New England Legal Foundation
  • Home
  • About
    • Mission & History
    • Annual Reports
    • Board of Directors
    • State Advisory Councils >
      • Connecticut
      • Maine
      • Massachusetts
      • New Hampshire
      • Rhode Island
      • Vermont
    • Trustees
    • Members
    • Staff
    • Job & Internship Opportunities
  • News & Events
  • Docket
  • Briefs
  • Donate
  • Contact

Tellabs, Inc. v. Makor Issues & Rights, Ltd.

10/17/2007

 
Arguing for an Interpretation of the “‘Strong Inference’ of Scienter” Requirement under the Private Litigation Reform Act of 1995 Consistent with Congress’s Intention to Limit Frivolous “Strike Suits” under Section 10(b) of the Securities Exchange Act of 1934

On June 21, 2007, the United States Supreme Court issued its decision in the case of Tellabs, Inc. v. Makor Issues & Rights, Ltd., 127 S. Ct. 2499 (2007).  Agreeing with NELF, the Court rejected a Seventh Circuit pleading standard that would have encouraged frivolous private securities fraud actions.  Justice Ginsburg delivered the opinion of the Court, joined by Chief Justice Roberts and Justices Kennedy, Souter, Thomas and Breyer.  The decision construes the requirement in the Private Securities Litigation Reform Act of 1995 (“PSLRA”) that, for a securities fraud complaint under Section 10(b) of the Securities Exchange Act of 1934 to survive a motion to dismiss, the allegations of the complaint must create a “strong inference” of scienter, or fraudulent intent.  The Seventh Circuit decision under review allowed claims to proceed provided plaintiffs alleged facts from which a reasonable person could infer fraudulent intent.  The Supreme Court held that, under the “strong inference” requirement, the inference of scienter “must be more than merely plausible or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.”  Justices Scalia and Alito filed concurring opinions in which each adopted NELF’s proposed interpretation of the “strong inference” requirement as necessitating an inference of fraudulent intent that is more plausible than the inference of innocent intent.  As Justice Scalia reasoned, there is “no indication that [the PSLRA] was meant to relax the ordinary rule under which a tie goes to the defendant.”  Both concurring Justices acknowledged, however, that the Court’s test would likely lead to the same results as a practical matter.  Justice Stevens dissented from the opinion of the Court, arguing for a probable-cause standard.

Comments are closed.

    The Docket

    To obtain a copy of any of NELF's briefs, contact us at info@nelfonline.org.

    Categories

    All
    1st Circuit Court Of Appeals
    2nd Circuit Court Of Appeals
    3rd Circuit Court Of Appeals
    Business Litigation Session
    CT
    CT Superior Court
    CT Supreme Court
    Employer Employee Relationships
    February 2018
    February 2019
    Government Regulation/Administration Of Justice
    MA
    MA Appeals Court
    MA Division Of Administrative Law Appeals
    March 2015
    MA Superior Court
    MA Supreme Judicial Court
    MA US District Court
    ME
    ME Supreme Judicial Court
    NH
    NH Supreme Court
    Property Rights
    RI
    RI Supreme Court
    SCOTUS
    United States Supreme Court
    US Court Of Appeals Federal Circuit
    US District Court ME
    VT
    VT Supreme Court

    RSS Feed

    Archives

    August 2020
    June 2020
    January 2020
    June 2019
    April 2019
    October 2018
    June 2018
    February 2018
    October 2017
    October 2016
    June 2016
    February 2016
    October 2015
    June 2015
    March 2015
    October 2014
    June 2014
    February 2014
    October 2013
    June 2013
    February 2013
    October 2012
    June 2012
    February 2012
    October 2011
    June 2011
    February 2011
    October 2010
    June 2010
    February 2010
    October 2009
    February 2009
    October 2008
    June 2008
    February 2008
    October 2007
    June 2007
    October 2006
    June 2006
    February 2006
    October 2005
    June 2005
    February 2005
    October 2004
    June 2004
    February 2004
    October 2003
    May 2003
    February 2003
    September 2002
    May 2002
    February 2002
    May 2001