In Tellabs, Inc. v. Makor Issues & Rights, Ltd., the Supreme Court
of the United States held that a securities-fraud complaint will survive a
motion to dismiss "only if a reasonable person would deem the inference of
[culpable state of mind] cogent and at least as compelling as any opposing
inference one could draw from the facts alleged." This Paper analyzes how
the Tellabs test may be applied, identifies questions left open under the
decision, and discusses broader implications of the opinion and the Private
Securities Litigation Reform Act of 1995 (PSLRA). Among other things, the
Paper suggests that the PSLRA's heightened pleading rules have deformed
the motion to dismiss to the point where it now operates in securities-fraud
cases as a hybrid falling somewhere between the traditional Rule 12(b)(6)
and Rule 56 summary judgment procedures.
Description
The Continuing Evolution of Securities Class Actions Symposium
