Opinion ID: 203426
Heading Depth: 3
Heading Rank: 1

Heading: Lateness of Assertion of Claim

Text: The plaintiffs filed four successive complaints in this matter over a period of twenty months before oral argument on the motions to dismiss on September 11, 2007. [22] Despite ample opportunity to assert their claims earlier, plaintiffs came up with a new theory, the shortened class period theory, in their memorandum in opposition to the motion to dismiss. The district court permitted argument on the theory but was not persuaded. Indeed, the court does not discuss the theory at all in its memorandum supporting its ruling on the motion to dismiss. Defendants argue the theory was waived. Our concern about theories raised for the first time by plaintiffs in response to defendants' motions to dismiss in securities cases is based in part on traditional notions of waiver and in part on the unusual requirements of the PSLRA. In enacting the PSLRA, Congress intended to raise the standards plaintiffs must meet to survive a motion to dismiss, for defendants to have a fair chance to test the viability of a complaint, and for courts to carefully scrutinize complaints. See Tellabs, 127 S.Ct. at 2509. That deliberate scheme is thrown into disarray when new theories are first produced in response to a motion to dismiss. The need for clarity and specificity about what plaintiffs' theories actually are is undercut. The PSLRA did not impose special burdens on Fed.R.Civ.P. 15(a), regarding amendments of complaints. See ACA Fin., 512 F.3d at 56. But plaintiffs here did not attempt to present this new theory in any of their amended complaints. That meant neither the court nor defendants had prior notice of the theory, much less prior opportunity to consider whether the theory met the PSLRA standards. The district court would have acted well within its discretion in declining to permit advancement of the new theory. And in future cases, honoring the purposes of the PSLRA, we may decline to hear arguments challenging dismissal based on belatedly advanced theories not contained clearly in amended complaints.