Opinion ID: 76625
Heading Depth: 2
Heading Rank: 1

Heading: Aggregating Pleadings to Infer Scienter

Text: 4 Under the PSLRA, a securities fraud complaint must plead fraud with particularity and allege facts giving rise to a strong inference of scienter. 1 The statute states that the complaint shall 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, 15 U.S.C. § 78u-4(b)(1), and shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind, 15 U.S.C. § 78u-4(b)(2). Nothing in this language suggests that scienter may only be inferred from individual facts, each of which alone gives rise to a strong inference of scienter, rather than from an aggregation of particularized facts. We readily join the courts that have interpreted the PSLRA to permit the aggregation of facts to infer scienter. See Broudo v. Dura Pharms., Inc., 339 F.3d 933, 940 (9th Cir.2003) (This court has made clear that allegations of scienter must be collectively considered.); In Re Cabletron Sys., 311 F.3d 11, 39 (1st Cir.2002) (`The plaintiff may combine various facts and circumstances indicating fraudulent intent' ... to satisfy the scienter requirement.) (quoting Aldridge v. A.T. Cross Corp., 284 F.3d 72, 82 (1st Cir.2002)); Abrams v. Baker Hughes, Inc., 292 F.3d 424, 431 (5th Cir.2002) (The appropriate analysis... is to consider whether all facts and circumstances `taken together' are sufficient to support the necessary strong inference of scienter on the part of the plaintiffs.); Fla. State Bd. of Admin. v. Green Tree Fin. Corp., 270 F.3d 645, 660 (8th Cir.2001) ([U]nder the Reform Act, a securities fraud case cannot survive unless its allegations collectively add up to a strong inference of the required state of mind.); Rothman v. Gregor, 220 F.3d 81, 92 (2nd Cir.2000) (Taken together with the allegations of poor sales and the pleadings in various lawsuits filed by GT, the Appellants have alleged sufficient facts to support a strong inference of recklessness.); see also Bourjaily v. United States, 483 U.S. 171, 179-80, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987) ([I]ndividual pieces of evidence, insufficient in themselves to prove a point, may in cumulation prove it. The sum of an evidentiary presentation may well be greater than its constituent parts.). 2 As noted above, Defendants appear to have conceded this point but then seek to raise other arguments as well. Below we address only one of their additional arguments. 5