Clarifying Securities Pleading: Judicial Notice of Third‑Party Public Statements and Form 4s Permitted; Puffery/Forward‑Looking Optimism Not Actionable Absent Specific Contrary Facts

Case: Bandol Lim v. Edward Hightower, No. 24-3960 (6th Cir. Oct. 21, 2025) (not recommended for publication)

Court: United States Court of Appeals for the Sixth Circuit

Panel: Judges Moore, Griffin, and Nalbandian. Opinion by Griffin, J., joined by Nalbandian, J.; Moore, J., concurring in part and dissenting in part.

Introduction

This appeal arises from the collapse of the Lordstown Motors–Foxconn electric-vehicle partnership and Lordstown’s subsequent Chapter 11 filing. Two Lordstown shareholders (the Stricklands) brought Exchange Act claims against three Lordstown executives—CEO Edward Hightower, CFO Adam Kroll, and former CEO Daniel Ninivaggi—alleging that optimistic public statements about the Foxconn relationship misled investors in violation of Section 10(b), Rule 10b‑5, and Section 20(a). The district court dismissed the complaint, took judicial notice of various public materials (including Foxconn’s public statements, Lordstown’s SEC filings attaching transactional agreements, and insiders’ Form 4s), and denied leave to amend (treated as effectively denied for failure to properly move).

On appeal, plaintiffs challenged (i) the Rule 12(b)(6) dismissal for failure to plead falsity/materiality and scienter with particularity under Rule 9(b) and the PSLRA, (ii) the scope of judicial notice, and (iii) the refusal to allow another amendment. The Sixth Circuit affirmed across the board. Judge Moore concurred in part and dissented in part, arguing that one narrow theory—material omissions regarding the pivot from the 2022 Joint Venture Agreement (JVA) to the Investment Agreement (IA)—was adequately pleaded against Hightower and Kroll, and that the district court overstepped in using judicial notice for the truth of documents in assessing scienter.

Summary of the Opinion

The court affirmed dismissal of the securities-fraud claims because:

No materially false or misleading statements or actionable omissions: The executives’ public praise of the Foxconn relationship consisted largely of non‑actionable puffery and protected forward‑looking statements under the PSLRA safe harbor, accompanied by meaningful cautionary language. Plaintiffs did not tether alleged omissions to specific statements rendered misleading, as required after Macquarie Infrastructure (2024).
No strong inference of scienter: Considered holistically under Tellabs and Helwig, the complaint failed to show knowing falsity or recklessness. Form 4s undercut insider‑trading allegations; confidential witness statements were vague and conclusory; temporal proximity alone (March 2023 statements followed by Foxconn’s April 2023 default) did not support scienter.
Judicial notice was proper: The district court did not abuse its discretion by noticing: (1) Foxconn’s public statements as relevant to what the defendants likely knew about the relationship; (2) Lordstown’s pre‑class‑period 8‑Ks attaching the transactional agreements; and (3) Form 4s reflecting insiders’ transactions.
Section 20(a) failed derivatively: Without a primary violation, the control‑person claim could not stand.
No abuse in denying leave to amend: Plaintiffs made only a perfunctory, two‑sentence request in an opposition brief. Under PSLRA constraints and Sixth Circuit practice (Begala; La. School Employees), a proper motion and proposed amendment were required.

Analysis

Precedents Cited and Their Roles

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007): Instructs courts to consider the complaint holistically, together with materials incorporated by reference and matters subject to judicial notice, and requires that the scienter inference be cogent and at least as compelling as competing inferences.
Twombly/Iqbal (Bell Atlantic Corp. v. Twombly; Ashcroft v. Iqbal): Baseline plausibility pleading standard under Rule 12(b)(6).
Rule 9(b) and PSLRA, 15 U.S.C. § 78u‑4(b)(2)(A): Heightened particularity for fraud (who/what/when/where/how) and “strong inference” of scienter for each statement.
In re Omnicare, Inc. Sec. Litig. (6th Cir. 2014) and Indiana State District Council v. Omnicare (6th Cir. 2009): Framework for falsity/materiality and scienter; opinions can be actionable if not honestly held or if undermined by undisclosed contrary facts.
Helwig v. Vencor, Inc. (6th Cir. 2001) (en banc): Non‑exhaustive factors to evaluate scienter, including insider trading, divergence between internal reports and external statements, temporal proximity, and disregard of current facts.
Basic Inc. v. Levinson, 485 U.S. 224 (1988): Materiality as significance to the reasonable investor and “total mix” of information; also underscores the Exchange Act’s philosophy of full disclosure.
Macquarie Infrastructure Corp. v. Moab Partners, L.P., 601 U.S. 257 (2024): Pure omissions are not actionable under Rule 10b‑5(b) unless they render existing statements misleading; focal in the majority’s omissions analysis.
Zaluski v. United American Healthcare Corp., 527 F.3d 564 (6th Cir. 2008) and In re Sofamor Danek Group, Inc., 123 F.3d 394 (6th Cir. 1997): Duty to disclose “hard” vs. “soft” information; soft information (opinions/predictions) triggers a duty only if virtually as certain as hard facts, though voluntarily disclosed soft information must be full and fair.
PSLRA Safe Harbor, 15 U.S.C. § 78u‑5: Protects forward‑looking statements (projections/plans) when accompanied by meaningful cautionary language or absent scienter.
Dougherty v. Esperion Therapeutics, Inc., 905 F.3d 971 (6th Cir. 2018): Focus for forward‑looking statements is whether veracity can be determined when made.
Stoneridge, Matrixx Initiatives, Ashland, PR Diamonds, Doshi, Nolan: Various building blocks on elements, scienter thresholds, and use of documents to contradict implausible allegations at dismissal.
Judicial notice authorities: Fed. R. Evid. 201(b); New England Health Care Emps. Pension Fund v. Ernst & Young (6th Cir.); Cortec Industries (2d Cir.); Kramer (2d Cir.); In re UnumProvident; Plymouth County v. ViewRay—supporting notice of public SEC filings, press releases, and Form 4s in securities cases.

Legal Reasoning

1) Judicial Notice at the 12(b)(6) Stage

Foxconn’s public statements: The district court noticed presentation decks, call transcripts, press releases, and Foxconn’s annual report. The majority deemed them relevant to what Lordstown’s executives likely knew, bearing on scienter. Plaintiffs attacked relevance, but the Sixth Circuit emphasized that these were public, undisputed, and part of the market’s information environment; corporate officers involved in the partnership could be expected to know them.
Lordstown’s 8‑Ks with agreements (APA, CMA, JVA): Routine, proper subjects of judicial notice; even pre‑class documents were relevant because the complaint spanned events before the class period and informed defendants’ contemporaneous perceptions.
Form 4s (Hightower and Kroll): Noticed to assess scienter and insider‑trading allegations. The court treated the Form 4s as contradicting the “disposal” theory, showing tax‑withholding conversions rather than sales and also acquisitions—undercutting suspicious‑trading inferences.

Dissent: Judge Moore agreed the court could notice the existence of public filings but objected to relying on them for their truth when assessing scienter. She argued the court crossed the line by treating Foxconn’s rosy statements and the Form 4 annotations (e.g., “not a sale”) as true rather than merely acknowledging their public availability, contrary to recent Sixth Circuit guidance (Hodges; Blackwell). In her view, these materials can inform materiality (market awareness) but should not resolve factual contests about what defendants believed or whether transactions were suspicious at the pleading stage.

2) Falsity and Materiality

Affirmative statements: Praise for collaboration, “broadened strategic partnership,” and a “better, simpler, easier structure” under the IA were largely non‑verifiable corporate optimism or forward‑looking hopes. The company repeatedly cautioned that success depended on Foxconn’s investment and other risks. The PSLRA safe harbor insulated future‑oriented statements accompanied by meaningful cautionary language; many statements were puffery—“too squishy” to be material to a reasonable investor.
Alleged omissions: Plaintiffs advanced broad assertions about Foxconn “dragging its feet,” stalling, and “moving goalposts,” but the majority treated these as soft information without a duty to disclose and not tied to any particular statement rendered misleading. Two “hard fact” omissions failed as pleaded:
- Hightower’s Taiwan trip and Foxtron CEO’s non‑meeting: Not contrary to Hightower’s general description of discussions with Foxconn’s leadership on operationalizing the JV; not a material contrary fact.
- October 2022 breach letter: The majority held that disclosure of the letter was not required at that time because the parties pivoted quickly to the IA and “moved on” from the JVA; until the IA outcome materialized, the status remained uncertain and not “virtually as certain as hard facts” (Zaluski). Moreover, under Macquarie, the omission must render prior statements misleading; plaintiffs failed to link this breach letter to a specific misleading statement.

Dissent: Judge Moore would allow a narrow omissions claim to proceed. Once Lordstown chose to speak about the JVA’s termination and the IA’s formation as a positive development, it was required to “speak fully and fairly” (Zaluski; Rubin). She viewed the complaint (reinforced by bankruptcy filings and executives’ own declarations) as alleging that Lordstown pivoted to the IA only because Foxconn had breached and would not perform the JVA. That context plausibly undermined public characterizations such as “better, simpler, easier” and a “strong sign of confidence,” making the omission material under Basic. The dissent thus framed the case as a selective-disclosure claim, not a pre‑announcement duty to disclose negotiation details.

3) Scienter

Applying Tellabs holistically and the Helwig factors:

Insider trading: The Form 4s showed tax‑withholding conversions and purchases rather than suspicious sales, defeating an inference of scienter.
Divergence between internal and external information: Plaintiffs’ confidential witnesses offered hindsight beliefs and general impressions, not particularized internal reports or communications attributable to defendants. Plaintiffs could not rely on executives’ titles to infer knowledge (PR Diamonds), especially against the backdrop of Foxconn’s substantial, ongoing investments.
Temporal proximity: Statements in early March 2023 followed by Foxconn’s April 2023 default did not, without more, raise a strong inference; proximity alone is insufficient (Konkol).
Overall: The complaint described Foxconn’s allegedly concealed sabotage, not the defendants’ contemporaneous knowledge of deception. Optimistic statements amid evolving agreements and genuine capital inflows do not, without particularized contrary facts, establish knowing falsity or recklessness; the theory sounded in “fraud by hindsight” (Novak).

Dissent: Judge Moore found a strong inference of scienter—at least as to Hightower and Kroll—based on: (i) their personal involvement and statements demonstrating intimate knowledge of the Foxconn relationship; (ii) the October 2022 breach letter and contemporaneous descriptions (via bankruptcy filings and declarations) that by fall 2022 it was “clear” Foxconn would not fulfill the JVA, yet the IA was publicly touted without that context; (iii) the centrality of the Foxconn partnership to Lordstown’s viability (heightening the inference that executives knew and appreciated the import of the breach); and (iv) job‑security motives and the need to maintain market confidence. She also cautioned that the district court improperly treated the Form 4s as conclusive at the pleading stage.

4) Section 20(a) Control-Person Liability

Derivative of the primary violation. Because the Section 10(b)/Rule 10b‑5 claim failed, the Section 20(a) claim was properly dismissed (Frank; Indiana State District Council).

5) Leave to Amend

PSLRA and Rule 15(a): Securities cases are not vehicles for iterative “advise‑and‑amend.” A bare request in an opposition brief, unaccompanied by a proposed amended pleading or a memorandum identifying specific amendments, is insufficient (Begala; La. School Employees). The district court did not abuse its discretion in effectively denying such a request.

Impact and Practical Implications

Judicial notice in securities cases: The majority reaffirms that courts may take notice of publicly available documents beyond the four corners of the complaint—press releases, third‑party public statements (even by counterparties), SEC filings (8‑Ks, Form 4s)—to test plausibility at Rule 12(b)(6). The dissent’s caution signals continuing litigation over how far courts may go in using noticed documents to resolve factual disputes at the pleading stage (particularly for scienter).
Puffery and PSLRA safe harbor: Optimistic, forward‑looking statements about partnerships and strategic plans—especially when paired with meaningful risk disclosures—remain largely non‑actionable. Plaintiffs must isolate concrete, verifiable statements and plead contemporaneous contradictory facts.
Omissions after Macquarie (2024): Plaintiffs must tether alleged omissions to specific statements rendered misleading. Bare “should have told us” narratives or general claims of uncooperativeness will not do. The dissent’s partial‑disclosure approach shows room for viable claims when a company affirmatively touts a transaction as a positive evolution while omitting known, deal‑driving breaches that materially color investor understanding.
Insider‑trading scienter theories: Form 4s can be potent for defendants; tax‑withholding conversions and net acquisitions undercut suspicious‑trading inferences. Plaintiffs should scrutinize Form 4 details (including footnotes and transaction codes) before alleging “disposals.”
Use of pre‑class‑period documents: Courts may look to earlier SEC filings and agreements to frame the “total mix” and to contextualize forward‑looking statements and risk disclosures. Plaintiffs should anticipate that context will be read holistically.
Pleading discipline under the PSLRA: Conclusory confidential‑witness assertions and hindsight characterizations are weak substitutes for particularized internal reports, emails, board materials, or contemporaneous analyses attributable to defendants. Specificity matters—who knew what, when, where documented, and how it contradicts the challenged statements.
Amendment practice: Do not rely on a cursory footnote request. File a stand‑alone motion, attach the proposed amendment, and delineate concrete, curative changes—especially in PSLRA cases.

Complex Concepts Simplified

Section 10(b)/Rule 10b‑5: The core federal securities‑fraud provision. It prohibits making any untrue statement of material fact or omitting a material fact necessary to make statements made not misleading, in connection with the purchase or sale of securities.
Materiality: Whether a reasonable investor would view the information as significantly altering the “total mix” available.
Scienter: A mental state embracing intent to deceive, manipulate, or defraud; in the Sixth Circuit, recklessness—akin to conscious disregard—can suffice, but when only “soft information” is at issue, plaintiffs often must show knowing falsity.
Puffery: Vague corporate cheerleading (e.g., “world‑class,” “strong partnership,” “better, simpler, easier”) that reasonable investors do not rely on; generally immaterial.
PSLRA Safe Harbor: Protects forward‑looking statements (projections, plans, objectives) if accompanied by meaningful cautionary language, or if plaintiffs fail to plead actual knowledge of falsity.
Hard vs. Soft Information: “Hard” facts (historical, objectively verifiable) often trigger disclosure duties; “soft” information (opinions, predictions) does not, unless (a) virtually as certain as hard facts or (b) voluntarily disclosed without full and fair context.
Macquarie (2024) and omissions: Rule 10b‑5(b) does not create liability for pure omissions; plaintiffs must show an omission made an affirmative statement misleading.
Judicial Notice (Rule 201): Allows courts to consider undisputed public facts and documents (e.g., SEC filings) at the motion‑to‑dismiss stage, especially in securities cases, to evaluate the totality of public information.
Form 8‑K / Form 4: 8‑K reports significant corporate events; Form 4 reports insider transactions—its details (including footnotes) often determine whether trading looks suspicious or routine (e.g., tax‑withholding conversions).
Helwig Factors: Non‑exhaustive indicators of scienter: unusual insider trading; divergence between internal and public information; timing; ignoring current facts, etc.

Conclusion

This decision reinforces the demanding PSLRA pleading regime in the Sixth Circuit. The majority affirms a robust use of judicial notice to contextualize securities claims—including noticing counterparties’ public statements and Form 4 details—and doubles down on the enduring shields of puffery and the safe harbor for forward‑looking optimism. It also tightens the omissions lever in the wake of Macquarie: plaintiffs must connect the dots between what was said and why silence about certain facts rendered those statements misleading.

Judge Moore’s partial dissent meaningfully flags two pressure points. First, while public documents are judicially noticeable, courts should avoid treating their contents as true to resolve scienter disputes at the pleading stage. Second, a selective‑disclosure claim may survive when executives choose to tout a transaction as a relationship‑strengthening pivot while omitting known, deal‑driving breaches that materially recast the narrative.

The practical message is clear: plaintiffs must plead particularized, contemporaneous contradictions to overcome puffery and safe‑harbor barriers and to establish scienter; defendants should curate complete, cautionary disclosures and marshal public documents (including Form 4s) early. And all parties should heed the Sixth Circuit’s procedural rigor—especially on amendment practice—in PSLRA actions.