TheCorporateCounsel.net

Yesterday, the SCOTUS granted a cert petition filed by NVIDIA seeking review of the 9th Circuit’s decision in E. Ohman J:Or Fonder AB v. NVIDIA Corp., (9th Cir.; 8/23), concerning the PSLRA’s heightened pleading requirements for allegations of falsity and scienter.  In its cert petition, NVIDIA pointed out that plaintiffs often try to meet the PSLRA’s heightened pleading requirements for falsity & scienter by alleging that internal documents contradict a company’s public statements, and that the 9th Circuit’s ruling presented two questions that have divided the circuits concerning how the PSLRA’s pleading requirements apply in this “common and recurring context”:

1. Whether plaintiffs seeking to allege scienter under the PSLRA based on allegations about internal company documents must plead with particularity the contents of those documents.

2. Whether plaintiffs can satisfy the PSLRA’s falsity requirement by relying on an expert opinion to substitute for particularized allegations of fact.

NVIDIA went on to note that, with respect to the pleading requirement for alleging scienter based on internal documents that contradict public statements, five circuits have held that the statute requires to allege the contents of those documents with particularity, while two (now including the 9th) have held that plaintiffs may allege scienter “merely by hypothesizing about what those documents ‘would have’ said.” As to the falsity requirement, NVIDIA pointed out that two circuits have held that plaintiffs can’t satisfy the PSLRA’s pleading standards by substituting an expert opinion for particularized allegations of fact, so the 9th Circuit’s decision permitting plaintiffs to do that creates a split.

By the way, the case caption isn’t a typo, “E. Ohman J:Or Fonder AB” is the correct name of the lead plaintiff. For some odd reason, today is my day for blogs involving parties with names that look like typos to American eyes. Over on DealLawyers.com, I blogged about an EC investigation of a deal under the EU’s Foreign Subsidy Rule in which for some reason the regulators decided to abbreviate the name of Emirates Telecommunications Group Company PJSC as “(e&)”.

– John Jenkins