Court Opinion

ID: 4356541
Source: CourtListenerOpinion
Date Created: 2019-01-07 19:00:55.163495+00
Date Added: 2024-06-11T14:19:22.664330
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 18-1815
ORGONE CAPITAL III, LLC, et al.,
                                                Plaintiffs-Appellants,
                                 v.

KEITH DAUBENSPECK, et al.,
                                               Defendants-Appellees.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
          No. 1:16-cv-10849 — Rebecca R. Pallmeyer, Judge.
                     ____________________

  ARGUED SEPTEMBER 24, 2018 — DECIDED JANUARY 7, 2019
                ____________________

   Before WOOD, Chief Judge, and EASTERBROOK and
BRENNAN, Circuit Judges.
    BRENNAN, Circuit Judge. Hype and reality can be at odds.
This contrast arises often in postmortems on once-fashiona-
ble, now-failed investment securities. Hype can raise inves-
tors’ hopes and, in turn, capital contributions. But when hype
accelerates an investment’s market value beyond its actual
worth, a financial bubble is formed.
2                                                          No. 18-1815

     Fisker Automotive, Inc. was such a bubble, bursting in
2013. Plaintiffs, all purchasers of Fisker securities between
2009 and 2012, assert various claims against defendants, each
of whom played roles in Fisker’s early-stage financing, for
allegedly misleading investors regarding Fisker’s intrinsic
value and imminent collapse. 1 Illinois law provides remedies
when securities are sold by means of deceptive and fraudu-
lent practices. But like any civil action, such claims must be
timely filed. Our review does not explore the cause of or the
defendants’ alleged roles in Fisker’s failure. Rather, we decide
whether plaintiffs’ claims fall within the Illinois securities
laws, and if so whether their claims are time-barred by
Illinois’s three-year statute of limitations for securities-based
claims.
                                    I
                                   A
    In 2008, Fisker, a manufacturer of luxury hybrid electric
cars, began attracting substantial financing as part of a trend
in venture capital investments toward green energy technol-
ogy start-ups. Investor enthusiasm was spurred by a $528.7
million loan to Fisker from the U.S. Department of Energy,
which offered direct financial support to manufacturers of
clean energy vehicles and components. Under the loan’s
terms, the Energy Department advanced Fisker $192 million.

    1Plaintiffs-appellants are Orgone Capital III, LLC, David Burnidge,
Lincolnshire Fisker, LLC, Kenneth A. Steele, Jr., and Robert F. Steel, and
defendants-appellees are Fisker director Keith Daubenspeck, Fisker’s
venture capital patron Kleiner Perkins Caufield & Byers, Kleiner Perkins’s
managing partners Ray Lane and John Doerr, and Fisker’s lead invest-
ment banker Peter McDonnell.
No. 18-1815                                                    3

The venture capital firm Kleiner Perkins Caufield & Byers, a
defendant here and a controlling shareholder of Fisker,
assisted with negotiating and securing the loan to Fisker.
Plaintiffs characterize Kleiner Perkins as “politically-con-
nected” and a “pioneering titan” of Silicon Valley’s venture
capital industry, known for its “hugely successful early back-
ing of companies.”
    Support from the federal government and Kleiner Perkins
were not the only factors sparking investor interest. Celebri-
ties including tech-industry rainmakers and A-list movie
stars invested in Fisker’s future. Media outlets from Wall
Street to Hollywood reported on these luminaries’ investment
in and association with Fisker. Further fueling the excitement
was Fisker’s public competition with another emerging
player in the electric vehicle market, Tesla, Inc.
    In 2009, before sales began on its first generation of vehi-
cles, Fisker announced that beginning in 2012 or 2013 its
second generation of vehicles would be built in Delaware.
Delaware agreed to chip in $21.5 million in state subsidies and
Vice President Joe Biden and Delaware Governor Jack
Markell participated in Fisker’s media unveiling of this
economic collaboration. Riding this wave of publicity and
contributions, Fisker secured funding from additional
venture capital firms and high net worth investors. These
investors included the five plaintiffs at bar, who collectively
purchased over $10 million in Fisker securities. By 2011, insti-
tutional and individual investors had poured $1.1 billion into
Fisker, betting on its revenue potential and sustainability
values.
    Fisker’s rise was rapid and highly publicized. So was its
fall. In late 2011, Fisker began selling its flagship automobile.
4                                                  No. 18-1815

By August 2012, it stopped all manufacturing operations to
preserve cash, and in April 2013, Fisker laid off 75% of its re-
maining workforce. That same month, the U.S. Government
seized $21 million in cash from Fisker to fulfill its first loan
payment. In September 2013, the Energy Department put
Fisker’s remaining unpaid loan amount (approximately $168
million) out to bid at a public auction. In November 2013,
Fisker filed for bankruptcy protection. The bubble had burst,
and lawsuits followed.
                               B
     On October 14, 2016, these plaintiffs filed a class action
complaint against the defendants alleging fraud, fraudulent
concealment of material information, breach of fiduciary
duty, and negligent misrepresentation in connection with
their purchases of Fisker securities. In the complaint, plain-
tiffs referenced a report released on April 17, 2013, by a
private research firm, PrivCo, entitled “FISKER
AUTOMOTIVE’S ROAD TO RUIN: How a ‘Billion-Dollar
Startup Became a Billion-Dollar Disaster’.” A press release
accompanying this PrivCo Report opined Fisker may go
down as “the most tragic venture capital-backed debacle in
recent history” due to “[t]he sheer scale of investment capital
and government loan money.” The PrivCo Report claimed
this money and capital was “squandered so rapidly and with
so little to show for it that the wreckage is breathtaking.”
According to plaintiffs, the PrivCo Report was supported by
over 11,000 pages of documents exposing Fisker’s imminent
bankruptcy and malfeasant management. The PrivCo Report
also highlighted production and financial data plaintiffs claim
defendants concealed.
No. 18-1815                                                    5

   Plaintiffs’ original complaint also describes several
congressional hearings held in April 2013, one week after the
PrivCo Report was published. Those hearings included testi-
mony from both government and Fisker officials as part of a
congressional investigation of Fisker’s impending failure and
the loss of $192 million in taxpayer funds.
     The complaint details how the PrivCo Report and congres-
sional hearings “brought to light” and “revealed the defend-
ants’ alleged wrongdoings. Plaintiffs pleaded “[t]he investi-
gations by PrivCo and Congress revealed fraud and breach of
fiduciary duties by, among others, [the defendants], in
connection with [d]efendants’ scheme to induce [p]laintiffs
and the Class to purchase Fisker Automotive Securities while
concealing from them material adverse information.” Plain-
tiffs also alleged that confidential documents disclosed by
PrivCo and Congress “revealed” the defendants “knew, but
failed to disclose to plaintiffs and the Class, material infor-
mation” concerning Fisker’s production delays. Quoting the
PrivCo Report, plaintiffs claim defendants “kept Fisker’s
troubles secret” and concealed Fisker’s cash crisis and
mismanagement while attracting new investors. Plaintiffs
alleged that defendants secured over $800 million through
fraud by disseminating materially false and misleading infor-
mation to rescue Kleiner Perkins from its “bad bet” on Fisker.
   Defendants moved to dismiss plaintiffs’ complaint as
barred by Illinois’s three-year statute of limitations, 815 ILL.
COMP. STAT. 5/13(D), for securities-based claims. Defendants
argued the notices provided by PrivCo and Congress
occurred in April 2013, but plaintiffs waited more than three
years to file their complaint in October 2016. The district court
6                                                            No. 18-1815

agreed and granted defendants’ motion based upon plain-
tiffs’ “straightforward factual disclosures” regarding the
PrivCo Report and at the congressional hearings. To the
district court, these disclosures demonstrated plaintiffs must
at a minimum have known facts that, in the exercise of
reasonable diligence, would have led to actual knowledge of
their claims.
    Although the district court dismissed plaintiffs’ complaint
as untimely, plaintiffs were granted leave to amend if they
wished “to expressly contradict the court’s conclusion about
the dates that they learned of the facts that would lead them
to their claims.”
                                    C
    Plaintiffs accepted the district court’s invitation and
amended their complaint in three ways. First, they deleted all
references to the PrivCo Report and congressional hearings.
Second, they asserted Delaware rather than Illinois law
controls this case under choice of law provisions within
certain Fisker securities purchase agreements. Third, they
claimed they first learned of the defendants’ purported
wrongdoing on December 27, 2013, after an action was
brought in Delaware by separate investor plaintiffs against
some of the same defendants here. 2
   Defendants moved again for dismissal and judgment on
the pleadings under Federal Rule of Civil Procedure 12(b)(6)
and (c). They argued plaintiffs’ amended complaint suffers
from the same infirmities as the original and that the lawsuit

    2 The Delaware plaintiffs raised the same core allegations as the plain-

tiffs here, relied on the same information derived from the PrivCo Report
and congressional hearings, and were represented by the same counsel.
No. 18-1815                                                     7

remains time-barred. The district court agreed, and
concluded that plaintiffs’ claims came under Illinois law,
regardless of plaintiffs’ contention that Delaware law should
apply.
    The district court also ruled that plaintiffs’ amended
complaint failed to cure the fundamental problem with their
original complaint, which affirmatively pleaded plaintiffs
had notice of their claims in April 2013. After the first dismis-
sal, the court gave plaintiffs leave to amend to “expressly
contradict” its finding that plaintiffs learned of facts in April
2013 that would lead them to their claims. But rather than
rebut the court’s finding, plaintiffs just deleted all references
to the PrivCo Report or congressional hearings from their
amended complaint. Because this information was not contra-
dicted in the amended complaint, the court reaffirmed its
previous conclusion that Illinois’s three-year statute of limita-
tions for securities law claims barred plaintiffs’ action, and
dismissed plaintiffs’ complaint with prejudice.
                                II
    We review de novo a district court’s order granting a Rule
12(b)(6) motion to dismiss based on the statute of limitations.
Indep. Tr. Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 934
(7th Cir. 2012). We similarly review de novo a district court’s
grant of judgment under Rule 12(c). Milwaukee Police Ass'n v.
Flynn, 863 F.3d 636, 640 (7th Cir. 2017); see also Brooks v. Ross,
578 F.3d 574, 579 (7th Cir. 2009) (noting that practical effect of
addressing a statute of limitations defense in Rule 12(c)
motion is same as addressing it in Rule 12(b)(6) motion).
    Where a plaintiff alleges facts sufficient to establish a
statute of limitations defense, the district court may dismiss
8                                                     No. 18-1815

the complaint on that ground. O'Gorman v. City of Chicago,
777 F.3d 885, 889 (7th Cir. 2015); Whirlpool Fin. Corp. v. GN
Holdings, Inc., 67 F.3d 605, 608 (7th Cir. 1995) (“[I]n the context
of securities litigation, if a plaintiff pleads facts that show its
suit [is] barred by a statute of limitations, it may plead itself
out of court under a Rule 12(b)(6) analysis.”). In performing
our review, we take the plaintiffs’ factual allegations as true
and give them the benefit of all reasonable inferences. Whirl-
pool Fin. Corp., 67 F.3d at 608. We may also take judicial notice
of matters of public record and consider documents
incorporated by reference in the pleadings. Milwaukee
Police Ass’n, 863 F.3d at 640.
    The district court dismissed plaintiffs’ claims as precluded
by Illinois securities law’s three-year statute of limitations. On
appeal, we decide whether that limitations period applies,
and if so, whether it has expired.
                                A
     A district court exercising diversity jurisdiction applies
the statute of limitations of the forum state, Klein v. George G.
Kerasotes Corp., 500 F.3d 669, 671 (7th Cir. 2007), in this case
Illinois.
    Plaintiffs argue otherwise. Despite bringing securities-
based claims, they contend the Illinois securities laws do not
govern their lawsuit. They argue choice of law provisions
contained in some (but not all) of the Fisker securities
purchase agreements they executed required them to pursue
their claims under Delaware law. Plaintiffs posit that because
they are precluded from any remedies under the Illinois
securities law, they cannot be subject to its three-year statute
of limitations, and thus that their lawsuit must be governed
No. 18-1815                                                     9

by Illinois’s five-year statute of limitations for “civil actions
not otherwise provided for.” See 735 ILL. COMP. STAT.
5/13-205.
    Plaintiffs’ argument is ambitious, but not supported by
law. As an initial matter, choice of law provisions did not bind
the plaintiffs. Nor do choice of law provisions automatically
foreclose the application of a forum state’s laws. Rather,
choice of law issues may be waived or forfeited by declining
to assert them in litigation. See McCoy v. Iberdrola Renewables,
Inc., 760 F.3d 674, 684 (7th Cir. 2014) (“The choice of law issue
may be waived … if a party fails to assert it.”); see also Vukadi-
novich v. McCarthy, 59 F.3d 58, 62 (7th Cir. 1995) (holding that
choice of law is “normally” waivable). Plaintiffs were likewise
free to waive the Delaware choice of law provisions they now
invoke. Further, the Illinois three-year statute of limitations
applies to all actions “brought for relief under [the Illinois
securities laws] or upon or because of any of the matters for
which relief is granted.” 815 ILL. COMP. STAT. 5/13(D). Thus,
“claims that do not directly invoke the [Illinois securities
laws] may still fall within its statute of limitations,” including
Delaware common law claims, like those plaintiffs assert.
Klein, 500 F.3d at 671 (citing Tregenza v. Lehman Brothers, Inc.,
678 N.E.2d 14, 15 (Ill. App. Ct. 1997)).
    In Tregenza, an investor plaintiff raised the same types of
claims as plaintiffs here—common law causes of action for
breach of fiduciary duty, fraud, and negligent misrepresenta-
tion arising out of the purchase of securities. The Illinois Ap-
pellate Court affirmed the dismissal of the investor’s claims
and held that they triggered the three-year statute of limita-
tions because “[they] are reliant ‘upon … matters for which
10                                                            No. 18-1815

relief is granted’ by the Securities Law.” Tregenza, 678 N.E.2d
at 15 (quoting 815 ILL. COMP. STAT. 5/13(D)).
     We applied the same reasoning in Klein to conclude the
Illinois securities laws governed the plaintiff’s claims.
500 F.3d at 672–74 (affirming dismissal of plaintiff’s claims for
common law fraud, breach of fiduciary duty, and punitive
damages as untimely under the Illinois securities laws). 3 In
Klein, we held that whether a plaintiff’s claim amounts to an
action for relief under the Illinois securities law, or upon or
because of any of the matters for which relief is granted by the
securities law, depends on what acts are encompassed within
the securities law. Id. at 672; see also 815 ILL. COMP. STAT.
5/13(D); Allstate Ins. Co. v. Countrywide Fin. Corp., 824 F. Supp.
2d 1164, 1176 (C.D. Cal. 2011) (interpreting same Illinois stat-
ute) (“The Court need not look past the plain language of the
statute to conclude that the ‘matters for which relief is
granted’ refers to the conduct giving rise to a suit rather than
the procedural question of whether an [Illinois securities law]
suit is allowed in a particular case.”)
    Illinois’s securities laws expressly prohibit the types of
misconduct alleged by plaintiffs and provide remedies there-
for. Plaintiffs claim defendants concealed material infor-
mation and made knowingly false statements regarding
Fisker’s operational and financial conditions in connection
with the sale of Fisker securities. Such conduct is prohibited

     3Before 2013, the Illinois securities laws contained a five-year statute
of repose, which applied to any “action … brought for relief under this
Section or upon or because of any of the matters for which relief is granted
by this Section.” See 2013 Ill. Legis. Serv. P.A. 98–174 § 13(D) (West). In
deciding whether the former statute of repose applied to the claims in
Klein, we interpreted the same statutes as here.
No. 18-1815                                                    11

under Illinois securities laws sections 5/12(F) (prohibiting
fraud and deceit in connection with the sale of securities),
5/12(G) (prohibiting the sale of securities by means of untrue
or misleading statements), and 5/12(I) (prohibiting any
device, scheme or artifice to defraud in connection with the
sale of securities). See 815 ILL. COMP. STAT. 5/12. Section 13 of
this statute provides remedies for the conduct prohibited in
these statutes. Likewise, its three-year statute of limitations
expressly applies to their violation. So under Klein, plaintiffs
have pleaded acts encompassed within and governed by the
Illinois securities laws, which are governed by its limitation
period.
    Plaintiffs contend that rather than Klein, Carpenter v. Exelon
Enterprises Co., LLC, 927 N.E.2d 768 (Ill. App. 1 Dist. 2010),
controls this case. Carpenter held that § 13 of the Illinois secu-
rities laws does not provide a remedy for common law claims
for breach of fiduciary duty brought by sellers of securities.
Id. at 774–77. Because the plaintiffs-sellers in Carpenter lacked
a remedy under the Illinois securities laws, the Illinois Appel-
late Court ruled that the three-year statute of limitations did
not govern their claims. Id. at 777. But where Carpenter and
Klein separate—whether the Illinois securities laws provide a
remedy for stock sellers—is of no value to plaintiffs. The lack
of an available remedy in Carpenter was due to the Carpenter
plaintiffs’ status as stock sellers. Here, plaintiffs sue as
purchasers of Fisker securities, not sellers. The Illinois securi-
ties laws expressly provide relief to securities purchasers. See
815 ILL. COMP. STAT. 5/13(A) (specifying that those who par-
ticipated or aided in selling a security in violation of the Illi-
nois securities laws are “joint and severally liable to the pur-
chaser,” including purchasers’ attorneys’ fees and expenses).
12                                                    No. 18-1815

    Plaintiffs’ position also suffers from forum shopping prob-
lems because the outcome they propose would reward a
stockholder who fails to bring suit in the appropriate state in
a timely manner. To address this problem, plaintiffs cite
Ferens v. John Deere Co. to show that forum shopping for a
more favorable statute of limitations is permissible. 494 U.S.
516, 531 (1990) (applying Mississippi’s six-year statute of
limitations to Pennsylvania claims after Pennsylvania’s two-
year tort limitations period had expired). But here, unlike in
Ferens, a more favorable statute of limitations law does not
exist. Plaintiffs concede that had they initiated their lawsuit in
Delaware under Delaware law, their claims would be subject
to a three-year statute of limitations. Likewise, had plaintiffs
initiated their lawsuit in Illinois under Illinois law, the same
three-year limit would be applied. Plaintiffs have offered no
authority to support their contention that by suing in Illinois
under Delaware law, parties get two additional years to sue.
    Plaintiffs cannot avoid Illinois’s statute of limitations by
encasing their common law claims in a Delaware husk.
Because the Illinois securities law’s three-year limitations
period controls in this case, Illinois’s residual five-year statute
of limitations does not apply. See 735 ILL. COMP. STAT. 5/13-
205 (restricting five-year statute of limitations to “civil actions
not otherwise provided for”); see also Tregenza, 678 N.E.2d at
15 (holding that the plaintiff’s action “is a cause otherwise
provided for” under the Illinois securities law, and that five-
year limitations period in § 5/13-205 is inapplicable) (internal
quotations omitted). The remaining question is whether
plaintiffs’ lawsuit was timely filed.
No. 18-1815                                                       13

                                  B
   Actions for relief under the Illinois securities laws must be
brought within three years from the date of a security’s sale.
815 ILL. COMP. STAT. 5/13(D). But if the party suing neither
knew nor in the exercise of reasonable diligence should have
known of any alleged violation of the Illinois securities law,
the three-year period to sue for Illinois securities law claims
begins to run the earlier of:
       (1) the date upon which the party bringing the
       action has actual knowledge of the alleged viola-
       tion of this Act; or
       (2) the date upon which the party bringing the
       action has notice of facts which in the exercise of rea-
       sonable diligence would lead to actual knowledge of
       the alleged violation of this Act.
815 ILL. COMP. STAT. 5/13(D)(1)-(2) (emphases added).
     Fisker securities were last sold to these plaintiffs in 2012.
Yet plaintiffs’ amended complaint avers they did not know of
facts concerning the defendants’ alleged violations until after
December 27, 2013, such that their October 14, 2016, original
complaint was timely filed. In its final dismissal order,
however, the district court found that the defendants’ alleged
fraud “was presented for the entire world to see no fewer than
three times before October 14, 2013.” Applying an “inquiry
notice” standard, the district court determined that PrivCo’s
and Congress’s April 2013 disclosures gave plaintiffs notice
of their potential claims. These findings were not rebutted,
and the district court concluded it was implausible that plain-
tiffs were first notified of facts leading to their claims later
than April 2013.
14                                                 No. 18-1815

    Plaintiffs challenge the district court’s application of
inquiry notice to dismiss their claims. They argue the first
clause of 815 ILL. COMP. STAT. 5/13(D)(2) regarding “notice of
facts” means “actual notice of facts,” not “inquiry notice.”
Plaintiffs note that “inquiry notice” does not appear in the
statute. But plaintiffs’ position encounters two problems.
First, although the text of § 5/13(D)(2) does not include the
phrase “inquiry notice,” it also does not include “actual
notice.” Plaintiffs ask us to supplant one omitted term for
another, which leads to the second problem: if we agreed with
plaintiffs’ proposed interpretation, what constitutes “actual
notice of facts” would be indistinguishable from “actual
knowledge,” the triggering event contained in § 5/13(D)(1).
Such a reading would render § 5/13(D)(1) redundant, which
violates the surplusage canon of statutory construction.
ANTONIN SCALIA & BRYAN A. GARNER, READING LAW 176
(2012).
    In contrast, the inquiry notice standard is consistent with
§ 5/13(D) and the cases interpreting this statute. Cf. Tregenza
v. Great Am. Commc’ns Co., 12 F.3d 717, 718 (7th Cir. 1993)
(explaining that under “inquiry notice,” a statute of limita-
tions “begins to run when the victim of the alleged fraud
became aware of facts that would have led a reasonable per-
son to investigate whether he might have a claim”); Allstate
Ins. Co., 824 F. Supp. 2d at 1182 (holding § 5/13(D) “appears to
be very close to the California inquiry notice standard,” which
“requires only that a party be on notice that an injury was
‘caused by wrongdoing’ before the statute begins to run.”).
   But here, we need not decide which notice standard
applies because plaintiffs’ suit is time-barred under the plain
language of § 5/13(D). Applying the text of § 5/13(D) to this
No. 18-1815                                                   15

case, plaintiffs must show they did not have notice of facts
that, in the exercise of reasonable diligence, would lead to
actual knowledge of the defendants’ alleged violations on or
before October 14, 2013. They have failed to do so. Plaintiffs’
original complaint made more than fleeting references to the
April 2013 PrivCo Report and ensuing congressional
hearings. They repeatedly pleaded these publications
“brought to light” and “revealed” the facts forming the bases
of their lawsuit. The PrivCo Report’s writing was not subtle.
It characterized Fisker as “the most tragic venture capital-
backed debacle in recent history” and alluded to fraud and
breach of fiduciary duties as the cause of Fisker’s “breathtak-
ing wreckage.” The PrivCo Report and congressional
hearings did more than stir up the possibility of a legal action;
they provided plaintiffs a detailed litigation roadmap.
    Red flags were not limited to disclosures by PrivCo and
Congress as provided in their original complaint. According
to plaintiffs’ amended complaint, in late 2011 “a scandal
erupted concerning Solyndra, another green energy start up
with DOE funding, and Fisker [] became a political issue
given its similar ties to DOE, becoming the subject of negative
stories on major news networks like ABC, CBS, and Fox, as
well as major newspapers.” The amended complaint contin-
ues that in early January 2012, Fisker executives notified
investors that “DOE refused to resume funding Fisker.” In
February 2012, media reported that Fisker’s “cash crunch”
resulted in forced layoffs, in addition to reporting on Fisker’s
scaled back sales projections and automobile recalls. The
same month, Fisker also informed its investors that it had
become “a political football” and that its negative press was
“a consequence of [] election year politics.” In August 2012,
Fisker’s leadership wrote to stockholders explaining that
16                                                 No. 18-1815

Fisker “has been under a media microscope” and was “the
target of politically motivated PR attacks.”
    “Scandals,” “negative stories,” “cash crunches,” product
recalls, layoffs, “PR attacks,” nationwide portrayal as a polit-
ical scapegoat, and cancellation of crucial federal funding—
all under the lens of a “media microscope”—are distressing
facts for any stockholder. All of these signals occurred before
April 2013 and were incorporated into plaintiffs’ amended
complaint.
    Fisker was a sophisticated and speculative private equity
investment. Among plaintiffs, the lowest total investment
was over $350,000, and the highest over $7,500,000. Yet even
an unsophisticated investor should have realized between
late 2011 (when Fisker was correlated with Solyndra) and
April 2013 (following the release of the PrivCo Report) that
something was wrong. Even assuming plaintiffs shut them-
selves off from media, a simple internet search of “Fisker” to
check on the status of their investment—as any reasonable
investor would do—would have revealed these troubling
facts. Plaintiffs counter that defendants were especially
sophisticated and employed significant resources to conceal
Fisker’s problems. The ominous facts plaintiffs detail in their
amended complaint undercut this assertion. Even if plausible,
plaintiffs’ assertion expired once PrivCo and Congress
presented Fisker’s flaws to the public. Defendants could no
longer conceal wrongdoings because, as plaintiffs expressly
concede, PrivCo and Congress “revealed” and “brought to
light” such wrongdoings as early as April 2013.
    Finally, plaintiffs contend the district court improperly
construed allegations in their superseded original complaint
as judicial admissions. See 188 LLC v. Trinity Indus., Inc., 300
No. 18-1815                                                     17

F.3d 730, 736 (7th Cir. 2002) (“When a party has amended a
pleading, allegations and statements in earlier pleadings are
not considered judicial admissions.”). Plaintiffs insist that
allegations in a superseded complaint—here, references to the
PrivCo Report and congressional hearings—should be
ignored.
    An amended pleading does not operate as a judicial tabula
rasa. “Under some circumstances, a party may offer earlier
versions of its opponent's pleadings as evidence of the facts
therein.” Id. In response, “the amending party may offer evi-
dence to rebut its superseded allegations.” Id. Consistent with
this process, the district court granted plaintiffs leave to
amend to rebut facts that they pleaded in their original com-
plaint showing their awareness of the defendants’ alleged
securities violations more than three years before filing. The
court provided plaintiffs the opportunity to expressly contra-
dict the court’s finding about when they learned of facts that
would lead them to their claims. Rather than contradict those
facts, plaintiffs simply deleted any references to them. A
district court is not required to ignore its prior decision, or its
findings supporting a dismissal and grant of leave to amend,
where, as here, the findings are based upon undisputed
public information plaintiffs themselves brought before the
district court.
    A district court may judicially notice a fact that is not sub-
ject to reasonable dispute because it: (1) “is generally known
within the trial court's territorial jurisdiction;” or (2) “can be
accurately and readily determined from sources whose accu-
racy cannot reasonably be questioned.” FED. R. EVID. 201(b);
see also General Electric Capital Corp. v. Lease Resolution Corp.,
128 F.3d 1074, 1081 (7th Cir. 1997) (holding same). Here, the
18                                                     No. 18-1815

district court considered the original complaint, as well as its
2017 opinion inviting plaintiffs to rebut their allegations of
notice triggering the Illinois securities limitations period. “[I]f
the finding taken from the prior proceeding is ‘not subject to
reasonable dispute,’ then the court has satisfied the eviden-
tiary criteria for judicial notice.” General Elec. Capital Corp., 128
F.3d at 1082; see also Watkins v. United States, 854 F.3d 947, 950
(7th Cir. 2017) (“Absent a claim that there is a plausible, good-
faith basis to challenge the legitimacy of [a prior complaint],”
the court is entitled to take judicial notice of a complaint and
its contents). That the PrivCo report exists, the Congressional
hearings transpired, and plaintiffs pleaded both facts in their
original complaint is beyond “reasonable dispute.” Accord-
ingly, the district court permissibly considered these findings
in its second and final dismissal of the plaintiffs’ lawsuit.
                                III
   Plaintiffs’ case concerns matters for which the Illinois
securities laws grant relief, and therefore falls within its three-
year statute of limitations. Plaintiffs’ claims against the
defendants accrued no later than April 2013, but they filed
their complaint in October 2016. Because plaintiffs failed to
bring this action within three years from the date their claims
accrued, their lawsuit was untimely filed and appropriately
dismissed.
                                                         AFFIRMED.