Plaintiffs citation to a 60 Minutes story was apparently not enough for Judge Joan Humphrey Lefkow (N.D. Ill.) to deny Defendants’ motions to dismiss in the Career Education securities class action. You see, Judge Lefkow commented that “even ignoring the problems inherent in a news report from a television program like 60 Minutes, e.g., the reporter's biases, the editing of the interviews to tell a story, plaintiff cannot rely on a 60 Minutes report to meet his pleading requirements under the PSLRA because he has failed to establish that the story related to incidents occurring during the Class Period or that it is probable that each of the interviewees had access to or knowledge of the allegations about which they spoke.”
This is the second loss for Plaintiffs, but Judge Lefkow will let them try a third (and final) time with the caveat that they “take note… that the quality of the allegations, rather than the quantity, is what is important in pleading a claim of securities fraud.”
You can read In re Career Education, issued March 28, 2006, at 2006 U.S. Dist. LEXIS 25252.
Nugget: “Plaintiff again argues that the court is to consider the totality of the allegations rather than dissecting each allegation as if it were standing alone. This argument puts the cart before the horse. Before the court draws any inferences, plaintiff must first meet the pleading requirements of the PSLRA, which requires that the complaint allege with specificity the statements that were false or misleading, the reasons why these statements were false or misleading, and if pleading on information and belief, what specific facts support that information and belief.”