In re: FORD MOTOR COMPANY SECURITIES LITIGATION, Class Action. PUBLIC SCHOOL… v. Ford Motor Company

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0275P (6th Cir.)
File Name: 04a0275p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
In re: FORD MOTOR
COMPANY SECURITIES
LITIGATION, Class Action.
____________________
PUBLIC SCHOOL TEACHERS’
PENSION AND RETIREMENT
FUND OF CHICAGO;
INTERNATIONAL
BROTHERHOOD OF
ELECTRICAL WORKERS,
LOCAL 98; JOSEPH SELLIMAN;
OHIO TUITION TRUST
AUTHORITY,
Plaintiffs-Appellants,
v.
FORD MOTOR COMPANY, et
al.,
Defendants-Appellees.
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No. 02-1670
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
Nos. 00-74233; 00-74247; 00-74324; 00-74667;
00-74685; 00-75091; 00-75110—Arthur J. Tarnow,
District Judge.
2 In re Ford Motor Co.
Securities Litigation
No. 02-1670
Argued: September 11, 2003
Decided and Filed: August 23, 2004
Before: KENNEDY, GUY, and DAUGHTREY, Circuit
Judges.
_________________
COUNSEL
ARGUED: William S. Lerach, LERACH, COUGHLIN,
STOIA & ROBBINS, San Diego, California, for Appellants.
Stuart J. Baskin, SHEARMAN & STERLING LLP, New
York, New York, for Appellees. ON BRIEF: William S.
Lerach, Eric A. Isaacson, LERACH, COUGHLIN, STOIA &
ROBBINS, San Diego, California, Edward M. Gergosian,
Matthew P. Montgomery, BARRACK, RODOS & BACINE,
San Diego, California, for Appellants. Stuart J. Baskin,
Jerome S. Fortinsky, SHEARMAN & STERLING LLP, New
York, New York, for Appellees.
_________________
OPINION
_________________
KENNEDY, Circuit Judge. Lead plaintiff, Public School
Teachers’ Pension and Retirement Fund of Chicago (Pension
Fund), and named plaintiffs, Ohio Tuition Trust Authority,
Joseph Selliman, and International Brotherhood of Electrical
Workers, Local 98, (collectively “plaintiffs”) filed this
consolidated class action complaint against Ford Motor
Company, Inc. on behalf of all investors who purchased Ford
common stock between March 31, 1998 and August 31, 2000
(“class period”), alleging violations of Section 10(b) of the
Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (2002),
and Rule 10b-5, 17 C.F.R. § 240.10b-5 (2002). This class

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1Ford asserted the com plaint should be dismissed with prejudice
since it was an am ended co mplaint.
action surrounds allegations that during the class period
which ended ten days after the announcement of a joint
voluntary recall by Ford and Bridgestone/Firestone, Inc.
(“Bridgestone”) of Bridgestone ATX tires (“ATX tires”) on
Ford Explorer vehicles: 1) Ford omitted material information
concerning the dangerousness of Ford Explorer vehicles
equipped with ATX tires when making statements about the
quality and safety of Ford Explorers, thereby making them
false, incomplete, or misleading; and 2) Ford’s financial
statements during the period are presumptively false because
Ford failed to include material information concerning the
contingent liability of related lawsuits and recalls in violation
of Generally Accepted Accounting Principles (“GAAP”).
The district court dismissed the action for failure to state a
claim under § 20(b) of the Securities Act and Rule 10b-5.
Plaintiffs appeal from the judgment of dismissal with
prejudice and the denial of their motion to set aside the
judgment and permit them to file an amended complaint.
I. Procedural History
On January 4, 2001, the district court consolidated a series
of class actions against Ford for alleged securities fraud. On
February 14, 2001, the district court appointed Pension Fund
as lead plaintiff and directed Pension Fund to file a
consolidated complaint. The consolidated complaint
(“complaint”) was filed March 16, 2001. On May 15, 2001,
Ford moved to dismiss the complaint with prejudice1
pursuant to Federal Rule of Civil Procedure 8, Federal Rule
of Civil Procedure 12(b)(6), and/or the Private Securities
Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-
4(b)(2). Both parties were permitted to file fifty-page briefs
and to submit full copies of the exhibits relied upon in the
complaint. On October 16, 2001, extensive oral arguments
4 In re Ford Motor Co.
Securities Litigation
No. 02-1670
2Section 10(b) of the Securities Act and Rule 10b-5 promulgated
thereunder prohibits “fraudulent material misstatement or omissions in
connection with the sa le or purchase of a security.”
were held on the motion to dismiss. At the hearing, the
district court, over the defendant’s objections, permitted
plaintiffs to present and rely on additional exhibits and argue
their support for plaintiffs’ allegations of Ford’s scienter. On
December 10, 2001, the district court granted Ford’s motion
to dismiss with prejudice, and entered judgment in favor of
Ford. Specifically, the district court held that the plaintiffs’
complaint failed to state a claim under § 10(b) of the
Securities Act and Rule 10b-52 in violation of Federal Rule of
Civil Procedure 12(b)(6); that plaintiffs failed to allege any
legally cognizable untrue statements or omission of material
fact; and that the allegedly false statements praising the
quality or safety of Ford products failed to state a claim
because they are “vague, corporate puffery or accurate.” With
respect to the alleged GAAP violation, the court held that
GAAP did not require Ford to disclose potential future recall
costs because “[t]he tire manufacturer is responsible for a tire
recall” under 49 U.S.C. § 30120(b), because “Ford was not
required to disclose such unforeseeable information, and Ford
had no independent duty to disclose potential recall costs.” As
an independent ground for its decision, the district court, after
examining the non-exhaustive list of factors typically relevant
to the pleading of scienter contained in Helwig v. Vencor, Inc.
251 F.3d 540 (6th Cir. 2001), also held that plaintiffs failed to
plead a strong inference of Ford’s scienter, as the PSLRA’s
heightened pleading requirements mandate. On December
22, 2001, plaintiffs filed a motion to amend the judgment and
for leave to amend their complaint together with a proposed
amended complaint (“PAC”).
On April 15, 2002, the district court denied plaintiffs’
motion on the ground that plaintiffs had not met any of the

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grounds permitting the district court to amend its judgment
under Federal Rule of Civil Procedure 59(e).
II. District Court’s Dismissal with Prejudice under
Rule 12(b)(6)
We review the district court’s dismissal on the pleadings
under Federal Rule of Civil Procedure 12(b)(6) de novo.
Bovee v. Coopers & Lybrand, C.P.A., 272 F.3d 356, 360 (6th
Cir. 2001). We “must construe the complaint in the light
most favorable to the plaintiff, accept all the factual
allegations as true, and determine whether the plaintiff can
prove a set of facts in support of . . . [his] claims that would
entitle . . . [him] to relief.” Id. “When an allegation is
capable of more than one inference,” we must construe that
allegation in the plaintiff’s favor. Helwig, 251 F.3d at 553.
Yet, we “need not accept as true legal conclusions or
unwarranted factual inferences.” Bovee, 272 F.3d at 361
(internal quotation marks and citation omitted).
To succeed on a § 10(b)(5)/Rule 10b-5 claim, plaintiffs
must establish: “(1) a misrepresentation or omission, (2) of a
material fact, (3) made with scienter, (4) justifiably relied on
by plaintiffs, and (5) proximately causing them injury.”
Helwig, 251 F.3d at 554 (citation omitted).
Adding to the Federal Rules of Civil Procedure 9(b)
requirement that fraud must be stated with particularity, the
PSLRA mandates that the complaint “specify each statement
alleged to have been misleading, the reason or reasons why
the statement is misleading, and, if an allegation regarding the
statement or omission is made on information and belief, the
complaint shall state with particularity all facts on which that
belief is formed.” 15 U.S.C. § 78u-4(b)(1). In addition, “the
complaint shall, with respect to each act or omission alleged
to violate this chapter, state with particularity facts giving rise
to a strong inference that the defendant acted with the
required state of mind.” 15 U.S.C. § 78u-4(b)(2) (2001). The
6 In re Ford Motor Co.
Securities Litigation
No. 02-1670
3Under the PS LRA ’s “safe harbor” pro vision for forward-loo king
statements, 15 U .S.C. § 78u-5(c)(1), a defendant is liable for such
statem ents only if they were material; if the defendant “had actual
knowledge that the statements were false or misleading”; and if the
defendant did no t identify the statements as forw ard-looking or insulate
them with “meaningful cautionary language.” Helwig, 251 F.3d at 547-
548 .
requisite state of mind is scienter, a “mental state embracing
intent to deceive, manipulate or defraud.” In re Comshare,
Inc. Sec. Litig., 183 F.3d 542, 548 (6th Cir. 1999) (quoting
Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194 (1976))
(internal quotation marks omitted). In particular, this court
has held that, concerning “statements of present or historical
fact,” Helwig, 251 F.3d at 552, plaintiffs may satisfy the
scienter pleading requirement “by alleging facts giving rise to
a strong inference of recklessness.”3 In re Comshare, 183
F.3d at 549. “[R]ecklessness [is] highly unreasonable
conduct which is an extreme departure from the standards of
ordinary care. While the danger need not be known, it must
at least be so obvious that any reasonable man would have
known of it.” Id. at 550 (internal quotation marks and citation
omitted). However, a plaintiff cannot satisfy the scienter
pleading requirement “by alleging facts merely establishing
that a defendant had the motive and opportunity to commit
securities fraud.” Id. at 549 (emphasis added) (noting that,
although facts concerning motive and opportunity may be
relevant to pleading circumstances from which one could
infer a strong inference of fraudulent scienter “and may, on
occasion, rise to the level of creating a strong inference of
reckless or knowing conduct, the bare pleading of motive and
opportunity does not, standing alone, constitute the pleading
of a strong inference of scienter”). Under the PSLRA’s
“strong inference” requirement, plaintiffs “need not foreclose
all other characterizations of fact,” but their factual
allegations, in creating an inference of scienter that is
“strong,” must rely on “the most plausible of competing
inferences.” Helwig, 251 F.3d at 553 (“Strong inferences . . .

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4W hile there was no discovery in this case, Ford’s conduct and
knowledge during the class period had b een explored in d epth in
Congressional hearings held before the class complaint was filed and in
depositions in a pro duct liability case, permitting plaintiffs to be quite
specific in their allegations with respect to both misrepresentations and
scienter in their 77-page and 154 -paragraph com plaint.
involve deductive reasoning; their strength depends on how
closely a conclusion of misconduct follows from a plaintiff’s
proposition of fact.”).
A. Plaintiffs’ Allegations
In 1988-89 Ford designed the Explorer to replace the
Bronco, a line of sports utility vehicles (SUV).4 Plaintiffs
have alleged that the Explorer was not thoroughly tested, and
that it had problems with its suspension and high-center of
gravity. The Explorer was sold with ATX tires of “C”
heat/temperature rating. While safe, this is the lowest rating
of the National Highway Traffic Safety Administration
(NHTSA) Uniform Tire Quality Grading System. This rating
has less ability to resist heat build-up than “A” and “B” tires.
Ford recommended a tire inflation of 26 psi. This was less
than the tire pressure recommended by Bridgestone for C-
rated tires. Low tire pressure decreases a tire’s ability to
resist heat – a cause of tire separation. Over 6,000,000
Explorers were sold by the end of the class period.
As of 1993, five lawsuits had been filed against Ford and
Bridgestone for tire separation failures of ATX tires on
Explorers. By 1996, fifteen suits were filed. By 1999, the
end of the class period, 50 such lawsuits had been filed
against Ford for injuries or deaths from Explorer crashes.
Ford and Bridgestone, in settling suits, obtained secrecy
agreements which required non-disclosure of discovery
materials and return of any discovery documents. In addition,
there were complaints due to tire failure made to Bridgestone.
8 In re Ford Motor Co.
Securities Litigation
No. 02-1670
In 1996, Bridgestone quietly replaced ATX tires in Arizona
related to ATX tire failure.
In 1998, Ford received a number of complaints about ATX
tires from drivers of Explorers in Saudi Arabia. Ford referred
those to Bridgestone, which posited that they were due to
driving conditions there -- high speeds, off-road driving, high
temperatures -- and not to the tires.
When complaints continued, Ford replaced ATX tires in
Saudi Arabia and other Persian Gulf countries with “C” tires
from another manufacturer which appeared to take care of the
tire separation problems. At about the same time, similar
complaints were made by drivers in Venezuela. There, too,
the problems were attributed to specific local conditions;
namely, driving at speeds of up to 100 miles-per-hour for
hundred-mile stretches and to the heat. Many of the tires in
Venezuela were manufactured by a Bridgestone factory there.
At Ford’s direction, ATX tires on vehicles in Venezuela were
replaced with ATX tires with a nylon cap. Additional
strength permitted raising the recommendation for inflation
pressure to 30 psi. Ford also made suspension changes and
different shock absorbers for Explorers being sold in
Venezuela. Bridgestone refused to pay for the changes,
blaming the Explorer’s suspension system. Plaintiffs allege
that the failure of Ford to reveal that it was experiencing these
problems with its Explorers with ATX tires in the Middle
East and Venezuela made all statements about the quality of
Ford products in general, false statements. The Venezuelan
government is now prosecuting Ford and Bridgestone for
their alleged collusion in hiding the defective nature of the
Explorer equipped with ATX tires.
B. Actionable Misrepresentation or Omission
The PSLRA mandates that, where plaintiffs allege that the
defendant “made an untrue statement of a material fact” or
“omitted to state a material fact necessary in order to make

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the statements made, in light of the circumstances in which
they were made, not misleading,” plaintiffs must “specify
each statement alleged to have been misleading, the reason or
reasons why the statement is misleading, and, if an allegation
regarding the statement or omission is made on information
and belief, the complaint shall state with particularity all facts
on which the belief is formed.” 15 U.S.C. § 78u-4(b)(1).
“Silence, absent a duty to disclose, is not misleading under
Rule 10b-5.” Basic, Inc. v. Levinson, 485 U.S. 224, 239 n.17
(1988). Yet, “even absent a duty to speak, a party who
discloses material facts in connection with securities
transactions ‘assume[s] a duty to speak fully and truthfully on
those subjects.’” Helwig, 251 F.3d at 561 (quoting Rubin v.
Schottenstein, 143 F.3d 263, 268 (6th Cir. 1998)). There is no
general or independent duty to disclose “soft information,”
information that is uncertain and not objectively verifiable
such as “predictions, matters of opinion, and asset appraisals.”
Helwig, 251 F.3d at 559. However, even with “soft
information,” a defendant may choose silence or speech based
on the then-known factual basis, but it cannot choose half-
truths. Helwig, 251 F.3d at 561, 564 (holding that a company
may remain silent regarding soft information “until the
fullness of time and additional detail permit confident
disclosure,” but it may not volunteer material, soft
information despite its uncertainty and then escape liability
for that information’s misleading or false nature).
Plaintiffs allege, not that Ford had an independent duty to
disclose the dangerousness of ATX equipped Explorers or the
possible loss contingency regarding it, but that Ford made
misrepresentations or statements that are misleading absent
the disclosure of such material information. In their
complaint, plaintiffs allege that Ford made many statements
about Ford having experienced earnings improvement and the
Explorer having set various sales records that were
misleading because Ford knew that such profits and sales
were due to its sale of a defective product and that the
eventual public revelation of the defect would affect adversely
10 In re Ford Motor Co.
Securities Litigation
No. 02-1670
Ford’s financial status. However, we have held that “[t]he
disclosure of accurate historical data does not become
misleading even if . . . [the company might predict] less
favorable results . . . in the future.” In re Sofamor Danek
Group, 123 F.3d 394, 401 n.3 (6th Cir. 1997). Because
plaintiffs have not alleged the historical inaccuracy of Ford’s
financial and earnings’ statements, such statements are not
misrepresentations.
A misrepresentation or an omission is material only if there
is a substantial likelihood that “a reasonable investor would
have viewed the misrepresentation or omission as ‘having
significantly altered the total mix of information made
available.’” In re Sofamor, 123 F.3d at 400 (quoting Basic,
Inc., 485 U.S. at 232). We may properly dismiss a complaint
on the ground that the alleged misrepresentations or
omissions are immaterial only if “they are so obviously
unimportant to a reasonable investor that reasonable minds
could not differ on the question of their unimportance.”
Helwig, 251 F.3d at 563 (internal quotation marks, citation
and emphasis omitted). “Immaterial statements include
vague, soft, puffing statements or obvious hyperbole” upon
which a reasonable investor would not rely. In re K-Tel Int’l,
Inc. Sec. Litig., 300 F.3d 881, 897 (8th Cir. 2002).
Statements that are “mere puffing” or “corporate optimism”
may be forward-looking or “generalized statements of
optimism that are not capable of objective verification.”
Grossman v. Novell, Inc. 120 F.3d 1112,1119 (10th Cir.
1997). In their complaint, plaintiffs allege that Ford made
many misleading statements regarding its commitment to
quality, safety, and corporate citizenship, such as: 1) “[A]t
Ford quality comes first.”; 2) “We aim to be the quality
leader”; 3) “Ford has its best quality ever”; 4) “Ford is “taking
across-the-board actions to improve . . . [its] quality.”; 5) Ford
has made “quality a top priority”; 6) “Ford is a worldwide
leader in automotive safety”; 7) Ford has made “quality a top
priority”; 8) Ford is “designing safety into . . . [its] cars and
trucks” because it wants its “customers to feel safe and secure

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No. 02-1670 In re Ford Motor Co.
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in their vehicles at all times”; 9) Ford “want[s] to make
customers’ lives . . . safer”; 10) Ford has “dedicated . . .
[itself] to finding even better ways of delivering . . . safer
vehicles to [the] consumer”; 11) Ford “want[s] to be clear
leaders in corporate citizenship”; 12) Ford’s “greatest asset is
the trust and confidence . . . [it] has earned from . . . [its]
customers”; 13) Ford “is going to lead in corporate social
responsibility.” Such statements are either mere corporate
puffery or hyperbole that a reasonable investor would not
view as significantly changing the general gist of available
information, and thus, are not material, even if they were
misleading. All public companies praise their products and
their objectives. Courts everywhere “have demonstrated a
willingness to find immaterial as a matter of law a certain
kind of rosy affirmation commonly heard from corporate
managers and numbingly familiar to the marketplace –
loosely optimistic statements that are so vague, so lacking in
specificity, or so clearly constituting the opinions of the
speaker, that no reasonable investor could find them
important to the total mix of information available.” Shaw v.
Digital Equip. Corp., 82 F.3d 1194, 1217 (1st Cir. 1996); see
also Nathenson v. Zonagen, Inc. 267 F.3d 400, 404, 419 (5th
Cir. 2001) (“broad, general statements” about “positive” and
“statistically significant” test results of a new drug were
puffery); Lasker v. N.Y. State Elec. & Gas Corp., 85 F.3d 55,
58 (2d Cir. 1996) (corporation’s self-praise about its business
strategy is “not considered seriously by the marketplace and
investors in assessing a potential investment”).
The same is true with respect to statements such as (1) “We
want to ensure that all our vehicles have world-class quality[,]
. . . developing cars and trucks that are defect-free” and
(2) “We’re also insisting our suppliers maintain Ford’s
stringent quality standards.” What Ford “wants” or is
insisting its suppliers do would not be interpreted by an
investor as a representation that its products achieve that
objective or its suppliers maintain the quality standards it
asks. Yet, plaintiffs maintain that this statement was false
12 In re Ford Motor Co.
Securities Litigation
No. 02-1670
because Ford permitted Bridgestone, its largest tire supplier
for the Explorer, Ford’s most important product, “to supply
defectively designed and/or improperly manufactured ATX
tires . . . [that] utilized bad, out-of-specification or
inappropriate raw materials, and had only a ‘C’
heat/temperature rating.”
Plaintiffs allege only three affirmative statements relating
specifically to the safety of Ford Explorers with ATX tires.
The first two are related. In February 2000, in response to an
inquiry from a Houston, Texas television station regarding
three specific rollover accidents involving Explorers with
ATX tires, a Ford public affairs manager is alleged to have
said that the “[F]ord Explorer is an extremely safe and
thoroughly engineered vehicle that, as substantiated by
NHTSA data, performs as well as or better than peer vehicles
in its class. . ..Ford is very, very proud of the Explorer and
strongly believes that the vehicle is extremely safe when
operated properly.”
In response to either the same or another inquiry regarding
Texas accidents, a public affairs manager stated “these
accidents clearly resulted from driver error and had nothing
to do with the design of the vehicle.”
Ford asserts as to these allegations, first, that they are
statements of opinion, that plaintiffs offer no basis to believe
Ford was not proud or otherwise did not believe the opinions
expressed, and that there is, therefore, no basis to conclude
that Ford knew they were false or made recklessly. Further,
with respect to the first statement, it was a comment on the
vehicle itself since that is what is measured by NHTSA. In
the instance of the second statement plaintiffs have failed to
allege with particularity that the Ford spokesman or Ford
knew that the statements were false or made with the
recklessness required under the PLRA. There are no
allegations with respect to the actual cause of the accidents
referred to or further identifying the accidents referred to.

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5W hile Mr. Nasser, President of Ford, stated at a later time that, in his
judgment, there was more than driver error involved, that was a judgment
made in retrospect after the recall and after he had the information
brought out in the congressional hearings. Plaintiffs do not allege any
specific fact about these specific accidents that establish they were not due
to driver error or, if they were, that the speaker or Ford knew otherwise
at the time.
The third statement was made on August 1, 2000, after
NHTSA had opened an investigation into the safety of
Bridgestone tires. In response to two safety groups urging
Ford to recall Ford Explorers equipped with ATX tires, Ford
responded in a written statement that it was “extremely
satisfied with the safety record of their vehicles.” Since the
recall of tires was legally the responsibility of Bridgestone
under 49 U.S.C. § 30120(b), the statement, as fairly read, is
the expression of Ford’s opinion as to the safety record of the
vehicle itself. As statements of the speakers’ opinions, these
statements are actionable only “if the speaker does not believe
the opinion and the opinion is not factually well grounded.”
Helwig, 251 F.2d at 562. Plaintiffs did not allege facts that
demonstrate the speaker did not believe the statements they
made.5
III. GAAP
The complaint alleges that Ford “lied when it issued its
financial statements when it failed to account for the
possibility of future recall costs in the United States as a loss
contingency” under GAAP. See generally RESEARCH AND
DEV: ARRANGEMENTS, Statement of Financial Accounting
Standards No. 5, §§ 8-13 (Financial Accounting Standards
Bd. 1975).
In their brief on appeal, plaintiffs argue only that “[e]ven if
the cost of replacing the tires [in the United States] could not
reasonably be estimated, GAAP required that Ford disclose
the nature of the liability if it was reasonably possible.” We
14 In re Ford Motor Co.
Securities Litigation
No. 02-1670
agree with Ford that the future recall costs that Ford agreed
voluntarily to pay did not need to be disclosed in prior
financial statements since no asset had been diminished nor
had a liability been incurred at the date of the financial
statements. Moreover, as the district court found, the tire
company was responsible for the recall of the tires under
49 U.S.C. 30120(b). Thus, it would be reasonable to expect
the cost of replacing any tires would be on Bridgestone.
While Bridgestone did not pay costs of tire replacement in
Saudi Arabia or Venezuela, that did not mean it would not in
the United States where it could be expressly mandated to do
so by NHTSA under federal law. Further, plaintiffs have not
pleaded sufficient facts to give rise to the strong inference of
scienter that is required under the PSLRA.
Ford also points to disclosures it did make in its 1999 10-K
stating that federal authorities had 28 investigations of alleged
safety defects and warning that the costs of such recall
campaigns could be substantial. It also disclosed that
investigation arising out of safety defects and other problems
could “require very large expenditures.” Similar disclosures
are made in earlier 10-Ks.
In In re Sofamor, plaintiff alleged the company’s financial
statements were “incomplete and misleading” because
defendant knew its product was defective and being sold for
an improper use, and should have disclosed the hazard of that
misuse and advised the public of likely intervention by
regulators. We held that there was no duty to disclose either
the hazards of the product or possible regulatory action, or
predict its failure losses where such predictions were not
“substantially certain.” 123 F.3d at 401-02.
Plaintiffs fail to allege any facts that establish that anyone
at Ford thought or anticipated a massive recall of tires was
necessary in the United States before the recall was
announced.

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IV. MOTION TO FILE AMENDED COMPLAINT
Plaintiff filed a motion to set aside the judgment and to file
an amended complaint under Fed. R. Civ. P. 15(a) and Fed.
R. Civ. P. 59(e), together with the proposed amended
complaint and a brief in support. Ford filed a response brief.
The district court refused to permit the filing of the amended
complaint, finding no showing of (1) an intervening change
in controlling law; (2) evidence previously unavailable; (3)
clear error of law in its prior opinion; or (4) manifest
injustice.
The court recognized that plaintiffs sought to file under
Fed. R. Civ. P. 15(a), as well as 59(e), but, noting that
plaintiffs had been permitted to present additional exhibits
relating to scienter during the oral argument on the motion to
dismiss, and that a court does not abuse its discretion in
denying a Rule 59(e) motion when it is premised on evidence
that the party had in its control prior to the original judgment,
it denied the motion.
We agree that the amended complaint presents the same
legal theories as the previously dismissed complaint. While
better organized, the substance of the allegations of Ford’s
knowledge, of scienter, and of the legal theories are no
different, except for a few additional advertisements regarding
Ford products, generally more complete Ford correspondence
files regarding the Middle East and Venezuela, and two
expert opinions as to whether plaintiffs had stated a cause of
action under PLSRA and GAAP.
While arguing that the motion to amend was properly
decided under Rule 59(e), Ford urges us to examine the
amended complaint, which relies on the same legal theories
and basic facts as the original complaint on the grounds that
granting the motion would have been futile and then should
have been decided under Rule 15(a) as well. The proposed
amended complaint’s allegations with respect to events in
16 In re Ford Motor Co.
Securities Litigation
No. 02-1670
Saudi Arabia and Venezuela are based on the attached
exhibits of all the Ford internal documents regarding the
problems there. The additional allegations, as well as the
exhibits, confirm Ford’s assertion that the cause of the
problems appeared to be largely related to the driving
conditions in those countries; namely, the very hot
temperatures, driving 100 miles-per-hour for a hundred miles,
and driving off road. While Ford personnel in Saudi Arabia
believed the problem was due to Bridgestone tires (since
Explorers with Goodyear tires did not have tire separation
problems), Ford management in the United States relied on
Bridgestone’s explanations.
While Bridgestone refused to pay for the additional expense
of caps or replacements tires in Venezuela, there is nothing in
the additional allegations that indicates any knowledge on the
part of Ford that there was any such problem in the United
States or that Bridgestone would not comply with 49 U.S.C.
§ 30120(b) and be responsible for any recall.
The proposed complaint references two internal emails
from Glenn R. Drake, the National Business Operations
Manager for Ford International Business Development, to
various other U.S.-based management members in late
January and early March of 1999, respectively, expressing
Drake’s doubt about whether Bridgestone, which had stated
that improper repairs on the ATX tires had caused the
Explorer rollovers”, was lying to avoid liability and
requesting Ford’s independent investigation into the matter.
However, there is no allegation that any such investigation
was undertaken.
The only other new allegations are “expert opinions” by an
accountant and an attorney expressing their opinions on
whether plaintiffs have stated a cause of action. Whether a
complaint states a cause of action is a question for the court.
We do not see any reason to change our conclusions because
of any arguments made in either opinion.

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No. 02-1670 In re Ford Motor Co.
Securities Litigation
17
In short, because nothing in the amended complaint cures
the failure to plead “with particularity facts giving rise to a
strong inference that defendant acted with the required state
of mind,” the district court did not abuse its discretion in
denying the motion to amend, whether under 15(a) or 59(e).
Even if we were to find that it abused its discretion, the error
would be harmless. Jet, Inc. v. Sewage Aeration Sys., 165
F.3d 419 (6th Cir. 1999). As we noted in an earlier case,
allowing the plaintiffs to file the proposed amended complaint
that contains the same deficiencies as the dismissed complaint
would frustrate the purpose of the PSLRA. See Miller v.
Champion, 346 F.3d 660, 692 (6th Cir. 2003).
V. CONCLUSION
For the reasons stated above, we affirm the district court’s
order granting Ford’s summary judgment motion for failure
to state a claim. We also affirm the district court’s denial of
Plaintiffs’ motion to set aside the judgment and permit them
to file an amended complaint.

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