Logourl black

Tellabs, Inc. v. Makor Issues & Rights, Ltd.

United States Supreme Court
551 U.S. 308 (2007)


Facts

The Private Securities Litigation Reform Act of 1995 (PSLRA) imposes on private plaintiffs in securities litigation stricter pleading standards. Included in this standard is the requirement that a complaint contain particularly stated facts that would give a “strong inference” both that a fraud took place and that the defendant intended to defraud; a legal status referred to as scienter. Tellabs, Inc. (defendant) was a company in the business of manufacturing equipment for use in fiber optic networks. Tellabs was led by its CEO, Richard Notebaert (defendant). During the period from December 2000 to June 2001, Tellabs and Notebaert gave increasingly optimistic projections about Tellabs’ potential for growth as well as its current financial condition. These statements in some instances amounted to outright false statements as to earnings. Some of these statements were also alleged to have induced certain individuals to buy Tellabs stock, thereby becoming shareholders (plaintiff). Eventually, in June 2001, the true state of Tellabs’ financial health was made public. In December 2002, the shareholders filed a class action suit against Tellabs and Notebaert in the United States District Court for the Northern District of Illinois under SEC Rule 10b-5. Tellabs and Notebaert responded by making a motion to dismiss, arguing that the shareholders had not met the pleading standards articulated in the PSLRA. The district court agreed and dismissed the suit. The shareholders then filed an amended complaint containing additional and more particularized facts. The district court again dismissed, though this time with prejudice. The shareholders appealed and the United States Court of Appeals for the Seventh Circuit reversed the district court. Tellabs and Notebaert appealed.

Rule of Law

The rule of law is the black letter law upon which the court rested its decision. To access this section, start your 7-day free trial of Quimbee for Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a question. To access this section, start your 7-day free trial of Quimbee for Law Students.

Holding and Reasoning (Ginsburg, J.)

The holding and reasoning section includes:

  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

To access this section, start your 7-day free trial of Quimbee for Law Students.

Concurrence (Scalia, J.)

The concurrence section is for members only and includes a summary of the concurring judge or justice’s opinion. To access this section, start your 7-day free trial of Quimbee for Law Students.

Concurrence (Alito, J.)

The concurrence section is for members only and includes a summary of the concurring judge or justice’s opinion. To access this section, start your 7-day free trial of Quimbee for Law Students.

Dissent (Stevens, J.)

The dissent section is for members only and includes a summary of the dissenting judge or justice’s opinion. To access this section, start your 7-day free trial of Quimbee for Law Students.

Here's why 90,000 law students rely on our case briefs:

  • Reliable - written by law professors and practitioners not other law students.
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your class - works on your mobile and tablet.
  • 12,195 briefs - keyed to 164 casebooks.
  • Uniform format for every case brief.
  • Written in plain English - not in legalese and not just repeating the court's language.
  • Massive library of related video lessons - and practice questions.
  • Ability to tag case briefs in an outlining tool.
  • Top-notch customer support.
Start Your Free Trial Now