“The Ninth Circuit’s view would reopen the floodgates to the same litigation abuses that led Congress to enact the PSLRA’s heighted pleading standard in the first place.”
—Cory Andrews, WLF General Counsel & Vice President of Litigation

(Washington, DC)—Today the U.S. Supreme Court agreed to review a sharply divided decision of the U.S. Court of Appeals for the Ninth Circuit that gutted the critical pleading requirements of the Private Securities Litigation Reform Act (PSLRA). The decision was a victory for Washington Legal Foundation, which filed an amicus brief with the court urging review. WLF’s brief was drafted with pro bono assistance from James N. Kramer, Daniel A. Rubens, and Jodie C. Liu of Orrick Herrington & Sutcliffe LLP. The National Association of Manufacturers joined WLF on the brief.

The Court today also granted review in two other cases in which WLF filed in support of certiorari: Wisconsin Bell, Inc. v. United States ex rel. Heath and EMD Sales v. Carrera.

The case arises from plaintiffs’ claim that NVIDIA should have told investors that a substantial portion of its gaming revenue was derived from sales to cryptocurrency miners rather than gamers. But plaintiffs lacked any data showing that this was true, much less that NVIDIA’s executives knew it was true. So plaintiffs hired an expert to create data relying on undisclosed and unreliable assumptions, then asserted that NVIDIA’s executives should have known about this made-up data. Concluding that plaintiffs’ allegations did not plausibly state a claim under the PSLRA, the district court dismissed the suit, but a divided Ninth Circuit panel reversed.

In its amicus brief urging Supreme Court review, WLF explained why the Ninth Circuit’s reliance on plaintiffs’ hired-gun expert report to establish falsity and scienter breaks with decisions from other circuits. If left in place, the appeals court’s decision would create an easy roadmap for future plaintiffs to engage in the kind of fishing expeditions the PSLRA was supposed to end. WLF intends to file another amicus brief at the merits stage later this summer.