Date: 05-31-2001

Case Style: Helwig v. Vencor, Inc.

Case Number: 99-5153

Judge: Merritt

Court: United States Court of Appeals for the Sixth Circuit

Plaintiff's Attorney: Kenneth J. Vianale of Milberg, Weiss, Bershad, Hynes & Lerach, Boca Raton, Florida

Defendant's Attorney: Gregory P. Joseph of Fried, Frank, Harris, Shriver & Jacobson, New York, New York, for Appellees.

Description: The complaint in this securities class action features allegations of insider trading, fraudulent omissions, and inflated stock prices punctured by bad news in the health care industry. The principal issues on appeal arise under the new pleadings standard created by the Private Securities Litigation Reform Act of 1995. As often is the case in suits for securities fraud, we must deal with controverted inferences of knowledge and intent to defraud from facts that give rise to more than one interpretation. How to steer a course between indulging strike suits and predatory allegations on the one hand and deterring meritorious claims on the other: This has been the work of Congress and a number of our sister circuits. The fruit of their efforts has been a statute containing general language at a high level of abstraction, an ambiguous legislative history, and a triparted split among the circuit courts. We conclude that plaintiffs here have stated a claim for securities fraud by creating--in the words of the statute--a "strong inference" that defendants projected financial well-being at a time when they had actual knowledge that their statements were false or misleading, while knowingly omitting material facts that would have tempered their optimism.

Outcome: Reversed and remanded.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None