Opinion ID: 803951
Heading Depth: 2
Heading Rank: 1

Heading: Standard of Review and Pleading Standards

Text: We review the dismissal of a complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) de novo, and “accept all well-pleaded facts as true and consider those facts in the light most favorable to the plaintiff.” Chapman v. New York State Div. for Youth, 546 F.3d 230, 235 (2d Cir. 2008). A complaint must plead claims that are “plausible on [their] face” to survive a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). A facially plausible claim is one in which “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the 4 misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. In addition, private securities fraud claims must meet heightened pleading requirements. ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 99 (2d Cir. 2007). First, a securities fraud claim must be pleaded pursuant to Fed. R. Civ. P. 9(b), “which requires that the circumstances constituting fraud . . . shall be stated with particularity.” Id. (quotation marks omitted). Second, private securities fraud claims must also satisfy the requirements of the Private Securities Litigation Reform Act (“PSLRA”). Id. Under the PSLRA, “[i]n pleading scienter in an action for money damages requiring proof of a particular state of mind, ‘the complaint 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.’” Id. (quoting 15 U.S.C. § 78u-4(b)(2)). A plaintiff may satisfy the PSLRA’s pleading requirements for scienter by alleging facts that either (1) show that the defendant had both the “motive and opportunity” to commit the alleged fraud, or (2) constitute “strong circumstantial evidence of conscious misbehavior or recklessness.” Id. A “strong inference” is one that is “more than merely plausible or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 314 (2007). When determining whether the facts alleged by a plaintiff support a “strong inference” of scienter, “a court must consider plausible, nonculpable 5 explanations for the defendant’s conduct, as well as inferences favoring the plaintiff.” Id. at 323-24. A reviewing court must assess all of the allegations holistically, not individually. Id. at 326. As the Supreme Court has noted, the ultimate inquiry is: “When the allegations are accepted as true and taken collectively, would a reasonable person deem the inference of scienter at least as strong as any opposing inference?” Id. at 326.