Opinion ID: 2802784
Heading Depth: 3
Heading Rank: 2

Heading: Aldinger

Text: Aldinger concedes that he “made” all the statements in Household’s SEC filings and in his own presentation to Goldman Sachs. The plaintiffs claim that Aldinger also agrees that he “made” the statements in the press releases, but we can’t find that concession anywhere in the record. We’re hesitant to hold as a matter of law that a CEO “makes” all statements contained in a company press release, as that term was narrowly defined in Janus. We haven’t been No. 13-3532 33 directed to evidence showing that Aldinger’s signature or name appeared in the press releases in the sense of an attribution. See Janus, 131 S. Ct. at 2302 (“[I]n the ordinary case, attribution within a statement … is strong evidence that a statement was made by—and only by—the party to whom it is attributed.”); cf. Peterson v. Winston & Strawn LLP, 729 F.3d 750, 752 (7th Cir. 2013) (noting that the defendant law firm would probably not be liable for the contents of a circular it helped prepare because it “did not sign the document or warrant the truth of its contents”). Nor does it appear that he actually delivered the statements in the press releases himself—say, for example, by reading them at a press conference. See Janus, 131 S. Ct. at 2302 (“One ‘makes’ a statement by stating it.”). Absent either attribution or actual delivery, the Janus inquiry turns on control. Id. at 2303 (“[T]he rule we adopt today [is] that the maker of a statement is the entity with authority over the content of the statement and whether and how to communicate it.”). As CEO, Aldinger of course had authority over the press releases in the sense that he could have exercised control over their content. But if that were enough to satisfy Janus, then CEOs would be liable for any statements made by their employees acting within the scope of their employment. That wouldn’t square with the Court’s reminder about “the narrow scope that we must give the implied private right of action” under Rule 10b-5. Id. Instead, as we understand Janus, Aldinger must have actually exercised control over the content of the press releases and whether and how they were communicated. That’s an inherently fact-bound inquiry, and it can’t be answered on this record. Accordingly, as to Aldinger’s liability 34 No. 13-3532 for the press releases, the Janus error was prejudicial, and he is entitled to a new trial. The error was not prejudicial as to Aldinger’s liability for Gilmer’s false statement to the media, however. The evidence at trial clearly established that Aldinger “made” this statement in the sense meant by Janus. Aldinger drafted the statement in response to growing protests about Household’s predatory lending practices, and he sent it to various executives, including Gilmer, in an e-mail that said, “Attached to this [e-mail] is our media holding statement … .” Gilmer simply read the statement verbatim to the media. As the CEO and the actual author of the statement, Aldinger had the “ultimate authority” over its content and whether and how to communicate it, the touchstone of Janus. Id. at 2302. The defendants contend that the question of prejudice must be considered in light of the jury’s findings on scienter. They note, for example, that the jury found Household and Aldinger responsible for “making” the Gilmer statement knowingly, while Gilmer, who actually delivered it, was found to have made it recklessly. The defendants suggest that this kind of combination is impossible after Janus. We do not see why. Nothing in Janus precludes a single statement from having multiple makers. See In re Pfizer Inc. Sec. Litig., 936 F. Supp. 2d 252, 268–69 (S.D.N.Y. 2013); City of Pontiac, 875 F. Supp. 2d at 374; City of Roseville Emps.’ Ret. Sys. v. EnergySolutions, Inc., 814 F. Supp. 2d 395, 417 (S.D.N.Y. 2011). And it’s not illogical to conclude that Aldinger, who wrote the statement and instructed Gilmer to deliver it, acted knowingly, while Gilmer, who simply parroted it, was merely reckless as to its falsity. No. 13-3532 35 That leaves the presentation by Schoenholz at the Investor Relations Conference. The plaintiffs argue that Aldinger’s presence in the room, and his participation in a question-andanswer session afterward, demonstrate that he controlled the content of the presentation, and that’s enough to satisfy Janus. We agree that post-Janus, liability for “making” a false statement can be established by inferences drawn from surrounding circumstances. But we can’t say with confidence that Aldinger’s actions at the conference satisfy the Janus standard. They may, but a properly instructed jury might conclude otherwise. Finally, the plaintiffs argue that the Janus error cannot have prejudiced Aldinger because he was found secondarily liable under § 20(a) of the Securities Exchange Act, which provides that “[e]very person who … controls any person liable under any provision of this chapter … shall also be liable jointly and severally with and to the same extent as such controlled person.” 15 U.S.C. § 78t(a). The jury found, for purposes of § 20(a), that Aldinger and Schoenholz were controlling persons with respect to each other and with respect to Household and Gilmer. Because Household issued the press releases and Schoenholz gave the presentation, this means that Aldinger is secondarily liable for their statements. Even so, Aldinger may have been affected by the jury’s allocation of responsibility for the plaintiffs’ losses. When multiple defendants are found liable, the jury is required to apportion fault between them. Id. § 78u-4(f)(3). The jury allocated 55% responsibility to Household, 20% to Aldinger, 15% to Schoenholz, and 10% to Gilmer. With a proper 36 No. 13-3532 instruction on what it means to “make” a false statement, the jury might allocate responsibility differently.13 Accordingly, Aldinger is entitled to a new trial on whether he “made” the false statements in Household’s press releases and in Schoenholz’s presentation at the Investor Relations Conference.