In City of Monroe Employees Retirement System v. Bridgestone Corp., No. 03-5505 (6th Cir. 2004), the 6th Circuit has seen the light, and at the pleading stage accepted the proposition that scienter was adequately plead against a Company, even though it failed to identify any individual officers or directors who acted with scienter.
In elaborating on the meaning of the statute’s term “strong inference,” Helwig explained that “[i]nferences must be reasonable and strong--but not [necessarily] irrefutable.” Id. The Complaint “need not foreclose all other characterizations of fact, as the task of weighing contrary accounts is reserved for the fact finder.” Id. Rather, under the “strong inference” requirement, the Retirement Fund is “entitled only to the most plausible of competing inferences.” Id. Strong inferences . . . involve deductive reasoning; their strength depends on how closely a conclusion of misconduct follows from a plaintiff’s proposition of fact.” Id. (quoted with approval in In Re Ford, 2004 WL 1873808 at *2). Our task is thus to determine whether the Complaint alleges facts that, if true, would, by forming the basis for a strong inference, “convince a reasonable person that the defendant knew a statement was false or misleading.” Adams v. Kinder-Morgan, Inc., 340 F.3d 1083, 1107 (10th Cir. 2003). Ultimately, in our scienter analysis, we “employ[] a totality of the circumstances analysis whereby the facts argued collectively must give rise to a strong inference of at least recklessness.” PR Diamonds, 364 F.3d at 691. “This necessarily involves a sifting of allegations in the complaint.” PR Diamonds, 364 F.3d at 691 (quoting Helwig, 251 F.3d at 551).The decision is set out below or and be found in pdf here.
