Skechers U.S.A., Inc. v. Skechers USA, Inc.

MEMORANDUM **

Municipal Employees Retirement System of Michigan and other plaintiffs appeal the district court’s dismissal of their First Amended Complaint against Skechers USA, Inc. and four of its principal officers alleging securities fraud in violation of sections 10(b) and 20(a) of the 1934 Securities Exchange Act, 15 U.S.C. §§ 78j, 78t, and 17 C.F.R. § 240 .10b-5. They allege that defendants Michael Greenberg, Robert Greenberg, and David Weinberg committed fraud when they made optimistic earnings projections in press releases and conference calls on April 24 and July 24, 2002, knowing that the company had been experiencing a decrease in demand.

Considering the plaintiffs’ allegations in their totality, Tellabs, Inc. v. Makor Issues & Rights Ltd., 551 U.S. -, 127 S.Ct. 2499 , 168 L.Ed.2d 179 (2007), we conclude that the plaintiffs have failed to “state with particularity facts giving rise to a strong inference that the defendant acted with” knowledge that their statements were false, as required by the PSLRA. 15 U.S.C. § 78u-4(b)(2).

jn argUjng that the named defendants knew that their April 24 and July 24, 2002 statements were false, the plaintiffs rely in large part on a…

I respectfully dissent. I would reverse the district court’s dismissal of Plaintiffs’ consolidated complaint and remand for further proceedings. Considering the totality of Plaintiffs’ allegations as required by Tel-labs, Inc. v. Makar Issues & Rights Ltd,., 551 U.S.-, 127 S.Ct. 2499 , 168 L.Ed.2d (2007), I would hold that they have me^ them burden under the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA) to allege a strong inference of scienter. Although this is a high standard, it is not an impossible one.

When reviewing a complaint alleging fraud under section 10(b), “courts must consider the complaint in its entirety” to determine “whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether *629 any individual allegation, scrutinized in isolation, meets that standard.” Tellabs, 127 S.Ct. at 2509 . Tellabs requires that overall, “[t]he inference of scienter must be more than merely ‘reasonable’ or ‘permissible’—it must be cogent and compelling ... at least as compelling as any opposing inference one could draw from the facts alleged.” Id. at 2510 . Thus, while we must also consider…