84 Employer-Teamster Joint Council Pension Trust Fund v. America West Holding Corp.
Opinion
lead Opinion
Ferguson, J.
Opinion by Judge FERGUSON; Dissent by Judge TALLMAN.
OPINION
Plaintiffs/Appellants (“Plaintiffs”), shareholders of America West Holdings Corp. (“Holdings”), appeal the District Court’s dismissal under Rule 12(b)(6) of their second amended consolidated complaint (“Second Amended Complaint”) against Defendants/Appellees Holdings; America West Airlines, Inc.; several America West officers; outside directors; and large shareholders (collectively referred to as “Defendants”). In their Second Amended Complaint, Plaintiffs alleged that Defendants violated section 10(b) of the Securities Exchange Act of 1934 (“1934 Act”), 15 U.S.C. § 78¡j(b), and Rule 10b-5, 17 C.F.R. § 240 .10b-5. Plaintiffs further alleged that the officers, directors, and controlling shareholders are liable under section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a).
On appeal, Plaintiffs argue that the District Court erred in dismissing their Second Amended Complaint for failure to meet the pleading requirements of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). This Court has jurisdiction pursuant to 28 U.S.C. § 1291 , and we reverse.
Background
Employer-Teamsters Joint Council No. 84 Pension Trust…
dissent Opinion
Tallman, J.
dissenting:
The Private Securities Litigation Reform Act (“Reform Act”) imposes strict requirements on plaintiffs pleading securities fraud claims. These include obligations to: plead that a defendant “made an untrue statement of material fact”; “specify each statement alleged to have been misleading[and] the reason or reasons why the statement is misleading”; and “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(l)-(2). I respectfully dissent from the majority’s ruling that the plaintiffs’ complaint has met these stringent standards.
I
The majority critically errs by swiftly dismissing the key fact that the revelations of the maintenance problems and FAA settlement had no significant effect on America West’s stock price.
On June 22, 1998, America West’s stock closed at $28. The Wall Street Journal first reported on June 23, 1998, that the FAA was contemplating penalties against America West for its failures in supervising maintenance contractors. This was the first public disclosure of this information. That day, America West’s stock rose to close at $28 1/8.