United States Court of Appeals for the Fifth Circuit · 2019-02-07
15usc78j: author: Flash3 · QA: FIX (Fable, neov2/cases/TRIAGE-Flash.md)
Case and law context
Role: applied; posture: private securities fraud class action; dismissal of complaint under Rule 12(b)(6) and PSLRA affirmed; result: claimant-lost; claim:
Uncertainty
None recorded
Misfit
None recorded
B · Case × element grid
Top-level elements follow claim order in panels of up to six elements. Case rows repeat across panels. Every recorded block retains its holding and basis; multiple blocks are not merged into a case-level verdict. ✓ satisfied · ✗ not satisfied · ○ not reached · · not addressed. Muted blocks are not counted. Sub-element evidence remains on case and element pages.
Elements 1–6 of 12
| Case | Statutory commerce, mails, or exchange facility | Section 78j(b) rulemaking hook | Materially false statement or misleading half-truth | Importance to a reasonable investor | Intent to deceive, manipulate, or defraud | Connection with a covered securities or swap transaction |
|---|---|---|---|---|---|---|
| Alaska Elec. Pension Fund v. Flotek Indus., Inc. — 915 F.3d 975 (2019) · United States Court of Appeals for the Fifth Circuit · 2019 (15usc78j: author: Flash3 · QA: FIX (Fable, neov2/cases/TRIAGE-Flash.md)) | · not addressed | · not addressed | · not addressed | · not addressed | · not addressed |
Elements 7–12 of 12
| Case | Private plaintiff's purchaser or seller status | Private investor transaction causation | Actual economic loss in private damages action | Causal connection between fraud and economic loss | Fraudulent scheme or deceptive course of business | Additional criminal mental-state requirement |
|---|---|---|---|---|---|---|
| Alaska Elec. Pension Fund v. Flotek Indus., Inc. — 915 F.3d 975 (2019) · United States Court of Appeals for the Fifth Circuit · 2019 (15usc78j: author: Flash3 · QA: FIX (Fable, neov2/cases/TRIAGE-Flash.md)) | · not addressed | · not addressed | · not addressed | · not addressed | · not addressed | · not addressed |
Instances and excluded annotation blocks
| Case | Element | Holding and scope | Pattern | Exact source quotations |
|---|---|---|---|---|
| Alaska Elec. Pension Fund v. Flotek Indus., Inc. — 915 F.3d 975 (2019) · United States Court of Appeals for the Fifth Circuit · 2019 — not · pleaded (15usc78j: author: Flash3 · QA: FIX (Fable, neov2/cases/TRIAGE-Flash.md)) | Intent to deceive, manipulate, or defraud | not Counted merits instance applied / merits basis: pleaded; party: Flotek Industries, Inc. and CEO Chisholm; count: class action securities fraud; subject: party=Flotek Industries, Inc. and CEO Chisholm; count=class action securities fraud Fifth Circuit holds that presenting erroneous well-production data at an investor conference, calling the software's evidence "conclusive" and its data "un-adjusted" and "back-checked", suggests at most negligence: no particularized allegation that Chisholm knew of the errors or of the missing quality control when he spoke, the company is too large for the "special circumstances" position-based inference, and group pleading is rejected. | CEO presents third-party-sourced product data that proves wrong; no allegation he knew, error easy to check | The starkest example of Flotek's provision of false information is that Chisholm presented demonstrably false information at the September 2015 conference in the form of incorrect well data.Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [17349:17539] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.It does appear that it would have been very easy to check if this data was correct-Flotek verified the alleged errors and responded to the Bronte Report within a day.Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [18791:18957] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.Indeed, as Chisholm admitted, there was a failure in quality control, because Flotek did not cross-reference "[the Drillinginfo data] with the [Texas] Railroad Commission data."Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [20418:20595] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.However, while this suggests negligence, there is no indication that Defendants had reason to know of any deficiencies in quality control problems before the data was made public.Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [18958:19137] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.However, there is no specific allegation that Chisholm knew at the time he made the statement at issue that FracMax utilized an algorithm.Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [16833:16971] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.To withstand a motion to dismiss, "an inference of scienter must be more than merely plausible or reasonable-it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent."Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [11139:11344] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.Thus, Chisholm's use of incorrect data at the September 2015 conference also fails to give rise to a strong inference of scienter.Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [19952:20082] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117.We agree that such allegations are insufficient to raise a strong inference of scienter and, at most, indicate "simple or even inexcusable negligence," a lesser showing than is required here.Source: docroot/ir/caselaw/f3d_915.jsonl#/f3d/915/0975-01; Unicode character offsets [25797:25988] (end exclusive); SHA-256 8691d155aacfa081e771ab2ac47ecdbc506617d1610f80ebad1700e66dcb9117. |