state with particularity

Petitioner Tellabs, Inc. manufactures specialized equipment used in fiber optic networks. During the time period relevant to this case, petitioner Richard Notebaert was Tellabs' chief executive officer and president. Respondents purchased Tellabs stock between December 11, 2000, and June 19, 2001. The shareholders alleged that Notebaert made statements indicating that demand for Tellabs' flagship networking device, the TITAN 5500, was continuing to grow when in fact demand for that product was waning. Notebaert made statements indicating that the TITAN 6500 was available for delivery and that demand for that product was strong and growing when in truth the product was not ready for delivery and demand was weak. Notebaert falsely represented Tellabs' financial results for the fourth quarter of 2000 and, in connection with those results, condoned the practice of channel stuffing under which Tellabs flooded its customers with unwanted products. Notebaert made a series of overstated revenue projections when demand for the TITAN 5500 was drying up and production of the TITAN 6500 was behind schedule. The first public glimmer that business was not so healthy came in March 2001 when Tellabs modestly reduced its first quarter sales projections. On June 19, 2001, the last day of the class period, Tellabs disclosed that demand for the TITAN 5500 had significantly dropped. Simultaneously, the company substantially lowered its revenue projections for the second quarter of 2001. The next day, the price of Tellabs stock, which had reached a high of $67 during the period, plunged to a low of $15.87. On December 3, 2002, the shareholders filed a class action in the District Court for the Northern District of Illinois. Their complaint stated, inter alia, that Tellabs and Notebaert had engaged in securities fraud in violation of section 10(b) of the Securities Exchange Act of 1934. Tellabs moved to dismiss the complaint on the ground that the shareholders had failed to plead their case with the particularity the PSLRA requires. The District Court agreed and therefore dismissed the complaint without prejudice. The shareholders then amended their complaint, adding references to 27 confidential sources and making further, more specific allegations concerning Notebaert's mental state. The District Court again dismissed, this time with prejudice. The Court of Appeals for the Seventh Circuit reversed in relevant part. Like the District Court, the Court of Appeals found that the shareholders had pleaded the misleading character of Notebaert's statements with sufficient particularity. Unlike the District Court, however, the Seventh Circuit concluded that the shareholders had sufficiently alleged that Notebaert acted with the requisite state of mind. The Supreme Court granted certiorari to resolve the disagreement among the Circuits on whether and to what extent a court must consider competing inferences in determining whether a securities fraud complaint gives rise to a strong inference of scienter.

Respondents are individuals who bought stock in Dura Pharmaceuticals, Inc., on the public securities market between April 15, 1997, and February 24, 1998. They brought this securities fraud class action against Dura and some of its managers and directors in federal court. Their detailed amended complaint alleged that before and during the purchase period, Dura made false statements concerning both its drug profits and future FDA approval of a new asthmatic spray device. It further alleged that on February 24, 1998, Dura announced that its earnings would be lower than expected, principally due to slow drug sales, after which Dura's shares lost almost half their value, falling from about $39 per share to about $21. About eight months later, in November 1998, Dura announced that the FDA would not approve its new asthmatic spray device. The next day Dura's share price temporarily fell but almost fully recovered within one week. The complaint alleged that in reliance on the integrity of the market the plaintiffs paid artificially inflated prices for Dura securities and suffered damages thereby. It contained nothing significantly more than that allegation about economic losses attributable to the spray device misstatement. The District Court dismissed the complaint. In respect to the spray device claim it held that the complaint failed adequately to allege loss causation. The Court of Appeals for the Ninth Circuit reversed, holding that the complaint adequately alleged loss causation because it pleaded that the price at the time of purchase was overstated. The Supreme Court granted Dura's petition for certiorari.

In the aftermath of the September 11th terrorist attacks, then-Attorney General John Ashcroft allegedly authorized federal prosecutors and law enforcement officials to use the material-witness statute to detain individuals with suspected ties to terrorist organizations, with no intention of calling most of them as witnesses. Abdullah al-Kidd, a native-born United States citizen, was apprehended by FBI agents in March 2003 as he checked in for a flight to Saudi Arabia. Two days earlier, federal officials had informed a Magistrate Judge that if al-Kidd boarded his flight, information crucial to the prosecution of Sami Omar al-Hussayen would be lost. Al-Kidd remained in federal custody for 16 days and on supervised release for 14 months, but prosecutors never called him as a witness. In March 2005, al-Kidd filed a Bivens action against Ashcroft to challenge the constitutionality of the alleged policy. The District Court denied Ashcroft's motion to dismiss based on absolute and qualified immunity. A divided panel of the Ninth Circuit affirmed. Judge Bea dissented, and eight judges dissented from the denial of rehearing en banc. The Supreme Court granted certiorari.

In the wake of the September 11, 2001 terrorist attacks, the FBI dedicated more than 4,000 special agents and 3,000 support personnel to an investigation that by September 18 had received more than 96,000 tips or potential leads from the public. In the ensuing months the FBI questioned more than 1,000 people with suspected links to the attacks or to terrorism in general. Of those individuals, 762 were held on immigration charges, and a 184-member subset of that group was deemed to be of high interest to the investigation and held under restrictive conditions designed to prevent communication with the general prison population or the outside world. Javaid Iqbal, a citizen of Pakistan and a Muslim, was arrested in November 2001 by agents of the FBI and Immigration and Naturalization Service on charges of fraud in relation to identification documents and conspiracy to defraud the United States. Pending trial, he was housed at the Metropolitan Detention Center in Brooklyn, New York. In January 2002 he was designated a person of high interest and placed in the Administrative Maximum Special Housing Unit, where detainees were kept in lock-down 23 hours a day and spent the remaining hour outside their cells in handcuffs and leg irons accompanied by a four-officer escort. Iqbal pleaded guilty to the criminal charges, served a term of imprisonment, and was removed to Pakistan. He then filed a Bivens action in the United States District Court for the Eastern District of New York against 34 current and former federal officials, including former Attorney General John Ashcroft and FBI Director Robert Mueller, as well as 19 John Doe corrections officers. The complaint concentrated on his treatment while confined to the ADMAX SHU and alleged that petitioners designated him a person of high interest on account of his race, religion, or national origin. The complaint alleged that the FBI under Mueller’s direction arrested and detained thousands of Arab Muslim men as part of the September 11 investigation, that the policy of holding post-September-11 detainees in highly restrictive conditions until cleared by the FBI was approved by Ashcroft and Mueller in discussions in the weeks after September 11, and that petitioners each knew of, condoned, and willfully agreed to subject Iqbal to harsh conditions solely on account of his religion, race, and national origin. It named Ashcroft as the principal architect of the policy and identified Mueller as instrumental in its adoption, promulgation, and implementation. Petitioners moved to dismiss the complaint for failure to state sufficient allegations showing their own involvement in clearly established unconstitutional conduct. The District Court denied the motion. Petitioners brought an interlocutory appeal, and while the appeal was pending the Supreme Court decided Bell Atlantic Corp. v. Twombly. The Court of Appeals for the Second Circuit affirmed the District Court’s decision. The Supreme Court granted certiorari.

Akos Swierkiewicz, a native of Hungary who was 53 years old at the time of his complaint, began working for Sorema N.A. in April 1989 as senior vice president and chief underwriting officer. Sorema is a reinsurance company headquartered in New York and principally owned and controlled by a French parent corporation. Nearly six years later, Sorema's Chief Executive Officer François M. Chavel demoted Swierkiewicz to a marketing and services position and transferred the bulk of his underwriting responsibilities to Nicholas Papadopoulo, a 32-year-old French national. About a year later, Chavel appointed Papadopoulo as chief underwriting officer, even though Swierkiewicz had 26 years of experience in the insurance industry while Papadopoulo had only one year of underwriting experience. Following his demotion, Swierkiewicz was isolated by Chavel, excluded from business decisions and meetings, and denied the opportunity to reach his true potential. In April 1997, Swierkiewicz sent a memo to Chavel outlining his grievances and requesting a severance package. Two weeks later, after refusing to resign without a severance package, Swierkiewicz was fired by Chavel. Swierkiewicz filed a lawsuit in the United States District Court for the Southern District of New York. He alleged that he had been terminated on account of his national origin in violation of Title VII of the Civil Rights Act of 1964. He also alleged that he had been terminated on account of his age in violation of the Age Discrimination in Employment Act of 1967. The district court dismissed the complaint, finding that Swierkiewicz had not adequately alleged circumstances that support an inference of discrimination. The United States Court of Appeals for the Second Circuit affirmed the dismissal. The Supreme Court granted certiorari to resolve a split among the Courts of Appeals concerning the proper pleading standard for employment discrimination cases.