Scalia Gets Snarky Over Scienter Standard

At issue in the SCOTUS’s decision today in Tellabs, Inc. v. Makor Issues & Rights, Ltd.[SCOTUSblogvia How Appealing] was the definition of the term “strong inference”, and therefore what the standard is for determining whether a plaintiff has met the pleading requirements as to scienter in a securities fraud case. Some mildly saucy benchslaps insued.
Justice Scalia expressed his disdain for the majority’s resolution to this issue (authored by Justice Ginsburg) this way in his concurring opinion:

If a jade falcon were stolen from a room to which only A and B had access, could it possibly be said there was a “strong inference” that B was the thief? I think not, and I therefore think that the Court’s test must fail. In my view, the test should be whether the inference of scienter (if any) is more plausible than the inference of innocence.

Well, I don’t know. If a Supreme Court justice uses a really bad analogy from an old movie, could it possibly be said that he had made a “strong argument?”
But Ginsburg wasn’t taking this lying down. Her benchslap back from n.5 of the majority opinion is after the jump.
Also, the SCOTUS issued two other opinions today:
Rita v. United States [SCOTUSblog via How Appealing]
Tennessee Secondary School Athletic Assn. v. Brentwood Academy [SCOTUSblog via How Appealing]

5 JUSTICE SCALIA objects to this standard on the ground that “[i]f a
jade falcon were stolen from a room to which only A and B had access,”
it could not “possibly be said there was a ‘strong inference’ that B was
the thief.” Post, at 1 (opinion concurring in judgment) (emphasis in
original). I suspect, however, that law enforcement officials as well as
the owner of the precious falcon would find the inference of guilt as to B
quite strong-certainly strong enough to warrant further investigation.
Indeed, an inference at least as likely as competing inferences can, in
some cases, warrant recovery. See Summers v. Tice, 33 Cal. 2d 80, 84-
87, 199 P. 2d 1, 3-5 (1948) (in bank) (plaintiff wounded by gunshot
could recover from two defendants, even though the most he could
prove was that each defendant was at least as likely to have injured
him as the other); Restatement (Third) of Torts §28(b), Comment e, p.
504 (Proposed Final Draft No. 1, Apr. 6, 2005) (“Since the publication of
the Second Restatement in 1965, courts have generally accepted the
alternative-liability principle of [Summers v. Tice, adopted in] §433B(3),
while fleshing out its limits.”). In any event, we disagree with JUSTICE
SCALIA that the hardly stock term “strong inference” has only one
invariably right (“natural” or “normal”) reading – his.

Oh, snap!
I gotta go with the majority on this one, at least as far as the analogy goes. If only A and B had access to the room, that raises no stronger inference as to B than as to A, but it certainly raises a stronger inference as to B than as to anyone else other than A.

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