The group pleading doctrine had long given plaintiffs a “leg up” in securities litigation. Then came the Private Securities Litigation Reform Act (PSLRA)1 in 1995, which was designed to “cut back” on such litigation, and particularly to derail “frivolous” securities lawsuits, and to address perceived abuse by the “routine filing of lawsuits against issuers of securities and others whenever there is a significant change in the issuer’s stock price without regard to any underlying culpability of the issuer.”2 As the Supreme Court noted in Tellabs, that set up a question of “whether the group pleading doctrine survived the PSLRA.”3
Background
Two of the chief issues confronting plaintiffs in securities actions are showing a defendant’s connection to an alleged fraud and showing that defendant’s intent was to make a false statement. The group pleading doctrine gave a boost to plaintiffs by helping overcome the first hurdle. As set forth in Oxford Health Plans,4 the group pleading doctrine permits plaintiffs to “rely on a presumption that statements in prospectuses, registration statements, annual reports, press releases, or other group-published information are the collective work of those individuals with direct involvement in the everyday business of the company.”
