                                    RECOMMENDED FOR FULL-TEXT PUBLICATION
                                         Pursuant to Sixth Circuit Rule 206
                                                  File Name: 04a0360p.06

                          UNITED STATES COURTS OF APPEALS
                                             FOR THE SIXTH CIRCUIT
                                               _________________


                                                              X
                                                               -
 CITY OF MONROE EMPLOYEES RETIREMENT SYSTEM, on

                                        Plaintiff-Appellant, -
 Behalf of Itself and All Others Similarly Situated,
                                                               -
                                                               -
                                                                   No. 03-5505

                                                               ,
             v.                                                 >
                                                               -
 BRIDGESTONE CORPORATION; BRIDGESTONE/FIRESTONE, -
                                                               -
                                     Defendants-Appellees. -
 INC.; YOICHIRO KAIZAKI; MASATOSHI ONO,

                                                               -
                                                             N
                              Appeal from the United States District Court
                            for the Middle District of Tennessee at Nashville.
                         No. 01-00017—Robert L. Echols, Chief District Judge.
                                                 Argued: June 9, 2004
                                       Decided and Filed: October 22, 2004
          Before: KEITH and CLAY, Circuit Judges; OBERDORFER, Senior District Judge.*
                                                  _________________
                                                       COUNSEL
ARGUED: Pamela M. Parker, LERACH, COUGHLIN, STOIA, GELLER, RUDMAN & ROBBINS, San
Diego, California, for Appellant. Thomas S. Kilbane, SQUIRE, SANDERS & DEMPSEY, Cleveland,
Ohio, James E. Gauch, JONES DAY, Washington, D.C., Erik L. Kitchen, STEPTOE & JOHNSON,
Washington, D.C., for Appellees. ON BRIEF: Pamela M. Parker, Michael J. Dowd, William S. Lerach,
LERACH, COUGHLIN, STOIA, GELLER, RUDMAN & ROBBINS, San Diego, California, George E.
Barrett, BARRETT, JOHNSTON & PARSLEY, Nashville, Tennessee, Edward M. Gergosian, BARRACK,
RODOS & BACINE, San Diego, California, for Appellant. Thomas S. Kilbane, George M. Von Mehren,
Paul B. Ockene, SQUIRE, SANDERS & DEMPSEY, Cleveland, Ohio, James E. Gauch, Stephen J. Brogan,
Jacqueline M. Holmes, JONES DAY, Washington, D.C., Antonia B. Ianiello, Brian M. Heberlig, STEPTOE
& JOHNSON, Washington, D.C., Frances F. Goins, ULMER & BERNE, Cleveland, Ohio, for Appellees.




   *
    The Honorable Louis F. Oberdorfer, Senior United States District Judge for the District of Columbia, sitting by designation.


                                                              1
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                    Page 2


                                                    _________________
                                                        OPINION
                                                    _________________
         OBERDORFER, Senior District Judge. In this appeal, we review the district court’s dismissal with
prejudice of a securities fraud class action Consolidated Complaint (“Complaint”) filed by investors in
Bridgestone Corporation (“Bridgestone”) against Bridgestone, its subsidiary Bridgestone/Firestone, Inc.
(“Firestone”), Bridgestone Chief Executive Officer (“CEO”) Yoichiro Kaizaki, and Bridgestone Executive
Vice President and Firestone CEO Masatoshi Ono. The district court dismissed the claims against Kaizaki
for lack of personal jurisdiction and dismissed the claims against Bridgestone, Firestone and Ono for failure
to state a claim upon which relief could be granted. For the reasons stated below, we affirm in part, reverse
in part, and remand.
                                                     I. BACKGROUND
        We assume the truth of the following facts for the purpose of this appeal. Unless otherwise
indicated, they are drawn from the Complaint.
         Bridgestone, a multi-national corporation with its international headquarters in Japan, is the world’s
largest tire manufacturer. Bridgestone’s stock trades in Japan on the Tokyo Stock Exchange. Bridgestone’s
stock does not trade on any American stock exchange. Accordingly, Bridgestone is not required to register
its equity securities with the United States Securities & Exchange Commission (“SEC”). Bridgestone’s
stock trades in the United States on the over-the-counter, or “OTC,” market. The OTC1 market is an
American market for foreign-issued securities not traded on any domestic stock exchange.
        Bridgestone operates in the United States through its regional corporate headquarters in Nashville,
Tennessee, and through its wholly owned subsidiary Firestone. Firestone’s corporate headquarters are in
Nashville. Firestone’s largest tire production facility is in Decatur, Illinois.
       From 1993 to 2001, Yoichiro Kaizaki was Bridgestone’s President and CEO. In January 2001, he
resigned from both positions. Kaizaki is now retired and resides in Japan. From 1993 to October 2000,
Appellee Masatoshi Ono was the Executive Vice-President of Bridgestone and CEO of Firestone. In
October 2000, Ono resigned from both positions.
        Lead Class Plaintiff City of Monroe Employees Retirement System (“the Retirement Fund”) is, like
all class members, a purchaser of Bridgestone common stock or American Depository Receipts2 for
Bridgestone common stock between March 31, 1998 to August 31, 2000. The allegations in the Retirement
Fund’s Complaint relate to events dating back to 1978.



    1
       See the National Association of Securities Dealers, Inc. (“NASD”) website, <http://www.nasd.com/resources/glossary>.
See generally New England Health Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir. 2003) (“a
court that is ruling on a Rule 12(b)(6) motion may consider materials in addition to the complaint if such materials are public
records or are otherwise appropriate for the taking of judicial notice.”); Fed. R. Evid. 201 (providing that “[a] court may take
judicial notice, whether requested or not” of a “judicially noticed fact” which “must be one not subject to reasonable dispute,”
a requirement satisfied if the fact is “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of
accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.”).
    2
       An American Depository Receipt, or “ADR,” represents ownership in a security issued by a foreign company in foreign
markets. Typically, a United States depositary bank has custody of the security corresponding to an ADR and issues the ADR
certificate to a United States investor. See generally Edward F. Greene, et al., U.S. Regulation of the International Securities and
Derivatives Markets, § 2.02 (2000); Fed. R. Evid. 201 (authorizing, and providing standards for, taking judicial notice). Each
Bridgestone ADR represents ten shares of Bridgestone common stock. See Joint Appendix (“App.”) at 140.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                            Page 3


        In that year, Firestone’s “Firestone 500" tire was the leading steel-belted radial tire brand. In 1978
and 1979 combined, Firestone manufactured approximately 14,000 defective Firestone 500 tires, resulting
in hundreds of passenger vehicle crashes and 41 fatalities. Initially, Firestone publicly attributed the known
failures to consumers’ failure to properly inflate or take care of their tires. Government investigators
subsequently determined that Firestone had added too much of an adhesion-boosting compound to the
rubber that held the steel belts together, resulting in rubber tire tread separating from underlying steel belts,
eventually leading to the tires suddenly falling apart. As a result, in 1979, Firestone    paid a $500,000 fine
imposed by the National Highway Traffic Safety Administration (“NHTSA”),3 the then-largest-ever fine
imposed by the NHTSA, and instituted a recall from consumers of 13 million Firestone 500 tires. The recall
injured Firestone’s corporate image, brand, and financial performance. App. at 143 (Complaint).
        In 1988,4 Bridgestone acquired Firestone for $2.6 billion. Upon acquiring Firestone, Bridgestone
sought to increase Firestone’s revenue by expanding its contractual relationship with Ford Motor Company
(“Ford”), a leading American automobile manufacturer.
        In 1988 and 1989, Ford was developing the Explorer, a new sport-utility vehicle. Firestone sought
to obtain the tire supply contract for the Explorer.   Towards that end, Firestone, in 1989, submitted
prototypes of its ATX tires to Ford for testing.5 An outside company tested seventeen of the prototypes.
In February 1989, the outside testing company reported that five of the seventeen prototypes had failed due
to tread separation problems under heavy loads and strenuous conditions.
       In March 1990, Ford introduced the new Explorer, equipped with Firestone ATX tires. Between
1990 and 1993, Ford sold over 300,000 Explorers per year. By 1993, Ford had become Firestone’s leading
customer as measured by sales volume and Firestone’s financial health had improved markedly. Firestone
had been losing approximately $1 million per day as of 1989-1990, prior to entering into the contract with
Ford to outfit the Explorer with ATX tires; by 1993, Firestone was profitable.
        Beginning in 1992, Firestone began receiving consumer complaints regarding tire tread defects,
some of which led to “rollover” accidents in which the Explorer would flip over on to its side. Between
1992 and 1996, consumers filed 16 or more lawsuits against Bridgestone or Firestone for rollover accidents
allegedly caused by ATX tire failures on the Explorer. Between 1993 and 1994, such suits based on
problems with ATX tires increased from 13% of the claims filed against Firestone from problems in light
truck tires to 43% of that category of claims. By 1999, at least 50 such suits had been filed.
       The Complaint alleges that by 1994, under pressure to cut its costs and increase the productivity and
production rates of its American manufacturing facilities, Firestone imposed longer hourly work shifts to
permit around-the-clock, seven days-a-week operations. In July 1994, Firestone’s labor force, which was
unionized, responded by engaging in a massive production strike.
        During the strike, Firestone continued production at its Decatur, Illinois manufacturing plant. To
do so, Firestone staffed the manufacturing floor with “untrained and inexperienced non-union replacement
workers,” along with management employees. App. at 146. During the strike, the number of defective tires
increased sharply “as supervisors and under-trained or untrained replacement workers were called on to
master highly skilled jobs to keep the Decatur plant running.” Id. at 147.



    3
        The NHTSA is an agency within the United States Department of Transportation. See generally 49 U.S.C. § 301 et seq.
    4
        The Complaint does not address the years 1980 - 1987.
    5
      The Firestone ATX brands included the ATX, ATX II, and Wilderness AT Tires. App. at 144, 150, 154. Unless otherwise
specified, we refer to these brands collectively as the “ATX” tires.
No. 03-5505             City of Monroe v. Bridgestone Corp., et al.                                    Page 4


         In 1996, Firestone management, as part of the negotiations that ended the strike, extracted from the
Firestone employees’ union concessions under which production speed increased, including longer work
shifts and retention of a seven-days-a-week production schedule. Id. at 147. In its 1996 Annual Report,
Bridgestone proclaimed that “[w]e reached an agreement in 1996 with the union that represents employees
at several of our North American plants . . . The union has accepted already-implemented adjustments in
working hours that permit our plants to operate 24 hours a day, seven days a week.” Id. at 246. After the
strike, the increased level of production errors persisted in tires made at Firestone’s Decatur plant. The
Complaint alleges that production and inspection shortcuts resulted in a sharp rise in the number of tires that
were not properly manufactured, tested, or inspected.
         In 1996, Firestone performed random quality control high-speed durability tests on various ATX
tires. In one of the sample tests, Firestone examined 129 ATX tires made at the Decatur plant. Eighteen
of those tires failed the test due to tire tread separation. In another random test of 229 ATX tires from the
Decatur plant, 31 failed. In an additional random test of 18 ATX tires, eight failed, seven of which were
from the Decatur plant. Internal Firestone documents show that the tires’ tread separation rate was highest
for tires produced at the Decatur plant from 1994 to 1996, during and just after the strike.
       In addition to the alleged several thousand claims submitted by consumers directly to Firestone for
compensation, between 1997 and 1999, United States consumers filed 34 suits against Bridgestone or
Firestone based on deaths or injuries allegedly caused by rollovers of Explorers equipped with Firestone
ATX tires. By no later than 1997, senior Firestone officials, including Firestone CEO and Bridgestone
Executive Vice-President Ono, were tracking the claims and lawsuits. Robert Martin, who was Firestone’s
Vice President of Quality Assurance from 1997 or earlier until his retirement in April 2000, testified in a
deposition that senior Firestone executives, Ono included, met at least quarterly from 1997 through 1999.
The meetings consisted of Firestone’s senior management group, the financial group, the quality group, and
the public relations / marketing department. Martin testified that those meetings included discussion of
tread-peeling claims and lawsuits lodged against Firestone and Bridgestone.
        Internal Firestone documents regarding property damage, injury claims, and tire performance data,
such as warranty adjustments and financial analysis of such claims, show that starting in 1996, the ATX tires
began to fail at higher rates than they had before. Similarly, a Firestone chart reveals that from 1998 to
1999, tread separations for the Wilderness AT, one of Firestone’s ATX tire models, increased by 194%.
According to a 1999 internal Bridgestone report, in 1997 and 1998, another Firestone tire model, the ATX
II, accounted for the majority of the tire claims against Firestone but for less than 10% of Firestone’s total
tire production. The Complaint alleges that Firestone “had knowledge of thousands of claims for and
complaints concerning ATX tire failures, especially ATX tires manufactured at [its] Decatur, Illinois plant
during and after a bitter 1994-1996 strike, due to design and manufacturing defects which resulted in over
2,200 rollover accidents, over 700 serious injuries and approximately 174 fatalities by 2000.” App. at 131
(Complaint). In response to the lawsuits, Firestone and Bridgestone entered into settlement agreements
under which the settlement agreements with plaintiffs were sealed, the parties entered into stipulated
protective orders to conceal discovery, and Bridgestone or Firestone had returned to it “damaging
documents.” Id. at 151.
        In 1996 and 1997, State Farm Insurance Company, the largest automobile insurer in the United
States, demanded that Firestone pay the costs of automobile accidents attributable to ATX tire failures.
Without conceding (or contesting) liability, Firestone reimbursed State Farm without public disclosure of
the claims or the resulting payments. Having been paid, State Farm did not sue Firestone, lawsuits which
the Complaint alleges “would have publicized the growing problem with the ATX tires.” Id. at 150.
       Firestone suppressed information pertaining to investigations by various governments, domestic and
foreign. In 1996, Arizona state government agencies expressed concern about the Firestone ATX tires.
Firestone sent a team of engineers to investigate and then replaced certain Explorer tires without any public
disclosure of the investigation or the replacements.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                  Page 5


        In Venezuela, between 1990 and 1998, over forty people were killed in Explorer accidents allegedly
due to ATX tire failures. Ford demanded that Firestone alter the design of its ATX tire being sold in
Venezuela to include a nylon layer. Firestone initially did not do so. The Venezuelan government
investigated and expressed concerns to Firestone about the ATX tires. According to a Venezuelan
government document, Firestone agreed to add a nylon layer to the tires in exchange for the Venezuelan
government’s promise that it would not publicly disclose this act by Firestone. According to the Venezuelan
government document, Firestone expressed a belief that disclosure of the layer-adding “would put in
jeopardy the Bridgestone brand in Venezuela.” Id. at 152.
        In Saudi Arabia, multiple people in Ford Explorers outfitted with Firestone ATX tires also died
between 1990 and 1998 due, allegedly, to ATX tire failures. Id. at 152. Firestone’s senior management
team discussed the possibility of a formal recall of the ATX tires in the Persian Gulf region. Firestone
ultimately decided not to initiate such a recall. Id. A March 1999 internal Ford memorandum stated, with
respect to that decision, that “Firestone legal has some major reservations about the plan to notify customers
and offer them an option . . . They feel that [the National Highway Traffic Safety Administration, or
“NHTSA”] will have to be notified of the program, since the product is sold in the U.S.” Id. at 153.
        Regarding the ATX-related accident data from the United States, Venezuela, and Saudi Arabia, the
Complaint alleges that Bridgestone and Firestone executives “kept the accident rate data which they had
and which showed these serious problems from safety regulators.” Id. at 151. The Complaint alleges that
their motive for doing so was “so they could report huge profits and their executives could retain their
positions of power, prestige and profit and Bridgestone’s stock and ADRs would continue to trade at
inflated, higher prices, providing the executives with direct economic benefits based on their stock holdings
and options and allowing them to personally pocket huge bonuses based on corporate profits.” Id. at 151-
52.
         The Complaint alleges a series of public, fraudulent statements by Bridgestone and Firestone,
beginning in March 1997 when Bridgestone issued its 1996 Annual Report.6 (Bridgestone typically issued
its annual reports for each fiscal year in March or April of the subsequent year). The 1996 Annual Report
stated, in its introductory “Word from the President” section:
         We are staking our claim to global leadership on the tire industry. . . . I am especially
         satisfied with our ongoing business turnaround in the Americas, the biggest tire market in
         the world
         ***
         Our competitive edge in tire technology remains our highest asset . . . . Technology will
         continue to strengthen the appeal of our products and operations. This will include safety
         and improving performance.
App. at 245-47 (1996 Annual Report).
        In March 1998 came Bridgestone’s 1997 Annual Report. The accompanying letter stated: “We are
making steady progress towards leadership in the world tire industry. . . . . Sales at our subsidiary for the
Americas, [Firestone], surpassed our parent-company turnover for the first time.” App. at 289 (1997 Annual
Report). Similarly, Bridgestone’s 1998 Annual Report, issued in April 1999, stated: “[t]he Americas, the
largest tire market in the world, are our biggest source of consolidated sales . . . Our global market share


    6
       The Complaint relies heavily on Bridgestone’s Annual Reports for fiscal years 1996 - 2000. Bridgestone attached to its
motions to dismiss before the district court copies of those documents. See App. at 241 - 476. Accordingly, we, like the district
court, consider the full text of the 1996 - 2000 Annual Reports. See Weiner v. Klais & Co., Inc., 108 F.3d 86, 98 (6th Cir. 1997)
(“[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the
plaintiff’s complaint and are central to [the plaintiff’s] claim.”).
No. 03-5505                City of Monroe v. Bridgestone Corp., et al.                                              Page 6


in original equipment tires increased further in 1998. That growth evidences high regard among automakers
for our strengths in product quality.” App. at 342 (1998 Annual Report).
       In early February 2000, a Houston, Texas television station reported that passengers in three
Explorers equipped with ATX tires had died after suffering rollover accidents. On February 4, 2000,
Firestone issued a release stating: “We monitor the performance of all of our tires and . . . we have full
confidence in them.” App. at 167 (Complaint).
          In March 2000, Bridgestone issued its 1999 Annual Report. It stated: “We are determined to assert
a singular advantage in product technology. . . . We increased our market share in North America in 1999
in . . . the original equipment market. Our North American operations are approaching a market share of
20%.” App. at 384 (1999 Annual Report). The Report included in its “Analysis of Financial Position”
section a chart indicating that  as a percentage of Bridgestone’s total international net sales, its net sales in
the Americas were 41.5 %,7 followed by Japan at 40.8 %, Europe 10.6% and “Others” 7.1%. See id. at 403.
In the “Americas” section, under the bold, purple-colored, large font heading of “Trends And Topics,” the
Report stated that “[w]e increased our market share in North America in 1999 . . . Demand for original
equipment tires continued to grow in 1999 in the booming North American automobile market.” Id. at 383-
84. The Annual     Report also stated that “[o]ur multi-brand strategy - centered on the Bridgestone, Firestone,
and Dayton8 brands -- raised our market profile further in 1999,” and that “aggressive product development
and strategic marketing have re-established the Firestone name as a vigorous brand in premium-grade tires,
as well as a large-volume, middle-market tires.” Id. at 384. It continued: “Ford Motor Company is our
oldest customer in North America . . . We also have become a major supplier to General Motors
Corporation, which recently honored us with its Supplier of the Year Award for the fifth consecutive year.
As a major supplier to leading European automakers, we have developed business with the North American
operations of those automakers, too. We also supply tires to nearly all the Japanese-owned vehicle plants
in North America.” Id.
         Each of the Annual Reports covering fiscal years 1996 to 1999 included financial statements with
a category labeled “Contingent Liabilities.” See App. at 278, 322, 367, & 417-18 (1996 - 1999 Annual
Reports, respectively). None of those reports, though, made a mention or disclosure of any loss contingency
related to any of Bridgestone or Firestone’s tires products that had previously been sold or sent to dealers.
        Each of the Annual Reports from 1996 to 1998 included a letter from Bridgestone’s outside auditors
Asahi and Company stating that the given Annual Report was prepared “in conformity with accounting
principles generally accepted in Japan applied on a consistent basis.” App. at 280, 324, and 370 (1996 -
1998 Annual Reports, respectively). The 1999 Annual Report contained similar language, stating that the
consolidated financial statements accompanying it were prepared “in conformity with accounting principles
and practices generally accepted in Japan . . . applied on a consistent basis, except for changes, with which
we concur, in the method of accounting for retirement and severance benefits and pension costs . . . and for
goodwill, consolidation differences, and income taxes.” App. at 422 (1999 Annual Report). The Complaint
alleges that under International Accounting Standard § 9010.08-.09, applicable in Japan pursuant to the
International Accounting Standards Committee, “loss contingencies should be recorded if it is probable that
an asset has been impaired or a liability incurred at the balance sheet date and a reasonable estimate of the
amount of the resulting loss can be made.” App. at 178 (Complaint). Section 9010.08-09 provides further
that “if either of the conditions is met and the possibility of the loss is not remote, the existence of the
contingent loss should be disclosed in the financial statements.” Id. The Complaint alleges that under this
standard, Bridgestone’s lack of recordings of a loss contingency in the financial statements accompanying

    7
      Bridgestone’s 1999 Annual Report did not break down the sales data between North and South America, nor as between
dealers in individual countries in the Americas.
    8
       Dayton was a Bridgestone brand marketed, in the words of the 1999 Annual Report, to consumers seeking “value-oriented
tires.” App. at 384.
No. 03-5505                City of Monroe v. Bridgestone Corp., et al.                                                Page 7


the Annual Reports for fiscal years 1996 through 1999 related to the safety and legal problems with the
Firestone ATX tires -- in particular a recall -- were each separately an actionable misrepresentation in
violation of federal securities laws.
          Generally Accepted Accounting Principles, or “GAAP,” are a series of general principles followed
by accountants in a given country or geographic area. Bridgestone’s 1999 Annual Report stated that “[t]he
Japanese consolidated financial statements have been prepared in accordance with the provisions set forth
in the . . . accounting principles and practices generally accepted in Japan (‘Japanese GAAP’).” App. at 413
(1999 Annual Report). It represented that the “accompanying financial statements include the accounts of
certain foreign subsidiaries, which are based upon U.S. GAAP, representing 45% of total consolidated assets
and 51% of total consolidated revenues in 1999.” Id. Bridgestone and Firestone do not dispute that this
statement was a reference to, among other non-Japanese Bridgestone subsidiaries, Firestone. United States
GAAP, as set forth in Financial Accounting Standards Board’s Statement of Financial Accounting Standards
No. 5 (“FASB 5"), “requires that loss be accrued whenever it is probable a loss has been incurred or an asset
impaired and the amount of the loss can be reasonably estimated” and that “[i]f the loss is at least reasonably
possible but no reasonable estimate can be made, the contingency at a minimum should be disclosed.” App.
at 178 (Complaint). The 1999 Annual Report stated that Japanese GAAP “are different in certain material
respects (e.g. topics addressed, available alternatives, recognition criteria, measurement practices,
presentation formats and disclosures, etc.), as compared to accounting and reporting standards generally
accepted in the U.S. (‘U.S. GAAP’).” App. at 413 (1999 Annual Report). The Report included at note 11
“a supplemental discussion of the accounting differences.” Id. Note 11 listed a number of “differences
between Japanese and U.S. GAAP.” Id. at 421. Note 11 did not include a reference to FASB 5 as one of
the differences between U.S. and Japanese GAAP. See id. The Complaint alleges that under FASB 5,
Bridgestone’s failure to either accrue for a loss or disclose both the ongoing losses from claims due to
settlement and the contingency of a recall or a major loss related to the impairment of the Firestone tires was
an actionable misrepresentation.
         In July 2000, after consumers filed two lawsuits against Firestone alleging that ATX tire tread
separation caused Ford Explorers to roll over and cause fatalities, the Wall Street Journal asked Firestone
to comment. A resulting July 26, 2000 Wall Street Journal article quoted a Firestone representative as
stating that Firestone had “full confidence” in its tires. App. at 170-71 (Complaint). Also in July 2000,
several safety groups urged Ford to recall all Explorers with Firestone ATX tires on them. On August 1,
2000, Firestone issued a written statement that “[w]e continually monitor the performance of all our tire
lines, and the objective data clearly reinforces our belief that these are high-quality, safe tires.” Id. at 170-
71. In that release, Firestone further stated that “[p]roperly inflated and maintained Firestone ATX . . . tires
are among the safest tires on the road today.” Id. On August 3, 2000, the New York Times published an
article about the Explorer and Firestone’s ATX tires, suggesting problems with the tires. The article
reported that “Firestone denied the charges . . . . ‘These are safe tires,’ said . . . a [Firestone] spokeswoman.”
Id. at 171.9 The Complaint alleges that these public statements by Firestone in July 2000 and August 2000
were misrepresentations in violation of federal securities laws.
        On August 9, 2000, Firestone announced that effective that day, it was beginning a formal, voluntary
safety recall. The recall included 6.5 million Firestone ATX tires on Explorers already sold and an offer
to replace all Firestone ATX tires on unsold Explorers in dealers’ inventory at that time. The recall
specifically designated ATX tires made at Firestone’s Decatur plant.
       In the months immediately following the recall, Firestone and Bridgestone suffered major upheaval.
In October 2000, Ono resigned as Executive Vice President of Bridgestone and Chief Executive of
Firestone. In January 2001, Kaizaki resigned as Bridgestone’s President and Chief Executive Officer.


    9
       The New York Times article identified the name of the Firestone spokesperson. Because that person is not a defendant in
this case, and because neither the quotation’s accuracy nor the spokesperson’s job description are disputed, we need not do so.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                    Page 8


Saudi Arabia banned the importation of 10
                                         ATX tires. The two companies’ images were subjected to an array
of public condemnation   by regulators,   congressional representatives from both major American political
parties,11 and industry analysts.12
         Most significant was the apparent financial impact of the recall. Firestone experienced a net $510
million loss for the 2000 fiscal year and Bridgestone’ total profits decreased from about $764 million in
1999 to about $153 million in 2000. Between August 8, the day before the recall, and September 21, 2000,
Bridgestone’s common stock share price on the Tokyo stock exchange dropped from over $2,200.00 to less
than $1,400.00. Between those same dates, its ADR share price dropped from over $202.00 to less than
$122.00. Bridgestone’s earnings for fiscal year 2000 were its lowest in a decade. In the 2000 Annual
Report, then-newly installed Bridgestone CEO Shigeo Watanabe stated that “[n]et earnings declined 80%
in the past year . . . That decline is attributable mainly to a special charge in connection with the tire recall
in the United States. We have recorded a charge at [Firestone] of $754 million [] for costs already incurred
in replacing the recalled tires and for potential liabilities and other legal costs in connection with the
problems that led to the tire recall. . . . Fallout from the recall will remain a marketing issue for us in North
America and elsewhere in 2001.” Id. at 432 (2000 Annual Report).13
       In the wake of the recall, Firestone immediately launched a four-month internal investigation
culminating in a report released publicly in December 2000. See App. at 174 (Complaint). The report found
that two problems were central to the ATX tires’ repeated failures. First was a problem with the tires’
“shoulder pocket,” an area from the sidewall to the tread designed to give traction in snow and off-road
driving conditions. In many of the ATX tires, the shoulder pocket was made with an angle steeper than is

    10
         See, e.g., Jennifer Hoyt, Agency Seeks Broader Authority to Probe Vehicle Safety Breaches , Houston Chronicle, Sept.
13, 2000, available on-line at 2000 WL 24511175 (“NHTSA Administrator Sue Bailey said she thought the problem was with
tires, but that the agency was still investigating the vehicle- tire interaction.”); Nedra Pickler, Hearings Scheduled on Tire Case,
Associated Press, Sept. 14, 2000, available on-line at 2000 WL 26675534 (“The National Highway Traffic Safety Administration
has said it is investigating 88 deaths and more than 250 injuries over the past decade involving Firestone tires. The Wall Street
Journal reported Thursday that five more deaths have occurred since the recall of 6.5 million ATX, ATX-II and Wilderness AT
tires was announced”); App. at 136 (quoting a statement made August 30, 2000 by Samuel Ruh Rios, President of Indecu, the
Venezuelan safety agency, that Bridgestone and Ford had “met to plan ways out of a situation that was affecting their commercial
interests, at the price of causing damage, destruction, and death. . . . . Both companies hid information and this caused many
accidents”); id. at 172 (quoting an August 31, 2000 Reuters Report as stating that “Venezuela’s consumer protection agency
recommended . . . that criminal charges be filed against Bridgestone Corp. . . . over defects linked to at least 46 deaths in
Venezuelan road accidents”). We take judicial notice of the fact that the media articles cited above by reference to electronic
databases were published, and not necessarily as to the truth of their contents. See generally Fed. R. Evid. 201.
    11
        See, e.g., Hoyt, Agency Seeks Broader Authority, at 2000 WL 24511175 (“Sens. Dianne Feinstein . . . and Herb Kohl []
announced that they would introduce a bill to increase civil penalties for withholding information from NHTSA. Their bill also
would set criminal penalties for companies that knowingly allow defective vehicles or parts to be distributed if death or injury
results.”); App. at 172-73 (Complaint, quoting statement by United States Representative Heather Wilson, in response to claims
by senior Firestone executives of lack of knowledge of fatal defects of the ATX tires: “‘That’s rubbish . . . You knew a long time
ago.’”); id. at 173 (quoting Representative Billy Tauzin as stating through his spokesman, after a congressional hearing on the
rollover accidents: “‘This latest information only confirms our suspicion that [Bridgestone and Firestone] knew a hell of a lot more
than they’re willing to admit.’”).
    12
       See, e.g., App. at 9 (Complaint, quoting David Meyers, Associate Professor of Management at Akron University, as stating
“‘I’m on record as saying that the Firestone brand name is toast . . . . That company’s in trouble, and that’s not news. I attended
the congressional hearings at which company executives testified, and those people aren’t believable. I wouldn’t trust them with
my kids[‘] piggy bank’”) (internal parentheses omitted); id. (quoting Columbia University Law School Dean and Professor David
Leebron as stating, on January 21, 2001: “‘This is Firestone’s Pinto.’”).
    13
        The recall’s public policy impact has been evident as well. The public controversy surrounding the safety issues that led
to the recall has in important ways influenced the policy debate in the four years since the recall. See, e.g., Danny Hakim, U.S.
Regulators Release Vehicle Rollover Data, N.Y. Times, Aug. 10, 2004, available on-line at <http://www.nytimes.com> (“The
government rollover tests began this year at the direction of Congress, which ordered the agency to develop a track test in the
wake of a series of fatal rollover crashes in the late 1990's involving Ford Explorers equipped with Firestone tires.”).
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                    Page 9


proper such that the pocket cracked on the inside. Particularly in those tires produced at the Decatur plant,
the cracking was prone to spread from the pocket to the point where two belts of rubber-coated steel fibers
form the tires’ core. Id. Second, noted the report, the materials used at the Decatur plant produced tires less
likely to stay intact. To make a tire, the various layers are heated and squeezed together by fusion. The
Decatur plant produced rubber pellets while the other plants used rubber sheets. In each case, the pellets
or sheets were sprayed with lubricant to keep the rubber from sticking together in large globules. Lubricant
makes tires stick together less. Because the pellets had a larger surface area than the sheets, the pellets in
the Decatur plant were exposed to two or three times more lubricant than the sheets from other plants. After
Firestone’s internal report was issued, Firestone began shipping rubber sheets from other plants to the
Decatur plant to avoid this problem. Id.
       On May 11, 2001, the Retirement Fund (as lead named plaintiff for the Class) filed the instant
Consolidated Class Action Complaint in the United States District Court for the Middle District of
Tennessee alleging violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934, codified at 15
U.S.C. § 78j(b), and Securities Exchange Commission Rule 10b-5, codified at 17 C.F.R. § 240.14 See App.
at 130-186. The four defendants -- Bridgestone, Firestone, Kaizaki, and Ono -- moved to dismiss the
Complaint on a variety of grounds. See App. at 191-526.
        On September 30, 2002, the district court issued a lengthy memorandum opinion and accompanying
order dismissing the Complaint. See App. at 975-1038. Two of the district court’s rulings are relevant in
this appeal, each of which we describe in further detail within our analysis in Part II. First, the district court
granted Kaizaki’s motion to dismiss for lack of jurisdiction. Second, the district court granted -- as to the
remaining three defendants, Bridgestone, Firestone, and Ono -- their motions to dismiss with prejudice all
counts for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure
12(b)(6).
         The Retirement Fund appeals.
                                                      II. DISCUSSION
         Overview
        On appeal, our analysis proceeds in three parts, Parts II(A)-I(C). Part II(A) articulates the applicable
standards of review. Part II(B) assesses whether the district court erred in granting Kaizaki’s motion to
dismiss for lack of personal jurisdiction and concludes that it did not err in so doing. Part II(C) addresses
the merits and divides into two sections. Part II(C)(1) discusses whether the Complaint adequately pleaded
any actionable statements and concludes, contrary to the district court, that one statement by Firestone and
two statements by Bridgestone were actionable but, like the district court, that the remaining alleged
statements in the Complaint were not actionable. Part II(C)(2) analyzes whether, for those three actionable
statements, the Complaint adequately pled scienter as against Bridgestone, Firestone and Ono. It concludes
that the Complaint did so for at least one statement with respect to each of the two corporate defendants,
but did not do so with respect to Ono.




    14
        On January 4, 2001, the Retirement Fund filed a class action against the now defendant-appellees in the United States
District Court for the Middle District of Tennessee, alleging securities fraud. On January 22, 2001, plaintiff Patricia Ziemer filed
a similar Complaint in that same court against the same defendants. On April 11, 2001, the district court consolidated the two
actions into the instant case.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                Page 10


A.        Standards of Review
         We review de novo the district court’s dismissal of the counts against Kaizaki for lack of personal
jurisdiction. See Nationwide Mut. Ins. Co. v. Tryg Int’l Ins. Co., Ltd, 91 F.3d 790, 793 (6th Cir. 1996). We
also review de novo the district court’s dismissal of the securities fraud complaint against Bridgestone,
Firestone, and Ono for failure to state a claim upon which relief can be granted. PR Diamonds, Inc. v.
Chandler, 364 F.3d 671, 680 (6th Cir. 2004). In performing that review, we, like the district court, ”must
accept as true ‘well-pleaded facts’ set forth in the complaint.” Id. (quoting Morgan v. Church’s Fried
Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). The Retirement Fund “need only give a ‘fair notice of what the
plaintiff’s claim is and the grounds upon which it rests.’” Lawler v. Marshall, 898 F.2d 1196, 1199 (6th Cir.
1990) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Rule 12(b)(6) allows a dismissal for failure to
state a claim only when “it appears beyond a doubt that the plaintiff can prove no set of facts in support of
his claims which would entitle him to relief.” Id. “What Rule 12(b)(6) does not countenance are dismissals
based on a judge’s disbelief of a complaint’s factual allegations.” Lawler, 899 F.2d at 1199 (quoting Neitzke
v. Williams, 490 U.S. 319, 328 (1989)). Construing the Complaint in a light most favorable to the
Retirement Fund, we must determine whether it “undoubtedly can prove no set of facts in support of [its]
claims that would entitle [it] to relief.” PR Diamonds, 364 F.3d at 680. That said, we do not accept as true
“the bare assertion of legal conclusions,” In re Sofamor Danek Group, Inc.,123 F.3d 394, 400 (6th Cir.
1997) (internal quotation omitted), nor do we “accept as true legal conclusions or unwarranted factual
inferences.” Id. (quoting Morgan, 829 F.2d at 12). Further, we may affirm the district court on any ground
supported by the record. In re Comshare Inc. Sec. Litig., 183 F.3d 542, 547-48 (6th Cir. 1999).
B.        Personal Jurisdiction
        The Due Process Clause of the United States Constitution “permits the exercise of both general and
specific jurisdiction.” Aristech Chem. Int’l Ltd. v. Acrylic Fabricators, Ltd., 138 F.3d 624, 627 (6th Cir.
1998). “General jurisdiction exists when a defendant has continuous and systematic contacts with the forum
state sufficient to justify the state’s exercise of judicial power with respect to any and all claims.” Id.
(internal quotation marks omitted). Kaizaki lives today in Japan and at all relevant times lived and worked
in Japan. The Retirement Fund does not argue that the district court could assert general jurisdiction over
him. Rather, it argues that the district court should have exercised specific jurisdiction over him, which,
in contrast, “subjects the defendant to ‘suit in the forum state only on claims that ‘arise out of or relate to’
a defendant’s contacts with the forum.’” Id. (quoting Helicopteros Nacionales de Colombia v. Hall, 466
U.S. 408, 414 & n.8 (1984)).
        Whether specific jurisdiction exists over Kaizaki depends on three criteria. Aristech, 138 F.3d at
627. First, he must have purposefully availed himself of the privilege of acting in the United States or have
purposefully caused a consequence in the United States. Id. Second, the cause of action must arise from
his actions   in the United States. Id. Finally, the exercise of jurisdiction by a court within the United
States15 over Kaizaki must be reasonable under the circumstances of this case. Id. at 628. The district court
held that the Retirement Fund’s Complaint failed all three prongs. See App. at 997-1002. We must affirm
the district court’s holding if we conclude that any one of the three prongs are not satisfied. See, e.g., Lak,
Inc. v. Deer Creek Enters., 885 F.2d 1293, 1303 (6th Cir. 1989) (“Each . . . criterion represents an
independent requirement, and failure to meet any of the three means that personal jurisdiction may not be
invoked.”) (emphasis supplied).



     15
        The Securities Exchange Act includes a nationwide service-of-process provision. See 15 U.S.C. § 78(a)(a). Therefore,
the “forum” for the purposes of personal jurisdiction analysis in the Kazaiki’s context is the United States, rather than any
particular federal judicial district within the United States. See United Liberty Life Ins. Co. v. Ryan, 985 F.2d 1320, 1330 (6th
Cir. 1993) (holding that 15 U.S.C. § 78(a)(a) “confers personal jurisdiction over any defendant with minimum contacts to the
United States”).
No. 03-5505                City of Monroe v. Bridgestone Corp., et al.                                              Page 11


        Upon review, we conclude, under the circumstances of this case, that the third, “reasonableness”
prong tips against exercising jurisdiction against Kaizaki. Whether the exercise of jurisdiction over a
foreign defendant is reasonable is a function of balancing three factors: “the burden on the defendant, the
interests of the forum State, and the plaintiff’s interest in obtaining relief.” Asahi Metal Industry Co., Ltd.,
v. Superior Ct. of Cal., 480 U.S. 102, 113 (1987).
         Applying that balancing test to this case, there is clearly potential, should this suit go forward, for
some substantial burden on Kaizaki. The Supreme Court has “cautioned that ‘[g]reat care and reserve
should be exercised when extending our notions of personal jurisdiction into the international field.’” Id.
(quoting Asahi, 480 U.S. at 115) (citation omitted and emphasis supplied), and that “the burden of mounting
a defense in a foreign legal system is ‘unique’ and should be afforded ‘significant weight in assessing the
reasonableness of stretching the long arm of personal jurisdiction over national borders.’” Aristech, 138
F.3d at 628 (quoting Asahi, 480 U.S. at 114). In performing this balancing of interests, we keep an eye
towards “the interstate judicial system’s interest” in judicial economy and “in furthering fundamental social
policies.” Asahi, 480 U.S. at 113. In Aristech, decided in 1998, this Court upheld the reasonableness of
exercising jurisdiction over a Canadian executive by reasoning, in part, that “a Canadian defendant . . .
bears a substantially lighter burden than does a Japanese defendant--or for that matter, most other foreign
defendants,” since “only a short plane flight separates Ontario from Kentucky.” 138 F.3d at 628 (emphasis
supplied). “This is not a case,” Aristech noted, “where the exercise of jurisdiction requires a company to
travel from the other side of the world or even across the [ocean].” Id. (internal ellipses and citations
omitted). In contrast, of course, Kaizaki is living in Japan, and is a retired senior citizen at that. Though,
presumably, a deposition or other proceedings involving Kaizaki’s participation could be conducted by
telephone or by counsel in Japan, circumstances might necessitate his traveling to the United States for a
trial or other litigation-related purpose.
        Turning to the other side of the scale, the countervailing interests of the United States as the forum
and the class plaintiffs in the instant suit being prosecuted against Kaizaki are relatively light. The key
defendants, we think, are Bridgestone and Firestone, the two corporate entities with substantial ongoing
business affairs in the United States. The 16  court’s personal jurisdiction over the corporate defendants, and
indeed over defendant Ono, is conceded. Thus, the marginal addition of Kaizaki would add little or
nothing to the potential recovery should the plaintiffs ultimately prevail on the merits and be awarded
damages, for which Kaizaki would be at most “liable jointly and severally,” but not separately liable. 15
U.S.C. § 78(t)(a). We thus agree with the district court’s conclusion that “[b]ecause Bridgestone, Firestone
and Ono are subject to jurisdiction, no actual violation of securities laws would go unpunished, and any
[recovery] is highly unlikely to be affected by Kaizaki’s dismissal.” App. at 1001. Though the United
States and the class plaintiffs of course have an interest in the enforcement of federal securities laws, those
interests as against Kaizaki are tempered in the circumstances of this case. We find no error in the district
court’s conclusion that exercise of jurisdiction over Kaizaki in the circumstances of this case was not
reasonable. Thus, even assuming, without deciding, that the first two prongs of the three-part specific
jurisdiction test are satisfied, the district court did not err in granting Kaizaki’s motion to dismiss for want
of personal jurisdiction on the grounds that the third “reasonableness” prong was not satisfied.
         The Retirement Fund suggests that even if we conclude that the circumstances of this case do not
satisfy the test for personal jurisdiction over foreign defendants, its “allegations of control person liability”
nonetheless “provide personal jurisdiction over Kaizaki.” Aplt’s Br. at 53. The notion of a control person
derives from § 20(a) of the Securities Exchange Act, which attaches liability to “[e]very person who,
directly or indirectly, controls any person liable under any provision of this chapter or of any rule or
regulation thereunder . . . unless the controlling person acted in good faith and did not directly or indirectly
induce the act or acts constituting the violation or cause of action.” 15 U.S.C. § 78t(a). The term “control”


    16
        Bridgestone did not cross-appeal the denial of its motion to dismiss for lack of personal jurisdiction. Neither Ono or
Firestone have contested personal jurisdiction.
No. 03-5505             City of Monroe v. Bridgestone Corp., et al.                                    Page 12


in this context is defined by the code of federal regulations as “the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.” 17 C.F.R. § 230.405(f).
        There is a division of judicial authority as to whether showing that a defendant is a controlling
person within the meaning of these provisions (and thereby potentially liable under the securities law to the
same extent as the controlled entity) is automatically sufficient to bring that defendant within the personal
jurisdiction of the court merely because the controlled entity itself has the requisite jurisdictional contacts.
See, e.g., In re Baan Co. Sec. Litig., 245 F. Supp.2d 117, 128-29 (D.D.C. 2003) (collecting cases). This
court has not apparently addressed the issue.
         The Retirement Fund’s theory is supported most prominently by San Mateo County Transit Dist.
v. Dearman, Fitzgerald, & Roberts, Inc., 979 F.2d 1356 (9th Cir. 1992). That decision held that jurisdiction
is appropriate if the plaintiff makes only “a non-frivolous allegation that the defendant controlled a person
liable for the fraud.” Id. at 1358. See also McNamara v. Bre-X Minerals Ltd., 46 F. Supp.2d 628, 636-37
(E.D. Tex. 1999) (adopting a rule that “the Court has personal jurisdiction over any Defendant as to which
the Plaintiffs make a prima facie showing of control person liability.”). Kaizaki responds that “[a] claim
of statutory liability . . . is no substitute for establishing personal jurisdiction.” Aple Bridgestone and
Kaizaki’s Br. at 46 n.18 and accompanying text. We agree. “[L]iability is not to be conflated with
amenability to suit in a particular forum. Personal jurisdiction has constitutional dimensions, and regardless
of policy goals, Congress cannot override the due process clause, the source of protection for non-resident
defendants.” AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 590-591 (9th Cir. 1996) (internal
citations omitted). The broad understanding of control person liability adopted by the securities laws cannot
on its own support personal jurisdiction. This approach would, as one persuasive opinion stated,
“impermissibly conflate[] statutory liability with the Constitution’s command that the exercise of personal
jurisdiction must be fundamentally fair.” In re Baan, 245 F. Supp.2d at 129 (Huvelle, J.). Though they may
involve a similar contact-based analysis, ultimately, the two inquiries must be distinct: “control person
liability under the securities laws . . . is not germane to the issue of personal jurisdiction.” FDIC v. Milken,
781 F. Supp.2d 226, 234 (S.D.N.Y. 1991) (Pollak, J.).
        We thus reject the Retirement Fund’s invitation to substitute our analysis of the securities laws’
substantive bases for liability for the required, due-process based personal jurisdiction analysis, and
therefore decline to address Kaizaki’s potential liability as a control person. For the foregoing reasons, we
hold that the district court did not err in granting Kaizaki’s motion to dismiss for want of personal
jurisdiction. We turn then to the merits of the Complaint and analyze whether the district court erred in
granting the motion to dismiss as against the other three defendants on the grounds that it failed to state a
claim upon which relief could be granted.
C.      Merits
        The “ ‘fundamental purpose of modern federal securities laws is to substitute a philosophy of full
disclosure for the philosophy of caveat emptor. “ Affiliated Ute Citizens v. United States, 406 U.S. 128, 151
(1972) (quoting SEC v. Capital Gains Research Bureau, 375 U.S. 180, 186 (1963)). Federal securities law
thus prohibits “fraudulent, material misstatements or omissions in connection with the sale or purchase of
a security.” Morse v. McWhorter, 290 F.3d 795, 798 (6th Cir. 2002). The standards for stating a claim
under Section 10(b) of the Securities Exchange Act of 1934 or under SEC Rule 10b-5 are the same: a
plaintiff must allege five elements: (1) a misrepresentation or omission; (2) of a material fact that the
defendant had a duty to disclose; (3) made with scienter; (4) justifiably relied on by plaintiffs; and (5)
proximately causing them injury. Helwig v. Vencor, Inc., 251 F.3d 540, 554 (6th Cir. 2001) (en banc)
(citing Aschinger v. Columbus Showcase Co., 934 F.2d 1402, 1409 (6th Cir. 1991)); see also Sofamor
No. 03-5505                  City of Monroe v. Bridgestone Corp., et al.                                             Page 13


Danek, 123 F.3d at 400.17 A statement is said to be “actionable” when it satisfies the first two of these
requirements, i.e., it is a misrepresentation or omission of a material fact that the defendant had a duty to
disclose. See, e.g., Nathenson v. Zonagen Inc., 267 F.3d 400, 415 (5th Cir. 2001); Castellano v. Young &
Rubicam, Inc., 257 F.3d 171, 179 (2d Cir. 2001). The district court held that the Retirement Fund’s
Complaint failed to plead adequately any actionable statements for any allegedly fraudulent statements. It
held in the alternative that the Retirement Fund failed to plead scienter adequately. The district court did
not address the remaining two elements of the claim: reliance and proximate cause. As detailed in the
discussion that follows, the district court’s merits holdings were in part erroneous.
          1.       Actionable Statements
        Since their enactment in response to the stock market crash of 1929, the “basic policies underlying
securities regulation” laws have been that “‘[th]ere cannot be honest markets without honest publicity’”
because “‘[m]anipulation and dishonest practices of the market place thrive upon mystery and secrecy.’”
Helwig, 251 F.3d at 556 (quoting Basic Inc. v. Levinson, 485 U.S. 224, 230 (1988) (in turn quoting H.R.
Rep. No. 1383, at 11 (1934)). The Supreme Court “’repeatedly has described the fundamental purpose of
the Act as implementing a philosophy of full disclosure’” Helwig, 251 F.3d at 556 (quoting Basic, 485 U.S.
at 230). Thus, federal securities laws prohibit certain “misrepresentation[s] or omission[s]” in connection
with the sale or purchase of a security. Morse, 290 F.3d at 798.
         In order to be actionable, however, the misrepresentation or omission in question must pertain to
material information that the defendant had a18duty to disclose, a set of requirements that serve as a limiting
principle to the general policy of disclosure. See, e.g., Basic, 485 U.S. at 238 (“[I]n order to prevail on
a Rule 10b-5 claim, a plaintiff must show that the statements were misleading as to a material fact. It is not
enough that a statement is false or incomplete, if the misrepresented fact is otherwise insignificant.”) (italics
in original omitted); In Re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1432 (3d Cir. 1997) (“there
is no general duty on the part of the company to provide the public with all material information.”). As this
Court has recognized, this set of requirements preserves the healthy limits on a public corporation’s “duty
to disclose all information, even colorably material,” because corporations might otherwise “face potential
second-guessing in a subsequent disclosure suit,” a regime that would threaten to “deluge investors with
marginally useful information, and would damage corporations’ legitimate needs to keep some information
non-public.” Sofamor Danek, 123 F.3d at 403 (citation and internal quotation marks omitted). A duty to
affirmatively disclose may arise when there is insider trading, a statute requiring disclosure,” or, as relevant
to this case, “an inaccurate, incomplete or misleading disclosure.” In re Digital Island Sec. Litig., 357 F.3d
322, 329 n.4 (3d Cir. 2004) (quotation omitted).
       As for materiality, whether or not a statement is material turns on “a fact-intensive test.” Helwig,
251 F.3d at 555.19 Materiality “depends on the significance the reasonable investor would place on the
withheld or misrepresented information.” Id. (quoting Basic, 485 U.S. at 240). That is, would the
information, had it been presented accurately, have “altered the ‘total mix’ of information made available?”
Helwig, 251 F.3d at 563 (quoting Basic, 485 U.S. at 231-32 (citation omitted)).


    17
        The Complaint also alleges liability against Kaizaki and Ono under § 20(a) of the Securities Exchange Act of 1934, 15
U.S.C. § 78t(a), which provides for liability of controlling persons. As discussed above, we need not analyze the merits of the
§ 20 claim against Kaizaki because we resolve those claims on the jurisdictional issue. And, as discussed below, we need not
resolve the “merits’ of the control person liability theory against Ono beyond our conclusion that the Complaint does not
adequately plead scienter against him.
    18
         As does the scienter requirement, discussed in detail in Part II(C)(2).
    19
       Cf. R. Gregory Roussel, Securities Fraud or Mere Puffery: Refinement of the Corporate Puffery Defense, 51 Vand. L. Rev.
1049, 1064-66 (1998) (discussing the virtues of the “contextual standard,” as distinguished from rigid, bright-line rules, in
assessing whether a statement should be classified as puffery).
No. 03-5505              City of Monroe v. Bridgestone Corp., et al.                                       Page 14


        In this vein, this Court has distinguished between “hard” and “soft” information.” Sofamor Danek,
123 F.3d at 401-02. Hard information” is “typically historical information or other factual information that
is objectively verifiable.” Id. (quotation omitted). Publicly disclosed, hard information is actionable if false
and material.
        “Soft information,” on the other hand, includes “predictions and matter of opinions.” Id. The failure
to disclose soft information is actionable “‘only if [it is] . . . virtually as certain as hard facts.’” Id. (quoting
Starkman v. Marathon Oil Co., 772 F.2d 231, 241 (6th Cir. 1985)). Thus, federal courts “everywhere ‘have
demonstrated a willingness to find immaterial as a matter of law certain kinds of rosy affirmation heard from
corporate managers and numbingly familiar to the marketplace -- loosely optimistic statements that are so
vague, [and] so lacking in specificity . . . that no reasonable investor could find them important to the total
mix of information.’” In re Ford Motor Co. Sec. Litig., 02-1670, __ F.3d __, 2004 WL 1873808, *4 (6th
Cir. Aug. 23, 2004) (quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1217 (1st Cir. 1996)).
         However, opinions may be deemed false or misleading under the securities laws if proof of their
falsity can be established “through the orthodox evidentiary process.” Virginia Bankshares, Inc. v.
Sandberg, 501 U.S. 1083, 1090, 1091-93 (1991). For such statements,”‘a company is generally under no
obligation to . . . volunteer [] information.’” Helwig, 251 F.3d at 564 (quoting, in a parenthetical, with
approval Kowal v. MCI Communications Corp.,16 F.3d 1271, 1277 (D.C. Cir. 1994)). If a company does
volunteer information, though, “‘its disclosure must be full and fair, and courts may conclude that the
company was obliged ‘to disclose additional material facts . . . to the extent that the volunteered disclosure
was misleading . . . .’” Id. (citations omitted). Our securities laws therefore “require an actor to ‘provide
complete and non-misleading information with respect to the subjects on which he undertakes to speak.’”
Helwig, 251 F.3d at 561 (quoting Rubin v. Schottensein,143 F.3d 263, 268 (6th Cir. 1998) (en banc)). Put
another way, as Judge Boggs explained in an en banc decision for this court: “[t]he question thus is not
whether a [defendant’s] silence can give rise to liability, but whether liability may flow from his decision
to speak . . . concerning material details . . . without revealing certain additional known facts necessary to
make his statements not misleading. This question is answered by the text of [SEC] Rule 10b-5(b) itself:
it is unlawful for any person to ‘omit to state a material fact necessary in order to make the statements made,
in the light of the circumstances under which they were made, not misleading . . .’” Rubin, 143 F.2d at 268
(quoting 17 C.F.R. § 240.10b-5(b)).
        With these standards in mind, we turn to analyze whether any of the numerous alleged fraudulent
statements in this case were actionable. The statements divide into two categories: (1) statements by
Bridgestone and Firestone that were allegedly false because they were material statements made regarding
the quality of Firestone’s tires “while in possession of specific, adverse information undermining the truth
of those statements,” Aplt’s Br. at 40; and (2) allegedly false representations made by Bridgestone in the
financial statements accompanying its Annual Reports.
        a.      Statements about the Quality or Safety of Firestone’s ATX Tires
        The Retirement Fund argues that the public statements by Bridgestone and Firestone summarized
in Part I were actionable because they engendered a duty to disclose adverse information about the safety
of Firestone’s tires. These statements include Bridgestone’s 1996 Annual Report statement that it sold “the
best tires in the world,” its publicly distributed written statement in “late 1996" that it had “no reason to
believe there is anything wrong with [its ATX tires]”; 1997 Annual Report statement that its products
demonstrated “global consistent quality”; 1997 Annual Report statement that “[r]igorous testing under
diverse conditions at our proving grounds around the world helps ensure reliable quality for original
equipment customers”; 1998 Annual Report statement that sales success in North American was due to
“high regard among automakers for our strengths in product quality;” and 1999 Annual Report statement
that “[w]e have built a premium-quality for. . . Firestone tires” and that “aggressive product development”
had “re-established the Firestone name as a vigorous brand in premium-grade tires;” as well as Firestone’s
statements in February 2000 that it had “full confidence” in the ATX tires and that ”[o]ur experience with
No. 03-5505              City of Monroe v. Bridgestone Corp., et al.                                        Page 15


Radial ATX indicates high consumer satisfaction with the quality and reliability of these tires”; in July 2000
that it had “full confidence” in its tires; on August 1, 2000 that “[w]e continually monitor the performance
of all our tire lines, and the objective data clearly reinforces our belief that these are high-quality, safe tires”
and that “[t]hese are safe tires.” The district court held that “plaintiffs fail to plead with sufficient
particularity an omission theory of liability,” App. at 1015 (Dist. Ct. Memorandum), reasoning that the
Complaint “failed to make a prima facie showing that Bridgestone [or Firestone] knew to a ‘substantial
certainty’ that Firestone’s tires were defective.” Id. at 1014 (quoting Sofamor Danek, 123 F.3d at 402). The
district court concluded, as to Bridgestone’s statements, that they were “statements of self-praise and
confidence in its future,” and therefore “constituted immaterial opinions” and on that basis dismissed the
claims based on those statements. App. at 1019. Similarly, as to Firestone’s statements, the district court
held that they were “of general optimism and in defense of its products . . . [and] immaterial as a matter of
law.” Id. at 1029. Accordingly, the district court held that the statements at issue were non-actionable
corporate “puffery,” id. at 1019-20, stating that “reasonable investors expect corporate managers to be
confident about their stewardship and the prospects of the business that they manage.’” Id. at 1018 (quoting
Shields v. Citytrust Bancorp., 25 F.3d 1124, 1129-30 (2d Cir. 1994).
       On appeal, Bridgestone and Firestone likewise argue that these statements were immaterial puffery.
As discussed below, with an important exception -- Firestone’s August 1, 2000 statement concerning
“objective data” -- we are persuaded by their argument.
                i.       Statements other than the August 1, 2000 Press Release
        Other than the August 1, 2000 statement, we agree that the statements recited above are best
characterized as loosely optimistic statements insufficiently specific for a reasonable investor “to find them
important to the total mix of information.” In re Ford, _ F.3d _, 2004 WL 1873808, at *4 (quoting Shaw
v. Digital Equip. Corp., 82 F.3d at 1217). These statements, both on their own terms and in context, lacked
a standard against which a reasonable investor could expect them to be pegged; such statements describing
a product in terms of “quality” or “best” or benefitting from “aggressive marketing” are too squishy, too
untethered to anything measurable, to communicate anything that a reasonable person would deem
important to a securities investment decision. The statements are analogous to those deemed immaterial
by a broad spectrum of federal courts. See, e.g., Longman v. Food Lion, Inc., 197 F.3d 675, 684 n.2 (4th
Cir. 1999) (concluding that the statements that “Food Lion is one of the best-managed high growth operators
in the food retailing industry” and that it provided its employees with “some of the best benefits in the
supermarket industry” were immaterial); Grossman v. Novell, Inc. 120 F.3d 1112, 1121 (10th Cir. 1997)
(holding that a company’s statement that it had achieved “substantial success” in integrating the sales force
of two merged companies was immaterial puffery); Sal Leandro Emergency Med. Group Profit Haring Plan
v. Philip Morris Cos., 75 F.3d 801, 811 (2d Cir. 1996) (holding that a company’s statements that it was
“optimistic” about its earnings and “should deliver income growth consistent with its historically superior
performance” was non-actionable “puffery”); In re Cybershop.com Sec. Litig., 189 F. Supp.2d 214, 229 &
232 (D. N.J. 2002) (holding that the statement that “[w]e are well prepared for the holiday season and
believe it will clearly differentiate us as the market leader in our segment of online retail” was not material);
In re Peritus Software Servs., Inc., 52 F. Supp.2d 211, 220 (D. Mass. 1999) (holding that the statement that
company’s product was enjoying “unprecedented market demand” was non-actionable puffery). We
conclude that the district court did not err in dismissing the claims based on these statements.
                ii.      Firestone’s August 1, 2000 “Objective Data” Representation
         On August 1, 2000, Firestone released its statement that “[w]e continually monitor the performance
of all our tire lines, and the objective data clearly reinforces our belief that these are high-quality, safe tires.”
The context of statements is often telling. See, e.g., Casella v. Webb, 883 F.2d 805, 808 (9th Cir. 1989)
(“what might be innocuous ‘puffery’ or mere statement of opinion standing alone may be actionable as an
integral part of a representation of material fact used to emphasize and induce reliance upon such a
representation.”); Scritchfield v. Paolo, 274 F. Supp.2d 163, 175-76 (D. R.I. 2003) (stressing that “a
No. 03-5505             City of Monroe v. Bridgestone Corp., et al.                                   Page 16


company’s statements that it is ‘premier,’ ‘dominant,’ or ‘leading’ must not be assessed in a vacuum (i.e.,
by plucking the statements out of their context to determine whether the words, taken per se, are sufficiently
‘vague’ so as to constitute puffery”). So it is with Firestone’s August 1, 2000 statement. In July 2000,
consumers filed multiple lawsuits against Firestone alleging that ATX tire tread separation caused Ford
Explorers to roll over and caused fatalities. That same month, several safety groups urged Ford to recall
the Explorers with Firestone ATX tires on them. On August 1, 2000, Firestone issued the statement
concerning the “objective data.” A reasonable juror could infer that the “objective data” representation was
a direct response to the lawsuits, or to the public challenges to the safety of Firestone’s tires, or to both.
        A reasonable juror could also conclude that the statement, without some qualification or
accompanying disclosure of the numerous pieces of evidence that tended to cut the other way, was a
misrepresentation. In 1996, Firestone had performed random quality control high-speed durability tests on
ATX tires. In one of the sample tests, Firestone examined 129 ATX tires made at the Decatur plant.
Eighteen of those tires failed the test due to tire tread separation. In another random test of 229 ATX tires
from Decatur, thirty-one failed. In an additional random test of 18 ATX tires, eight failed, seven of which
were from the Decatur plant. Internal Firestone documents show that Firestone knew since 1996-1997 from
property damage and injury claims and tire performance data, such as warranty adjustments and financial
analysis of such claims, that its ATX tires were failing at unprecedented rates. Similarly, a Firestone chart
reveals that from 1998 to 1999, tread separations for the Wilderness ATX tires -- one of the ATX models --
increased by 194%. According to a 1999 internal Bridgestone report, in 1997 and 1998, another of the ATX
models -- the ATX II tires -- accounted for the majority of Firestone’s claims but less than 10% of its total
production. Further, in Venezuela, between 1990 and 1998, over forty people were killed in Explorer
accidents due to ATX tire failures and Ford had demanded that Firestone alter the design of its ATX tire
being sold in Venezuela to include a nylon layer.
         Firestone does not point to any record evidence showing its statement regarding the “objective data”
was supported with respect to the ATX tires. It may be the case that at the summary judgment or trial stages
of this dispute, Firestone will identify evidence that persuades the finder of fact that, as of the date of its
statement on August 1, 2000 that “[p]roperly inflated and maintained Firestone ATX . . . tires are among
the safest tires on the road today,” id. at 171, the available objective data supported that claim. Or perhaps
Firestone will introduce some other evidence showing that its statement about the objective data was in fact
not misleading or false. However, at this stage in the lawsuit, construing the Complaint in a light most
favorable to the Retirement Fund, see PR Diamonds, 364 F.3d at 680, we conclude that Firestone’s
representation concerning “objective data” could be deemed a material misrepresentation by a reasonable
fact-finder. Accord, e.g., Hanon v. Dataproducts Corp., 976 F.2d 497, 501-02 (9th Cir. 1992) (holding that
the defendants’ statements emphasizing superior quality were material because “a reasonable jury could
conclude that Dataproducts publicly released optimistic statements when it knew its product could not be
built reliably”); In re ValuJet, Inc. Sec. Litig., 984 F Supp. 1472, 1477-78 (N. D. Ga. 1997) (statement that
airline’s safety record was “certifiably among the very best in the airline industry” was material and
actionable); In re F & M Distrib. Inc. Sec. Litig. 937 F. Supp. 647, 653 (E. D. Mich. 1996) (holding that
the defendant chain store’s failure to disclose an adverse industry trend that made the “deal buying”
strategy touted in its prospectus less viable than otherwise known could be actionable); In re Medimmune,
Inc. Sec. Litig., 873 F. Supp. 953, 967 (D. Md. 1995) (holding that a drug company’s statements that “the
results of treatment with [its product] were highly statistically significant along all of the efficacy
parameters,” and “[t]he data are overwhelmingly good” were material and actionable); Cohen v.
Prudential-Bache Sec., Inc., 713 F. Supp. 653, 659 (S.D.N.Y. 1989) (holding that a broker’s statement to
a client that she “would receive a very strong cash flow without risk to her initial investment” could not be
dismissed as immaterial puffery).
       In holding that Firestone’s August 1, 2000 statement was actionable, we express no opinion as to
whether Firestone necessarily had an obligation to disclose the various safety and looming regulatory issues
surrounding the ATX tires regardless of whether it affirmatively spoke on the subject. The Retirement Fund
does not rely on that allegation and, indeed, has waived such an argument. See App. at 558 (the Retirement
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                 Page 17


Fund stating in a brief to the district court that “[p]laintiffs do not contend that in the face of defendants’
silence they should have disclosed the defects in the ATX tires.”). We merely hold that once Firestone
elected to make statements such as the statement regarding the “objective data,” it was required to qualify
that representation with known information undermining (or seemingly undermining) the claim. Accord
Mayer v. Mylod, 988 F.2d 635, 639 (6th Cir. 1993) (“corporate officers are not required to speak, [but] once
they do, they must be truthful if their comments are material to investors’ decisionmaking.”); In re K-Tel
Intern, Inc. Sec. Litig., 300 F.3d 896, 898 (8th Cir. 2002) (“the requirement is not to dump all known
information with every public known announcement, but the law ‘requires an actor to provide complete and
non-misleading information with respect to the subjects on which 20he undertakes to speak’”) (quoting
Helwig, 251 F.3d at 561) (emphasis supplied by the Eighth Circuit).
        Firestone next argues that the August 1, 2000 statement is non-actionable because it was “immaterial
as a matter of law.” Aple Firestone’s Br. at 40. Echoing the district court, Firestone argues that the
statement was one of “‘of general optimism and in its defense of its products’” id. (quoting App. at 1018),
and one that “reflect[ed] the market’s understanding that others had suggested the products were not as safe
as Firestone believed.” Aple Firestone’s Br. at 47. As such, Firestone argues, the statement does “not come
within the duty of disclosure” because such opinions are “‘routinely discounted by reasonable investors.’”
Id. at 44 (quoting Sofamor Danek, 123 F.3d at 402).
        We reject this argument also, for several reasons. First, we do not agree that the statement that “the
objective data clearly reinforces our belief that these are high-quality, safe tires” was a statement of general
optimism or purely opinion. Rather, the statement was an assertion of a relationship between data and a
conclusion, one that a finder of fact could test against record evidence.
        Second, even if the statement regarding “objective data” was best classified as an opinion, it was still
specific enough to form the basis of an actionable securities fraud claim. Federal courts have drawn the
line on whether a statement may be actionable based, not on whether in the abstract a statement was best
characterized as fact or opinion but, rather, if it was an opinion, on the nature of the statement. The key is
whether the proposition at issue can be proven or disproven using standard tools of evidence. Thus, as
alluded to above, vague statements not subject to verification by proof are generally deemed non-actionable
puffery. But “opinion or puffery . . . in particular contexts when it is both factual and material . . . may be
actionable.” Longman v. Food Lion, Inc., 197 F.3d 675, 684 (4th Cir. 1999) (emphasis supplied).
         For example, in Virginia Bankshares, the Supreme Court held that an opinion expressed by a
corporation’s board members to its minority stockholders that the stock price of $42.00 for the purchase of
the company’s shares was a “high value” and represented a “fair” transaction could be both factual and
material. 501 U.S. at 1091. In so holding, the Court expressly rejected the petitioner’s argument, similar
to that offered by Firestone here, that the Court “would invite amorphous issues outside the readily provable
realm of fact if [it] were to recognize liability . . . on proof that the directors did not recommend the merger
for the stated reason.” 501 U.S. at 1093. “It is no answer to argue,” the Court stated, “that the quoted
statement on which liability was predicated did not express a reason in dollars and cents, but focused instead
on the ‘indefinite and unverifiable’ term, ‘high’ value, much like the similar claim that the merger’s terms
were ‘fair’ to shareholders.” Id. “The objection ignores the fact,” observed the Court, “that such
conclusory terms in a commercial context are reasonably understood to rest on a factual basis that justifies
them as accurate, the absence of which renders them misleading.” Id. Rather, “[p]rovable facts either
furnish good reasons to make a conclusory commercial judgment, or they count against it, and expressions
of such judgments can be uttered with knowledge of truth or falsity just like more definite statements, and


    20
       Contrary to Bridgestone and Firestone’s assertions, such a conclusion is consistent, or not inconsistent, with this court’s
decision in Sofamor Danek, 123 F.3d at 401-02. In that case, the defendant corporation was silent as to the alleged products
defects and likely regulatory problems and this court held there was no actionable omission. In contrast, Firestone (and
Bridgestone) chose to speak, implicating, through that choice, the duty to speak truthfully as to the topics on which it spoke.
No. 03-5505                  City of Monroe v. Bridgestone Corp., et al.                                                  Page 18


defended or attacked through the orthodox evidentiary21process that either substantiates their underlying
justifications or tends to disprove their existence.” Id.
        This court’s en banc decision in Helwig also reflected these insights. In that case, the defendant
corporation stated that it was “comfortable” with favorable earnings per shares estimates made before the
passage of a piece of legislation even though in secret, internal communications, the corporation was making
negative predictions about the impact of the statute on earnings. Helwig recognized that such opinions about
a verifiable assertion “contain ‘at least three implicit factual assertions: (1) that the statement is genuinely
believed, (2) that there is a reasonable basis for that belief, and (3) that the speaker is not aware of any
undisclosed facts tending to seriously undermine the accuracy of the statement.’” Helwig, 251 F.3d at 557
(quoting Schneider v. Vennard (In re Apple Computer Sec. Litig.), 886 F.2d 1109, 1113 (9th Cir. 1989)).
Reversing the district court’s dismissal of the securities fraud claim, Helwig noted that unlike the facts
underlying this court’s decisions in “Sofamor Danek, [in which] the information claimed as adverse to the
company had already been disclosed and was publicly available to permit an independent assessment by
investors and analysts,” or “Starkman, [which] was a case about non-disclosure,” id., the complaint in
Helwig “[wa]s about selective disclosure of information . . . essential to complete a picture [the defendants]
had only partially revealed.” Helwig, 251 F.3d at 557 (citing Sofamor Danek, 123 F.3d at 401 and
Starkman, 772 F.2d at 241) (emphasis supplied). “[T]he protection for soft information,” Helwig stated,
“ends where speech begins.” Id.
        As in Helwig, the Retirement Fund’s Complaint pleads a theory of liability for selective, incomplete
disclosure. Following Helwig, we conclude that a reasonable juror in this case could conclude that
Firestone’s statement that “the objective data clearly reinforces our belief that these are high-quality, safe
tires” carried with it the representation that there was a reasonable basis for that belief, and that Firestone
was not aware of any undisclosed facts tending to seriously undermine the accuracy of the statement, and
that both those representations were misleading. That juror could thus find that the statement concerning
objective data was actionable. Accord Warsaw v. Xoma Corp., 74 F.3d 955, 959 (9th Cir. 1996) (holding
that a company’s statements regarding the safety of its new products were actionable where the reassuring
statements “were designed to prevent shareholder flight in the aftermath of a damaging report regarding the
possible hazards of [the product]”).
         Finally, as to Firestone’s contention that the statement about the “objective data” is non-actionable
because it “reflect[ed] the market’s understanding that others had suggested the products were not as safe
as Firestone believed,” Aple Firestone’s Br. at 47, this argument mischaracterizes the facts as pled in the
Complaint. A number of courts have 22    indeed suggested that misrepresentations about a fact already known
to the marketplace are not actionable. And, although this Court has not directly addressed this theory, it
voiced the logical complement in Helwig, which, in reaching its conclusion that the statement at issue was
material, relied in part on the fact that the information at issue was “known exclusively” to the defendants.
251 F.3d at 560 (emphasis supplied). It makes logical sense that a claim based on the alleged withholding
from the public of information that contradicts information publicly stated is defeated by a demonstration
that the allegedly withheld information was in fact disclosed to the public; however, that rule is not apposite

    21
       This court has recognized that “Virginia Bankshares is instructive for” materiality analysis in § 10(b) cases because
although the Court in Virginia Bankshares was concerned with § 14(a), not § 10(b) of the Securities Exchange Act, “the [SEC]
has promulgated the same rule for each section: violations occur under each section whenever a statement is false or a material
omission makes the statements which are made misleading.” Mayer v. Mylod, 988 F.2d 635, 639 n.2 (6th Cir. 1993) (citing 17
C.F.R. §§ 240.10b-5 and 240.14a-9 (1991)).
    22
         See, e.g., Longman, 197 F.3d at 684-85 (4th Cir. 1999) (“Plaintiffs’ securities fraud claim cannot succeed because, despite
the fact that Food Lion denied the charges, the nature of the off-the-clock claims and the claims’ risk to earnings were in fact well
known to the market before the PrimeTime Live broadcast, and therefore Food Lion’s omissions were not material”); In re Apple
Computer Sec. Litig., 886 F.2d 1109, 1114-15 (9th Cir. 1989) (“We conclude that in a fraud on the market case, the defendant’s
failure to disclose material information may be excused where that information has been made credibly available to the market
by other sources.”).
No. 03-5505             City of Monroe v. Bridgestone Corp., et al.                                      Page 19


here. Contrary to the implications of Firestone’s argument, that “others” had “suggested the products were
not as safe as Firestone believed” does not demonstrate that the market had received the adverse information
-- about the tires’ test data, the claims for liability based on tire failure, and the deaths in the United States
and abroad -- that form the basis of the information the Retirement Fund alleges was withheld from the
public. Rather, “[i]n an open and efficient securities market . . . information important to reasonable
investors (in effect, the market) is immediately incorporated into the stock price.” In Re Burlington Coat
Factory Sec. Litig., 114 F.3d at 1425 (internal citation omitted). And, indeed, not until after Firestone’s
August 9, 2000 recall did the share value for both the Bridgestone common stock and Bridgestone ADRs
each plummet by over one third of their value in approximately six weeks: between August 8, the day before
the recall, and September 21, 2000, Bridgestone’s common stock share price on the Tokyo stock exchange
dropped from over $2,200.00 to less than $1,400.00, and its ADR share price from over $202.00 to less than
$122.00. Accordingly, a reasonable juror could conclude that the revelations that accompanied the
announcement of the August 2000 recall were in part reflected in this substantial share price change, which
would suggest strongly that the market had not -- prior to the public disclosures encapsulated in the recall --
received the full extent of information related to the safety-related problems associated with Firestone’s
tires, and that such information was quite important to investors.
       For the foregoing reasons, we hold that while most of the statements alleged by the Retirement Fund
were insufficiently specific to be actionable, the August 1, 2001 statement regarding “objective data” is
actionable. We turn now to Bridgestone’s alleged misrepresentations in the Annual Reports’ financial
statements.
        b.      Bridgestone’s Annual Report Financial Statements
        The district court held that none of the claims based on financial statements in Bridgestone’s Annual
Reports for fiscal years 1996 through 1999 were actionable. The district court reasoned that the Complaint
“failed to plead a single fact that would have caused a reasonable investor to believe that Bridgestone’s
financial statements were prepared according to United States GAAP, or that a reasonable investor would
have relied on this belief,” failed to “plead any particular fact that could establish any inference that
Bridgestone violated Japanese GAAP,” and that “even if Bridgestone was subject to United States GAAP,”
the Complaint “failed to plead with particularity any facts establishing a strong inference that Bridgestone
should have ‘considered probable’ a Firestone recall and thus established a huge contingent liabilities fund.”
App. at 1016 (quoting FASB 5). Bridgestone argues that we should affirm on essentially the district court’s
rationales. As discussed below, we disagree with that conclusion with respect to Bridgestone’s 1999 Annual
Report but agree with the result reached by the district court concerning the claims based on Bridgestone’s
1996-1998 Annual Report financial statements.
                 i.      1999 Annual Report
         Issued in March 2000, the 1999 Annual Report included at least two representations that a
reasonable juror might conclude were material misrepresentations: (1) that no impairment of Bridgestone’s
corporate assets was substantially certain to occur through problems arising from customers or regulators’
actions (the “No Impairment” representation); and (2) that there were no actual, material losses connected
to the lawsuits and responses to the regulatory scrutiny of the ATX tires (the “No Loss” representation).
         The “No Impairment” Representation
          The 1999 Annual Report included several groups of statements that, taken together, constituted a
representation to the investing public that no impairment of Bridgestone’s corporate assets was substantially
certain to occur through problems arising from customers or regulators’ actions. The below comparison of
the Annual Report’s accounting policy statements, the actual disclosures under those statements, and the
alleged “on the ground” facts at Bridgestone and Firestone, reveals why a reasonable juror could conclude
that this statement was a misrepresentation.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                Page 20


          The accounting policy statements communicated to the investing public that if a loss or asset
impairment was probable, the Annual Report would disclose that contingency in some form. The 1999
Report included a letter from Bridgestone’s outside auditors stating that it was prepared “in conformity with
accounting principles generally accepted in Japan applied on a consistent basis.” Under International
Accounting Standard § 9010.08-.09, applicable in Japan pursuant to the International Accounting Standards
Committee, “loss contingencies should be recorded if it is probable that an asset has been impaired or a
liability incurred at the balance sheet date and a reasonable estimate of the amount of the resulting loss can
be made.” Section 9010.08-09 provides further that “if either of the conditions is met and the possibility
of the loss is not remote, the existence of the contingent loss should be disclosed in the financial
statements.” The 1999 Report also stated that “the Japanese consolidated financial statements have been
prepared in accordance with the provisions set forth in the . . . accounting principles and practices generally
accepted in Japan (“Japanese GAAP”).” It further represented that Bridgestone’s “accompanying financial
statements include the accounts of certain foreign subsidiaries, which are based upon U.S. GAAP,” a
reference to Firestone, its largest foreign subsidiary. We thus disagree with the district court’s observation
that no investor could have reasonably concluded that a representation was being made under United States
GAAP.
         United States GAAP, via FASB 5,23 “requires that loss be accrued whenever it is probable a loss
has been incurred or an asset impaired and the amount of the loss can be reasonably estimated. If the loss
is at least reasonably possible, but no reasonable estimate can be made, the contingency at a minimum
should be   disclosed.” The unmistakable representation, under both the Japanese and American GAAP
policies,24 was that if a loss or asset impairment was probable, the Annual Report reader would see a
discussion of it in some form in the report. A fortiori then, the Report included the representation that if
there were a substantial certainty of such an impairment, that contingency or risk would be disclosed. Cf.
United States v. Lamartina, 584 F.2d 764, 766-67 (6th Cir. 1978) (embracing this greater-includes-the-lesser
logic in the criminal context and noting that “a defendant may be found guilty of an offense necessarily
included in the offense charged.”).
          The disclosures under the Annual Report’s stated policies included no reference to the impairment
or likelihood of impairment to the asset of the Firestone Brand. The notes to the Consolidated Financial
Statements did include a category labeled “Contingent Liabilities,” which disclosed deferred income tax
assets, deferred tax liabilities, discounted export bills, and lease commitments, note regarding “Market
Value Information,” which provided a disclaimer that Bridgestone was “exposed to the currency fluctuation
risks in relation” to certain “forward contracts and to the interest rate fluctuation in relation to interest rate
swaps,” as well as statements cautioning that “those derivatives do not exceed corresponding financial
instruments,” and that Bridgestone “believes that the risk that the counterparts will not be able to fully
satisfy their obligations under contracts is minimum.” However, neither the Contingent Liability section
nor the Market Value Information section, nor any other portion of the 1999 Annual Report, disclosed the
contingency of any loss or asset impairment related to any of the Firestone tire products due to the lawsuits,
regulatory scrutiny, or safety-related reasons. Nor did they disclose the potential risk of such an event.
        The 1999 Annual Report’s simultaneous inclusion of the accounting policies, the listed
contingencies, and the absence of any mention of a contingency concerning Firestone tires constituted a
representation that no loss or asset impairment arising from Firestone tire products due to the lawsuits,


    23
        In the United States, GAAP “are the official standards adopted by the American Institute of Certified Public Accountants,
a private professional association, through three successor groups it established: the Committee on Accounting Procedure, the
Accounting Principles Board, and the Financial Accounting Standards Board (the ‘FASB’).” Ganino v. Citizens Utils. Co., 228
F.3d 154, 160 n.4 (2d Cir. 2000). “The SEC treats the FASB’s standards as authoritative.” Id.
    24
         The policies articulated in FASB 5 and § 910.08-09 are very similar if not identical in substance. The absence on Note
11's list of differences between U.S. and Japanese GAAP of any reference to the two provisions reinforces that notion.
No. 03-5505             City of Monroe v. Bridgestone Corp., et al.                                     Page 21


regulatory scrutiny, or safety-related reasons was “probable” or “reasonably possible.” The question then
is whether a reasonable juror could find that the facts belied that representation.
         Bridgestone suggests that it is only in hindsight evident that there was a probability or reasonable
possibility of a substantially adverse event as of March 2000. We disagree. By March 2000, Bridgestone
and Firestone, according to the allegations of the Complaint, had received thousands of claims for and
complaints concerning ATX tire failures, covering hundreds of serious injuries and 174 fatalities by 2000
allegedly resulting from problems with the tires. Firestone had paid off State Farm for the costs of
automobile accidents attributable to ATX tire failures. The investigations and scrutiny by the Arizona and
Venezuelan governments reinforces the impression that evidence was present of serious risks of adverse
consequences for the ATX brand. From 1998 to 1999, tread separations for one ATX model increased by
194%. In 1997 and 1998, another of Firestone’s ATX model’s tires accounted for the majority of the
company’s claims but during those same years, that model accounted for less than 10% of Firestone’s total
production. These claims and suits and payments were discussed at least quarterly from 1997 to 1999 in
meetings that consisted of Firestone’s senior management group, including Bridgestone Executive Vice-
president Ono, and Firestone’s financial group, quality group, and public relations / marketing department.
A major decision such as a recall by a Fortune 500 corporation is unlikely to simply materialize out of the
blue. As the Complaint alleges, the various increasing problems at Firestone crescendoed in 1998 and 1999.
From the facts pleaded, assumed to be true, and construing the complaint in the light most favorable to the
plaintiffs, it was, under all these circumstances, at least reasonably possible” if not “probable” that, as of
March 2000, the Firestone flagship brand ATX tires would experience a serious, adverse, financial event --
an impairment of the asset. Bridgestone’s effective representation that no loss or asset impairment arising
from Firestone tire products due to the lawsuits, regulatory scrutiny, or safety-related reasons was
“probable” or “reasonably possible” could thus be deemed by a reasonable juror to have been a
misrepresentation based on the facts available at that time.
         The question, then, is whether the “No Impairment” representation was material. Put another way,
was it “‘so obviously unimportant to a reasonable investor that reasonable minds could not differ on the
question of [its] importance?’” Helwig, 251 F.3d at 563 (quoting Ganino, 228 F.3d at 162) (emphasis in
Helwig). We conclude that it was not. The 1999 Annual Report included at least six statements that
stressed to shareholders or potential shareholders the significance of the Firestone brand or the American
and North American market, of which Firestone was Bridgestone’s major brand: (1) “We are determined
to assert a singular advantage in product technology. . . . We increased our market share in North America
in 1999 in . . . the original equipment market. Our North American operations are approaching a market
share of 20%.”; (2) a representation that as a percentage of Bridgestone’s net sales, its sales in the Americas
were 41.5 %, the largest of any geographic sector; (3) “[w]e increased our market share in North America
in 1999 . . . Demand for original equipment tires continued to grow in 1999 in the booming North American
automobile market”; (4) a statement under the bold, purple-colored, large font label of “Trends And Topics
“ that “[o]ur multibrand strategy - centered on . . . Firestone . . . raised our market profile further in 1999;”
(5) “aggressive product development and strategic marketing have re-established the Firestone name as a
vigorous brand in premium-grade tires, as well as in large-volume, middle-market tires;” and that (6) “[a]s
a major supplier to leading European automakers, we have developed business with the North American
operations of those automakers, too. We also supply tires to nearly all the Japanese-owned vehicle plants
in North America.” Firestone’s financial and brand name health was of obvious importance to the overall
state of Bridgestone’s financial health. That relationship was evident both from its portrayal in the Annual
Reports and in the severely adverse results that resulted immediately after the asset impairment occurred:
in addition to the stock and ADR share price drops, recall that Firestone and Bridgestone each experienced
a net $510 million loss for the 2000 fiscal year and that Bridgeport’s net earnings in 2000 were 80% less
than in fiscal year 1999. We conclude -- at a minimum -- that the probability or reasonably possibility of
Firestone’s brand name experiencing a significant asset impairment was not information “so obviously
unimportant to a reasonable investor that reasonable minds could not differ on the question of [its]
unimportance.” Id. This information was therefore not “immaterial” within the meaning of the federal
No. 03-5505             City of Monroe v. Bridgestone Corp., et al.                                    Page 22


securities laws. 15 U.S.C. § 78u-5(c)(1)(A)(ii). A reasonable juror could conclude that Bridgestone’s “no
impairment” representation in the 1999 Annual Report was actionable.
        The No Material Loss Representation
         The second representation from Bridgestone’s 1999 Annual Report that a reasonable jury could
conclude was actionable was its effective representation that there were no actual, material losses connected
to the lawsuits and responses to the regulatory scrutiny of the ATX tires. FASB 5 “requires accrual by a
charge to income (and disclosure) for an estimated loss from a loss contingency if two conditions are met:
(a) information available prior to issuance of the financial statements indicates that it is probable that an
asset had been impaired or a liability had been incurred at the date of the financial statements, and (b) the
amount of loss can be reasonably estimated.” The Retirement Fund asserts that both FASB 5 and its
Japanese analogue gave rise to a duty to disclose because Bridgestone “had specific knowledge throughout
the Class Period that [it was] already incurring substantial loses through the replacement of tires, settlements
of lawsuits and payment of claims.” Aplt’s Br. at 47.
         Bridgestone responds on this point with two arguments. First, it argues that the Complaint’s claims
based on problems related to the tires’ safety record are an impermissible attempt to plead fraud by
hindsight. Bridgestone asserts that “the Retirement Fund “has simply seized upon disclosures made in later
annual reports and alleged that they should have been in earlier ones.” Aple Bridgestone and Kaizaki’s Br.
at 30 (internal quotations omitted). This is literally true but does not mean that the Complaint advances an
impermissible theory of liability: the losses already sustained as of March 2000 were clearly facts
reasonably (and actually) available to Bridgestone in an amount calculable with precision or near-precision
as of March 2000; if they were material and subject to disclosure under the stated accounting policies, it is
no answer to say they were eventually disclosed later in time.
        Bridgestone’s second and more forceful argument is that these losses were not material.
Bridgestone asserts that “the complaint contains no pleaded fact indicating Bridgestone knew about any
substantial losses or that those amounts . . . actually were substantial for an $18 billion company.” Aple
Bridgestone and Kaizaki’s Br. at 29 (quotation marks omitted). “Indeed,” Bridgestone argues, “every
manufacturer replaces its products, settles lawsuits, and pays claims as part of its day-to-day business; yet,
no one would contend these activities alone requir[e] reserves.” Id.
          This argument is ultimately unpersuasive for three reasons. First, assuming the truth of the facts
set forth in the Complaint, by March 2000 -- when the Bridgestone 1999 annual Report was issued -- over
2000 rollover accidents, 700 serious injuries and 170 fatalities had occurred yielding thousands of claims
for and complaints concerning ATX tire failures and Bridgestone (via Firestone) incurred numerous
categories of financial losses, including those affiliated with entering into numerous settlement agreements
with the injured parties involving compensation, reimbursing State Farm, absorbing the cost of replacing
the tires in Arizona, and absorbing the cost of adding a nylon layer to its tires in Venezuela. A reasonable
juror could infer from this category-based evidence (as opposed to dollar-amount-based evidence not
included in the Complaint) that the related losses were substantial. That the Retirement Fund has not
through disclosure at this pre-discovery stage identified the precise amount of the payments as of March
2000, or amounts corresponding to agreements reached by Bridgestone or Firestone by March 2000 for sums
not as of then yet paid out, is no bar to the claim. The precise information as to dollar amount is presumably
available thus far only to Bridgestone and may well emerge in discovery. It is enough at this motion to
dismiss stage that the Complaint alleges specific losses via seemingly out of the ordinary payments on this
wide array of issues, each of which, as stated, was a definite amount that had already been paid out by the
time of the release of the subsequent annual report. See FASB 5 (requiring the disclosure of “information
available prior to issuance of the financial statements indicat[ing] that it is probable that an asset had been
impaired or a liability had been incurred at the date of the financial statements” the amount of which can
“be reasonably estimated.”).
No. 03-5505                City of Monroe v. Bridgestone Corp., et al.                                         Page 23


         Second, while it is likely the case that not every settlement or claim requires a reserve, that is
besides the point here. These payments were not as a group routine or minor; they covered thousands of
claims that alleged a common problem with a major product of Bridgestone’s largest subsidiary in its
highest volume sales market, the Americas. Because the 1999 Annual Report represented that there were
no actual losses connected to the lawsuits and responses to the regulatory scrutiny of the ATX tires’ failures,
there was a duty to disclose any material information to the contrary, be it in the form of a reserve, notice
of a contingency, or some other form of disclosure.
         Third, to the extent the materiality question is close, the general rule for securities fraud cases is
that “[a]t [the motion to dismiss] stage in the proceedings, a complaint may not properly be dismissed on
the ground that the alleged misstatements or omissions are not material unless they are so obviously
unimportant to a reasonable investor that reasonable minds could not differ on the question of their
unimportance.” Helwig, 251 F.3d at 553 (internal citations, quotations, and ellipses and emphasis omitted).
Courts “generally reserve such questions for the trier of fact.” Id. (collecting cases). We think this approach
is appropriate here, both because a reasonable juror could find this claim actionable and because we are
reversing on independent grounds with respect to a separate statement in the 1999 Annual Report.
                   ii.     Annual Reports 1996 - 1998
         With respect to the financial statements for the Annual Reports for fiscal years 1996 to 1998, we
conclude that the district court did not err in dismissing the claims based on those statements. Unlike the
1999 Annual Report, these reports contained no representation to the effect that United States GAAP
standards applied. Any claim, if at all, based on these Annual Reports would have to be based solely on the
implied statement (to American investors at that) that International Accounting Standard § 9010.08-.09
applied. Most significantly, much of the evidence that the Complaint relies on as establishing that the asset
was impaired or likely to suffer impairment became fully available after March of 1999, when the last of
these three reports was issued, particularly the data summary on the 34 suits against Bridgestone based on
deaths or injuries by consumers of Firestone-equipped Ford Explorers from rollovers allegedly caused by
Firestone tires, the tread separations increases from 1998 to 1999, and the dramatic rise in problems in 1998
and 1999. The facts tending to undermine the truth of the Annual Reports’ representations regarding
impairment and loss were thus not known at all or not known to their full extent as of the dates that the
Annual Reports for the 1996 - 1998 fiscal years were issued.
        For the foregoing reasons, we conclude that the Complaint pleaded three actionable claims: (1)
Firestone’s August 1, 2000 “objective data” representation; (2) Bridgestone’s “No Impairment”
representation; and (3) Bridgestone’s “No Loss” representation.
          2.       Scienter
         Mindful that to survive a motion to dismiss, a federal securities fraud claim must “withstand an
exacting statement-by-statement analysis,” In Re First Union Corp. Sec. Litig., 128 F. Supp.2d 871, 886
(W.D. N.C. 2001), the question then is whether the Complaint adequately pled scienter for these particular
statements as against Bridgestone, Firestone, or Ono. Scienter is “a mental state embracing intent to
deceive, manipulate, or defraud.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976). “As with
all fraud claims, Federal Rule of Civil Procedure 9(b) applies to pleading a defendant’s state of mind,
allowing that “’[m]alice, intent, knowledge, and other condition of mind of a person may be averred
generally.’” PR Diamonds, Inc., 364 F.3d at 682 (quoting Fed. R. Civ. P. 9(b)).
         However, in 1995, Congress, having “concluded that Rule 9(b) had “‘not prevented abuse of the
securities laws by private litigants,’”25 enacted the Private Securities Litigation Reform Act (“Reform Act”).


   25
        Comshare, 183 F.3d at 548 (quoting H.R. Conf. Rep. No. 104-369 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 818).
No. 03-5505                  City of Monroe v. Bridgestone Corp., et al.                                                   Page 24


The Reform Act grafted on “special requirements for pleading scienter in federal securities fraud cases.”
PR Diamonds, 364 F.3d at 682. As amended by the Reform Act, the securities laws provide:
          In any private action arising under this chapter in which the plaintiff may recover money
          damages only on proof that the defendant acted with a particular state of mind, the
          complaint shall, with respect to each act or omission alleged to violate this chapter, state
          with particularity facts giving rise to a strong inference that the defendant acted with the
          required state of mind.
15 U.S.C. § 78u-4(b)(2) (emphasis added). Under the Reform Act, if a plaintiff does not meet this
requirement, the reviewing district court “shall, on the motion of any defendant, dismiss the complaint.”
15 U.S.C. § 78u-4(b)(3).26 In enacting the Reform Act’s scienter-related provisions, Congress sought
simultaneously to curb frivolous securities fraud litigation, which “‘unnecessarily increase[s] the cost of
raising capital and chill[s] corporate disclosure, [and is] often based on nothing more than a company’s
announcement of bad news, not evidence of fraud,’” Comshare, 183 F.3d at 548-49 (quoting S. Rep. No.
104-98 (1995), 1995 U.S.C.C.A.N. 679, 690), and “to protect investors and to maintain confidence in the
securities markets.” H.R. Conf. Rep. No. 104-369, at 31 (1995), U.S.C.C.A.N. at 730. Reflecting this
balance, this court has noted that after the Reform Act, for those complaints advancing non-frivolous, well-
pled allegations of scienter, “[o]ur willingness to draw inferences in favor of the plaintiff remains
unchanged.” Helwig, 251 F.3d at 550; see also id. at 553 (rejecting an interpretation of the Reform Act
under which “it [would] become a choke-point for meritorious claims”).


          In elaborating on the meaning of the statute’s term “strong inference,” Helwig explained that
“[i]nferences must be reasonable and strong--but not [necessarily] irrefutable.” Id. The Complaint “need
not foreclose all other characterizations of fact, as the task of weighing contrary accounts is reserved for the
fact finder.” Id. Rather, under the “strong inference” requirement, the Retirement Fund is “entitled only
to the most plausible of competing inferences.” Id. Strong inferences . . . involve deductive reasoning;
their strength depends on how closely a conclusion of misconduct follows from a plaintiff’s proposition of
fact.” Id. (quoted with approval in In Re Ford, 2004 WL 1873808 at *2). Our task is thus to determine
whether the Complaint alleges facts that, if true, would, by forming the basis for a strong inference,
“convince a reasonable person that the defendant knew a statement was false or misleading.” Adams v.
Kinder-Morgan, Inc., 340 F.3d 1083, 1107 (10th Cir. 2003). Ultimately, in our scienter analysis, we
“employ[] a totality of the circumstances analysis whereby the facts argued collectively must give rise to
a strong inference of at least recklessness.” PR Diamonds, 364 F.3d at 691. “This necessarily involves a
sifting of allegations in the complaint.” PR Diamonds, 364 F.3d at 691 (quoting Helwig, 251 F.3d at 551).
Towards that end, Helwig identified nine factors that, while “not exhaustive,” are “helpful” in determining
whether the facts as pled are “probative” of scienter in securities fraud actions:
          (1) insider trading at a suspicious time or in an unusual amount;
          (2) divergence between internal reports and external statements on the same subject;


    26
        We take no position as to the constitutionality of the Reform Act’s heightened scienter pleading requirements. The
Seventh Amendment to the Constitution provides that “the right of trial by jury shall be preserved, and no fact tried by a jury, shall
be otherwise reexamined in any Court of the United States, than according to the rules of the common law.” U.S. Const. Am.
VII. Traditionally, there has been a right to jury trial for securities fraud claims. See, e.g., SEC v. Infinity Group Co. 212 F.3d
180, 196 (3d Cir. 2000). The Reform Act compels dismissal unless the facts pleaded in the Complaint produce a “‘strong
inference that the defendant acted” with scienter. 15 U.S.C. § 78u-4(b)(2)). One might argue that for cases where a juror could
conclude that the facts pleaded showed scienter, but that conclusion would not be the most plausible of competing inferences, a
Seventh Amendment Problem is presented. However, the Retirement Fund has not advanced any such argument and we decline
to address the merits of this constitutional question sua sponte.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                  Page 25


          (3) closeness in time of an allegedly fraudulent statement or omission and the later
          disclosure of inconsistent information;
          (4) evidence of bribery by a top company official;
          (5) existence of an ancillary lawsuit charging fraud by a company and the company’s quick
          settlement of that suit;
          (6) disregard of the most current factual information before making statements;
          (7) disclosure of accounting information in such a way that its negative implications could
          only be understood by someone with a high degree of sophistication;
          (8) the personal interest of certain directors in not informing disinterested directors of an
          impending sale of stock; and
          (9) the self-interested motivation of defendants in the form of saving their salaries or jobs.
251 F.3d at 552 (citing Greebel v. FTP Software,  Inc., 194 F.3d 185, 196 (1st Cir. 1996)) (in turn, collecting
cases). With these standards in mind,27 we turn to analyze scienter as to each of the three relevant
defendants, the two corporate legal persons -- Firestone and Bridgestone -- and the one individual, Firestone
CEO and Bridgestone Executive Vice-President Ono. Id.
          Scienter as to Firestone
          On August 1, 2000, Firestone released its statement that “[w]e continually monitor the performance
of all our tire lines, and the objective data clearly reinforces our belief that these are high-quality, safe tires.”
With respect to Firestone’s scienter concerning this statement, at least five of the nine non-exclusive Helwig
factors are apparent in the Complaint’s alleged facts. First, there was a clear “divergence between internal
reports and external statements on the same subject,” Helwig, 251 F.3d at 552; witness the contrast between
the data known or available to Firestone as of August 2000 -- concerning the evidence of defective tires
from Decatur and three years of a marked rise in the rates of deaths, injuries and claims and lawsuits based
on several thousand rollover accidents, hundreds of injuries, and nearly 200 fatalities in the United States,
over forty deaths in Venezuela, the multiple deaths in Saudi Arabia -- versus the unqualified positive
comments on the “objective data.” Firestone’s awareness of the circumstances at the Decatur plant,
including in particular the strike, the untrained replacement workers, the production schedule time increase
imposed by Bridgestone and Firestone in the labor negotiations with the union, and the test results pointing
to higher rates     of problems in the Decatur-produced ATX tires, make the imputation of scienter
reasonable.28
        Other factors reinforce this conclusion. There was a “closeness in time of an allegedly fraudulent
statement or omission and the later disclosure of inconsistent information.” id.; the August 1 statement about
“objective data” was followed one week later by the recall of 6.5 million tires and four months later by the
admission that many of the tires from the Decatur plant were made with a shoulder pocket more likely to
crack than normal due to an improper angle and were more likely to fail to stick together properly. There


    27
         We note that, contrary to Bridgestone’s and Firestone’s arguments, which rely heavily on In re Carter Wallace Inc. Sec.
Litig., 220 F.3d 36 (2d Cir. 2000), and Oran v. Stafford, 226 F.3d 275 (3d Cir. 2000), the precedent of this circuit frames our
scienter inquiry in this claim for securities fraud based on partial or incomplete disclosure.
    28
        Arguably, the known background of the 1979 recall based on a faulty adhesion compound discovered after Firestone’s
public disavowals of such a problem and the strikingly similar pattern to the problems identified in Firestone’s 2000 investigative
report makes it that much more reasonable to impute scienter to Firestone.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                 Page 26


was also a “disregard,” or at least a seeming disregard, of “the most current factual information before
making statements” Id. Further, to the extent Firestone disclosed its data to Bridgestone in a form
substantially similar to that presented in Bridgestone’s Annual Reports, Firestone’s “disclosure of
accounting information [was made] in such a way that its negative implications could only be understood
by someone with a high degree of sophistication.” Id. Finally, assuming, as the Complaint alleges, that
Bridgestone executives “kept the accident rate data which they had and which showed these serious
problems from safety regulators . . . so they could report huge profits and their executives could retain their
positions of power, prestige and profit and Bridgestone’s stock and ADRs would continue to trade at
inflated, higher prices, providing the executives with direct economic benefits based on their stock holdings
and options and allowing them to personally pocket huge bonuses based on corporate profits,” there was
thus a “self-interested motivation of defendants in the form of saving their salaries or jobs.” Helwig, 251
F.3d at 552.29
         Three of the nine Helwig factors are clearly absent as pertains to Firestone, although in a sense these
factors all go to the same question: conflict of interest. That is, there is no evidence of alleged insider
trading at a suspicious time or in an unusual amount, no evidence of bribery by a top company official, and
no evidence of personal interest of certain directors in not informing disinterested directors of an impending
sale of stock.
         That covers eight of the nine Helwig factors. A word is in order on whether the remaining factor
is present, i.e. whether there is the “existence of an ancillary lawsuit charging fraud by a company and the
company’s quick settlement of that suit.” Id. There is not, strictly speaking, such evidence because the
claims in question were not based on fraud per se. However, the presence of closely related evidence carries
some weight, particularly given that the list of factors is “non-exhaustive.” Id. Firestone entered into
multiple settlement agreements in response to product liability suits under which the settlement agreements
with plaintiffs were sealed, the parties entered into stipulated protective orders to conceal discovery, and
Firestone would have returned to it “damaging documents.” The gravamen of these claims and lawsuits,
though framed as pre-litigation claims or lawsuits in tort, was closely parallel to that of this suit: the tires
were not safe and Firestone should be held accountable for that fact. Moreover, Firestone secretly settled
with State Farm all claims for insurance in exchange for lack of disclosure by State Farm and avoided
through a secrecy agreement with the Venezuelan government any disclosure of its having added nylon
layers to ATX tires in Venezuela. The evidence of these secret settlements gets at the same notion as does
the Helwig factor instructing courts to analyze whether there have been ancillary lawsuits filed charging
fraud followed by quick settlement of such suits. The apparent animating idea is that a company engaging
in such practices is, all things being equal, more likely than not aware of the improper nature of the practice
being alleged, or at least of the perception of the given problem, which puts it on notice and, is fair to say,
generates a duty to inquire. These settlements are thus appropriate to weigh in our scienter analysis, since
“this court has made clear that ‘the label which a plaintiff applies to a pleading does not determine the nature
of the cause of action which he states.’” Minger v. Green, 239 F.3d 793, 799 (6th Cir. 2001) (quoting
United States v. Louisville & Nashville R. Co., 221 F.2d 698, 701 (6th Cir. 1955). Thus, in substance, if not
form, we think a sixth of the nine factors is also present.
           Given all this, we conclude under the totality of the circumstances that “the facts argued collectively
. . . give rise to a strong inference of at least recklessness.” PR Diamonds, 364 F.3d at 691. The Retirement




    29
        We reject Firestone’s suggestion that the withholding of information by senior corporate executives to effectuate an
inflation of the executives’ bonuses, stock prices, and job security is an “ordinary corporate event.” Aple Firestone’s Br. at 45.
Even if a regular occurrence, it is not an event this court sanctions as being legitimately ordinary.
No. 03-5505                 City of Monroe v. Bridgestone Corp., et al.                                                  Page 27


Fund has therefore adequately pleaded scienter with respect to its claim against Firestone for the Firestone’s
August 1, 2000 statement.30
          Scienter as to Bridgestone
         We next analyze whether the Complaint adequately pled scienter against Bridgestone for the two
actionable representations in the 1999 Annual Report discussed above in Part II(C)(i)(a): (1) the “No
Impairment” representation - that no impairment of Bridgestone’s corporate assets was substantially certain
to occur through problems arising from customers or regulators’ actions and (2) the “No Loss”
representation - that there were no actual, material losses connected to the lawsuits and responses to the
regulatory scrutiny of the ATX tires. A brief word is in order, though, on the nature of these claims.
Contrary to Bridgestone’s characterizations, the Retirement Fund’s theory is not that the Complaint relies
on the violation of GAAP to prove scienter. As Bridgestone correctly points, that allegation, without more,
would not be sufficient to plead scienter adequately. See, e.g., Adams v. Standard Knitting Mills, Inc., 623
F.2d 422, 432-33 (6th Cir. 1980) (concluding that although “there is sufficient evidence to support the
Court’s finding that ]the defendant] inadequately tested . .. financial figures in certain respects, [] the
evidence falls far short of proving that [the defendant] intended to deceive the stockholders.”). Rather,
GAAP is only part of the Complaint’s explanation of the falsity of the claim: as discussed below, the
Complaint alleges a wide range of facts above and beyond the violation of GAAP on which a reasonable
juror could conclude scienter was proven. That brief detour aside, we turn to the two statements.
                    Bridgestone’s Scienter Concerning its No Impairment Representation
         As to Bridgestone’s scienter with respect to the “No Impairment” representation, we conclude that
“the most plausible of competing inferences” arising from the evidence is that Bridgestone was at least
reckless as to the falsity of that representation. Helwig, 251 F.3d at 553. The analysis on this claim breaks
down similarly to that for Firestone: four -- arguably five -- of the Helwig factors are present.
         First, and in this case most significantly, the Complaint pleads facts that, if proven, could show a
divergence between internal reports and external statements on the same subject. By the end of 1999,
consumers had filed fifty lawsuits based on alleged problems with the ATX tires against Bridgestone or
Firestone or both, thirty-four of them filed between 1997 and 1999. As former Firestone Vice-President of
Quality Assurance Robert Martin testified in his deposition, Ono, who was Bridgestone’s Executive Vice-
President in addition to his role as Firestone CEO, was a member of the working group that from 1997 to
1999 tracked the lawsuits’ status. An internal 1999 Bridgestone document included data that one of the
ATX tire models -- the ATX II -- was the basis of the majority of the claims against Firestone but only ten
percent of its production. A reasonable juror could conclude that this was a red flag as to problems with
the tire model. Similarly, the ATX Wilderness model experienced in 1999 a rise in claims for tire tread
separations of 194% over the previous year, another potential red flag. Thus, the facts known or available
to Bridgestone were seemingly in tension with the representation that no impairment risk of Bridgestone’s


    30
        We do not foreclose the possibility that, going forward, Firestone may be held liable for Bridgestone’s misrepresentations
to the extent the Retirement Fund can prove Firestone communicated misleading results to Bridgestone. “[T[he requirement that
the plaintiff allege that the defendant made a misrepresentation does not mean that the plaintiff must allege that the defendant
communicate[d] that misrepresentation directly to the plaintiff.” In re Kidder Peabody Sec. Litig., 10 F. Supp. 2d 398, 407
(S.D.N.Y. 1998); see, e.g., Cooper v. Pickett, 137 F.3d 616, 624 (9th Cir. 1997) (defendant “ ‘cannot escape liability simply
because it carried out its alleged fraud through the public statements of third parties’”) (quoting Warshaw v. Xoma Corp., 74 F.3d
955, 959 (9th Cir.1996)); Anixter v. Home-Stake Prod. Co., 77 F.3d 1215, 1226 (10th Cir. 1996) (“there is no requirement that
the alleged violator directly communicate misrepresentations to plaintiffs for primary liability to attach”). If the Retirement Fund
can show that Firestone was the originator of Bridgestone’s misrepresentations regarding Firestone and that Firestone knew or
should have known that its misrepresentation would be communicated to investors, primary liability should attach. See Anixter,
77 F.3d at 1226. We need not assess here the factual question of whether Firestone was the original of Bridgestone’s
misrepresentations regarding Firestone and that Firestone knew or should have known that the misrepresentation would be
communicated to investors.
No. 03-5505                City of Monroe v. Bridgestone Corp., et al.                                               Page 28


corporate assets was substantially certain to occur through problems arising from customers or regulators’
actions and that there was no contingency risk of such a loss. Consider also Firestone’s previous tire tread
problems, fine, and massive recall, with which it is reasonable to assume, given due diligence standards,
that Bridgestone, as its suitor in a multi-billion dollar purchase the previous decade, was aware. This history
was in the known corporate background and should have made Bridgestone more attuned to the likelihood,
or at least non-trivial, contingent possibility, of a major financial hit to Firestone as the lawsuits, settlements,
and regulatory and public scrutiny surrounding the Firestone ATX tires, as used on the Explorer, intensified
from 1996 to 1999. This is particularly so given that the Americas were Bridgestone’s largest sales market,
that the North American market was, according to Bridgestone’s Annual Reports, a major source of past
and presumed future growth, that Firestone was the primary engine fueling that growth, and that the
Explorer contract in particular was -- by all appearances -- a key to Firestone’s return to profitability.

          Three, arguably four, other factors are further probative of Bridgestone’s scienter, albeit with less
force than the first one. First, for the reasons just outlined, we conclude that the facts could show that
Bridgestone disregarded “the most current factual information before making statements.” Helwig, 551 F.3d
at 552. Second, the 1999 Annual Report, by combining its statement of accounting policy with its silence,
can be viewed as “disclosure of accounting information in such a way that its negative implications could
only be understood by someone with a high degree of sophistication.” Id. Third, for the reasons discussed
above with respect to Firestone, the evidence supports a finding of “self-interested motivation of defendants
in the form of saving their salaries or jobs.” Id. Fourth, for the reasons discussed in the context of Firestone
but also applicable to Bridgestone, the existence of ancillary claims by consumers and State Farm Insurance,
lawsuits, and settlements based on claims alleging harm from unsafe ATX tires, and Bridgestone’s quick
and secret settlements of such claims, arguably is also probative of Bridgestone’s recklessness as to the truth
of its “No Impairment” representation.
         The four other Helwig factors admittedly are not probative of scienter. As to the “closeness in time
of an allegedly fraudulent statement or omission and the later disclosure of inconsistent information,”
Bridgestone’s statement in March 2000 occurred over four months before the information accompanying
the safety recall was disclosed, too distant in time to draw an adverse inference. And, as discussed in the
Firestone context, the Complaint does not allege insider trading at a suspicious time or in an unusual
amount, evidence of bribery by a top company official, or the personal interest of certain directors in not
informing disinterested directors of an impending sale of stock.
         Nonetheless, considering the totality of the circumstances, in particular the divergence of internal
and external statements with respect to clearly material information going to one of Bridgestone’s major
flagship brands, “the facts argued collectively . . . give rise to a strong inference of at 31
                                                                                            least recklessness”
as to the truth of its “No Impairment” representation. PR Diamonds, 364 F.3d at 691. The Retirement
Fund has therefore adequately pleaded scienter with respect to its claim against Bridgestone for that
representation.
                   Bridgestone’s Scienter as to the “No Loss” Representation
        We turn now to analyze whether the facts as pleaded give rise to a strong inference of recklessness
by Bridgestone as to its representation in the 1999 Annual Report that there were no actual, material losses
connected to the lawsuits and responses to the regulatory scrutiny of the ATX tires. Again, we think the
key factor here is the “divergence between internal reports and external statements on the same subject.”
Helwig, 251 F.3d at 552. As discussed, Ono, Bridgestone’s Executive Vice-President, met at least quarterly
with Firestone’s senior management group from 1997 to 1999, the financial group, the quality group, and

    31
        Cf. In re Ford, __ F.3d __, 2004 WL 1873808, at *6 (in affirming the dismissal of securities fraud claims against Ford
arising out of facts common to this case, noting that “it would be reasonable to expect the cost of replacing tires would be on
Bridgestone.”).
No. 03-5505               City of Monroe v. Bridgestone Corp., et al.                                        Page 29


the public relations / marketing department and in those meetings discussed the tread-peeling claims lodged
against Bridgestone (as well as against Firestone). Assuming the truth of the Complaint’s allegations, these
discussions addressed the lawsuits, claim settlements, and informal complaints that led to investigations by
governmental authorities in Arizona, Venezuela, and Saudi Arabia, as well as the secret settlements with
State Farm under which Firestone reimbursed State Farm for accidents allegedly caused by ATX tire
failures. Ono’s    awareness of the claims as gleaned from these meetings is directly attributable to
Bridgestone32 because “[t]he scienter of the senior controlling officers of a corporation may be attributed
to the corporation itself to establish liability as a primary violator of § 10(b) and Rule 10b-5 when those
senior officials were acting within the scope of their apparent authority.” Adams v. Kinder-Morgan, 340
F.3d at 1107; 2 Thomas Lee Hazen, Treatise on the Law of Securities Regulation § 12.8[4], at 444 (4th ed.
2002) (“[K]nowledge of a corporate officer or agent acting within the scope of [his] authority is attributable
to the corporation.”).
        Two facts reinforce the notion that Bridgestone knew or should have known that it was taking
heavy losses via claims settlement resulting from alleged problems with the ATX tires. First, Bridgestone
should have been particularly attuned to the possibility of defect-caused problems from ATX tires
manufactured at the Decatur plant in light of its awareness of the strike and the round-the-clock production
schedule and the “implemented adjustments in working hours that permit our plants to operate 24 hours a
day, seven days a week” that Bridgestone’s 1996 Annual Report trumpeted, showing that it was clearly
aware of the situation. Second, a 1999 Bridgestone internal report shows that the ATX II model was
accounting for a quite disproportionate percentage of claims alleging tire failure relative to its production
quantity as a Firestone’s total tire output: over 50% versus 10%.
         There is, as with the other two actionable statements and for the reasons previously stated, evidence
of the existence of ancillary lawsuits and the company’s quick settlement of those suits, of disregard of the
most current factual information before making statements, of disclosure of accounting information in such
a way that its negative implications could only be understood by someone with a high degree of
sophistication, and of the self-interested motivation of defendants in the form of saving their salaries or jobs.
Also like the analysis of the “No Impairment” representation, there is a lack of probative evidence as to the
remaining Helwig factors.
          Again, given this totality of circumstances, “the facts argued collectively . . . give rise to a strong
inference of at least recklessness” by Bridgestone as to the truth of its “no loss” representation. PR
Diamonds, 364 F.3d at 691. The Retirement Fund has therefore also adequately pled scienter with respect
to its claim against Bridgestone for this representation.
         Scienter as to Ono
          The Complaint attributes to Ono, as an individual corporate officer of Firestone and Bridgestone,
all of the alleged misrepresentations of those two corporate defendants. The Retirement Fund seeks to
attach liability to Ono based on his status as Firestone CEO and Bridgestone Executive Vice-President when
those two companies issued the alleged misrepresentations. The Retirement Fund argues that “Ono is
Liable for Firestone’s and Bridgestone’s statements under the group-published doctrine and inference,” also
known as the “group-pleading” doctrine. Aplt’s Br. at 48. The district court dismissed the claim against
Ono for failure to plead scienter. As detailed below, we agree with that result.
        At least two circuits have specifically recognized a “group pleading” exception to the
pleading-with-particularity requirements of Federal Rule Civil Procedure 9(b). See Wool v. Tandem
Computers Inc., 818 F.2d 1433, 1440 (9th Cir. 1987); Schwartz v. Celestial Seasonings, Inc.,124 F.3d 1246,

    32
       The Retirement Fund makes no serious argument that Bridgestone can be held liable for Firestone’s August 1, 2000
statement; we therefore do not address that argument. We note though that generally, “a subsidiary’s fraud cannot be
automatically imputed to its corporate parent.” In re Comshare, 183 F.3d at 554.
No. 03-5505                  City of Monroe v. Bridgestone Corp., et al.                                                Page 30


1254 (10th Cir. 1997). That exception is premised on the assumption that “[i]n cases of corporate fraud
where the false or misleading information is conveyed in prospectuses, registration statements, annual
reports, press releases, or other ‘group-published information,’ it is reasonable to presume that these are the
collective actions of the officers.” Wool, 818 F.2d at 1440.
         Firestone argues that this doctrine runs afoul of the amended pleading requirements embodied in
the Reform Act, which requires, for adequate pleading of scienter, that a federal securities fraud complaint
state the relevant facts “with particularity.” 15 U.S.C. § 78u-4(b). The United States Court of Appeals for
the Fifth Circuit 33
                  and a number of district courts have held that the group-pleading doctrine is foreclosed by
the Reform Act. Generally without discussion of the effect of the Reform Act, the several circuits that
embraced the group-pleading doctrine prior to the passage of the Reform Act have continued to apply that
doctrine since the Reform Act’s enactment. See Howard v. Everex Systems, Inc., 228 F.3d 1057, 1065-66
(9th Cir. 2000); Schwartz, 124 F.3d at 1254. This       court has not taken a position on whether such an
exception exists. Courts are divided on this issue.34
            We need not decide here the current viability of the group-published doctrine because resolution
of that question is not required to decide this case. The Complaint pleads, regarding Ono, little more than
his corporate titles, dates of employment and resignation, and attendance at the quarterly meetings. The
Retirement Fund does not allege by direct allegation or even upon information and belief that Ono played
any role in drafting, reviewing, or approving the Firestone’s “objective data” representation or the
Bridgestone annual reports, 1999 or any other years. Nor does it allege that he was, as a matter of practice,
or by job description, typically involved in the creation of such documents. Even if we permit the group-
pleading inference, these alleged facts, without more, are not enough to plead scienter adequately, See, e.g.,
Johnson v. Telltabs, Inc., 262 F. Supp.2d 937, 946-47 (N. D. Ill. 2003) (“Even if the group pleading doctrine
survives the [Reform Act], . . . [a] plaintiff is . . . required at least to include allegations . . . relating to
an individual defendant’s duties . . . that create a presumption that the company’s statement was somehow
. . . attributable to an individual defendant. Simply alleging an individual defendant’s title is not enough.”);
In re Baan, 103 F. Supp.2d at 18 (noting that to satisfy the group-pleading doctrine, a complaint “must
identify the roles of the individual defendants, and describe their involvement, if any, in preparing the
misleading statements”). Accordingly, we conclude that the district court did         not err in dismissing the
claims in the Complaint against Ono for failure to adequately allege scienter.35
                                                    III. CONCLUSION
          To summarize, we hold that: (1) the district court did not err in granting Kaizaki’s motion to dismiss
for lack of personal jurisdiction; (2) because the Complaint, for Firestone’s August 1, 2000 statement that
“[w]e continually monitor the performance of all our tire lines, and the objective data clearly reinforces our
belief that these are high-quality, safe tires,” adequately alleges an actionable statement and scienter against
Firestone, the district court erred in dismissing the claim based on that statement; (3) the district court did
not err in dismissing the claims against Firestone for its numerous other statements because those statements

    33
         See Southland Secs. Corp. v. INSpire Ins. Solution, Inc., 365 F.3d 353, 364 (5th Cir. 2004) (collecting cases).
    34
        Compare, e.g., In re SmarTalk Teleservices, Inc. Sec. Litig., 124 F. Supp.2d 527, 545 (S.D. Ohio 2000); In re Raytheon
Sec. Litig., 157 F. Supp.2d 131, 152-53 (D. Mass. 2001); In re Baan Co. Sec. Litig., 103 F. Supp.2d 1, 17 (D.D.C. 2000); In re
Sunbeam Sec. Litig., 89 F. Supp.2d 1326, 1340-41 (S.D. Fla. 1999); In re Stratosphere Corp. Sec. Litig., 1 F. Supp.2d 1096, 1108
(D. Nev. 1998) (holding that the group pleading doctrine survived the enactment of the Reform Act), with In re Miller Indus.,
Inc. Sec. Litig., 12 F. Supp.2d 1323, 1329 (N.D. Ga.1998); Allison v. Brooktree Corp., 999 F. Supp. 1342, 1350 (S.D. Cal. 1998);
(holding that the Reform Act abolished the group pleading doctrine)
    35
        At first glance, it might seem incongruous to reach this conclusion after relying in part on Ono’s knowledge of the claims
settlements as a basis for Bridgestone’s scienter on that claim. However, while an individual officer’s scienter may be attributed
to the corporation, liability for the corporation’s act does not, absent independent evidence, generally flow from the corporation
to the corporate officer.
No. 03-5505                   City of Monroe v. Bridgestone Corp., et al.                                                       Page 31


were not material; (4) the district court erred in dismissing the claims against Bridgestone based on two of
its effective representations in the 1999 Annual Report -- (i) that no impairment of Bridgestone’s corporate
assets was substantially certain to occur through problems arising from customers or regulators’ actions,
and (ii) that there were no actual, material losses connected to the lawsuits and responses to the regulatory
scrutiny of the ATX tires -- because for those representations, the Complaint adequately pled an actionable
statement and scienter against Bridgestone; (5) the district court did not err in dismissing the claims based
on Bridgestone’s representations in the financial statements of the 1996-1998 Annual Reports because those
statements were not misrepresentations; and (6) the district court did not err in dismissing the claims against
Ono for lack of scienter. We therefore need not reach any of the district court’s additional rulings.36
         To withstand the 12(b)(6) motions by Bridgestone and Firestone, the Retirement Fund must for each
alleged misrepresentation have adequately alleged five elements: (1) a misrepresentation or omission; (2)
of a material fact that the defendant had a duty to disclose; (3) made with scienter; (4) justifiably relied on
by plaintiffs; and (5) proximately causing them injury. In addition to dismissing the claim against Kaizaki
for lack of personal jurisdiction, the district court in its 12(b)(6) analysis held that the Complaint did not
satisfy the first three elements as against Bridgestone, Firestone, and Ono, holdings as to which, as just
summarized, we reverse with respect to Bridgestone and Firestone and affirm as to Ono. The district court
did not address the final two of the five requisite elements: justifiable reliance and proximate cause. The
parties’ briefs did not address these elements on appeal. As a “‘general rule . . . a federal appellate court
does not consider an issue not passed upon below.’” Pinney Dock & Transport Co., 838 F.2d 1445, 1461
(6th Cir. 1988) (quoting Singleton v. Wulff, 428 U.S. 106, 120 (1976)). We see no special reason to do so
here. Consequently, we remand to the district court to consider whether the Complaint adequately pleads
justifiable reliance and proximate cause with respect to the three actionable statements as against
Bridgestone and Firestone, and for further proceedings not inconsistent with this opinion.
           AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.




    36
         In connection with the defendants’ motions to dismiss, the district court issued two rulings in addition to those discussed
in the opinion, neither of which we need to analyze. First, the district court denied Bridgestone’s motion to dismiss for lack of
personal jurisdiction. See App. at 987-97 (Dist. Ct. Memorandum). Because Bridgestone does not cross-appeal, we do not
address this aspect of the district court’s ruling. See Spann v. Colonial Village, Inc., 899 F.2d 24, 35 (D.C. Cir. 1990) (Ginsburg,
R.B., J.) (noting that objections to “personal jurisdiction . . . can be waived at any stage of a proceeding and ordinarily are waived
by failure to take a cross-appeal”) (citing United States v. American Ry. Express Co., 265 U.S. 425, 435-36 n.11 (1924)). Second,
although the district court did not enter a Judgment in concert with its September 30, 2002 Order granting the several motions
to dismiss, the Retirement Fund treated the district court’s dismissal Order as a Judgment and, accordingly, on October 16, 2002,
timely filed a motion pursuant to Federal Rule of Civil Procedure 59(e) to alter or amend the Judgment or in the alternative for
leave to file a Proposed Amended Consolidated Complaint, which the Retirement Fund attached to its Rule 59(e) motion, along
with numerous proposed exhibits. See App. at 1039-1319. On February 25, 2003, the district court denied that motion on the
grounds of undue delay and futility. See id. at 1446-58. Because we have resolved the appeal on the question of whether the
district court’s initial dismissal was correct, the question of whether the district court also erred in its denial of the motion for leave
to amend is moot. We therefore do not address it.
