at 67, ¶ 78.) 

As the District Court properly recognized, all that OFI 

has pled with particularity is that there was risk of a dispute 

with the USW and that Cooper was aware of and was 

preparing for that risk. But “[p]reparing for responses to a 

major announcement does not mean that [Cooper] knew 

which responses would occur,” and relying on the fact that

the USW did ultimately file grievances is “an attempt to 

prove fraud by hindsight,” something our Court has long 
32

rejected. (J.A. at 12 (citing Cal. Pub. Employees’ Ret. Sys. v. 

Chubb Corp., 394 F.3d 126, 158 (3d Cir. 2004)).) Nothing in 

the pleadings points to knowledge on the part of Cooper that a 

material dispute with the USW was either pending or 

threatened as of June 12, 2013. The fact that labor action 

followed does not make Cooper’s statement false. Taken 

together and as true, OFI has failed to plead more than an 

awareness by Cooper that adverse labor action was possible. 

That falls well short of demonstrating with particularity that 

Cooper was aware of a pending or threatened labor action at 

the time the Merger Agreement was announced. As a result, 

Cooper’s representation about a material labor dispute was 

not materially false. The District Court properly found OFI’s 

claim in that regard to be wanting. 

ii. The August 9, 2013 10-Q Filing 

OFI next turns to the 10-Q statement filed by Cooper 

on August 9 for the fiscal quarter ending June 30, 2013,

alleging two misrepresentations are in that document: 1) the 

statement that Cooper had maintained sufficient internal 

controls over its financial reporting, and 2) its 

characterization of the strike at CCT, in particular its start 

date, its “temporary” nature, and the motivating force behind 

it. 

a. Internal Controls

 

OFI targets as misleading the statement in Cooper’s

10-Q that there were “no other changes in the Company’s 

internal controls over financial reporting during the quarter 

ended June 30, 2013 that have materially affected, or are 

reasonably likely to materially affect, the Company’s internal 
33

controls over financial reporting.” (J.A. at 143.) The

argument here mirrors OFI’s argument about Cooper’s 

representations in the Merger Agreement concerning internal 

controls. (See supra § C.1.b.) There is, however, the 

additional allegation that CCT effectively shut Cooper out the 

facility before the end of the reporting period on June 30 and 

out of its financial system by early July. OFI further asserts 

that Cooper failed in its duty to update its 10-Q once it knew 

that there were material changes to its control over financial 

reporting. 

It is worth noting what OFI does not say. At no point 

does it challenge the accuracy or completeness of the 

financial information contained in the 10-Q, nor does it claim 

that the 10-Q omits or misstates any financial information 

relating specifically to CCT and its finances. The assertion is 

limited to an allegedly false claim of control over financial 

reporting. But OFI itself asserted that August 19, 2013 was 

the date as of which “Cooper could not collect information in 

its finance and accounting system to provide either internal or 

external financial reporting.” (J.A. at 71, ¶ 86.) That this 

allegation in the Complaint appends to that date the 

parenthetical “(but most likely in early July)” is 

inconsequential. (Id.) Because these pleadings must be 

particularized under the PSLRA, a bald assertion that the date 

was “most likely” earlier, without more, is insufficient to 

support the allegation that Cooper’s claim that their internal 

controls were operating normally was materially misleading. 

See Avaya, 564 F.3d at 253. Working from the facts that 

were pled with particularity, Cooper lost its ability to gather 

CCT’s financial information ten days after the filing, and over 

a month after the reporting period closed. Thus any claim of 

falsity must be based on the same theory propounded with 
34

respect to the Merger Agreement – namely that CCT’s 

separate financial system made any alleged control by Cooper 

“illusory.” As already discussed, that theory is without 

sufficient factual support to be actionable under §10(b). 

Presumably in anticipation of that problem, OFI points 

to the requirements of 17 CFR § 229.308(c) and pivots to an 

assertion that Cooper had a duty to update its 10-Q. That 

regulation demands that parties “[d]isclose any change in the 

registrant’s internal control over financial reporting,” 17 CFR 

§ 229.308(c), but the requirement to update is tied to the 

evaluations called for by 17 CFR §§ 240.13a-15(d) and 

240.15d-15(d), both of which demand reporting of changes 

that “occurred during ... the issuer’s fiscal quarter[].” 

Nothing in the pleading suggests that there was, in fact, a 

change in Cooper’s internal controls during the quarter 

ending June 30, the relevant reporting period for the 10-Q. 

That being the case, there was no requirement to update.16 

 

16 Even if Cooper’s statements regarding the internal 

controls proved false, OFI has failed to sufficiently plead 

scienter. Specifically, the assertion that Cooper, Armes, or 

Hughes, with an “intent to deceive, manipulate, or defraud,” 

Avaya, 564 F.3d at 252 (internal quotation marks omitted), 

withheld information about a loss of internal controls in this 

10-Q is undermined by the fact that they reported having 

suffered exactly that loss only a few weeks later in Cooper’s 

August 30, 2013 Proxy Statement. It is unclear why Cooper 

would risk litigation at a critical time by materially 

misrepresenting a fact, only to disclose the same fact mere 

weeks later. The more plausible inference – that Cooper 

simply did not lose control of the financial systems until 
35

b. CCT Strike 

OFI’s other complaint regarding the 10-Q alleges a 

material misrepresentation in its statement about the strike at 

CCT, specifically Cooper’s failure to identify Chengshan as 

the root cause of the strike and Cooper’s characterization of 

the strike as temporary.17 

Beginning with allegations regarding the source of the 

strike, OFI claims that Cooper’s statement that “[t]he 

unionized work force at [CCT] implemented a work 

stoppage,” (J.A. at 146), was misleading because Cooper

knew that the strike “was orchestrated and implemented by 

Chengshan (not the ‘unionized workforce’),” (Opening Br. at 

40). In support of that assertion, OFI points to a meeting 

between Cooper executives and Che that took place on 

July 10, 2013. At that meeting, the objective of which was to 

end the strike, Armes took notes indicating that Che wanted 

to stop the merger and would support the strike. OFI also 

points to Armes’s testimony wherein he confirmed that 

 

August 19, 2013, when they admit they did – precludes the 

“strong inference” necessary to support OFI’s claim. 

17 OFI also says in its brief that the 10-Q includes 

misstatements about the timing of the strike. OFI did not 

raise that issue in the Complaint, nor did it ever mention the 

issue before the District Court. Consequently, that argument 

is waived. See DIRECTV Inc. v. Seijas, 508 F.3d 123, 125 

n.1 (3d Cir. 2007) (“It is well established that arguments not 

raised before the District Court are waived on appeal.”).
36

Cooper had been told that “Che was behind all that was going 

on” at CCT. (A70, ¶ 83.)

In its defense, Cooper asserts that it had no legal 

obligation to speculate about who was behind the strike and 

that any omission on that score did not make its statement 

materially misleading. There is some force to that response. 

To say that workers implemented a strike does not say who 

planned or motivated it. But, even taking the statement that 

the “unionized workforce [at CCT] implemented a work 

stoppage” (J.A. at 146) as implying that the strike originated 

with the union and its leadership, not management, it is still 

not actionable because the facts pled do not give rise to a 

“strong inference of scienter” while “tak[ing] into account 

plausible opposing inferences,” Winer Family Trust, 503 F.3d 

at 327 (quoting Tellabs, 551 U.S. at 323). The strong 

inference must arise in the context of “all of the facts alleged, 

taken collectively ... .” Tellabs, 551 U.S. at 323 (emphasis in 

original). Here, while the Complaint might, with some strain,

be sufficient to state with particularity that there had been a

misrepresentation, it still fails to raise a “strong inference”

that Cooper, Armes, and Hughes were acting with a “mental 

state embracing intent to deceive, manipulate, or defraud.” 

Avaya, 564 F.3d at 252 (internal quotation marks omitted). 

The identified statement was a single phrase buried 

within a filing that encompassed dozens of pages. Beyond 

general assertions about the gains to Armes and Hughes if the 

merger successfully closed, OFI did not plead any facts 

demonstrating that the extra information about Che’s support 

for the strike would have materially affected the closing of 

the merger. That being the case, it is unclear what Cooper, 

Armes, and Hughes stood to gain from this relatively minor 
37

misrepresentation, if that’s what it was. Other “plausible 

opposing inferences,” including that the statement was simply 

imprecise or received little attention due to the context in 

which it was made, seem more likely than the inference that 

Cooper, Armes, or Hughes intentionally made this particular 

statement to defraud investors. 

OFI’s post hoc scouring of countless pages of 

documents for a stray and inartfully phrased comment that 

can be argued to be technically false seems like just the sort 

of litigation maneuver the PSLRA was meant to eliminate. 

One purpose of the statute is to prevent disappointed investors 

from treating every imprecise statement during a transaction 

as an invitation to file a lawsuit. Cf. H.R. Rep. No. 104-369, 

at 31-32 (1995) (Conf. Rep.) (noting that the statute aims to 

“discourage frivolous litigation” and “abusive practices,” 

including “the routine filing of lawsuits against issuers of 

securities and others whenever there is a significant change in 

an issuer’s stock price, without regard to any underlying 

culpability of the issuer, and with only faint hope that the 

discovery process might lead eventually to some plausible 

cause of action”).

OFI further alleges, however, that because Cooper 

brought up the topic of the strike, it undertook a duty to 

accurately “convey the impact and nature of the strike and 

shutdown,” which duty it breached by calling the strike a 

“temporary work stoppage.” (Opening Br. at 40.) But 

because the description of the strike’s nature is a forwardlooking statement and is surrounded by cautionary language, 

it is protected by the PSLRA safe harbor provision. Adjacent 

to its acknowledgment of the July 13, 2013 work stoppage, 

Cooper noted that, “[i]f the Company is unable to resolve this 
38

labor dispute or if there were to be an additional work 

stoppage or other work disruption, [Cooper’s] business and 

operating results could suffer.” (J.A. at 146.) Elsewhere in 

the document, where it referred to the strike as “temporary,”

Cooper also noted that, if there were “[a]n extended work 

stoppage at [CCT, it] could negatively affect the Company’s 

future financial performance.” (J.A. at 141.)18 The 10-Q’s

acknowledgement of the business effects of the then-active 

strike, and its reference to the implications of that stoppage 

persisting or later being renewed, provided sufficient notice to 

the reader about the specific risks attached to the forwardlooking statement. Consequently, we conclude that Cooper’s 

statement classifying the work stoppage as “temporary” falls

within the PSLRA safe harbor for forward-looking statements

and adds no strength to OFI’s § 10(b) claim. 

iii. The August 30, 2013 Proxy Statement

OFI complains next of the Proxy Statement released 

by Cooper on August 30, 2013. According to OFI, Cooper 

misled investors about the outlook for the merger by 

providing misleading projections, by underplaying the 

severity and effect of the strike at CCT, and by failing to 

 

18 Of note, the 10-Q also includes, in various places, 

warnings that it is filled with forward-looking statements, that 

those statements ought not be considered to be assurances, 

and that labor problems could confound any projections. 
39

adequately disclose that rival suitor “Party C” was actually 

Chengshan.19 

a. Projections 

OFI argues that “Cooper’s financial projections 

presented in the Proxy Statement were objectively false 

because they were materially greater than the projections used 

internally and presented to Apollo just weeks earlier.” 

(Opening Br. at 51.) The Complaint alleges that the forecasts 

provided to Apollo between July 21 and August 9, 2013 

included a substantial drop in projected revenue and operating 

profits relative to the projections shared in the Proxy.

20

 The 

projections included in the Proxy Statement are in fact more 

favorable than those that Cooper provided to Apollo in late 

July and early August, but that does not make the Proxy 

Statement false. 

 

19

 OFI also makes a general allegation that Cooper 

“falsely and misleadingly assured investors that the Merger 

was on track.” (Opening Br. at 44.) However, because it did 

not identify specific affirmative assertions in the Proxy that 

are false, this claim cannot meet the strictures of the PSLRA. 

20 The Complaint also references further revised 

projections provided to Apollo in September. Because those 

projections were not made until after the release of the 

August 30, 2013 Proxy Statement, they shed no light on what 

Cooper knew before that date. 
40

The projections attached to the Proxy Statement did 

not stand alone as a statement of affirmative fact. Indeed, 

their inclusion is accompanied by a lengthy and specific 

disclaimer that states:

[The] financial projections set forth below are 

included in this proxy statement only because 

this information was provided to the Apollo 

Parties ... in connection with a potential 

transaction involving Cooper Tire ... You 

should not regard the inclusion of these 

projections in this proxy statement as an 

indication that Cooper Tire, the Apollo 

Parties,[or other relevant parties] considered or 

consider the projections to be necessarily 

predictive of actual future events, and you 

should not rely on the projections as such.

(J.A. at 197-98) (emphasis added). It also referred to the

documents as “outdated financial projections” and explicitly 

stated that Cooper “d[id] not intend to update” them. (J.A. at 

198.)

The projections are plainly not included as statements

of fact. Instead, the only relevant statement of fact is that the 

projections were, in fact, the projections that Cooper provided 

to Apollo and the financing bank during the negotiation of the 

deal. OFI does not allege that Cooper provided Apollo or the 

financing bank with some different set of projections during 
41

negotiations. Consequently, OFI has not pled falsity as it 

relates to the projections.21

b. CCT Strike 

Next, OFI contends that Cooper’s claim in the Proxy 

Statement that “[n]either the strike nor the plant slowdown 

are expected to have an effect on the consummation of the 

merger” was a material misrepresentation. (J.A. at 105-06, ¶¶ 

174-75.) In support, OFI points to its allegation that the Vice 

Chairman of Apollo sent an email to Armes three days before 

the Proxy Statement went out that referenced the problems 

with accessing CCT financial records and stated that, “[w]ith 

no control over the financial records, there is little chance we 

can get a financing done given the need for your auditors to 

sign off,” adding that “the completion of the [merger] may be 

jeopardized.” (J.A. at 71-72, ¶ 87.) The weight of that

particularized factual allegation is bolstered, says OFI, by the

allegations that Cooper knew that Che had orchestrated the 

strike and had no intention of relenting until the merger was 

 

21

 Even if the content of the projections were at issue, 

they would be covered by the PSLRA safe harbor codified at 

15 U.S.C. § 78u-5(c)(1). The preamble to the projections 

directly identifies them as forward-looking statements and is 

replete with warnings that they had become “outdated,” that 

no party involved considered them to be “predictive of actual 

future events,” and that they constituted “aspirational 

projections based on a consistent growth rate rather than 

likely projections.” (J.A. 198.) Such warnings are well 

within the ambit of the safe harbor provision, and the 

projections are therefore immunized from any § 10(b) claim. 
42

defeated or he received a payoff. With Che ensuring that 

Cooper could not access the CCT financial records, and 

Apollo insisting that it needed the financial records to 

complete the merger, there was, according to OFI, no way

that Cooper could have reasonably believed that the strike 

would not impede the merger closing, making any assertion 

to the contrary a deliberate and material misrepresentation. 

This line of reasoning has significantly better traction 

than the rest of OFI’s contentions, but it does not account for 

the PSLRA’s safe harbor. The statement regarding the effect

of the strike on the merger includes the word “expected,” a 

term that identifies the statement as forward-looking. In its 

disclaimer regarding “Forward-Looking Statements,” Cooper 

identified a number of relevant factors that “could cause [its] 

actual results and events to differ materially from those 

expressed or implied by forward-looking statements,”

including “the impact of labor problems, including 

disruptions at the Company,” and “changes in [Cooper’s] 

relationship with joint-venture partners.” (J.A. at 182.) While 

those warnings could have been more direct, Cooper included 

considerable detail regarding the CCT strike, and in so doing 

supplied sufficient context to constitute cautionary language

with respect to its forecast regarding the strike’s outcome. 

Indeed, immediately before the statement about which OFI 

complains, the Proxy explained, in detail, that the strike was 

underway, that CCT’s employees were “demanding 

termination of the merger,” that the strike had started and 

stopped before, and that CCT was then denying Cooper 

access to the facility and withholding financial information. 

(J.A. 201.) Paired with those significant disclosures, 

Cooper’s warnings cleared the bar for providing the 

“meaningful cautionary statements” required by the PLSRA 
43

safe harbor provision. 15 U.S.C. § 78u-5(c)(1). Any 

investors reading that section of the Proxy Statement were on

notice of the labor problem and could place in context 

Cooper’s statement of general optimism that the situation 

would be resolved without affecting the merger. 

To try to avoid that conclusion, OFI claims that 

Cooper cannot seek the shelter of the safe harbor provision 

because Cooper, Armes, and Hughes could not, given the 

facts on the ground at CCT, have believed that the strike 

would not impede the closing of the merger. Even if that 

premise were correct,22 OFI misreads the law. The provisions 

 

22 That contention of intentional falsity is suspect, 

given what Cooper, Armes, and Hughes have said about the 

Material Adverse Effect clause of the Merger Agreement. 

They seem to have believed that clause allowed them to push 

the merger forward even in the event of problems at CCT. 

The fact that Cooper sued Apollo in the Court of Chancery in 

an attempt to obtain just such a result confirms that belief, 

and OFI’s Complaint effectively concedes it. (See J.A. at 60-

61, ¶ 63 (“Cooper negotiated a Material Adverse Effect 

clause in the Merger Agreement that Cooper believed would 

allow it to argue that a negative reaction by Chengshan would 

not constitute an event that would permit Apollo to walk 

away from the deal.”).) That being the case, it is certainly a 

plausible inference that Cooper did not aim to deceive 

investors through this expressed optimism, but rather that it 

actually believed it could push the merger through even with 

the shutdown. However, because we need not reach this 

issue, we decline to opine on what Cooper and its officers did 
44

of the safe harbor under § 78u-5(c)(1) are disjunctive; they 

immunize any forward-looking statement provided that either

it is “accompanied by meaningful cautionary statements,” id. 

§ 78u-5(c)(1)(A), or “the plaintiff fails to prove the forwardlooking statement ... was made with actual knowledge ... that 

the statement was false or misleading,” id. § 78u-5(c)(1)(B). 

Thus, where a future-looking statement is accompanied by 

sufficient cautions, then “the state of mind of the individual 

making the statement is irrelevant, and the statement is not 

actionable regardless of the plaintiff's showing of scienter.”23 

In re Cutera Sec. Litig., 610 F.3d 1103, 1112 (9th Cir. 2010). 

See also, e.g., Miller v. Champion Enterprises Inc., 346 F.3d 

660, 672 (6th Cir. 2003) (“[I]f the statement qualifies as 

‘forward-looking’ and is accompanied by sufficient 

cautionary language, a defendant’s statement is protected 

regardless of the actual state of mind.”); Edward J. Goodman 

 

or did not believe about the efficacy of the Material Adverse 

Effect clause.

 

23 This conclusion does not necessarily foreclose the 

possibility that knowing falsity within the cautionary 

language could undermine a claim to protection by the safe 

harbor. See, e.g., Asher v. Baxter Int'l Inc., 377 F.3d 727, 734 

(7th Cir. 2004), as amended (Sept. 3, 2004) (declining to 

dismiss a complaint under the safe harbor provision where the 

defendant “omitted important variables from the cautionary 

language and so made projections more certain than its 

internal estimates at the time warranted”). Because OFI has 

not challenged the meaningfulness of Cooper’s cautionary 

language on such grounds, however, we need not decide that 

question here, and decline to do so. 
45

Life Income Trust v. Jabil Circuit, Inc., 594 F.3d 783, 795 

(11th Cir. 2010) (“[A]n allegation of actual knowledge of 

falsity will not deprive a defendant of protection by the 

statutory safe harbor if his forward-looking statements are 

accompanied by meaningful cautionary language.”); H.R. 

Rep. No. 104-369, at 44 (1995) (Conf. Rep.) (“The first prong 

of the safe harbor requires courts to examine only the 

cautionary statement accompanying the forward-looking 

statement. Courts should not examine the state of mind of the 

person making the statement.”).

That being the case, whether Cooper, Armes, or 

Hughes believed that statement to be true at the time is 

irrelevant, as long as there was sufficient “meaningful 

cautionary language.” Since such language was present, 

Cooper’s statements regarding the impact of the strike on the 

merger agreement are protected by the PSLRA safe harbor 

and do not support OFI’s §10(b) claim. 

c. “Party C” Omission 

The final issue that OFI raises about the Proxy 

Statement is Cooper’s failure to identify “Party C” as 

Chengshan. In laying out the timeline of merger negotiations 

between Cooper and Apollo, and between Cooper and a 

number of other parties referred to by pseudonym, the Proxy 

Statement reveals the existence of Party C and its role as a 

potential purchaser. OFI asserts that, because Cooper told 

shareholders of the existence of Party C, it put that party “in 

play” such that Cooper was then required to disclose that 
46

Party C was a consortium led by Chengshan.24 (Opening Br. 

at 45.) Unfortunately for OFI, and as noted by the District 

Court, § 10(b) and Rule 10b-5 do not impose liability for 

“statements that are simply incomplete,” only those that are 

“misleading or untrue.” Winer Family Tr., 503 F.3d at 330. 

OFI’s Complaint does not identify any affirmative statement 

by Cooper that is rendered untrue or misleading by the 

alleged fact that Chengshan was a participant in Party C. 

OFI attempts to rescue its assertion by relying on 

Shapiro v. UJB Financial Corp. for the proposition that, once 

a subject is mentioned, the disclosing party is then “bound to 

speak truthfully” on the subject. 964 F.2d 272, 282 (3d Cir. 

1992). OFI has misconstrued that obligation. In Shapiro, a 

defendant claimed its financial disclosures were the product 

of management practices that were “‘adequate,’

‘conservative,’ ‘cautious,’ and the like,” and we concluded 

 

24 It is not obvious that OFI has actually pled with 

particularity that Party C was, in fact, a consortium led by 

Chengshan. While it refers to that as a fact that was “later 

disclosed,” (J.A. at 79, ¶ 106), the Complaint includes very 

little substance to back its assertion. It does identify several 

references that suggest that Chengshan had a role as one of 

the rival suitors, but those factual pleadings do not extend to 

the fact that Party C was the anonymous suitor led by 

Chengshan. The clearest evidence is a financial news postmortem of the deal that reported that Chengshan was a part of 

the consortium that acted as a competing bidder and that 

further includes some details about Chengshan’s involvement 

that match the statements about Party C in the proxy, 

including price per share. 
47

that, by so describing those practices, “the subject [was] ‘in 

play.’” Id. In other words, we held that once a party has 

made a characterization on a subject, it is on notice to speak 

truthfully about the subject of that characterization. But we 

are not faced with such a circumstance here. Cooper 

mentioned Party C in the August 30 Proxy Statement only as 

part of a much longer story of how the merger came to be. 

No reference to Party C included any characterizations that 

would trigger a need for additional disclosure. There thus 

was no misrepresentation by omission regarding Party C, and 

we confirm the conclusions of the District Court to that effect. 

In sum, no assertions in the Proxy Statement were material 

misrepresentations, and therefore nothing in the document 

lends support to OFI’s § 10(b) claim. 

iv. The September 8-Ks 

Finally, OFI alleges that the 8-Ks released by Cooper 

on the 19th and 30th of September 2013 were misleading 

because they failed to disclose that the USW arbitration 

decision, and Apollo’s reaction to it, had placed the 

consummation of the merger in peril. In support of that

allegation, OFI points to the testimony of Cooper’s general 

counsel before the Court of Chancery describing Apollo’s 

reaction to the USW arbitration decision and Apollo’s stated

concern about the share price for the merger in light of that 

decision and the difficulties at CCT. OFI also places great 

weight on statements by Armes that, as of late September, he 

had “a lot of reservations about whether [the deal] would 

close or not.” (J.A. at 82, ¶ 113.) Although the Complaint 

alleges that Apollo “demanded a downward modification of 

the deal price beginning in September,” (id.), the facts pled 

with specificity tell a more tempered story. The USW 
48

arbitration decision does appear to have had some influence

on Apollo’s evaluation of the deal, but it is far from clear that 

it immediately precipitated a substantial change in position.25 

From the Complaint, it is apparent that, while Apollo 

expressed its displeasure with the agreed-upon price as of a 

meeting on September 17, it only “demanded a price 

reduction” over the phone on September 25. (J.A. at 83, 

¶ 114.) The first formal request for a price reduction did not 

occur until September 28, when two emails from Apollo’s 

counsel to Cooper’s counsel requested a price reduction of 

$2.50 per share and asserted that the reduction was 

“necessary to see the Merger through.” (J.A. at 83, ¶ 114). 

Turning first to the 8-K dated September 19, 2013, the 

Complaint fails to plead with particularity that Apollo had 

requested a price reduction, let alone suggested that the 

merger’s closing would be contingent on such a reduction, 

prior to the issuance of that 8-K. That being the case, OFI 

has not pled what it claims to be a material omission. What’s 

more, even if such a request had been made, none of the 

statements made by Cooper in that document would have 

been rendered false or misleading by the omission of that 

development. OFI also complains that Cooper did not 

 

25

 The Complaint quotes an Apollo representative as 

saying that, in addition to other concerns, “now we have this 

arbitration decision and the Steelworkers to deal with,” but 

also includes the statement by that same representative that if 

they could “fit [the arbitration decision costs] in the financing 

great, but if not, they have to come out of somewhere, and 

that somewhere was Cooper shareholders ... .” (J.A. at 82, 

¶ 113.) 
49

describe the merger as “imperiled” or in danger in its 

communication. (Opening Br. at 52.) But Cooper was under 

no obligation to use any adjective, let alone a pejorative one, 

to describe the state of the deal. See In Re Donald J. Trump 

Casino Sec. Litig. – Taj Mahal Litig., 7 F.3d 357, 375 (3d Cir. 

1993) (“We do not mean to suggest that § 10(b) or Rule 10b5 requires insiders to characterize ... transactions with 

pejorative nouns or adjectives.”) (internal quotation marks 

omitted). Consequently, OFI’s allegations as to the 

September 19 8-K have no merit. 

Turning to the September 30 8-K, OFI complains, 

albeit obliquely, that Cooper’s omission of the fact that 

Apollo had demanded a price cut amounted to a material 

misrepresentation. That argument fails on two fronts. First, 

the omission of that fact did not make any affirmative 

statement misleading. Again, an omission, standing alone, 

does not create a cause of action under § 10(b). See Winer 

Family Tr., 503 F.3d at 330 (explaining that, while “[l]iability 

may exist under [§10(b)] for misleading or untrue statements, 

[it does] not for statements that are simply incomplete”); cf. 

Information to be Included in the Report for Form 8-K (SEC 

Form 873), Section 1.02, at 5, https://www.sec.gov/about/

forms/form8-k.pdf (“No disclosure is required ... during 

negotiations or discussions regarding termination of a 

material definitive agreement unless and until the agreement 

has been terminated.”). 

Second, even if Cooper’s failure to disclose the price 

reduction demand constituted a material misrepresentation, 

OFI has failed to establish a plausible inference of scienter. 

Cooper argues persuasively that it did not need to disclose the 

demanded price reduction because it believed Apollo had no 
50

contractual right to demand such a reduction. That calls into 

question whether OFI’s few relevant factual allegations could 

give rise to a “strong inference” that Cooper knew the 

omission of Apollo’s request constituted a misrepresentation,

Avaya, 564 F.3d at 267-68, especially when taken together 

with the fact that the Court of Chancery confirmed Cooper’s 

belief on that score (J.A. at 304 (noting that “Apollo lacked 

the contractual right to demand renegotiation of the merger 

agreement based on the necessity to renegotiate USW 

contracts”)). Cooper’s choice not to disclose a request by 

Apollo that it was not entitled to make thus does not 

constitute an actionable material misrepresentation. 

In sum, we find nothing of merit in OFI’s allegations 

regarding either of the 8-Ks filed by Cooper in September

2013. 

C. SECTIONS 14(A) AND 20(A) CLAIMS

OFI advances two final claims of substantive error, 

arguing that the District Court improperly dismissed its 

claims under Section 14(a)26 and Section 20(a)27 of the ’34

Act. OFI’s § 14(a) claim is predicated on a finding of a 

 

26 Codified at 15 U.S.C. § 78n(a) and creating a cause 

of action for material misrepresentations made in a Proxy 

Statement.

27 Codified at 15 U.S.C. § 78t(a) and establishing 

derivative liability for supervisors of those committing an 

independent violation of federal securities laws, in this case 

the alleged § 10(b) violations discussed supra.
51

material misrepresentation in the Proxy Statement and its 

§ 20(a) claim is similarly predicated on a finding that a 

federal securities law was violated. Having concluded that 

the Proxy Statement contained no misrepresentation and that 

no laws were broken, we likewise conclude that there was no 

error in the District Court’s dismissal of those claims. 

III. CONCLUSION

For the foregoing reasons, we will affirm.