Alejandro Handal v. Innovative Industrial Properties Inc
Split Score
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This score (0-100) indicates how likely this case is to be reviewed by the Supreme Court based on:
Case Summary
Disposition
Affirmed
Former shareholders of Innovative Industrial Properties sued the company and several officers for securities fraud, alleging that misstatements about due-diligence practices, tenant monitoring, and reimbursement payments concealed a tenant’s Ponzi-style fraud. The Third Circuit held that nearly all challenged statements were either opinions, accurate, or not misleading, that the single arguably false statement lacked the requisite scienter, and therefore affirmed dismissal of the complaint with prejudice.
Circuit Split Identified
Legal Issue
Whether and to what extent a court may infer "corporate (collective) scienter"—i.e., attribute scienter to a corporation without identifying a specific culpable individual—when assessing liability under §10(b) and Rule 10b-5.
Circuit Positions
Recognize corporate/collective scienter in limited or ‘exceedingly rare’ situations.
Has neither accepted nor rejected the corporate scienter doctrine and declines to decide its applicability in the instant case.
Conflict Summary
Several circuits allow plaintiffs, in rare circumstances, to plead scienter against a corporation by alleging a ‘collective’ or ‘corporate’ scienter theory, while other circuits (including the Third Circuit in this opinion) have not adopted or expressly declined to adopt the doctrine, leaving the question open.