Judge Stewart R. Dalzell (E.D. Pa.) was "most grateful" to Plaintiffs for their "professional courtesy" in providing a "red-lined version of the 132-page second amended complaint," as it "greatly simplified" the "task." What "task" might that be you ask? How about granting Defendants’ motions to dismiss -- again.
You see, Judge Dalzell held that "Plaintiffs have again failed to allege particularized facts that create a strong inference that defendants acted with the scienter that the law requires," because they have not pled "facts showing that the Individual Defendants were presented with suspicious earnings figures or information that would call into question otherwise reasonable earnings reports."
In sum, "the relevant jurisprudence prevents us from reflexively imputing to the Individual Defendants knowledge of a subsidiary's under-reporting of transportation costs. We cannot do so absent strong indications that those defendants had sufficient reason to know of, or be suspicious about, the defective accounting system."
You can read In re Stonepath, issued April 3, 2006, at 2006 U.S. Dist. LEXIS 15808.
Nugget: "We cannot impute knowledge to those defendants of the deficiencies of an accounting program used by a subsidiary, albeit an important one."