ORDER

JAMES CARR, District Judge

This is a suit by former shareholders of the Dana Corporation against three of the company's former officers. The gravamen of the complaint is that the three defendants worked together to falsify financial information about the financial circumstances of an important Dana unit. That misinformation contributed to overly optimistic public statements by Dana officials.

In time, Dana acknowledged the falsity of its earlier statements. It also restated past financial reports and amended its related SEC filings. Thereafter the company filed a bankruptcy petition.

Plaintiff's suit contends defendants are primarily liable to them for the role their misconduct played in ensuing events. Defendants assert that, because they never made any statements to the investing public, no one could have relied on any statements by them. Plaintiff, they contend, improperly seeks to find them primarily liable on the basis that they aided and abetted others in perpetrating a fraud on the investing public.

Defendants moved to dismiss. I denied that motion, stating, in part:

Defendants contend that they were mere aiders and abettors who merely assisted the fraud perpetrated by their superiors. Viewed, however, most favorably to the plaintiff, the complaint bears a contrary reading: namely, that those who spoke directly to the investing public merely conveyed to the public the defendants' conduct that was at the heart of the fraud. While defendants' superiors could have snuffed out what the defendants had started, the fact that they did not do so does not relieve defendants of exposure to culpability as primary participants, even if they and their role was hidden in the shadows from investors' eyes.

*****

The complaint here alleges more than mere incidental and insignificant help in creating the falsely bright picture that others presented to the public. According to the complaint, the defendants sketched out and helped fill in that picture during the entire period it was on display. If the jury finds truth in the plaintiff's allegations, it might also find that, but for the defendants' handiwork, the public all along would have seen the real Dorian Gray.

Pending are defendants' motions to reconsider my decision in light of the Supreme Court's recent opinion in Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296 (2011). [Docs. 104, 105, 107]. I agree that Janus, which changed the doctrine of securities liability under Rule 10b-5(b), compels reconsideration and partial reversal of my earlier opinion.

Discussion

The authority to reconsider denial of a motion to dismiss before final judgment has been entered is well established. E.g., Fed.R.Civ.P. 54(b); Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988) ("[a] court has the power to revisit prior decisions of its own . . . in any circumstance."). While a motion for reconsideration should not be used to re-litigate issues previously considered, courts traditionally will find justification for reconsidering interlocutory orders when there is: 1) an intervening change of controlling law; 2) new evidence; or 3) a need to correct a clear error or prevent manifest injustice. Rodriguez v. Tennessee Laborers Health Welfare Fund, 89 Fed. App'x. 949, 959 (6th Cir. 2004) (unpublished disposition) (citing Reich v. Hall Holding Company, 990 F. Supp. 955, 965 (N. D. Ohio 1998)). Here, the change or clarification in the law provided by the Supreme Court's decision in Janus justifies revisiting my prior decision denying defendants' motions to dismiss.

1. Janus Capital Group Inc. v. First Derivative Traders

At issue in that case, as in the one at hand, is the provision of Rule 10b-5 making it "unlawful for any person, directly or indirectly, . . . [t]o make any untrue statement of a material fact" in connection with the purchase or sale of securities." 17 CFR § 240.10b-5(b).

The plaintiff — Janus Investment Fund — alleged that JCM should be primarily liable for misleading statements found in certain of the plaintiff's prospectuses. JCM, as Janus Investment Fund's investment advisor, was responsible for the day-to-day management of the investment portfolio and the Funds' other business affairs, such as administrative, compliance and accounting matters. JCM drafted and reviewed the Fund prospectuses, including the allegedly fraudulent language. JCM disseminated the prospectuses through its parent company's web site. All officers of Janus Investment Fund were also officers of JCM, but only one member of Janus Investment Fund's board of trustees was associated with JCM, and thus JCM and the Janus Investment Fund were legally independent entities.

The Court of Appeals for the Fourth Circuit held that the complaint stated a viable claim for primary liability against JCM because it alleged that, by participating in the writing and dissemination of the prospectuses, JCM "made" the misleading statements in the documents.

The Supreme Court disagreed. The Court's rationale turns on an extremely limited interpretation of the verb "to make." Reading all nuance and any implication of "creating" out of the word, the Court announced that "[o]ne `makes' a statement by stating it." It is not enough to have drafted the statement; only the person or entity with "ultimate authority" can be found to have "made" the statement:

For purposes of Rule 10b-5, the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it. Without control, a person or entity can merely suggest what to say, not "make" a statement in its own right. One who prepares or publishes a statement on behalf of another is not its maker. And in the ordinary case, attribution within a statement or implicit from surrounding circumstances is strong evidence that a statement was made by — and only by — the party to whom it is attributed. This rule might best be exemplified by the relationship between a speechwriter and a speaker. Even when a speechwriter drafts a speech, the content is entirely within the control of the person who delivers it. And it is the speaker who takes credit — or blame — for what is ultimately said.

The Court reasoned that the rule articulated in Janus properly focused on "the entity with the authority over the content of the statement and whether and how to communicate it." Without such authority, it is not "`necessary or inevitable' that any falsehood will be contained in the statement." Janus thus "set[] the pleading bar even higher in private securities fraud actions seeking to hold defendants primarily liable for the misstatements of others." Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 692 n. 8 (9th Cir. 2011).

A. 10b-5(b) i. Janus and Corporate Insiders

Plaintiff contends that Janus should not alter my prior holding in this case for the simple reason that here defendants are corporate insiders. Because the defendant in Janus was a legally separate entity, plaintiff argues, the Court's rationale cannot apply to the facts at hand. Plaintiff asserts that, "[i]n essence, Janus involves a secondary actor" and thus " Janus does not analyze whether corporate executives can be liable." [Doc. 108 at 8].

However, the Court "adopt[ed] a rule" that "[f]or Rule 10b-5 purposes, the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it." Janus, supra, 131 S. Ct at 2303, 2298. The Court made clear that it intended its analysis to elucidate the contours of primary and secondary liability under Rule 10b-5(b). The Court determined that:

there must be some distinction between those who are primarily liable (and thus may be pursued in private suits) and those who are secondarily liable (and thus may not be pursued in private suits). We draw a clean line between the two — the maker is the person or entity with ultimate authority over a statement and others are not. In contrast, the dissent's only limit on primary liability is not much of a limit at all. It would allow for primary liability whenever `[t]he specific relationships alleged . . . warrant [that] conclusion' — whatever that may mean."

Thus, nothing in the Court's decision in Janus limits the key holding — the definition of the phrase "to make . . . a statement" under Rule 10b-5(b) — to legally separate entities. Instead the Court defined primary liability as requiring "ultimate authority." Id. The degree of separation between entities naturally will inform the analysis of where ultimate authority lies. In Janus, the fact of legal separation was persuasive evidence that the defendants did not have ultimate authority.

I am not the only reader of Janus to interpret the Court's decision this way. The dissent agreed that the Court's holding applies to corporate insiders, noting that:

The possibility of guilty management and innocent board is the 13th stroke of the new rule's clock. What is to happen when guilty management writes a prospectus (for the board) containing materially false statements and fools both board and public into believing they are true? Apparently under the majority's rule, in such circumstances no one could be found to have "ma[d]e" a materially false statement — even though under the common law the managers would likely have been guilty or liable (in analogous circumstances) for doing so as principals (and not as aiders and abettors).

The Court's interpretation of the verb "to make" is an interpretation of the statutory language in question in this case, and therefore cannot be ignored simply because the defendants are corporate insiders. See, e.g., Local 703, I.B. of T. Grocery Food Emples. Welfare Fund v. Regions Fin. Corp., 2011 U.S. Dist. LEXIS 93873, 2-3 (N.D. Ala. Aug. 23, 2011) (upholding liability for corporate officers on the grounds that "unlike the separate legal entities in Janus, the defendants here are in ultimate authority over their statements."); Curry v. Hansen Med., Inc., 2011 WL 3741238 (N.D. Cal. Aug. 25, 2011) (applying the ultimate authority rule to a corporate insiders).

Therefore, the proper inquiry for the case at hand is whether the defendants had ultimate authority over the false statements in question.

ii. Ultimate Authority

Plaintiff argues that even if the rationale of Janus extends to corporate insiders, the complaint sufficiently alleges the defendants "made" a statement in violation of Rule 10b-5(b). Plaintiff currently contends:

• [D]efendants alone had ultimate authority over the financial results reported for Dana's CVS and Heavy Vehicle business units;

• Their actions made it `necessary or inevitable' that Dana would report falsified financial results; and

• The federal disclosure laws Dana operated under dictated `whether and how' the financial results defendants had authority over were communicated.

[Doc. 108 at 12].

A plain meaning reading of the complaint [Doc. 1 at ¶¶ 10, 11, 37] gives the lie to that argument.

In plaintiff's own summary:

beginning in 1Q04 [Dana's] CEO Michael J. Burns ("Burns") and Dana's CFO Robert C. Richter ("Richter"), imposed a mandatory 6% profit margin increase for each of Dana's plants and divisions, including the Heavy Vehicle Group and CVS. ¶ 10. This 6% benchmark was not based on actual or forecasted performance, but instead came from Dana's top management as a directive for all plants and divisions to meet. Id. Plant personnel had no choice but to increase forecasts to meet this 6% increase, even where feedback from Dana's customers confirmed that the level of growth could not be achieved. Id. Likewise, division personnel refused to accept actual forecasts provided by plant personnel if they did not reflect this 6% goal. Id. The pressure to meet the 6% benchmark was most intense within the Heavy Vehicle Group, and CVS in particular. ¶ 11. . . . Faced with these pressures, defendants crafted numerous ways to fraudulently manipulate CVS's revenues and accounts payable to meet the 6% target and make it appear as if the Company's restructuring and cost reduction efforts were paying off. ¶¶ 11, 37-66.

[Doc. 60 at 5-6], citing to the complaint, [Doc. 1] (emphasis supplied).

Plaintiff adds, "Burns and Richter knew that the edict was unobtainable" and that by requiring this arbitrary numbers defendants "would have to manipulate the underlying data to generate reported profits" [Doc. 1 at ¶ 37(b)]. "This pressure was so severe that actual forecasts provided by plant personnel were not accepted by Dana's finance department personnel if they did not meet the pre-established benchmark." Id. at ¶ 10. Thus, "the increased forecasts were not based on the plant's actual performance, but instead were determined from above before a plant's budget would be accepted and approved by finance department personnel." Id.

Defendants were, according to the complaint and early briefing, acting in response to a mandatory directive. In plaintiff's own words, "[t]o meet the demands imposed by Dana's CEO and CFO and ensure their continued employment, defendants improperly manipulated CVS's accounting to inflate Dana's FY04, 1Q05 and 2Q05 earnings." [Doc. 60 at 6].

This description of the defendants' roles cannot be reconciled with plaintiff's current assertion that "Dana's CEO, CFO, or its Board of Directors had no discretion to alter the results that defendants had sent." [Doc. 108 at 13]. The defendants sent the results that they were commanded to send.

The complaint does not state a claim for primary liability under Janus, because the defendants did not have ultimate authority over the content of the statement.

B. Deceptive Conduct under 10b-5(a) and (c)

In addition to the allegation that defendants made false and misleading statements in violation of Rule 10(b)5-(b), plaintiff contends that defendants are liable under 10(b)-5(a) and (c) for deceptive conduct. As I noted in my earlier decision, the Supreme Court has unequivocally held that conduct can be deceptive and provide a basis for primary liability. Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 158 (2008). The issue in Stoneridge was whether an investor could recover from a party which "neither makes a public misstatement nor violates a duty to disclose but does participate in a scheme to violate § 10(b)." Id.

In Stoneridge the Court held that a court could not impose Rule 10b-5 liability for deceptive actions or statements on which investors did not rely because those actions or statements had not been disclosed sufficiently in the marketplace. Defendants argue that because in this case there was neither specific attribution nor a duty to disclose they cannot be held liable.

i. Specific Attribution

The opinion in Janus dealt with liability under Rule 10b-5(b), not 10b-5(a) or (c). Still, defendants argue that " Janus resolves any lingering doubt as to whether direct attribution is required to state a claim under Rule 10b-5(a) and (c)" because " Stoneridge imposed a specific attribution requirement upon deceptive conduct allegations," and the Court in Janus saw "no reason to treat participating in the drafting of a false statement differently from engaging in deceptive transactions, when each is merely an undisclosed act preceding the decision of an independent entity to make a public statement." [Doc. 110 at 10-11].

I disagree. The Court's language in Janus on which defendants rely makes no reference to attribution, and therefore defendants' argument that Janus "[n]oted that Stoneridge imposed a specific attribution requirement upon deceptive conduct allegations," is misplaced.

The full paragraph in Janus states:

Adopting the Government's definition of "make" would also lead to results inconsistent with our precedent. The Government's definition would permit private plaintiffs to sue a person who "provides the false or misleading information that another person then puts into the statement." Brief for United States as Amicus Curiae 13. 8 But in Stoneridge, we rejected a private Rule 10b-5 suit against companies involved in deceptive transactions, even when information about those transactions was later incorporated into false public statements. 552 U.S., at 161, 128 S. Ct. 761, 169 L. Ed. 2d 627. We see no reason to treat participating in the drafting of a false statement differently from engaging in deceptive transactions, when each is merely an undisclosed act preceding the decision of an independent entity to make a public statement.

Nothing in this paragraph suggests that Stoneridge required specific attribution for all 10b-5(a) and (c) claims, or that Janus adopts such a rule. At its most broad, the paragraph suggests that the Janus Court would require an independent entity's acts to be disclosed before finding liability.

In fact, one can as easily read the paragraph to suggest that there may be "a reason to treat participating in the drafting of a false statement differently from engaging in deceptive transactions, when each is [not] merely an undisclosed act preceding the decision of an independent entity to make a public statement." This case does not involve independent entities — despite defendants' labored attempt to classify themselves, as employees, as independent entities from the corporation. And Dana touted HVG's results in its press releases.

The Court in Stoneridge did not impose a blanket specific attribution requirement on deceptive conduct claims, to be applied regardless of the relationship of the parties. Instead, the Court found that the proximate relationship between the defendants' conduct and the investors' harm was "too remote to show reliance." Id. at 159 (concluding that in the case before it, "respondents' deceptive acts, . . . which were not disclosed to the investing public, are too remote to satisfy the reliance requirement.").

Where, as in Stoneridge and in Janus, the defendant is a legally independent third party, reliance becomes particularly difficult to show, and therefore attribution, or lack thereof, that much more significant. I have already found that plaintiff sufficiently alleged reliance under 10b-5(a) and (c).

Because Stoneridge did not hold that attribution is always necessary for Rule 10b-5(a) and (c) claims, I cannot read the Janus Court's vague affirmation of Stoneridge to do so either.

ii. Duty to Disclose

But defendants can cite no binding caselaw espousing such requirement for all 10b-5(a) or (c) claims outside of an omissions case. The Sixth Circuit, in Benzon v. Morgan Stanley Distribs., Inc., 420 F.3d 598, 610 (6th Cir. 2005), held that "a defendant `not liable under Rule 10b-5(b) for failure to disclose . . . may still be held liable under Rule 10b-5(a) and 10b-5(c) as a participant in [an] allegedly fraudulent scheme.'" (Quoting Scholnick v. Schecter, 752 F. Supp. 1317, 1323 (E.D. Mich. 1990)).

The Court's decision in Stoneridge is entirely consistent with Benzon. The Court in Stoneridge examined the issue of "when, if ever, an injured investor may rely upon § 10(b) to recover from a party that neither makes a public misstatement nor violates a duty to disclose but does participate in a scheme to violate § 10(b)." 552 U.S. at 159. The Court concluded that "[c]onduct itself can be deceptive"; there need not be "a specific oral or written statement before there could be liability under § 10(b) or Rule 10b-5." Id. at 158.

Courts interpreting Rule 10b-5 since Stoneridge have continued to find that a plaintiff need not allege a disclosure violation to plead a cause of action under Rule 10b-5(a) and (c). E.g., Clayton v. Heartland Res., Inc., 754 F. Supp. 2d 884 (W.D. Ky. 2010); In re Nat'l Century Fin. Enters., Inc. Fin. Inv. Litig., 553 F. Supp. 2d 902, 908 (S.D. Ohio 2008); In re Able Laboratories Sec. Litig., 2008 WL 1967509, at * 18 (D.N.J. Mar. 24, 2008); New York City Emples. Ret. Sys. v. Berry, 616 F. Supp. 2d 987, 995-996 (N.D. Cal. 2009) (finding sufficient under 10b-5(a) and (c) "allegations of the systematic perpetration and concealment of improper stock option granting practices by a high-level corporate insider, who is also alleged to have had a role in the dissemination of false financial information.").

Nothing in Janus alters the landscape of 10b-5(a) and (c) violations to add a duty to disclose requirement.

Conclusion

It is, therefore,

ORDERED THAT defendants' motions for reconsideration (Docs. 104, 105, 107) be, and the same hereby is granted in part and denied in part.

A telephonic status/scheduling conference is set for September 12, 2011 at 11:00 a.m.

So ordered.