Court Opinion

ID: 9554387
Source: CourtListenerOpinion
Date Created: 2023-08-08 20:01:41.144293+00
Date Added: 2024-06-11T15:33:47.093316
License: Public Domain

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                                                     [DO NOT PUBLISH]
                                     In the
                 United States Court of Appeals
                          For the Eleventh Circuit

                            ____________________

                                  No. 22-10658
                            ____________________

        IN RE: TUPPERWARE BRANDS CORPORATION SECURITIES
        LITIGATION

        SRIKALAHASTI M. VAGVALA,
        Individually and on behalf of all other persons
        similarly situated,
                                                          Plaintiﬀ-Appellant,
        versus
        TUPPERWARE BRANDS CORPORATION,
        PATRICIA A. STITZEL,
        CASSANDRA HARRIS,
        MICHAEL POTESHMAN,
        E.V. “RICK” GOINGS,
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        2                       Opinion of the Court                   22-10658

        LUCIANO GARCIA RANGEL,

                                                        Defendants-Appellees,
                              ____________________

                   Appeal from the United States District Court
                        for the Middle District of Florida
                    D.C. Docket No. 6:20-cv-00357-GAP-GJK
                            ____________________

        Before BRANCH and GRANT, Circuit Judges, and HINKLE,* District
        Judge.
        GRANT, Circuit Judge:
                Tupperware is accused of materially misrepresenting its
        financial performance in violation of § 10(b) of the Securities
        Exchange Act and Rule 10b-5. In a typical securities lawsuit
        targeting a corporation, the plaintiffs will seek to hold the company
        liable by alleging that the maker of a false or misleading statement
        herself acted with the required state of mind. But here no one
        argues that those who made Tupperware’s allegedly false or
        misleading statements intended to defraud investors or recklessly
        disregarded the risk that the statements may be false. Instead, the
        complaint alleges that a fraudulent sales scheme occurred at one of
        Tupperware’s foreign subsidiaries and asks that we hold the

        * The Honorable    Robert L. Hinkle, United States District Judge for the
        Northern District of Florida, sitting by designation.
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        22-10658               Opinion of the Court                         3

        company liable based on the lower-level corporate officials who
        knew of or orchestrated the fraud.
               To do so, the lower-level corporate officials must have been
        “responsible for” the alleged misstatements. Mizzaro v. Home
        Depot, Inc., 544 F.3d 1230, 1254 (11th Cir. 2008). This occurs when
        the official orders or approves the false statement or furnishes false
        information or language for inclusion in the statement. Id. The
        lower-level corporate officials that the shareholders point to may
        have known about the fraud—or even orchestrated the fraud
        themselves—but the complaint failed to directly connect them to
        the alleged misstatements. Accordingly, we affirm the dismissal of
        the misrepresentation claims against Tupperware for failure to
        adequately plead scienter.
                The shareholders also claim to have brought a scheme
        liability claim against Tupperware and Luciano Garcia Rangel,
        Tupperware’s Group President for Latin America during the class
        period. We affirm the dismissal of that claim as a shotgun pleading.
        We also therefore affirm the dismissal of the control person liability
        claim, which is derivative of an allegation of a primary violation.
                                          I.
               Tupperware is headquartered in Orlando, Florida and its
        securities are publicly traded on the New York Stock Exchange.
        Everyone (or at least everyone of a certain age) remembers
        “Tupperware parties.” These parties were hosted in the homes of
        Tupperware’s independent sellers, who would invite friends over
        for games, food, chats, and, of course, to sell Tupperware’s food
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        4                     Opinion of the Court                22-10658

        storage containers—a new product that was not yet a household
        staple. See Erin Blakemore, Tupperware Parties: Suburban Women’s
        Plastic Path to Empowerment, History Channel (Mar. 1, 2019),
        https://www.history.com/news/tupperware-parties-brownie-
        wise [https://perma.cc/3C9U-B5Y2]. But the company is not
        limited to food storage—it operates as a direct-to-consumer
        marketer of various products across a range of sectors including
        skin and hair products, cosmetics, toiletries, jewelry, and
        nutritional products.
               Most relevant here, Tupperware acquired Fuller Cosmetics
        in 2005. Fuller’s sales were primarily in Mexico, and its model was
        patterned on the same direct-to-consumer approach that made
        Tupperware successful. Specifically, Fuller used a network of
        independent salespersons—it called them the “Fullerettes”—to sell
        its cosmetic and fragrance products.
                Fuller’s numbers, however, did not mirror Tupperware’s
        early successes. After years of declining sales, Tupperware
        announced that it was partially impairing Fuller’s goodwill value.
        It also warned of a “high risk of future impairment to the remaining
        goodwill balance” if Fuller’s operating performance continued to
        fall below expectations.
               The shareholders allege that Tupperware named Luciano
        Garcia Rangel as its Group President for Latin America and
        Evaristo Hernandez as Fuller’s Managing Director to avoid this
        fate. Accepting the complaint’s allegations as true, Garcia Rangel
        and Hernandez—with the knowledge and support of Keith
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        22-10658              Opinion of the Court                      5

        Haggerty, Tupperware’s Vice President of Operations for the
        Americas—orchestrated a scheme to boost Fuller’s recorded
        revenue. The scheme allegedly took advantage of Fuller’s sales
        model, with Fuller shipping extra (often high-value) products to
        the Fullerettes—products that exceeded the amount that they had
        ordered. Because the Fullerettes paid Fuller directly for the
        products (which they could then resell), Fuller increased its
        accounts receivable in the amount the Fullerettes would have
        owed the company had they in fact ordered the products. Fuller’s
        management knew that these products would, in many cases, be
        returned—but Fuller recognized the revenue as soon as the
        products shipped. The complaint alleges that to avoid excess
        inventory from building up when the products were eventually
        returned, Fuller’s management overrode the system that
        automatically replenished Fuller’s stock when enough products
        shipped.
              According to the complaint, these fake sales accounted for
        up to 60% of Fuller’s recorded revenues during the class period.
        These inflated figures allowed Tupperware to avoid further
        impairment to Fuller’s goodwill value, which led to
        overstatements in Tupperware’s operating income, net income,
        and earnings per share.
              The complaint alleges a series of public misrepresentations
        in Tupperware’s quarterly and annual reports, press releases,
        earnings calls, and other filings with the Securities and Exchange
        Commission. For the year ending December 29, 2018, for example,
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        6                          Opinion of the Court                         22-10658

        the complaint alleges that Tupperware’s trademarks and
        tradenames were overstated by 97%, its goodwill by 29%, its
        operating income by 16%, and its net income and diluted earnings
        per share by 38%. In its quarterly report for the first quarter of
        2018, Tupperware reported a “meaningful increase” in Fuller’s
        sales, which it attributed to “enhanced merchandising and product
        propositions” and “more efficient promotional spending.” The
        complaint alleges that these explanations about Fuller’s increase in
        sales were materially false.
               Eventually, the scheme fell apart. When it did, Tupperware
        was forced to impair Fuller’s goodwill value and its stock price fell
        35%. A few months later, an impairment of Fuller’s tradename led
        to another decline in stock price, this time 45%. And in August
        2021, Tupperware disclosed that the SEC was investigating.1 It also
        corrected various misstatements in its previous reporting that it
        admitted “result[ed] from the override of certain controls by
        management at the Company’s Tupperware Mexico operations
        and from the misconduct of Fuller Mexico employees.”
               Following the declines in Tupperware’s stock price, several
        class action lawsuits were filed; they were eventually consolidated,

        1 Tupperware agreed to a settlement order with the Commission for violations

        of §§ 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act, related to
        recordkeeping and internal controls. SEC Charges Tupperware Brands
        Corporation for Internal Controls and Books and Records Failures, U.S. Sec. & Exch.
        Comm’n (Sept. 30, 2022), https://www.sec.gov/enforce/34-95943-s
        [https://perma.cc/64YY-8XZ7]. Neither the Commission’s order nor its
        findings are included in the Complaint, which was filed before the settlement.
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        22-10658               Opinion of the Court                          7

        with Srikalahasti Vagvala named as the lead class plaintiff. The
        operative complaint brings securities fraud claims against
        Tupperware and Garcia Rangel (the former Group President for
        Latin America) under § 10(b) of the Securities Exchange Act, 15
        U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5. The claims
        against Tupperware are based on allegedly false or misleading
        statements made by Tupperware’s Chief Executive Officer or Chief
        Financial Officer. E.V. “Rick” Goings and Patricia A. Stitzel both
        served as Chief Executive Officer at different times during the class
        period. Michael Poteshman and Cassandra Harris also served, at
        different times during the class period, as Tupperware’s Chief
        Financial Officer.
               Specifically, Count I alleges misrepresentation claims under
        Rule 10b-5(b) against Tupperware and scheme liability claims
        under Rule 10b-5(a) and (c) against Tupperware and Garcia Rangel.
        Derivative of those claims against Tupperware, the complaint also
        brings a control person liability claim against Stitzel and Goings
        (former CEOs), Poteshman and Harris (former CFOs), and Garcia
        Rangel under § 20(a) of the Securities Exchange Act, 15 U.S.C.
        § 78t(a). The class is defined as all persons or entities purchasing or
        acquiring Tupperware’s publicly traded stock from January 31,
        2018 through February 24, 2020.
                After granting multiple opportunities to amend, the district
        court dismissed the shareholders’ third amended complaint with
        prejudice. The misrepresentation claims against Tupperware
        failed to adequately allege corporate scienter. The scheme liability
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        8                       Opinion of the Court                  22-10658

        claims failed to allege a scheme aimed at deceiving or defrauding
        investors. And without a primarily violation, the control person
        liability claim necessarily failed.
              The shareholders now appeal the district court’s order
        dismissing the complaint, and we affirm.
                                          II.
               We review a district court’s order dismissing a securities
        class action complaint de novo. Mizzaro, 544 F.3d at 1236.
                                          III.
               Section 10(b) of the Securities Exchange Act makes it
        unlawful for any person to use or employ “any manipulative or
        deceptive device or contrivance” in violation of rules promulgated
        by the Securities and Exchange Commission. 15 U.S.C. § 78j(b). In
        turn, the SEC’s Rule 10b-5 makes it unlawful to “make any untrue
        statement of a material fact or to omit to state a material fact
        necessary in order to make the statements made, in the light of the
        circumstances under which they were made, not misleading.” 17
        C.F.R. § 240.10b-5(b). To successfully plead a claim under these
        provisions, the plaintiffs must allege, among other things, that a
        material misrepresentation or omission was made with scienter—
        a wrongful state of mind. Mizzaro, 544 F.3d at 1236 (citing Dura
        Pharms., Inc. v. Broudo, 544 U.S. 336, 341 (2005)). In this Circuit, the
        required state of mind is an “intent to defraud or severe
        recklessness on the part of the defendant.” FindWhat Inv. Grp. v.
        FindWhat.com, 658 F.3d 1282, 1299 (11th Cir. 2011) (quotation
        omitted).
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        22-10658               Opinion of the Court                        9

                Securities fraud claims are subject to the heightened
        pleading standards of the Private Securities Litigation Reform Act
        of 1995. The complaint must “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)(A). A “strong inference” is
        one that is “cogent and at least as compelling as any opposing
        inference one could draw from the facts alleged.” Tellabs, Inc. v.
        Makor Issues & Rights, Ltd., 551 U.S. 308, 324 (2007). To assess
        whether the complaint satisfies this high standard, we ask: “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?” Mizzaro, 544 F.3d at 1239 (quotation
        omitted).
                Because corporations do not have states of mind of their
        own, “the scienter of their agents must be imputed to them.” Id.
        at 1254.      In a securities fraud suit based on alleged
        misrepresentations, we start by looking “to the state of mind of the
        individual corporate official or officials who make or issue the
        statement.” Id. (quotation omitted). But here the shareholders do
        not allege that those who made the statements acted with
        scienter—when Tupperware’s CEOs and CFOs made the allegedly
        false statements concerning Fuller’s sales they were not aware of
        the fraud nor reckless in failing to discover it.
              We also look to the state of mind of any corporate officials
        who “order or approve” a statement “or its making or issuance, or
        who furnish information or language for inclusion therein, or the
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        10                     Opinion of the Court                 22-10658

        like.” Id. (quotation omitted). Put another way, we look to the
        corporate officials that are “responsible for” the false or misleading
        statement. Id.
              The shareholders urge us to adopt a broader (and novel)
        standard. In their view, if a corporate official’s fraudulent act is a
        proximate cause of a materially false or misleading statement, then
        that corporate official’s scienter should be imputed to the
        corporation. They contend that this is consistent with the plain
        meaning of Mizzaro’s “responsible for” standard because a
        corporate official is “responsible for” a misstatement when her
        fraudulent conduct proximately causes the falsity of the statement.
        Id.
               The shareholders misread Mizzaro. To start, “the language
        of an opinion is not always to be parsed as though we were dealing
        with language of a statute.” Reiter v. Sonotone Corp., 442 U.S. 330,
        341 (1979). But in any event, Mizzaro does not say, as the
        shareholders here suggest, that the corporate official must only be
        responsible for the statement’s falsity. See Mizzaro, 544 F.3d at
        1254–55. The complaint in Mizzaro failed to allege that any
        corporate official was aware of the alleged fraud and was
        “responsible for issuing the allegedly false public statements.” Id.
        (emphasis added). The outcome would have been different under
        a proximate cause standard because the focus was on the issuing of
        the false or misleading statement, not the underlying fraudulent
        conduct. Without a more direct connection to the statement itself,
        Mizzaro shows that it is insufficient that a lower-level corporate
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        22-10658                Opinion of the Court                          11

        official’s misconduct proximately caused a statement to be false or
        misleading.
                The shareholders also urge us to embrace part of the Sixth
        Circuit’s standard—“[a]ny high managerial agent or member of the
        board of directors who ratified, recklessly disregarded, or tolerated
        the misrepresentation after its utterance or issuance.” In re
        Omnicare, Inc. Sec. Litig., 769 F.3d 455, 476 (6th Cir. 2014). It is true
        that Mizzaro leaves the door open to actions that are “like” ordering
        or approving a statement before it is made or issued or “like”
        furnishing information or language for inclusion in a statement.
        Mizzaro, 544 F.3d at 1254. But looking to the state of mind of
        officials after the statement issued is not “like” either. See id.
        Expanding our standard in this way would thus also be inconsistent
        with Mizzaro.
                In sum, to hold a corporation liable for securities fraud, we
        first look “to the state of mind of the individual corporate official
        or officials who make or issue the statement.” Id. (quotation
        omitted). Failing that, we look to the state of mind of the corporate
        officials who “order or approve it or its making or issuance, or who
        furnish information or language for inclusion therein, or the like.”
        Id.
                                          IV.
              Applying that standard here, we conclude that the complaint
        against Tupperware fails to state a § 10b-5 misrepresentation claim
        because it does not adequately plead scienter.
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        12                     Opinion of the Court                22-10658

               The shareholders allege that three corporate officials acted
        with scienter imputable to Tupperware: Fuller’s Managing
        Director, Evaristo Hernandez; the Group President of Latin
        America, Luciano Garcia Rangel; and the Vice President of
        Operations for the Americas, Keith Haggerty. In broad strokes, the
        complaint alleges that each of these officials were involved in,
        orchestrated, or knew of the scheme to artificially inflate Fuller’s
        revenue. For purposes of this appeal, we assume—without
        deciding—that each of these officials acted with scienter. But we
        conclude that the complaint does not create the requisite
        connection between these corporate officials and the public
        statements—it does not allege that they ordered or approved the
        statements or their making or issuance, or that they furnished
        information or language for inclusion therein, or any other activity
        directly connected to the statements. See Mizarro, 544 F.3d at 1254.
               Before examining the involvement level of each of these
        three officials in turn, we note the pleading standards applicable in
        this context. First, while there is no per se rule against the use of
        anonymous sources, the weight to be afforded to allegations based
        on statements proffered by confidential sources depends on their
        particularity. Id. at 1240. The complaint must “fully describe[] the
        foundation or basis of the confidential witness’s knowledge,
        including the position(s) held, the proximity to the offending
        conduct, and the relevant time frame.” Id. Accordingly, we can
        only credit the statements from confidential witnesses to the extent
        that the basis for each statement is explained.
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        22-10658                Opinion of the Court                         13

               Second, the Private Securities Litigation Reform Act requires
        that Tupperware’s scienter be alleged “with respect to each act or
        omission alleged to violate” the chapter. 15 U.S.C. § 78u-
        4(b)(2)(A); Phillips v. Scientific-Atlanta, Inc., 374 F.3d 1015, 1018
        (11th Cir. 2004). Therefore, there must be allegations creating a
        strong inference of the required nexus with the corporate official
        with respect to each specific alleged misrepresentation.
               Third, the Private Securities Litigation Reform Act also
        requires a plaintiff to “state with particularity” the facts giving rise
        to a strong inference of scienter. 15 U.S.C. § 78u-4(b)(2). This
        means that “omissions and ambiguities count against inferring
        scienter” and that speculation and conclusory allegations will not
        be sufficient. Tellabs, 551 U.S. at 326; Garfield v. NDC Health Corp.,
        466 F.3d 1255, 1265 (11th Cir. 2006); see also Brophy v. Jiangbo
        Pharms., Inc., 781 F.3d 1296, 1304 (11th Cir. 2015).
                                          A.
              We start with the allegations relating to Evaristo
        Hernandez, Fuller’s Managing Director. In the complaint, the
        anonymous “Former Employee 1” states that “it would be unusual
        for any communications from Fuller to [Tupperware’s Orlando
        headquarters] to occur without Hernandez’s knowledge and
        approval.” Former Employee 1 was one of Fuller’s Divisional Sales
        Directors. He was in charge of seven geographic sales districts in
        Mexico and reported to the Regional Sales Director. He was at the
        company from October 2018 through May 2019. Former
        Employee 6, a Vice President for Human Resources, adds that
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        14                     Opinion of the Court                 22-10658

        “Hernandez approved the sales figures before they could be
        furnished to corporate headquarters in Orlando.”
                The complaint also points to Tupperware’s amended
        Annual Report for fiscal year 2020 as corroboration. The
        shareholders argue that this disclosure establishes that Hernandez
        “furnished” information for Tupperware to incorporate into its
        financial statements. In that disclosure, Tupperware revealed to its
        investors the existence of an SEC investigation regarding its
        operations in Mexico. Tupperware also stated that its financial
        reporting for 2019, 2020, and 2021 contained misstatements
        “resulting from the override of certain controls by management at
        the Company’s Tupperware Mexico operations and from the
        misconduct of Fuller Mexico employees.” Tupperware shared that
        it had “terminated the individuals involved in the override” in 2020,
        and the shareholders argue that this must mean Hernandez, who
        was removed from his position in November 2019 and terminated
        in January 2020.
               These allegations are insufficient to lead to a strong
        inference that Hernandez was directly involved in Tupperware’s
        public statements. At the outset, we note that the complaint lacks
        direct evidence. For example, there are no emails or certifications
        from Hernandez that show his involvement with Tupperware’s
        public financial reporting. Nor can we consider the statements
        provided by the anonymous former employees as direct evidence.
        To start, they suffer from a lack of particularity; the complaint does
        not explain the foundation for either former employee’s statement.
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        22-10658              Opinion of the Court                      15

        It also lacks particularized facts showing why a divisional sales
        director (Former Employee 1) or a Vice President for Human
        Resources (Former Employee 6) would be familiar with Fuller’s
        financial reporting. In other words, the complaint does not
        establish a “proximity to the offending conduct” for either
        confidential witness. Mizarro, 544 F.3d at 1240. A divisional sales
        director is a relatively low-level employee without exposure to the
        company’s financial reporting. The complaint alleges only that this
        employee was “in charge of” multiple geographic sales districts,
        with multiple levels of supervisors above him. Meanwhile, the
        complaint does not explain the basis for Former Employee 6’s
        conclusion that Hernandez approved the sales figures for inclusion
        in the company’s SEC filings or other public statements.
               To be sure, evidence of the “smoking-gun” genre is not
        necessary to create a strong inference of scienter. Id. at 1249
        (quoting Tellabs, 551 U.S. at 324). As circumstantial evidence, one
        could argue that Hernandez’s title as Managing Director of Fuller
        leads to the inference that he approved its financial results and
        furnished information for inclusion in Tupperware’s public
        statements. But without more information about Tupperware’s
        process for preparing its public financial statements, that
        conclusion would be speculative—which is not enough in the
        context of fraud.
               Tupperware’s disclosure adds little to the inference that
        Hernandez was responsible for Tupperware’s statements. Again,
        the issue here is not whether Hernandez knew of or orchestrated
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        16                     Opinion of the Court                22-10658

        the fraud at Fuller—what matters is whether he was directly
        connected to Tupperware’s financial reporting. So even if we
        assume that Tupperware’s disclosure does refer to Hernandez,
        engaging in fraudulent conduct is not the same as being responsible
        for public statements with material misrepresentations or
        omissions about that fraudulent conduct. As the district court put
        it, Tupperware’s disclosure establishes only that “some employees
        engaged in misconduct, those employees were terminated, and
        due to that misconduct, the false data ended up in the public
        disclosures.” The disclosure may confirm the source of the false
        data but it does not explain how the false data was transmitted from
        Fuller to Tupperware’s consolidated financial reporting. It does
        not connect Hernandez’s alleged fraudulent misconduct with
        Tupperware’s public reporting. And with no further allegations
        connecting Hernandez to Tupperware’s financial reporting, the
        complaint fails to create a strong inference that would allow for
        Hernandez’s scienter to be imputed to the corporation.
               What’s more, even if the complaint had generally pleaded
        Hernandez’s approval of Fuller’s financials, it failed to do so “with
        respect to each act or omission alleged to violate” the chapter. 15
        U.S.C. § 78u-4(b)(2)(A). For example, the shareholders allege that
        Tupperware’s April 2018 earnings call suggestion that Fuller’s sales
        improved due to “rebranding, [and] updating the merchandising
        and the product proposition to add energy to every campaign and
        boost the sales force morale” was misleading because the improved
        sales were in fact due to the fake sales scheme. But there are no
        allegations that connect Hernandez’s approval of sales figures or
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        22-10658               Opinion of the Court                        17

        communications generally to the alleged misrepresentations made
        in that call. Nor do any allegations connect Hernandez to the
        preparation of the CEO’s statements to investors stating the
        reasons for Fuller’s increased sales. Did Hernandez explain to the
        CEO, or someone else, why sales at Fuller had improved? We do
        not know—and there are no facts alleged in the complaint from
        which we can infer that he did.
               The shareholders resist this conclusion by relying heavily on
        Public Employees’ Retirement System of Mississippi v. Mohawk
        Industries, Inc., 564 F. Supp. 3d 1272 (N.D. Ga. 2021). But that
        decision does not help the shareholders; in fact, it illustrates the
        sorts of allegations missing from their complaint. In Mohawk, the
        plaintiffs alleged, based on statements from executive employees
        directly involved, that the flooring division president—whose
        scienter was imputed to the corporation—“furnished, approved
        and personally certified each quarter the purported accuracy of the
        information contained within the financial reports.” Id. at 1303
        (quotation omitted). And this information “was provided to
        investors during quarterly conference calls and incorporated in
        Mohawk’s consolidated financial statements and SEC filings.” Id.
        (quotation omitted and alteration adopted). This is the type of
        allegation that is missing from the shareholders’ complaint against
        Tupperware—particularized facts from sources with first-hand
        knowledge showing that Hernandez directly furnished
        information for, approved of, or certified public financial reporting.
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        18                     Opinion of the Court                22-10658

               In sum, the complaint needed to allege that Hernandez had
        a direct role in each alleged public misstatement by, as relevant
        here, approving the statement or furnishing information to be
        included. Because the facts alleged in the complaint fail to create a
        strong inference that he did, we cannot impute Hernandez’s
        scienter to Tupperware.
                                         B.
               The shareholders next point to Garcia Rangel, who was
        Tupperware’s Group President of Latin America during the class
        period. To support Garcia Rangel’s scienter, the complaint relies
        on an anonymous former financial analyst in Tupperware’s USA &
        Canada division (not the Latin America division), who retired in
        May 2018, four months into the class period. This employee,
        identified as Former Employee 7, says that in the USA & Canada
        division the Group President would review and approve the
        quarterly financial results before furnishing them to Tupperware.
        And indeed, when Garcia Rangel was the Group President of the
        USA & Canada division from 2010 to 2012, Former Employee 7
        says that Garcia Rangel approved its financial reporting. The
        complaint extrapolates from these facts to conclude that when
        Garcia Rangel was the Group President of the Latin America
        division, he would have reviewed and approved Fuller’s financial
        statements before they were incorporated into Tupperware’s
        consolidated financial reporting.
              We can credit the facts alleged by Former Employee 7 as
        they relate to the USA & Canada division, but we cannot do the
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        22-10658                Opinion of the Court                         19

        same for the Latin America division. Former Employee 7 worked
        in a different division, largely during a different time frame, and
        does not claim to have any personal knowledge or connection to
        the preparation of Fuller’s financial results. He lacks any proximity
        to the offending conduct. Even his interactions with Garcia
        Rangel—which are not described—would have occurred years
        before the alleged misstatements. The complaint has not provided
        a detailed enough explanation of the basis for Former Employee 7’s
        knowledge with respect to the Latin America division and Garcia
        Rangel’s conduct there.
               This lack of particularized facts connecting the practices and
        procedures of the USA & Canada division with the Latin America
        division is fatal to a finding of a strong inference of scienter. All we
        can do is speculate, based on Former Employee 7’s statements, that
        the procedures across the two divisions were the same and that
        Garcia Rangel would have approved—and did in fact approve—
        Fuller’s financials. This is particularly so when the complaint itself
        even concedes that in some respects the divisions operate
        differently.
               And as with Hernandez, even if Former Employee 7’s
        statements were sufficient to conclude that Garcia Rangel’s
        responsibilities generally included reviewing and approving
        financial statements, there are no allegations tying Garcia Rangel
        to each of the specific misrepresentations alleged in the complaint.
             In a last-ditch effort, the shareholders argue that Garcia
        Rangel “commanded” Fuller employees to continue the fraudulent
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        20                    Opinion of the Court                22-10658

        sales scheme at an alleged town hall. But commanding the
        continuation of a fraud is not the same as commanding a false or
        misleading public statement. Again, because we have assumed
        Garcia Rangel’s scienter, we are focused on his connection to the
        alleged misstatements, not his connection to the underlying
        scheme. We conclude that Garcia Rangel’s scienter cannot be
        imputed to Tupperware.
                                        C.
               Finally, the shareholders point to Keith Haggerty, the Vice
        President of Operations for the Americas, who reported directly to
        Tupperware’s Executive Vice President of Product Innovation and
        Supply Chain. But the only allegation regarding Haggerty is a
        statement from Former Employee 6—the Fuller Vice President for
        Human Resources—that Haggerty “visited Fuller quarterly to
        review its operations and financial results.” The complaint neither
        explains the basis for the former employee’s conclusion nor
        describes with any particularity what Haggerty did to review
        Fuller’s operations and financial results or what he did with the
        information he gathered. Accordingly, we cannot impute
        Haggerty’s scienter to Tupperware.
              The shareholders do not point to anyone else whose scienter
        could potentially be imputed to the corporation. Accordingly, the
        complaint does not allege facts leading to a strong inference of
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        22-10658                 Opinion of the Court                      21

        scienter with respect to Tupperware, and we affirm the district
        court’s order dismissing the misrepresentation claims.2
                                            V.
               The shareholders also argue that the complaint asserts so-
        called “scheme liability” claims against Garcia Rangel and
        Tupperware under Rule 10b-5(a) and (c). Whereas subsection (b)
        of Rule 10b-5 prohibits the making of untrue statements or
        omissions, subsections (a) and (c) prohibit deceptive conduct. 17
        C.F.R. § 240.10b-5. Subsection (a) makes it unlawful to “employ
        any device, scheme, or artifice to defraud.” Id. § 240.10b-5(a).
        Subsection (c) makes it unlawful to “engage in any act, practice, or
        course of business which operates or would operate as a fraud or
        deceit upon any person.” Id. § 240.10b-5(c). Both subsections
        maintain the requirement of being “in connection with the
        purchase or sale of any security.” Id. § 240.10b-5.
              The district court dismissed the third amended complaint’s
        scheme liability claim because it failed to allege that Garcia Rangel,
        Hernandez, or Tupperware engaged in a “scheme aimed at
        deceiving or defrauding investors.” In our view, the problem with
        the complaint’s scheme liability claim is more fundamental—it was
        improperly pleaded.
               A complaint that “commits the sin of not separating into a
        different count each cause of action or claim for relief” is a shotgun

        2 The shareholders conceded at oral argument that Garcia Rangel is not

        alleged to have made a material misrepresentation or omission.
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        22                      Opinion of the Court                   22-10658

        pleading. Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d 1313,
        1323 (11th Cir. 2015). The class shareholders’ third amended
        complaint brings two different claims—one misrepresentation
        claim and one scheme liability claim—in the same count. That
        makes it “virtually impossible to know which allegations of fact are
        intended to support which claim(s) for relief.” Anderson v. Dist. Bd.
        of Trs. of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996). The
        reader is required to discern for herself which allegations and facts
        in the complaint apply to the class shareholders’ misrepresentation
        claim and which apply to the scheme liability claim. See Cesnik v.
        Edgewood Baptist Church, 88 F.3d 902, 905 (11th Cir. 1996).
        Moreover, that count brings claims against both Garcia Rangel and
        Tupperware without a clear indication of which claim applies to
        which defendant.
                We therefore affirm the dismissal of the class shareholders’
        scheme liability claim on the ground that it is an impermissible
        shotgun pleading. The class shareholders have had multiple
        opportunities to amend their complaint. Due to its shotgun
        nature, when the defendants moved to dismiss the first amended
        complaint, they did not raise arguments concerning scheme
        liability. The district court excused this because it was an
        “unexpected issue[]” raised “for the first time by the opposing
        party’s response.” But that also put the class shareholders on notice
        of the pleading deficiency, which they have never corrected. Cf.
        Jackson v. Bank of Am., N.A., 898 F.3d 1348, 1358 (11th Cir. 2018).
        Because the class shareholders have had their “one chance to
        replead before dismissing a complaint with prejudice on shotgun-
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        22-10658                Opinion of the Court                         23

        pleading grounds,” we affirm the dismissal with prejudice. Auto.
        Alignment & Body Serv., Inc. v. State Farm Mut. Auto. Ins. Co., 953 F.3d
        707, 732 (11th Cir. 2020).
                                          VI.
               We also affirm the dismissal of the § 20(a) claim against
        Goings, Stitzel, Poteshman, Harris, and Garcia Rangel for control
        person liability. A § 20(a) claim imposes liability “not only on the
        person who actually commits a securities law violation, but also on
        an entity or individual that controls the violator.” Laperriere v. Vesta
        Ins. Grp., Inc., 526 F.3d 715, 721 (11th Cir. 2008). But a “primary
        violation of the securities law is an essential element of a § 20(a)
        derivative claim.” Thompson v. RelationServe Media, Inc., 610 F.3d
        628, 635 (11th Cir. 2010). Because the complaint does not
        successfully allege a primary violation of the securities laws, we
        affirm the district court’s order.
                                    *      *      *
                Our sister circuit has warned that if “the scienter of any
        agent can be imputed to the corporation, then it is possible that a
        company could be liable for a statement made regarding a product
        so long as a low-level employee, perhaps in another country, knew
        something to the contrary.” In re Omnicare, 769 F.3d at 475–76. Yet
        that is exactly what the class shareholders ask of us here. Because
        lower-level employees, in another country, knew of a fraudulent
        sales scheme, they ask that we impute their scienter to
        Tupperware. Doing so would be inconsistent with our precedent,
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        24                     Opinion of the Court                 22-10658

        so the district court’s order dismissing the class shareholder’s third
        amended complaint is AFFIRMED.
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        22-10658               HINKLE, J., Concurring                        1

        HINKLE, District Judge, Concurring:
               I concur in the result and all the majority opinion except the
        shotgun-pleading discussion. That discussion relates only to the so-
        called scheme-liability claim. I agree with the district court that, as
        a matter of substance, the third amended complaint fails to state a
        scheme-liability claim on which relief can be granted. This would
        be true even if the same facts were set out in a separate count and
        in a form that could not be characterized as a shotgun pleading. I
        would affirm the dismissal of the scheme-liability claim on this
        basis.