Opinion ID: 76625
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: 2 This appeal arises from a securities fraud class action against Scientific-Atlanta, Inc. (S-A) and James F. McDonald and Wallace G. Haislip, the company's CEO and CFO (the individual defendants). Plaintiffs allege that Defendants falsely portrayed S-A's financial performance and exaggerated demand for its products to the detriment of investors and in violation of § 10(b) of the Securities Exchange Act of 1934 (the Exchange Act), 15 U.S.C. § 78j(b), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. They also allege that the individual defendants are liable for S-A's violations as controlling persons of S-A under § 20(a) of the Exchange Act. 15 U.S.C. § 78t(a). Defendants moved to dismiss the action for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and failure to plead fraud with particularity under Rule 9(b) and the PSLRA. 15 U.S.C. § 78u-4(b). The district court denied the motion, finding that the complaint stated a claim and pled fraud with particularity. In re Sci.-Atlanta, 239 F.Supp.2d 1351, 1362-63, 1364-65 (N.D.Ga.2002). The district court noted that although individual allegations in the complaint, considered in isolation, may not have given rise to a strong inference of scienter, the allegations created such an inference when viewed collectively. Id. at 1366. Defendants petitioned for interlocutory appeal under 28 U.S.C. § 1292(b), and the district court certified the narrow question of whether allegations that standing alone do not give rise to a `strong inference' of scienter under the [PSLRA] may nevertheless be aggregated to create such a finding. We granted the petition, and we now affirm.