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In re Omnicare, Inc. Sec. Litig.

United States Court of Appeals, Sixth Circuit

October 10, 2014

IN RE: OMNICARE, INC. SECURITIES LITIGATION. PAUL ANSFIELD et al. Plaintiffs, KBC ASSET MANAGEMENT N. V., Plaintiff-Appellant,
v.
OMNICARE, INC.; JOEL GEMUNDER; DAVID W. FROESEL, JR.; JOHN L. WORKMAN; CHERYL D. HODGES, Defendants-Appellees

Argued January 30, 2014

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Appeal from the United States District Court for the Eastern District of Kentucky at Covington. No. 2:11-cv-00173--David L. Bunning, District Judge.

ARGUED: Andrew M. McNeela, KIRBY MCINERNEY LLP, New York, New York, for Appellant.

Richard W. Reinthaler, WINSTON & STRAWN LLP, New York, New York, for Appellees.

ON BRIEF: Andrew M. McNeela, Ira M. Press, J. Brandon Walker, KIRBY MCINERNEY LLP, New York, New York, Gary J. Sergent, O'HARA, RUBERG, TAYLOR, SLOAN & SERGENT, Crestview Hills, Kentucky for Appellant.

Richard W. Reinthaler, John E. Schreiber, WINSTON & STRAWN LLP, New York, New York, William T. Robinson III, Michael E. Nitardy, FROST BROWN TODD LLC, Florence, Kentucky, Mark Alan Vander Laan, Amanda P. Lenhart, DINSMORE & SHOHL, LLP, Cincinnati, Ohio, for Appellees.

Before: BOGGS and MOORE, Circuit Judges; BARRETT, District Judge.[*]

OPINION

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KAREN NELSON MOORE, Circuit Judge. On May 11, 2012, KBC Asset Management N.V. (" KBC" ) filed a Consolidated Amended Complaint (" Complaint" ), on behalf of Paul Ansfield and other similarly situated shareholders, against Omnicare, Inc. (" Omnicare" ) and several of its current and former officers (collectively, " the Individual Defendants" ): Joel Gemunder, former President and Chief Executive Officer; David W. Froesel, Jr., former Chief Financial Officer; John L. Workman, current President and Chief Financial Officer; and Cheryl D. Hodges, former Senior Vice

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President and Secretary. In the Complaint, KBC alleged that the defendants had committed securities fraud in violation of § 10(b) of the Securities Exchange Act of 1934 (" 1934 Act" ), codified at 15 U.S.C. § § 78j(b) and 78t(a), as well as Securities and Exchange Commission (" SEC" ) Rule 10b-5, codified at 17 C.F.R. § 240.10b-5. Specifically, KBC charged the defendants with making various material misrepresentations and omissions between January 10, 2007 and August 5, 2010 (" the Class Period" ) in public and in SEC filings regarding Omnicare's compliance with Medicare and Medicaid regulations. Omnicare moved to dismiss the suit for failure to state a valid claim, and the district court granted Omnicare's motion. KBC now appeals.

The elephant-sized boulder blocking KBC's suit is the Private Securities Litigation Reform Act of 1995 (" PSLRA" ), Pub. L. No. 104-67, 109 Stat. 737, codified at 15 U.S.C. § 78u-4, which created heightened pleading standards for securities-fraud cases. To satisfy this heavier, statutorily created burden, plaintiffs must identify each misleading or false statement and explain how it is misleading. 15 U.S.C. § 78u-4(b)(1)(B). In addition, plaintiffs must " state with particularity facts giving rise to a strong inference that the defendant[s] acted with the required state of mind." § 78u-4(b)(2)(A). These requirements are not easily satisfied. In this case, we must answer whether plaintiffs have cleared these hurdles and what allegations can be considered in making that determination. Our ultimate answers do not favor KBC, and thus, we AFFIRM the dismissal of the Complaint.

I. BACKGROUND

The actors and allegations in the Complaint are many and muddled. By way of clarification: KBC is an asset-management company, located in Brussels, Belgium, that bought and held Omnicare stock during the Class Period. Its opponent, Omnicare, is the nation's largest provider of pharmaceutical care for the elderly, operating in forty-seven states, the District of Columbia, and Canada.

Gemunder was the President, the CEO, and a director of Omnicare from May 20, 1981 to August 2, 2010. He allegedly had responsibility for overseeing the company and making various certifications to the SEC. R. 94 at 7-9 (Compl. at ΒΆ 11) (Page ID #831-33). Moreover, KBC claimed that Gemunder had knowledge that Omnicare was not ...


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