Weil, Gotshal & Manges LLP

"Information and Belief" Pleading Under the Reform Act

Schiller, Miranda S.

(October 1999, Securities Reform Act Litigation Reporter)


By Miranda S. Schiller and Haron W. Murage
The vast majority of securities fraud class action complaints are based, in part, on information and belief rather than plaintiff’s personal knowledge.  These complaints must comply with the pleading requirement of the Private Securities Litigation Reform Act of 1995 Pub. L. No. 104-67, codified at 15 U.S.C.A. § 78u-4 et seq.  (“PSLRA” or “Reform Act”), which provides that a complaint based on information and belief must state with particularity all facts upon which plaintiffs’ belief regarding defendant’s allegedly misleading statements is based.  Since the passage of the Reform Act, a number of courts have analyzed the statute’s information and belief pleading requirement and have reached conflicting results.  

The first question courts must resolve is whether a complaint is based on information and belief where the plaintiff insists that it is not.  The second question courts must resolve is the type of pleading that satisfies the “particularity” standard of the Reform Act.  Although the Reform Act’s stringent pleading requirement for information and belief complaints is separate and apart from the requirement in Rule 9(b) of the Federal Rules of Civil Procedure (“Rule 9(b)”), that fraud be pled with particularity, there is considerable overlap between what plaintiffs must allege to satisfy these two statutes.

Pleading Securities Fraud On Information And Belief Prior To The Reform Act                                      
Prior to the enactment of the Reform Act, many courts relaxed the pleading requirements of Rule 9(b) in securities fraud actions where the facts constituting the fraud were solely within the adverse party’s knowledge. See, e.g., 2 Moore’s Federal Practice, § 9.03[1][g], at 9-24 (3d ed. 1999) (citing cases).  Federal courts generally allowed plaintiffs to plead securities securities fraud on information and belief when it related to facts peculiarly within defendants’ knowledge, provided however, that the complaint contained a statement of facts upon which the belief is founded. See, e.g., Weiner v. The Quaker Oats Co., 129 F.3d 310, 319-20 (3d Cir. 1997); Kowal v. MCI Communications Corp., 16 F.3d 1271, 1279 (D.C. Cir. 1994); Tuchman v. SDC Communications Corp., 14 F.3d 1061, 1068 (5th Cir. 1994); Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993); Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878 (1st Cir. 1991); Wexner v. First Manhattan Co., 902 F.2d 169, 172-73 (2d Cir. 1990); Craighead v. E.F. Hutton & Co., Inc., 899 F.2d 485, 489-90 (6th Cir. 1990).  The Reform Act codified and strengthened a pleading requirement that had not been applied consistently by the courts. See, e.g., In re Aetna Inc. Sec. Litig., 34 F. Supp. 2d 935, 942 (E.D. Pa. 1999); In re Silicon Graphics, Inc. Sec. Litig., 970 F. Supp. 746, 763 (N.D. Cal. 1997).  But see Queen Uno Ltd. Partnership v. Coeur D’Alene Mines Corp., 2 F. Supp. 2d 1345, 1352 (D. Colo. 1998) (Section 21D(b)(1) “appears in large part to be merely a codification of pre-existing Tenth Circuit law”); Zeid v. Kimberley, 973 F. Supp. 910, 915 (N.D. Cal. 1997) (“Congress codified the rule for pleading on information and belief”).

The Reform Act
Securities fraud complaints that are filed after the Reform Act and that are based on “information and belief” must now state with particularity all facts upon which that belief is formed.  Specifically, Section 21D(b)(1) of the Reform Act provides that in any private action in which plaintiff alleges that a defendant:

(a)        made an untrue statement of a material fact; or

(b)        omitted to state a material fact necessary in order to make the statements made, in light of the circumstances in which they were made not misleading;

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 upon which that belief is formed. 16 U.S.C. A. § 78u-4(b)(1).  (Emphasis added).  The Reform Act does not specify the types of matters that may be pled on information and belief.

Over the last three years, at least thirteen reported federal district court decisions have addressed the “information and belief” requirements of the Reform Act.  As described below, courts have taken a few different approaches to the application  of this statute.

Judicial Interpretation Of The Reform Act “Information And Belief” Pleading Requirements

Whether A Complaint Is Pled On Information And Belief
A number of plaintiffs have sought to plead around the requirements of  Section 21D(b)(1) of the Reform Act by alleging that their claims are based on “an investigation of counsel” or “information from former employees,” as opposed to “information and belief.”  Plaintiffs couch their complaints in this language in an effort to avoid having to state with particularity all of the facts which support their belief that the challenged statements were false or misleading when made.

In a few cases where plaintiffs have alleged that their complaints are based on “counsel’s investigation” -- as opposed to information and belief -- the courts have looked beyond plaintiffs’ characterization of their pleadings and have held plaintiffs to the “information and belief” pleading standard of the Reform Act.  Other courts have simply accepted plaintiffs’ characterization of their pleadings.

For example, plaintiffs in In re Silicon Graphics, Inc. Sec. Litig. 970 F. Supp. 746 (N.D.Cal. 1997).  This case is currently on appeal to the Ninth Circuit Court of Appeals. alleged that their complaint “was based upon the investigation of their counsel” and in response to defendants’ motion to dismiss their complaint under Section 21D(b)(1) of the Reform Act, disputed that it was based on information and belief.  Plaintiffs asserted that their allegations were based on counsel’s review of “SEC filings, securities analysts reports and advisories about the Company, media reports about the Company and discussions with consultants.” Id. at 763.  In rejecting plaintiffs’ characterization of their complaint, the court held that “because the sources [cited] do not provide plaintiffs with personal knowledge, the complaint must be based on information and belief -- that is the only alternative.” Id.  Similarly, in Novak v. Kasaks, 997 F. Supp. 425, 431-32 (S.D.N.Y. 1998). the court rejected plaintiffs’ argument that a virtually identical complaint was based on the investigation of counsel as opposed to information and belief.  The complaint was dismissed because, among other things, it failed to state with particularity the facts upon which plaintiffs based their belief that defendants’ statements were fraudulent.  

Plaintiffs in Hockey v. Medhekar 30 F. Supp. 2d 1209 (N.D. Cal. 1998). unsuccessfully sought to plead around the requirements of Section 21D(b)(1) by alleging that their complaint was based in part on “information obtained from former employees and discussions with consultants.” Id. at 1215.   The court, citing In re Silicon Graphics, held that the complaint was based on information and belief.

In Lirette v. Shiva Corp., 999 F. Supp. 164 (D. Mass. 1998). the court held that a complaint which was purportedly based not only on “information and belief” but also on an “investigation by plaintiffs’ counsel . . . is no longer an acceptable approach to pleading” under the Reform Act. Id. at 165.  The courtdirected plaintiffs to “supplement” their complaint to “specify, as to each particular allegation . . . whether that allegation is made upon information and belief or is supported by some document or statement on personal knowledge by a potential witness.” Id.  The court noted, however, that the sources of plaintiffs’ information need not be specified. Id.  

These cases can be cited for the proposition that even though plaintiffs’ counsel may have conducted a thorough investigation of the facts supporting the alleged securities fraud and drafted the complaint to avoid reference to “information and belief,” the complaint must still comply with Section 21D(b)(1) of the Reform Act because it is based on information which could only have come from a third party.

At least five other courts have reached entirely different holdings in securities fraud actions in which plaintiffs claimed to have based their complaints on counsel’s investigation and carefully avoided any reference to “information and belief.”  The courts in these cases have simply accepted, without analysis, plaintiffs’ characterization of their complaints.  For instance, in Queen Uno Ltd. Partnership v. Coeur D’Alene Mines Corp., 2 F. Supp. 2d 1345 (D. Colo. 1998). despite the fact that the complaint was virtually identical to the complaint in In re Silicon Graphics, (i.e., purportedly based on counsel’s investigation), the court concluded that the information and belief standard was inapplicable: “plaintiffs could have stated they were seeking to plead on information and belief . . . they have not done so.” Id. at 1354.  See also Warman v. Overland Data Inc., 1998 WL 110018, at *3 (S.D. Cal. Feb. 20, 1998) (holding that “as plaintiffs have pled their allegations based on investigation of the attorney and not upon information and belief, the complaint need not state with particularity all the facts on which the belief is formed”); Howard Gunty Profit Sharing v. Quantum Corp. 1997 WL 514993, at *3 (N.D. Cal. Aug. 14, 1997) (holding that the complaint was not based on information and belief as it explicitly stated that it was based on counsel’s investigation).

In another case, Zeid v. Kimberley, 973 F. Supp. 910 (N.D. Cal. 1997). defendants moved to dismiss the complaint on the grounds that it contained several allegations which were “implicitly based on information and belief” but which did not comply with the Reform Act.  Defendants argued that, “due to the nature of the allegations, they cannot be based on either [p]laintiffs’ or their counsels’ personal knowledge.” Id. at 915.  The court, however, noted that the complaint “does not state that any allegations are based on ‘information and belief’ but rather, it asserts that [p]laintiffs obtained the facts through ‘investigation of counsel.’” Id.  The court concluded that “even though some of the facts appear to be peculiarly within [d]efendants’ knowledge, [p]laintiffs . . . through investigation, acquired sufficient facts to state a claim for fraud without relying on allegations made on information and belief.” Id.  

Similarly, in In re Aetna Inc. Sec. Litig. 34 F. Supp. 2d 935. (“In re Aetna I”), the court dismissed, with leave to replead, the complaint for failure to satisfy the Reform Act’s information and belief pleading requirements.  The amended complaint in In re Aetna Inc. Sec. Litig. In re Aetna Inc. Sec. Litig., MDL No. 1219 (E.D. Pa. filed Mar. 24, 1999). (“In re Aetna II”), expressly stated that plaintiffs’ allegations were “not pled on information and belief but rather solely on the investigation of counsel.”  The court noted that plaintiffs “have altered the way in which they have plead their allegations in the Second Amended Complaint.  Unlike the First Amended Complaint, the Second Amended Complaint is not pled on information and belief but rather solely on the investigation of counsel.” Id. at 1.  Although the court questioned “whether there is any real difference between information and belief allegations that are based on the investigation of counsel and allegations that are not pled on information and belief but rather on investigation of counsel,” Id. it declined to resolve the issue.  Without explanation, the court, citing Zeid, concluded that the Reform Act’s information and belief pleading standard did not apply to the In re Aetna II complaint.

The reason that the holdings of Queen Uno, Zeid, and In re Aetna II are not consistent with other cases, such as In re Silicon Graphics, is that the courts in these cases simply accepted plaintiffs’ assertion that their pleadings were not based on “information and belief.”  The analysis underlying the In re Silicon Graphics, Novak v. Kasaks and Hockey v. Medhekar decisions appears to be more consistent with the language of the Reform Act and its legislative framework.  Indeed, as noted by the court in In re Silicon Graphics, Representative Bryant’s proposed amendment to the pleading standard -- which would have allowed plaintiffs to simply plead facts supporting their belief -- was rejected in favor of language which requires all facts to be pled with particularity. 970 F. Supp. at 763; 141 Cong. Rec. H2848-49 (daily ed. Mar. 8, 1995).

The Level of Particularity
Not only have the courts reached inconsistent results on whether virtually identical pleadings must meet the Reform Act’s information and belief pleading standard, but they have reached inconsistent holdings with respect to the level of detail required in a complaint that is based on information and belief.  Most courts have held that boilerplate, generic descriptions of the types of sources upon which plaintiffs’ beliefs are based do not suffice, and instead have required plaintiffs to identify the specific sources on which they relied, such as documents and names of individuals.

In In re Silicon Graphics, for example, the court reviewed the legislative history of the Reform Act’s information and belief standard and concluded that “plaintiffs must plead” the sort of information described by members of the House of Representatives during the Congressional debates on the Reform Act.  The court relied on Representatives Bryant’s and Dingell’s commentary -- both of whom argued that the Reform Act’s pleading standard was too stringent.  Representative Bryant expressed a concern that:

[A]t the beginning of the case plaintiff would have to set forth “with specificity all information,” they have to give all the information in advance that forms the basis for the allegations of the plaintiff, meaning any whistle-blower within a securities firm involved would have to be uncovered in the pleadings in the very, very beginning. 141 Cong. Rec. H2848 (daily ed. Mar. 8, 1995).

Representative Dingell further observed that under the Reform Act, “you must literally, in your pleadings, include the names of confidential informants, employees, competitors, Government employees, members of the media, and others who have provided information leading to the filing of the case.” Id. at H2849.  

The court in In re Silicon Graphics applied, word for word, Representative Dingell’s commentary on what must be included in a complaint that is based on information and belief and held that plaintiffs failed to satisfy this standard. 970 F. Supp. at 763-64.  The complaint did not identify, with precision, the internal corporate reports which management was allegedly in possession of and which contradicted management’s misleading optimistic statements about the company.  When plaintiffs are basing their fraud allegations on such internal reports, “[t]he allegations should include the titles of the reports, when they were prepared, who prepared them, to whom they were directed, their content, and the sources from which plaintiffs obtained this information.” Id. at 767.  (Emphasis added.)

In In re Aetna I, 34 F. Supp. 2d 935. although the complaint identified the types of documents reviewed by counsel, defendants argued that the complaint failed to satisfy Section 21D(b)(1) of the Reform Act because it did not “identify with any particularity,the source of [plaintiffs’] beliefs.” Id. at 942.  The court agreed.  Based on a review of the legislative history of the Reform Act, the court concluded that Congress intended to impose “a heightened standard of pleading on information and belief [complaints] which can be satisfied by identifying the sources upon which [plaintiffs’] beliefs are based.” Id. at 942 (citing In re Silicon Graphics).  The complaint in In re Aetna I, “provide[d] little, if any, specificity about the foundation of their attorneys’ allegations.” Id.  The court dismissed the complaint with leave to replead to “state with particularity the sources of the facts that they allege on information and belief.” Id. at 943.  See also In re Health Management Sys., Inc. Sec. Litig., 1998 WL 283286, at *3 (S.D.N.Y. June 1, 1998) (holding that a complaint was insufficient because it did “not indicate what publicly available articles, releases and filings the plaintiffs relied on, nor [did] it indicate what ‘other matters’ of public record plaintiffs reviewed”).  

In Malin v. Ivax Corp., 17 F. Supp. 2d 1345 (S.D. Fla. 1998). the court applied Section 21D(b)(1) of the Reform Act to dismiss a securities fraud complaint and held:

While few courts have addressed [the specificity requirement] in any significant depth, clearly Congress intended courts to take seriously the requirement that a plaintiff plead with particularity all facts upon which the plaintiff is basing the information and beliefs contained in the plaintiff’s allegations. Id. at 1360.

Plaintiffs in Malin v. Ivax Corp. alleged that defendants had employed “a practice of shelf-stock adjustment” in order to boost the company’s short-term sales and profits and to further the company’s interests in possible acquisitions or mergers.  While acknowledging that “[p]laintiffs ha[d] gone to great lengths to set forth explicitly the motive for this practice,” and “explained in detail” why such a practice violated Generally Accepted Accounting Principles (“GAAP”), the court nonetheless concluded that the Reform Act requires more.  According to the court, the complaint should have provided answers to the following questions:

Upon what facts do the [p]laintiffs base their belief that the shelf-stock adjustment practice existed?  As to which products was the practice in place?  Who were the customers given such shelf-stock adjustments?  How much inventory of product did those customers buy?  When was [the company] forced to adjust the price of that inventory and to what extent?  To what extent did these adjustments affect [the company’s] financial projections? Id. at 1360.

Other types of information which plaintiffs have been required to plead in complaints that are based on information and belief include the names of “consultants” and former corporate employees who provided the information forming the basis of plaintiffs’ allegations.  For example, in Novak v. Kasaks, 997 F. Supp. 425 (S.D.N.Y. 1998). the court held that “[i]f plaintiffs do, in fact, have this sort of information available to them, then it should have been included in the complaint.  Oral, unsworn representations made by counsel cannot substitute for formal pleadings or affidavits.” Id. at 432.  In a subsequent decision, the court held that the amended complaint still failed to satisfy Section 21D(b)(1) and dismissed the complaint with prejudice.  See 26 F. Supp. 2d 658 (S.D.N.Y. 1998)

In Hockey v. Medhekar, 30 F. Supp. 2d 1209 (N.D. Cal. 1998). plaintiffs alleged that the corporation violated GAAP and SEC rules by, among other things, booking certain contingent transactions as sales, failing to adequately disclose its merchandise return policies, and by failing to disclose “non-cancelable purchase commitments.”  While the court applied the pleading standards of Rule 9(b) and the Reform Act interchangeably, it concluded that the complaint was deficient under either standard because it failed to identify which customers returned goods or whether those goods “were returned pursuant to a non-disclosed right of return,” nor did the complaint identify the alleged non-cancelable purchase commitments, the parties to such commitments, or what such commitments related to.

Other courts have taken a less stringent approach in applying the Reform Act’s information and belief pleading requirement, citing a contervailing legislative concern, that at the pleading stage, access to proof may be limited, even in cases where there has been wide-spread fraud.  In Queen Uno, for example, the court agreed with In re Silicon Graphics that “if plaintiffs pleading a complaint based on information and belief have in their possession internal documents or information obtained from confidential informants, then they must identify specific facts regarding the documents and set forth the names of and information provided by the informants.” 2 F. Supp. 2d at 1354 n.4. (Emphasis added.)  But the court did not agree with In re Silicon Graphics’ holding “that a complaint pled on information and belief must include such information to withstand a motion to dismiss.” Id. (Emphasis added.)  According to the court, Section 21D(b)(1) does not mean “that an information and belief claim can be properly pled only if plaintiffs have such information; rather, [Section 21D(b)(1)] merely requires that if plaintiffs do in fact have such information it must be set forth in the complaint.” Id.  The court viewed this approach as reconciling the Congressional objective of ensuring early disclosure by plaintiffs of all factual bases for their claims, and the realization that at the pleading stage, “plaintiffs’ access to most of a defendant’s internal sources is limited.” Id.  Although this commentary may only be dicta, since the court had already concluded that the complaint was not pled on information and belief, it is inconsistent with Silicon Graphics and, if applied by other courts, would create an exception which swallows the Reform Act rule.

Plaintiffs’ securities fraud claims in Head v. Netmanage, Inc. 1998 WL 917794 (N.D. Cal. Dec. 30, 1998). were based on allegations that the defendants omitted to disclose that the company’s sales personnel were “inadequately trained,” that certain of the company’s “value added resellers” were “downplaying the company’s products in favor of competing products” and that sales were not keeping pace with internal management projections.  Plaintiffs alleged that their complaint was based on information they had received from “confidential sources.” Id. at *2.  The court’s application of Section 21(D)(b)(1) to the complaint in this case fell somewhere in between that of In re Silicon Graphics and Queen Uno.  It held that where plaintiffs’ allegations are based on conversations plaintiffs or their attorneys had with others, “plaintiffs could set forth the substance of those conversations without identifying with which particular [persons] plaintiffs spoke.” Id.   The court dismissed the complaint.

The court in In re Aetna II MDL No. 1219 (E.D. Pa. filed Mar. 24, 1999).  We understand that the Third Circuit dismissed defendants’ appeal of this Order but did not address the Reform Act’s information and belief pleading requirement. followed the same middle ground in denying a motion to dismiss plaintiffs’ second amended complaint.  Defendants moved to dismiss that complaint on the grounds that it did not comply with the court’s prior order in In re Aetna I 34 F. Supp. 2d 935. which, according to defendants, required plaintiffs to identify, by name, the individuals who were the source of their information regarding the alleged fraud.  The court held that although it had required plaintiffs to state with particularity the sources of their beliefs, it “did not require [p]laintiffs to name the ‘human sources’ that were consulted as part of counsel’s investigation.” MDL No. 1219, at 1.

Conclusion
As is evident from the foregoing cases, Section 21D(b)(1) of the Reform Act imposes a tough standard for pleading securities fraud which can provide the basis for attacking an information and belief complaint that is distinct from that available under Rule 9(b) of the Federal Rules of Civil Procedure. See, e.g., Malin v. Ivax Corp., 17 F. Supp. 2d 1345 (S.D. Fla. 1998) (dismissing a complaint solely for failure to satisfy Section 21D(b)(1)).

In responding to a securities fraud complaint, defense counsel should initially determine whether the complaint, wholly or in part, is pled on information and belief.  Such a determination depends, significantly, on whether the facts supporting the allegations are within plaintiff’s or a third-party’s knowledge.  Where the allegations are stated to be based on facts acquired through counsel’s investigation -- and even when plaintiff denies that the allegations are based on information and belief -- defense counsel may still be able to prevail on an argument that the complaint is based on information and belief and is required, but fails to meet the “particularity” requirements of Rule 21D(b)(1) of the Reform Act.

By the same token, in preparing a complaint, counsel should give careful consideration to whether some or all of the allegations are based on information and belief.  Those which are should include a statement of the actual sources relied upon.  A boilerplate clause generally describing the types of documents reviewed is inadequate.  Where third party witnesses, such as consultants or former employees, are referred to as having supplied information that forms the basis of the complaint, they too should be identified in the complaint.  

Footnotes
  1.  Pub. L. No. 104-67, codified at 15 U.S.C.A. § 78u-4 et seq.
  2.  See, e.g., 2 Moore’s Federal Practice, § 9.03[1][g], at 9-24 (3d ed. 1999) (citing cases).
  3.  See, e.g., Weiner v. The Quaker Oats Co., 129 F.3d 310, 319-20 (3d Cir. 1997); Kowal v. MCI Communications Corp., 16 F.3d 1271, 1279 (D.C. Cir. 1994); Tuchman v. SDC Communications Corp., 14 F.3d 1061, 1068 (5th Cir. 1994); Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993); Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878 (1st Cir. 1991); Wexner v. First Manhattan Co., 902 F.2d 169, 172-73 (2d Cir. 1990); Craighead v. E.F. Hutton & Co., Inc., 899 F.2d 485, 489-90 (6th Cir. 1990).
  4.  See, e.g., In re Aetna Inc. Sec. Litig., 34 F. Supp. 2d 935, 942 (E.D. Pa. 1999); In re Silicon Graphics, Inc. Sec. Litig., 970 F. Supp. 746, 763 (N.D. Cal. 1997).  But see Queen Uno Ltd. Partnership v. Coeur D’Alene Mines Corp., 2 F. Supp. 2d 1345, 1352 (D. Colo. 1998) (Section 21D(b)(1) “appears in large part to be merely a codification of pre-existing Tenth Circuit law”); Zeid v. Kimberley, 973 F. Supp. 910, 915 (N.D. Cal. 1997) (“Congress codified the rule for pleading on information and belief”).
  5.  16 U.S.C. A. § 78u-4(b)(1).
  6.  970 F. Supp. 746 (N.D.Cal. 1997).  This case is currently on appeal to the Ninth Circuit Court of Appeals.
  7.  Id. at 763.
  8.  Id.
  9.  997 F. Supp. 425, 431-32 (S.D.N.Y. 1998).
  10.  30 F. Supp. 2d 1209 (N.D. Cal. 1998).
  11.  Id. at 1215.
  12.  999 F. Supp. 164 (D. Mass. 1998).
  13.  Id. at 165.
  14.  Id.
  15.  Id.
  16.  2 F. Supp. 2d 1345 (D. Colo. 1998).
  17.  Id. at 1354.  See also Warman v. Overland Data Inc., 1998 WL 110018, at *3 (S.D. Cal. Feb. 20, 1998) (holding that “as plaintiffs have pled their allegations based on investigation of the attorney and not upon information and belief, the complaint need not state with particularity all the facts on which the belief is formed”); Howard Gunty Profit Sharing v. Quantum Corp. 1997 WL 514993, at *3 (N.D. Cal. Aug. 14, 1997) (holding that the complaint was not based on information and belief as it explicitly stated that it was based on counsel’s investigation).
  18.  973 F. Supp. 910 (N.D. Cal. 1997).
  19.  Id. at 915.
  20.  Id.
  21.  Id.  
  22.  34 F. Supp. 2d 935.
  23.  In re Aetna Inc. Sec. Litig., MDL No. 1219 (E.D. Pa. filed Mar. 24, 1999).
  24.  Id. at 1.
  25.  Id.
  26.  970 F. Supp. at 763; 141 Cong. Rec. H2848-49 (daily ed. Mar. 8, 1995).
  27.  141 Cong. Rec. H2848 (daily ed. Mar. 8, 1995).
  28.  Id. at H2849.
  29.  970 F. Supp. at 763-64.
  30.  Id. at 767.
  31.  34 F. Supp. 2d 935.
  32.  Id. at 942.
  33.  Id. at 942 (citing In re Silicon Graphics).
  34.  Id.
  35.  Id. at 943.  See also In re Health Management Sys., Inc. Sec. Litig., 1998 WL 283286, at *3 (S.D.N.Y. June 1, 1998) (holding that a complaint was insufficient because it did “not indicate what publicly available articles, releases and filings the plaintiffs relied on, nor [did] it indicate what ‘other matters’ of public record plaintiffs reviewed”).  
  36.  17 F. Supp. 2d 1345 (S.D. Fla. 1998).
  37.  Id. at 1360.
  38.  Id. at 1360.
  39.  997 F. Supp. 425 (S.D.N.Y. 1998).
  40.  Id. at 432.  In a subsequent decision, the court held that the amended complaint still failed to satisfy Section 21D(b)(1) and dismissed the complaint with prejudice.  See 26 F. Supp. 2d 658 (S.D.N.Y. 1998)
  41.  30 F. Supp. 2d 1209 (N.D. Cal. 1998).
  42.  2 F. Supp. 2d at 1354 n.4.
  43.  Id.
  44.  Id.
  45.  Id.
  46.  1998 WL 917794 (N.D. Cal. Dec. 30, 1998).
  47.  Id. at *2.
  48.  Id.
  49.  MDL No. 1219 (E.D. Pa. filed Mar. 24, 1999).  We understand that the Third Circuit dismissed defendants’ appeal of this Order but did not address the Reform Act’s information and belief pleading requirement.
  50.  34 F. Supp. 2d 935.
  51.  MDL No. 1219, at 1.
  52.  See, e.g., Malin v. Ivax Corp., 17 F. Supp. 2d 1345 (S.D. Fla. 1998) (dismissing a complaint solely for failure to satisfy Section 21D(b)(1)).

Reprinted with permission from the October 1999 edition of Securities Reform Act Litigation Reporter.
   
Weil, Gotshal & Manges LLP

This website is maintained by Weil, Gotshal & Manges LLP in New York, NY.
Copyright © 2014 Weil, Gotshal & Manges LLP, All Rights Reserved. The contents of this website may contain
attorney advertising under the laws of various states. Prior results do not guarantee a similar outcome.