allegations in the Second Amended Complaint are made "upon
information and belief . . ., based upon . . . the investigation
made by and through [counsel]." Id. (emphasis added).
Allegations made on the basis of an investigation of counsel,
nevertheless, are the functional equivalent of allegations made
upon information and belief.*fn11 In re Nice Systems, Ltd. Sec.
Litig., 135 F. Supp.2d 551, 568-69 (D.N.J. 2001); see also In re
Silicon Graphics, 183 F.3d at 985; In re Theragenics Corp. Sec.
Litig., 105 F. Supp.2d 1342, 1351 (N.D.Ga. 2000); In re
PETsMART, Inc. Sec. Litig., 61 F. Supp.2d 982, 989 (D.Ariz.
1999); In re Green Tree Financial Corp. Stock Litig.,
61 F. Supp.2d 860, 872 (D.Minn. 1999); In re Aetna, 34 F. Supp.2d at
942. Therefore, because the Plaintiffs are pleading upon
information and belief, the PSLRA requires that the Plaintiffs
particularize all facts upon which their belief was formed,
including the identities of unnamed "former employees."
15 U.S.C. § 78u-4(b)(1); see also In re Nice Systems, 135 F. Supp.2d at
570-72. This they have failed to do.
The language of a statute is the starting point when
considering its meaning. Williams v. Taylor, 529 U.S. 420, 431,
120 S.Ct. 1479, 146 L.Ed.2d 435 (2000); Richardson v. U.S.,
526 U.S. 813, 818, 119 S.Ct. 1707, 143 L.Ed.2d 985 (1999); U.S. v.
Gregg, 226 F.3d 253, 257 (3d Cir. 2000). "Where the statutory
language is plain and unambiguous, further inquiry is not
required, except in the extraordinary case where a literal
reading of the language produces an absurd result." Idahoan
Fresh v. Advantage Produce, Inc., 157 F.3d 197, 202 (3d Cir.
1998); see also U.S. v. Ron Pair Enterprises, Inc.,
489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (Where "the
statute's language is plain, `the sole function of the courts is
to enforce it according to its terms.'") (quoting Caminetti v.
U.S., 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917)).
"[I]f the statutory language is clear, a court must give [such
language] effect unless this `will produce a result demonstrably
at odds with the intention of [the] drafters.'" Government of
the Virgin Islands v. Knight, 989 F.2d 619, 633 (3d Cir. 1993)
(quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564,
570, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982)); see also Williams,
529 U.S. at 431, 120 S.Ct. 1479 ("We give the words of a statute
their ordinary, contemporary, common meaning, absent an
indication Congress intended them to bear some different
import.") (citation and internal quotations omitted); Gregg,
226 F.3d at 257 ("Once the plain meaning of the statute is
determined, it is conclusive except in rare cases in which the
literal application of a statute will produce a result
demonstrably at odds with the intention of the drafters.")
(citation and internal quotations omitted).
When construing the language of a statute, "significance and
effect" must be accorded "to every word." Rake v. Wade,
508 U.S. 464, 471, 113 S.Ct. 2187, 124 L.Ed.2d 424 (1993) (citations
omitted); see also Public Lands Council v. Babbitt, 529
304 U.S. 728, 746, 120 S.Ct. 1815, 146 L.Ed.2d 753 (2000) (a statute
must "be construed in such a fashion that every word has some
operative effect.") (quoting U.S. v. Nordic Village, Inc.,
503 U.S. 30, 36, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992)); In re Top
Grade Sausage, Inc., 227 F.3d 123, 129 (3d Cir. 2000) ("[C]ourts
are obliged to give effect, if possible, to every word Congress
used.") (quoting In re Cohn, 54 F.3d 1108, 1115 (3d Cir.
1995)). Accordingly, when interpreting a statute, words may not
simply be read out of the statute. See e.g. National Credit
Union Admin. v. First National Bank & Trust Co., 522 U.S. 479,
502, 118 S.Ct. 927, 140 L.Ed.2d 1 (1998); Morales v. Trans World
Airlines, 504 U.S. 374, 385, 112 S.Ct. 2031, 119 L.Ed.2d 157
(1992); see also In re Nice Systems, 135 F. Supp.2d at 570-72.
The plain language of the PSLRA indicates that a plaintiff may
not plead some facts and withhold others. As mentioned, a
complaint on information and belief "shall state with
particularity all facts on which that belief is formed."
15 U.S.C. § 78u-4(b)(1) (emphasis added). Although the words "all"
and "facts" are not defined in the PSLRA, the meaning of each is
plain. "All" means "every member or individual component of."
Black's Law Dictionary 74 (6th ed. 1990). "Fact" is defined as
"an event or circumstance." Id. at 591. "Facts" also include
the names of confidential informants, employees, competitors and
others who provide information which leads to the filing of a
complaint under the Exchange Act. 141 Cong. Rec. H2849 (8 March
The plain language of the PSLRA dictates that plaintiffs
pleading on information and belief set forth each and every
event, circumstance, confidential informant, employee or others
who supply data which leads to the drafting of the complaint.
See Immigration and Naturalization Service v. Elias-Zacarias,
502 U.S. 478, 482, 112 S.Ct. 812, 117 L.Ed.2d 38 (1992) ("In
construing statutes, we must, of course, start with the
assumption that the legislative purpose is expressed by the
ordinary meaning of the words used.") (citation and internal
quotations omitted); see also In re Nice Systems, 135 F. Supp.2d
As discussed, moreover, "only the most extraordinary showing of
contrary intentions from [legislative history] would justify a
limitation on the `plain meaning' of the statutory language."
Ries v. National Railroad Passenger Corp., 960 F.2d 1156, 1161
(3d Cir. 1992) (quoting Garcia v. U.S., 469 U.S. 70, 75, 105
S.Ct. 479, 83 L.Ed.2d 472 (1984)). While neither necessary nor
appropriate for consideration in the present matter, the plain
language and understanding of the PSLRA are reinforced by its
In H.R. Conf. Rep. No. 104-369, Congress stated that its intent
in promulgating the information and belief provision was to
require that a "plaintiff . . . state with particularity all
facts in the plaintiff's possession on which the belief is
formed." H.R. Conf. Rep. No. 104-369, at 41, reprinted in
1995 U.S.C.C.A.N. at 740 (emphasis added). As the Supreme Court has
commented, a conference report such as the one issued in
connection with the passage of the PSLRA is "traditionally [an]
authoritative indicator of legislative intent." Northeast
Bancorp, Inc. v. Board of Governors of Federal Reserve System
472 U.S. 159, 170, 105 S.Ct. 2545, 86 L.Ed.2d 112 (1985); see
also Garcia, 469 U.S. at 76, 105 S.Ct. 479 ("[T]he authoritative
source for finding the Legislature's intent lies in the Committee
Reports on the bill, which `represen[t] the considered and
collective understanding of those Congressmen involved in
drafting and studying
proposed legislation.'") (quoting Zuber v. Allen, 396 U.S. 168,
186, 90 S.Ct. 314, 24 L.Ed.2d 345 (1969)).
Additional legislative history regarding information and belief
allegations comes from consideration of an amendment to H.R. 1058
(the version of the PSLRA from the House of Representatives),
proposed by Congressman John Bryant, D-TX (the "Bryant
Amendment"). Arguing against the requirement that plaintiffs
state with particularity all facts on which their beliefs are
formed, Representative Bryant expressed concern that
at the beginning of the case plaintiff would have to
set forth "with specificity all information," they
have to give all the information in advance that
forms the basis for the allegations of the plaintiff,
meaning any whistle-blower within a securities firm
involved would have to be uncovered in the pleadings
in the very, very beginning.
141 Cong. Rec. H2848 (8 March 1995). Congressman John Dingell,
D-MI, agreed and stated that H.R. 1058, if passed without the
Bryant Amendment, would require plaintiffs "literally, in [their]
pleadings, [to] include the names of confidential informants,
employees, competitors, and others who have provided information
leading to the filing of the case." 141 Cong. Rec. H2849 (8 March
1995). Despite such concerns, Congress rejected the Bryant
Amendment. 141 Cong. Rec. H2848 (8 March 1995).