When the U.S. Supreme Court issued its landmark Tellabs v. Makor decision in 2007, setting a high standard for what plaintiffs must prove in a class-action securities lawsuit, Corporate America celebrated. Three more recent court rulings have proven that the Tellabs standard is here to stay.
Specifically, Tellabs spelled out how much “scienter,” or knowing intent to commit wrongdoing, that plaintiffs must prove when suing a company … and plaintiffs have prove a lot. As part of its decision, the Supreme Court instructed lower courts to take a holistic approach in determining whether all of the plaintiffs’ allegations together comprise a “strong inference” of scienter.
