Finding that the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA) applied to claims under Section 14(a) of the Securities Exchange Act of 1934, an Illinois District Court dismissed plaintiff’s complaint.
Plaintiff shareholder brought an action against defendants Equity Office Properties Trust (EOPT) and its board of directors arising from the sale of EOPT to the higher of two bidders, alleging that proxy statements issued by EOPT during the bidding war for its sale contained untrue statements of material fact and omitted to state material facts related to the value of the company in violation of Section 14(a). Defendants moved to dismiss, asserting that the PSLRA’s heightened pleading requirements governed plaintiff’s claim.
Joining the majority of courts which addressed the issue, the Court found that the unambiguous statutory language of the PSLRA mandated its application to Section 14(a) cases and dismissed the complaint. It found that plaintiff’s complaint was insufficient to meet the heightened pleading requirement of the PSLRA because it did not allege how information allegedly omitted from the proxy statement rendered the statement misleading, nor did plaintiff allege with particularity facts giving rise to a strong inference that defendants acted with the requisite state of mind. (Beck v. Dobrowski et al., 2007 WL 3407132 (N.D.Ill. Nov. 14, 2007))