Analyst Reports Uncited in Securities Complaint May Be Judicially Noticed on 12(b)(6) Motion
From Patel v. Parnes, 2008 U.S. Dist. LEXIS 46630 (C.D. Cal. May 19, 2008):
While the court agrees with plaintiffs that the analyst reports may not be judicially noticed for the truth of the matters contained therein, it is appropriate to consider them for the purpose for which defendants offer them — i.e., to show "whether and when information was provided to the market." As defendants note, in determining whether their alleged misrepresentations and omissions were material, "there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available.'" Basic Inc. v. Levinson, 485 U.S. 224, 231-32, 108 S. Ct. 978, 99 L. Ed. 2d 194 (1988) (quoting TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S. Ct. 2126, 48 L. Ed. 2d 757 (1976)); see also California Public Employees' Retirement System v. Chubb Corp., 394 F.3d 126, 169 (3d Cir. 2004) (considering analysts' reports as part of the "total mix" of information available to a reasonable shareholder deciding how to vote); In re Enron Corp. Securities, Derivative & "ERISA" Litig., 490 F.Supp.2d 784, 808 (S.D. Tex. 2007) ("Plaintiffs have also alleged that the analysts' reports were part of the total mix of information upon which Plaintiffs based their investment decisions").
Moreover, although plaintiffs do not directly cite a particular analysts' report, they allege that "Standard Pacific was followed by securities analysts from several major brokerages....
The Court also held it appropriate to take judicial notice of newspaper articles relating to the issuer on the same basis (i.e., not for the truth) — but not articles that were not related to the issuer.
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