Orbis Global Equity LE Fund (Australia Registered) et al v. Vale S.A. et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------x
ORBIS GLOBAL EQUITY LE FUND
(AUSTRALIA REGISTERED) et al.,
Plaintiffs,
-against-
VALE S.A. et al.,
Defendants.
------------------------------------x
MEMORANDUM & ORDER
21-CV-6590 (EK)(VMS)
ERIC KOMITEE, United States District Judge:
Vale S.A. is a large iron-ore mining company. 	On
January 25, 2019, one of its dams collapsed, leading to
disaster: the event killed 270 people and caused severe damage
to the surrounding environment.
This was not the first time a Vale dam had collapsed.
In 2015, another collapse — of a dam owned by a Vale joint
venture — killed 19 people and similarly wreaked environmental
havoc. 	In the wake of that collapse, Vale made a series of
public statements about its risk-management practices and the
safety and stability of its dams.
After the 2019 collapse, Vale’s stock price plummeted.
Investors commenced a putative securities-fraud class action in
this district against the company and several of its executives.
See In re Vale S.A. Securities Litigation, No. 19-cv-526
(E.D.N.Y.). 	Judge Dearie, then presiding, granted the
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defendants’ motion to dismiss that case in part. 	He later
denied a motion for reconsideration. 	Id., ECF Nos. 74, 80.
This is a different (albeit related) case. 	The
plaintiffs here are eight investment funds — all advised by
Orbis Investment Management Limited — who opted out of the class
action. 	The complaint in this action largely tracks the one in
the class action, except that it adds new causes of action under
Section 18 of the Exchange Act and state common law, adds new
“scheme liability” allegations under Section 10(b), and alleges
four misstatements that are absent from the class action
complaint. 	The instant complaint also incorporates findings
from two reports that Vale issued after the filing of the class
action complaint: (1) the Report of the Expert Panel on the
Technical Causes of the Failure of Feijão Dam I, dated December
12, 2019 (the “Expert Panel Report”); and (2) an executive
summary of Vale’s independent investigation report, dated
February 20, 2020 (the “Independent Investigation Report”).
Vale moved to dismiss the fund plaintiffs’ Section 18,
common-law fraud, and Section 20(a) claims in full. 	It also
moved to dismiss the Section 10(b) claim as to the individual
defendants and the new alleged misstatements. 	The Court held
oral argument, following which the plaintiffs sought — and
received — leave to file an amended complaint. 	The parties then
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submitted supplemental briefing. 	For the reasons set forth
below, the motion to dismiss is now granted in part.
Background
The facts described herein are taken from the amended
complaint. 	See ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493
F.3d 87, 98 (2d Cir. 2007).
A. 	The Parties
The plaintiffs (referred to collectively herein as
“Orbis”) are eight affiliated investment funds that purchased or
acquired Vale Common American Depositary Shares (“ADSs”) and
Vale Preferred ADSs on or after December 23, 2016 (and held
those shares through January 25, 2019), but opted out of the
Class Action. 	Compl. ¶¶ 36-44. 	The defendants are Vale S.A.
(“Vale”) and five of its executives. 	Defendant Murilo Ferreira
was Vale’s Chief Executive Officer from May 2011 through May
2017. 	Id. ¶ 46. 	He was succeeded by defendant Fabio
Schvartsman, who served as CEO through March 2019. 	Id. ¶ 47.
Defendant Gerd Peter Poppinga was the Executive Director of
Vale’s Ferrous Minerals division from July 2017 through March
2019. 	Id. ¶ 49. 	Defendant Luciano Siani Pires has been the
Executive Director of Finance and Investor Relations since
August 2012 and was also the chair of the Executive Risk
Committee. 	Id. ¶ 48. 	Finally, defendant Luiz Eduardo Froes do
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Amaral Osorio has been the Executive Director of Sustainability
and International Business since July 2017. 	Id. ¶ 50.
B. 	Events Prior to the January 2019 Dam Collapse
Vale is alleged to have been (as of November 2023) the
world’s largest producer of iron ore and pellets, operating
mines primarily in Brazil. 	Id. ¶ 51. 	“Tailings” are the waste
byproducts that remain after the saleable part of iron ore is
separated out. 	Id. ¶ 52. 	These tailings are often stored in
earth-filled embankments known as tailings dams. 	Id. 	Tailings
dams can be assembled in different ways. 	“Upstream
construction” is the least expensive method of construction but
also the riskiest. 	Id. ¶¶ 54, 59.
On November 5, 2015, an upstream tailings dam operated
by a Vale joint venture in Mariana, Brazil collapsed. 	This
event — referred to as the “Mariana” or “Fundão” collapse —
killed nineteen people, destroyed a nearby town, and polluted
the water supply relied upon by hundreds of thousands of
residents. 	Id. ¶ 61. 	This catastrophe led to the passage of
dam-safety legislation in Brazil that required Vale to satisfy
new regulatory requirements, including annual safety
certifications and biannual dam audits. 	Id. ¶¶ 63, 108, 385.
It also elicited investor interest in Vale’s dam safety and the
potential for a future collapse. 	Id. ¶¶ 7, 12. 	Vale’s CEO even
“coined a new company motto” — “Mariana, Never Again!” 	Id. ¶ 8.
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In the years following the Mariana dam collapse, Vale
executives made a litany of public statements about Vale’s dam
safety and risk management practices. 	These statements appeared
in Vale’s Annual Reports, Sustainability Reports, Form 6-Ks, and
publicly available presentations and articles. 	And though Vale
had audited its dams before the Mariana collapse, the new
regulatory regime now required it to do so more frequently.
Plaintiffs identify thirty-three alleged misstatements
that Vale and its executives made during this period. 	See id.
¶¶ 246-365. 	These include Vale’s assertions that its dams were
stable and safely managed, and that external auditors had
verified the dams’ safety. 	Id. ¶¶ 246, 252, 267, 279.
Plaintiffs also allege that Vale misrepresented the sufficiency
of its risk management strategies, internal disclosure controls,
and commitment to safety, sustainability, and the environment.
Id. ¶¶ 291, 296, 301, 338-40.
C. 	January 2019 Dam Collapse, Subsequent Investigations,
and Stock-Price Reaction
On January 25, 2019, Dam 1 of Vale’s Córrego do Feijão
iron ore mine (“Dam 1”) collapsed, killing 270 people and
causing extensive environmental damage. 	Id. ¶¶ 17, 195. 	The
same day, Vale confirmed media reports that the dam had burst,
resulting in possible fatalities. 	Id. ¶¶ 196-97, 432. 	Vale’s
stock price declined steeply as reports of the dam collapse
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spread. 	Vale ADSs fell by $1.20 per share from the previous
closing price of $14.86 — a decline of over 8%. 	Id. ¶¶ 195-96.
The following trading day, Vale’s ADSs dropped an additional
$2.46 per share. 	Id. ¶ 197.
This incident led to a number of investigations and
the publication of several reports, including the Vale Expert
Panel and Independent Investigation Reports discussed above, as
well as a July 2019 Brazilian Senate Report and a September 2019
Minas Gerais House of Representatives Report.1 	Id. ¶ 83.
According to Orbis, these reports reveal that Vale knew prior to
the collapse — through internal risk analyses and audits — about
the precarious state of Dam 1, as well as the unacceptable
safety risks posed by numerous other Vale tailings dams. 	Id.
In quantifying its damages, Orbis points to certain
additional stock-price declines throughout the following year,
which it seeks to connect to later Dam 1-related disclosures,
including those made in the investigatory reports. 	Id. ¶¶ 198-
209.
1 The class action complaint refers to both the Senate Report and House
of Representatives Report. 	As noted above, the Expert Panel Report and
Independent Investigation Summary postdate the filing of the class action
complaint.
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Legal Standard
A. Rule 12(b)(6)
To survive a motion to dismiss under Rule 12(b)(6), a
complaint must plead facts sufficient “to state a claim to
relief that is plausible on its face.” 	Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).2 	A claim is facially
plausible “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” 	Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). 	The Court must accept all factual allegations
in the complaint as true and draw all reasonable inferences in
the plaintiffs’ favor. 	See Lundy v. Cath. Health Sys. of Long
Island Inc., 711 F.3d 106, 113 (2d Cir. 2013). 	At the same
time, the Court is “not bound to accept as true a legal
conclusion couched as a factual allegation.” 	Iqbal, 556 U.S. at
678.
B. Rule 9(b) and the PSLRA
Securities fraud claims are subject to the “heightened
pleading requirements” of both Federal Rule of Civil Procedure
9(b) and the Private Securities Litigation Reform Act (“PSLRA”).
In re Synchrony Fin. Sec. Litig., 988 F.3d 157, 166 (2d Cir.
2 Unless otherwise noted, when quoting judicial decisions this order
accepts all alterations and omits all citations, footnotes, and internal
quotation marks.
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2021). 	Rule 9(b) requires a plaintiff to “state with
particularity the circumstances constituting fraud.” 	Fed. R.
Civ. P. 9(b). 	“Allegations that are conclusory or unsupported
by factual assertions are insufficient.” 	ATSI Commc’ns, 493
F.3d at 99. 	The PSLRA further requires a plaintiff to “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, . . . state with particularity all facts on which that
belief is formed.” 	15 U.S.C. § 78u-4(b)(1). 	Thus, plaintiffs
“must do more than say that the statements were false and
misleading; they must demonstrate with specificity why and how
that is so.” 	Carpenters Pension Tr. Fund of St. Louis v.
Barclays PLC, 750 F.3d 227, 236 (2d Cir. 2014).
Like federal securities claims, common-law fraud
claims must also satisfy the requirements of Rule 9(b).
Eternity Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y.,
375 F.3d 168, 187 (2d Cir. 2004).
Discussion
Defendants “do not ask the Court to reconsider any of
its previous rulings in the Class Action.” 	Defs.’ Br. 1, ECF
No. 27. 	They do, however, seek to dismiss the Section 18 and
common-law fraud claims, which have no analogue in the class
action. 	They also seek to dismiss the Section 10(b) and Section
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20(a) controlling-person claims against the Individual
Defendants. 	Id. 	Finally, they seek a ruling that several newly
alleged misstatements are inactionable under Section 10(b). 	Id.
A. 	Plaintiffs’ Section 18 Claim Is Not Time-Barred
Vale argues that plaintiffs’ Section 18 claim is time-
barred, invoking the two-year limitations period set forth in
28 U.S.C. § 1658(b)(1). 	See Dekalb Cnty. Pension Fund v.
Transocean Ltd., 817 F.3d 393, 407 (2d Cir. 2016), as amended
(Apr. 29, 2016) (Section 1658(b) statute of limitations governs
Section 18 claims). 	Orbis counters that the claims are timely
because, under American Pipe & Construction Co. v. Utah, the
filing of the complaint in In Re Vale tolled the statute of
limitations for this action. 	See 414 U.S. 538 (1974).
Plaintiffs have the better argument.
In American Pipe, the Supreme Court held that “the
commencement of a class action suspends the applicable statute
of limitations” for putative class members. 	Id. at 554. 	The
Court later clarified that American Pipe tolling applies to
class members, like Orbis, who opt out and file individual
suits. 	Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176 n.13
(1974); see also In re WorldCom Sec. Litig., 496 F.3d 245, 254-
55 (2d Cir. 2007) (summarizing the relevant Supreme Court
precedent).
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American Pipe and its progeny focus on both efficiency
and fairness to all parties. 	Fairness to the putative class
requires tolling because its members “are expected and
encouraged to remain passive during the early stages” of a class
action, relying “on the named plaintiffs to press their claims.”
Cullen v. Margiotta, 811 F.2d 698, 719 (2d Cir. 1987), overruled
on other grounds, Agency Holding Corp. v. Malley-Duff & Assocs.,
Inc., 483 U.S. 143 (1987); Crown, Cork & Seal Co. v. Parker, 462
U.S. 345, 352-32 (1983). 	At the same time, tolling is fair to
the defendants: the filing of the putative class action has put
them on notice “not only of the substantive claims being brought
against them, but also of the number and generic identities of
the potential plaintiffs who may participate in the judgment.”
American Pipe, 414 U.S. at 555. 	So notified, the defendants
face a reduced risk that documentary evidence will be lost, or
that witnesses’ memories will fade. 	Cullen, 811 F.2d at 720.
Given these considerations, American Pipe tolling is
“properly extended to claims” that involve “the same evidence,
memories, and witnesses as were involved in the initial putative
class action.” 	Id. 	This is true even where there are
“differences between the legal theories advanced by plaintiffs”
in the prior action and the one then under consideration. 	Id.;
see also MYL Litigation Recovery I LLC v. Mylan N.V., No. 19-CV-
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1799, 2020 WL 1503673, at *7-8 (S.D.N.Y. Mar. 30, 2020) (factual
similarity, not legal similarity, is key).
The Second Circuit has not explicitly ruled on the
issue presented here — whether a prior Section 10(b) class claim
can toll an individual Section 18 claim. 	But this question
recurs frequently,3 and most district courts have said that
Section 18 claims do not qualify for American Pipe tolling.
See, e.g., Gotham Diversified Neutral Master Fund, LP v. Chicago
Bridge & Iron Co. N.V., No. 18-CV-9927, 2019 WL 3996519, at *3
(S.D.N.Y. Aug. 23, 2019) (collecting cases); Orbis Glob. Equity
Fund Ltd. v. NortonLifelock Inc., No. 21-CV-01995, 2023 WL
1800963, at *7 (D. Ariz. Feb. 7, 2023) (describing “majority”
view “that Section 10(b) claims raised in class actions do not
toll the statute of limitations for later-filed Section 18
claims”). 	Indeed, one court concluded that “almost by
definition, filing a § 10(b) class action does not put a
defendant on notice that it will be called upon to defend a § 18
3 Section 18 claims are difficult to maintain on a classwide basis
because they require plaintiffs to show they actually relied on a defendant’s
misrepresentation. 	E.g., Erica P. John Fund, Inc. v. Halliburton Co., 563
U.S. 804, 810 (2011) (“[R]equiring proof of individualized reliance from each
member of the proposed plaintiff class effectively . . . prevent[s] such
plaintiffs from proceeding with a class action.”). 	Institutional investors,
by contrast, have the incentives to litigate an individual securities fraud
case and are well situated to show actual reliance. 	See, e.g., Villare v.
ABIOMED, Inc., No. 19-CV-7319, 2020 WL 3497285 at *7 (S.D.N.Y. June 29, 2020)
(noting that institutional investors have a significant financial interest in
securities litigation). 	Accordingly, institutional investors often choose to
opt out of a class action asserting only Section 10(b) claims and file their
own cases raising both Section 10(b) and Section 18 claims.
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claim.” 	Children's Hosp. & Med. Ctr. Found. of Omaha v.
Countrywide Fin. Corp., No. 11-CV-02056, 2011 WL 13220509, at *4
(C.D. Cal. Aug. 22, 2011).
We respectfully disagree. 	The cases holding that
American Pipe tolling does not apply focus on the difference in
the “[t]he legal standards for proving § 18 and § 10(b) claims.”
Gotham, 2019 WL 3996519, at *3; see also Children’s Hospital,
2011 WL 13220509, at *3 (tolling did not apply because “legal
standards for bringing an action under § 18 are significantly
different from those for § 10(b)”). 	But “[f]or a plaintiff who
wishes to take advantage of American Pipe tolling, the legal
theory asserted is not the relevant metric.” 	MYL Litig., 2020
WL 1503673, at *8. 	Rather, as described above, the relevant
question is whether the new case relies on “new factual bases.”
Id. at *8 (emphasis added); Cullen, 811 F.3d at 721.
Here, the defendants — who are ably represented —
point to no evidence relevant to the Section 18 claim that is
not also relevant to defending the Section 10(b) claim.
Instead, they quote the cases addressed above and point to the
differences in Sections 10(b) and 18’s legal standards. 	Defs.’
Br. 10-11. 	And the Court, like plaintiffs, is “hard pressed to
conclude that the [earlier] complaint was not sufficient to
alert the defendants . . . to preserve the evidence” required to
defend the instant Section 18 claim. 	Cullen, 811 F.2d at 721.
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To prove a Section 18 claim, a plaintiff must show
that (1) the defendant “ma[d]e or cause[d] to be made” a “false
or misleading statement” in a filing with the Securities and
Exchange Commission, (2) upon which the plaintiff actually
relied, (3) resulting in loss to the plaintiff. 	15 U.S.C.
§ 78r(a); Special Situations Fund III QP, L.P. v. Deloitte
Touche Tohmatsu CPA, Ltd., 645 Fed. App’x 72, 75 (2d Cir. 2016).
Plaintiffs’ allegations regarding the false and misleading
statements and loss causation are almost identical to those in
the earlier class action.4 	See Compl. ¶¶ 246-336 (false and
misleading statements also at issue in class action); ¶¶ 428-453
(loss causation allegations also at issue in class action). 	And
“no special preservation of witnesses or evidence would
ordinarily be necessary” for defendants to litigate actual
reliance, Cullen, 811 F.2d at 720-21, because the facts and
evidence relevant to that issue are uniquely in plaintiffs’
possession.
4 Plaintiffs add allegations regarding four additional loss-causation
events that postdate the filing of the amended class action complaint. 	See
Compl. ¶¶ 454-477. 	But three of those events — the release of the Brazilian
Senate Report, the announcement of criminal charges related to the Dam 1
collapse, and the release of the Vale Independent Investigation Report —
clearly relate to the same underlying misconduct and factual allegations.
Cf. Fed. R. Civ. P. 15(c)(1) (“amendment to a pleading relates back to the
date of the original pleading when . . . [it] asserts a claim or defense that
arose out of the [same] conduct, transaction, or occurrence”). 	One new loss-
causation event — a May 2019 report about issues at an entirely different
Vale dam — is far more attenuated.
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It is true that good faith is an affirmative defense
under Section 18, see 15 U.S.C. § 78r(a), but not Section 10(b).
Still, the evidence relevant to that defense is substantially
similar to that needed to dispute scienter under Section 10(b).
See, e.g., David Brodsky et al., Federal Securities Litigation,
A Deskbook for the Practitioner, 9-7. 	This is because refuting
good faith will “as a practical matter . . . generally involve
proof of a defendant’s state of mind,” specifically that “a
defendant acted, at a minimum, recklessly.” 	DeKalb, 817 F.3d at
407. 	And, as discussed in Section III.B.2, below, plaintiffs
here and in the class action rely on similar allegations of
recklessness to prove scienter under Section 10(b).
Plaintiffs’ Section 18 claim is timely under American
Pipe. 	We need not address whether the tolling of that claim
extends to the four new alleged misstatements, as those
statements are immaterial in any case. 	See Section III.B.3,
below.
B. 	Challenges to the Section 10(b) and Section 20(a)
Claims
Section 10(b) of the Exchange Act makes it unlawful to
“use or employ, in connection with the purchase or sale of any
security . . . any manipulative or deceptive device or
contrivance in contravention of such rules and regulations as
the [Securities and Exchange] Commission may prescribe.”
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15 U.S.C. § 78j(b). 	The SEC’s implementing rule, Rule 10b–5,
provides that it is unlawful “[t]o make any untrue statement of
a material fact or to omit to state a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading.” 	17 C.F.R
§ 240.10b–5(b).
The elements of a Section 10(b) claim are: “(1) a
material misrepresentation or omission by the defendant; (2)
scienter; (3) a connection between the misrepresentation or
omission and the purchase or sale of a security; (4) reliance
upon the misrepresentation or omission; (5) economic loss; and
(6) loss causation.” 	Stoneridge Inv. Partners, LLC v.
Scientific–Atlanta, 552 U.S. 148, 157 (2008). 	An omission is
actionable when (among other requirements) disclosure of the
information is “necessary in order to make statements made, in
the light of the circumstances under which they were made, not
misleading.” 	Matrixx Initiatives, Inc. v. Siracusano, 563 U.S.
27, 44 (2011) (quoting Rule 10b–5).
Defendants level several arguments at the Section
10(b) claims. 	First, plaintiffs improperly rely on group
pleading to ascribe statements to defendants that did not make
them. 	Second, plaintiffs fail to plausibly allege scienter as
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to the individual defendants.5 	Third, the new alleged
misstatements are immaterial. 	Fourth, plaintiffs fail to
adequately allege scheme liability.
1. 	The Individual Defendants’ Liability Is Limited
to Those Statements They Are Alleged to Have Made
To be liable under Section 10(b), a defendant must
have “made” the alleged misstatement(s). 	Janus Capital Group,
Inc. v. First Derivative Traders, 564 U.S. 135, 141 (2011). 	In
this context, “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.” 	Id. at 142.
Vale argues that, in many places, the complaint fails
to plead facts showing that any individual defendant had
“ultimate authority” over a given misstatement. 	Defs.’ Br. 21-
23. 	Plaintiffs dispute this, invoking the “group pleading
doctrine,” which they argue survived the Supreme Court’s
decision in Janus. 	Pls.’ Mem. 17-18, ECF No. 28.6 	We disagree
with plaintiffs’ reading of Janus and the group-pleading cases.
5 They argue that plaintiffs’ Section 20(a) claim fails for the same
reason.
6 Orbis acknowledges that, even under the group-pleading standard, not
all individual defendants can be liable for all misstatements. 	They assert
that (1) Ferreira and Schvartsman should be liable for all statements made
during the time each served as Vale’s CEO, Pls.’ Br. 17; (2) Siani should be
liable for all statements, given his role as Vale’s Executive Director of
Finance and Investor Relations, head of the Business Risk Management
division, and chair of the Executive Risk Committee, id. at 18; (3) Osorio
should be liable for certain misstatements about sustainability and safety,
given his position as Vale’s Executive Director of Sustainability and
International Business, id.; and (4) Poppinga should be liable solely for the
misstatement alleged in paragraph 259 of the amended complaint. 	Pls.’ Supp.
Br. 9-10, ECF No. 46.
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The group pleading doctrine “permit[ted] securities
fraud plaintiffs to rely on a presumption that statements in
prospectuses, registration statements, annual reports, press
releases, or other group-published information, are the
collective work of those individuals with direct involvement in
the everyday business of the company.” 	In re Banco Bradesco
Sec. Lit., 277 F. Supp. 3d 600, 637 (S.D.N.Y. 2017). 	Therefore,
rather than attributing a particular statement to a particular
defendant, a plaintiff could plead “that the individual
defendants were corporate insiders involved in the everyday
business of the company, and that the statements [at issue] were
made in group-published documents.” 	Id. at 639.
We hold, as have other courts in this Circuit, that “a
theory of liability premised on treating corporate insiders as a
group cannot survive a plain reading of the Janus decision.” 	In
re UBS AG Sec. Litig., No. 07-CV-11225, 2012 WL 4471265, at *10
(S.D.N.Y. Sept. 28, 2012), aff’d sub nom. City of Pontiac
Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173 (2d
Cir. 2014) (collecting cases).7 	Janus expressly rejected the
idea that “creating” a statement by “prepar[ing]” “publish[ing]”
or “participating in the drafting” of it equates to having
“ultimate authority over the statement.” 	Janus, 564 U.S. at
7 The Second Circuit has noted that the “continuing viability of group
pleading” is in question following Janus, but it has not squarely ruled on
the issue. 	Colbert v. Rio Tinto PLC, 824 F. App’x 5, 10 (2d Cir. 2020).
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143-46. 	Instead, “attribution within a statement or implicit
from surrounding circumstances is [ordinarily] strong evidence
that a statement was made by — and only by — the party to whom
it is attributed.” 	Id. at 142–143. 	While, as plaintiffs
correctly point out, the defendants in Janus were third party
advisors, nothing suggests its holding is limited to such
parties. 	Thus, “[i]f undeniable proof that an individual worked
on a statement does not meet Janus’s requirement,” evidence
under the group-pleading doctrine “must also fall short.” 	In re
Banco Bradesco, 277 F. Supp. 3d at 638–41.
One upshot of the foregoing analysis is that
plaintiffs’ Section 10(b) claim against defendant Poppinga must
be dismissed. 	The only misstatement Poppinga is alleged to have
made comes from an April 2018 Valor Econômico article. 	The
article quotes defendant Schvartsman as saying Vale’s dams were
in “impeccable” and “impressive” shape. 	Compl. ¶ 258.
Plaintiffs allege that “this statement was based on an email
[Schvartsman] received from Defendant Poppinga ‘affirming’ that
Vale’s dams were ‘impeccable’ and ‘impressive.’” 	Id. ¶ 259.
But Janus explicitly held that Section 10(b) does not “permit
private plaintiffs to sue a person who provides the false or
misleading information that another person then puts into the
statement.” 	Janus, 564 U.S. at 144-45. 	Accordingly, plaintiffs
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have not pleaded sufficient facts to support the claim that
Poppinga was the “maker” of any alleged misstatement.
All other defendants are plausibly alleged to have
been the maker of at least one statement. 	The case will
therefore continue as to them. 	Each individual defendant’s
liability under Section 10(b), however, will be limited to those
statements he is specifically alleged to have made.
2. 	Plaintiffs Plausibly Allege Scienter
To establish liability under Section 10(b), plaintiffs
must allege that a defendant acted with scienter, “a mental
state embracing intent to deceive, manipulate, or defraud.”
Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 319
(2007). 	The PSLRA requires plaintiffs to “state with
particularity facts giving rise to a strong inference that the
defendant acted with the required state of mind” “with respect
to each act or omission alleged to violate” Section
10(b). 	15 U.S.C. § 78u–4(b)(2)(A). 	An inference of scienter
will be strong only when it is “cogent and at least as
compelling as any opposing inference of nonfraudulent intent.”
Tellabs, 551 U.S. at 309. 	To raise such an inference, a
complaint must allege facts showing either (1) “motive and
opportunity to commit fraud, or (2) strong circumstantial
evidence of conscious misbehavior or recklessness.” 	ECA, Loc.
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134 IBEW Joint Pension Tr. of Chicago v. JP Morgan Chase Co.,
553 F.3d 187, 197-98 (2d Cir. 2009).
Plaintiffs allege adequate evidence of conscious
misbehavior or recklessness on the part of the individual
defendants.8 	So, their Section 10(b) claims survive against each
individual defendant (except Poppinga, as discussed above).
“Conscious misbehavior or recklessness . . . can be
established by showing . . . that defendants knew facts or had
access to information suggesting that their public statements
were not accurate.” 	In re Centerline Holding Co. Sec. Litig.,
380 F. App’x 91, 93 (2d Cir. 2010). 	In the class action, Judge
Dearie held that this standard had been met at the pleading
stage. 	In re Vale S.A. Securities Litigation, No. 19-cv-526,
ECF No. 74, at 19-31 (E.D.N.Y.).
8 Because we conclude that plaintiffs have adequately alleged
recklessness, we need not reach motive and opportunity. 	Under current case
law, the bar for pleading motive and opportunity is very high. 	Plaintiffs
may not rely on “motives possessed by virtually all corporate insiders,” such
as the desire to maintain a high stock price “in order to increase executive
compensation or prolong the benefits of holding corporate office.” 	Novak v.
Kasaks, 216 F.3d 300, 307 (2d Cir. 2000). 	Indeed, some courts have gone so
far as to say that motives relating to the “very survival” of a company —
such as avoiding bankruptcy — are insufficient. 	See In re PXRE Grp., Ltd.,
Sec. Litig., 600 F. Supp. 2d 510, 531–32 (S.D.N.Y.), aff’d sub nom. Condra v.
PXRE Grp. Ltd., 357 F. App’x 393 (2d Cir. 2009) (collecting cases). 	But
here, plaintiffs do not simply allege that Vale’s insiders wanted to keep the
stock price high. 	Rather, they point to the collapse of another Vale-owned
dam in 2015 that also resulted in casualties and environmental destruction.
Given the intense focus thereafter on the mining industry, and Vale in
particular, in the wake of that collapse, Vale’s insiders allegedly had every
incentive to “lull [its] investors into thinking that dam safety remained a
priority and that the risk of another dam collapse was being minimized.”
Pls.’ Supp. Br. 4. 	We think that where plaintiffs allege so specific a
motive, that should likely be sufficient. 	Cf. In re Time Warner Inc. Sec.
Litig., 9 F.3d 259, 269-71 (2d Cir. 1993) (plaintiffs’ allegations of motive
sufficiently specific to survive motion to dismiss).
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Defendants do not seek to relitigate that holding
here. 	They instead argue that by incorporating the Expert Panel
Report and Independent Investigation Report into the amended
complaint, plaintiffs have undermined their own allegations of
scienter. 	Defs.’ Br. 17. 	For example, the Independent
Investigation Report concluded that “no information regarding
the risk of Dam 1’s collapse was disclosed to Vale’s high-level
executives.” 	Id. at 7. 	And the Expert Panel Report asserts
that there were “no signs of distress” prior to Dam 1’s collapse
such that Vale’s executives could not have known about the
collapse. 	Id. at 8, 15. 	Because plaintiffs cite portions of
these reports, Vale asks the Court to accept as true the entire
contents of each report. 	Defs.’ Reply 4, ECF No. 30.
The parties spill much ink about the extent to which
the Court should consider these two reports on a Section
12(b)(6) motion. 	But that dispute is ultimately immaterial.
Even considering the reports in their entirety — as defendants
request — the amended complaint still sufficiently alleges a
strong inference of scienter.9
9 District courts may permissibly consider documents outside the
complaint on a motion to dismiss when the complaint “relies heavily upon
[their] terms and effect, which renders the document[s] integral to the
complaint.” 	Chambers v. Time Warner, Inc., 282 F.3d 147, 153 & n.3 (2d Cir.
2002). 	A court may consider a document “integral” to the complaint even if
the complaint “contains only limited quotation from that document.” 	San
Leandro Emergency Med. Grp. Profit Sharing Plan v. Philip Morris Co., 75 F.3d
801, 808 (2d Cir. 1996). 	Nor must the court “limit its consideration to [the
plaintiff’s] selected quotations”: it may consider the “full text” of the
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The portions of the reports the defendants cite as
refuting scienter raise, at most, a question of fact more
appropriately resolved at summary judgment. 	Roth, 489 F.3d. at
509 (“[A] ruling on a motion for dismissal pursuant to Rule
12(b)(6) is not an occasion for the court to make findings of
fact.”). 	For example, defendants emphasize the Expert Panel
Report’s finding that the collapse was sudden, and that Dam 1
showed “no signs of distress” leading up to it. 	Expert Panel
Report 69, ECF No. 26-4. 	But the report simultaneously states
that Dam 1 was only a “marginally stable dam (i.e., close to
failure in undrained conditions),” due to issues with things
like design and water management that long predated the
collapse. 	Id. at iv. 	Similarly, defendants claim that the
Independent Investigation Report confirms that information about
Dam 1’s safety was not disclosed to high level executives. 	See
Defs.’ Br. 15. 	But the report focuses on information disclosed
in a particular set of meetings: those of “the Board of
Directors and their main Advisory Committees.” 	Independent
Investigation Report 26-27, ECF No. 26-3. 	Even if we presumed
outside documents to contextualize the plaintiff’s quotations. 	Id. at 808-
09. 	Courts will generally “accept the factual allegations contained in the
[integral documents] as sufficiently reliable as a factual source for
[p]laintiffs’ allegations.” 	McIntire v. China MediaExpress Hldgs., Inc., 927
F. Supp. 2d 105, 124 (S.D.N.Y. 2013). 	Critically, however, resolution of
factual disputes is not appropriate at the motion-to-dismiss stage, and the
Second Circuit has cautioned that even if documents are integral to the
complaint, they should be considered “only to determine what the documents
stated, and not to prove the truth of their contents.” 	Roth v. Jennings, 489
F.3d 499, 509 (2d Cir. 2007).
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its truth, then, the report would not foreclose the plaintiffs’
allegations that the individual defendants received such
information through other channels, such as the risk matrix and
monthly risk reports. 	See In Re Vale, No. 19-CV-526, Order Den.
Recons. 6-7.
To the extent the Independent Investigation and Expert
Panel Reports present contradictory evidence regarding scienter,
that conflict will not be resolved on a motion to dismiss. 	At
this stage, plaintiffs have adequately alleged defendants’
knowledge.
3. 	The New Alleged Misstatements Are Not Material
Orbis alleges four new misstatements related to
disclosure controls and procedures that were not pleaded in the
Class Action. 	None is actionable.
Two of the misstatements are taken from substantially
similar sections of Vale’s 2016 and 2017 Annual Reports, which
read, in relevant part:
Our chief executive officer and chief financial
officer have concluded that our disclosure controls
and procedures were effective to provide reasonable
assurance that information required to be disclosed by
us in the reports filed or submitted under the
Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the
applicable rules and forms, and that it is accumulated
and communicated to our management, including our
chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding
required disclosure.
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Compl. ¶¶ 338, 339. 	The other new misstatements consist of
substantially identical certifications that Vale made pursuant
to Section 302 of the Sarbanes-Oxley Act (“SOX”), again in both
2016 and 2017. 	Id. ¶¶ 340-41. 	In the SOX certification, the
CEO and CFO affirmed: “The company’s other certifying officer(s)
and I are responsible for establishing and maintaining
disclosure controls and procedures” and have “[e]valuated the
effectiveness of the company’s disclosure controls and
procedures.” 	Id. ¶ 340.
Plaintiffs allege that these statements were false
because Vale did not have the effective internal disclosure
controls and procedures it claimed. 	Id. ¶ 342; see also Pls.’
Supp. Br. 11, ECF No. 46. 	To support that allegation,
plaintiffs rely on Schwartzman’s deposition testimony that he
did “not recall” serving on Vale’s Disclosure Committee or
attending its meetings, or even know that the committee existed,
despite having been appointed its Chair. 	Compl. ¶ 349. 	The
amended complaint also includes allegations about Vale’s
hierarchical structure and the rigid channels for reporting
safety concerns within the geotechnics group. 	Compl. ¶¶ 355-65.
Orbis contends that these allegations demonstrate that
“[d]efendants could not have reasonably believed that Vale had
effective internal controls over disclosures.” 	Pls.’ Supp. Br.
11. 	But defendants argue that whether these statements were
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false does not matter: they were too generic to be material to
investors. 	Defs.’ Supp. Br. 9-10, ECF No. 45. 	Defendants are
correct.
A statement can only give rise to a Section 10(b)
violation if it is one that a reasonable investor would rely on.
“Assertions of satisfactory regulatory compliance can be
materially misleading if the descriptions of compliance efforts
are detailed and specific.” 	Plumber & Steamfitters Loc. 773
Pension Fund v. Danske Bank A/S, 11 F.4th 90, 103 (2d Cir.
2021). 	But “[i]t is well-established that general statements
about reputation, integrity, and compliance with ethical norms
are inactionable puffery, meaning that they are too general to
cause a reasonable investor to rely upon them.” 	Singh v. Cigna
Corp., 918 F.3d 57, 63 (2d Cir. 2019).
The Second Circuit has held that statements like those
at issue here constitute puffery. 	See ECA, Loc. 134 IBEW Joint
Pension Tr. of Chicago v. JP Morgan Chase Co., 553 F.3d 187 (2d
Cir. 2009) (statement affirming that company has “risk
management processes [that] are highly disciplined” and “set the
standard for integrity” was too general to induce reliance);
Plumber & Steamfitters Loc. 773 Pension Fund, 11 F.4th at 103
(statement that defendant “strive[s] to conduct [its] business
in accordance with internationally recognized principles [of] .
. . anti-corruption” too vague to be actionable). 	The
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disclosure-control misstatements simply affirm that Vale’s
disclosure controls were effective, without describing what
those controls were or how they operated. 	Accordingly, whether
the statements were false — and whether defendants knew they
were false when made — is irrelevant. 	“[T]heir generality . . .
prevents them from rising to the level of materiality required
to form the basis for assessing a potential investment.” 	In re
Liberty Tax, Inc. Sec. Litig., 828 F. App’x 747, 751 (2d Cir.
2020). 	Plaintiffs’ 10(b) claim may not proceed as to the new
alleged misstatements.
4. 	Plaintiffs Fail to Allege Scheme Liability
Against the Individual Defendants
Orbis also argues that — separate and apart from any
liability for misstatements — the individual defendants are
liable under Rule 10b-5(a) and (c) for perpetrating a fraudulent
scheme. 	“Scheme liability” is premised on deceptive conduct
independent of misrepresentations or omissions. 	See SEC v.
Kelly, 817 F. Supp. 2d 340, 344 (S.D.N.Y. 2011).
To state a scheme liability claim under Rule 10b-5(a)
or (c), “a plaintiff must show: (1) that the defendant committed
a deceptive or manipulative act, (2) in furtherance of the
alleged scheme to defraud, (3) with scienter, and (4) reliance.”
Plumber & Steamfitters Loc. 773 Pension Fund, 11 F.4th at 105.
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Plaintiffs have failed to plead scheme liability
because they do not “identif[y] any deceptive act apart from the
alleged misrepresentation.” 	Menaldi v. Och-Ziff Cap. Mgmt. Grp.
LLC, 164 F. Supp. 3d 568, 586 (S.D.N.Y. 2016) (dismissing
claim). 	Instead, the complaint “rests upon the incorporation of
the previous [110] pages of the pleading” paired with the
conclusory assertion the defendants “employed devices, schemes
and artifices to defraud.” 	Plumber & Steamfitters Loc. 773
Pension Fund, 11 F.4th at 105; see Compl. ¶ 482. 	“Absent some
sort of enumeration of which specific acts constituted an
alleged scheme,” plaintiffs’ claim “cannot go forward.” 	Plumber
& Steamfitters Loc. 773 Pension Fund, 11 F.4th at 105.
5. 	Plaintiffs’ Section 20(a) Claim Survives
In their Section 20(a) claim, plaintiffs allege that,
as controlling persons, “[d]efendants Ferreira, Schvartsman,
Siani, Poppinga, and Osorio culpably participated in Vale’s
violation of Section 10(b) and Rule 10b-5.” 	Compl. ¶¶ 491-99.
Defendants’ only argument for dismissal of this claim is that
plaintiffs have failed to allege the individual defendants’
scienter. 	See Defs.’ Br. 25. 	Because we conclude that
plaintiffs have sufficiently pleaded scienter, see Section
III.B.2, above, their Section 20(a) claim likewise survives.
See In re Virtu Fin., Inc. Sec. Litig., 770 F. Supp. 3d 482,
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527-28 (E.D.N.Y. 2025) (allegations of scienter sufficient for
Section 10(b) are also sufficient for Section 20(a)).
C. 	The Common Law Fraud Claim Is Barred Under SLUSA
Finally, defendants move to dismiss Orbis’s fourth
cause of action: state common law fraud. 	Compl. ¶¶ 30, 303-
309.10 	Defendants argue that this claim is statutorily barred
under the Securities Litigation Uniform Standards Act (“SLUSA”),
which precludes private parties from filing: “(1) a covered
class action (2) based on state law claims, (3) alleging that
defendants made a misrepresentation or omission of a material
fact (4) in connection with the purchase or sale of (5) covered
securities.” 	15 U.S.C. § 78bb(f)(1); Rayner v. E*TRADE Fin.
Corp., 899 F.3d 117, 119-20 (2d Cir. 2018). 	The parties dispute
only the first condition: whether this case, together with the
Class Action, constitutes a “covered class action.”
A “covered class action” includes “any group of
lawsuits filed in or pending in the same court and involving
common questions of law or fact” that collectively seek damages
“on behalf of more than 50 persons” and “are joined,
consolidated, or otherwise proceed as a single action for any
purpose.” 	15 U.S.C. § 78bb(f)(5)(B)(ii). 	Neither side disputes
that the instant action and In Re Vale are pending in the same
10 Though plaintiffs do not specify what “state common law” they rely
on, see Compl. ¶¶ 30, 303-309, both parties seem to assume it is New York’s.
Defs.’ Br. 11. 	Our analysis would remain the same regardless.
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court, “involv[e] common questions of law or fact,” and together
seek damages “on behalf of more than fifty people.” 	Id.; see In
re AOL Time Warner, Inc. Sec. Litig., 503 F. Supp. 2d 666, 672
(S.D.N.Y. 2007) (fifty person requirement aggregated across both
lawsuits). 	Thus, the relevant question is whether the actions
“proceed as a single action for any purpose.”
“Courts have recognized that Congress intended the
clause ‘for any purpose,’ . . . to be broadly construed.”
Kuwait Inv. Off. v. Am. Int’l Grp., Inc., 128 F. Supp. 3d 792,
812 (S.D.N.Y. 2015). 	Therefore, it is enough for the cases to
be “coordinated, and not consolidated.” 	R.W. Grand Lodge of
Free & Accepted Masons of Pennsylvania v. Meridian Cap.
Partners, Inc., 634 F. App’x 4, 9 (2d Cir. 2015). 	And such
coordination can be informal. 	See Amorosa v. Ernst & Young LLP,
682 F. Supp. 2d 351, 375 (S.D.N.Y. 2010), aff’d, 409 F. App’x
412, 417 (2d Cir. 2011). 	For example, in Amorosa, the court
concluded that the plaintiff’s opt-out action was proceeding “as
a single action for any purpose” with the class action because
the opt-out plaintiff had designated his case as “related” and
“agreed to stay proceedings in his action pending resolution of
a motion to amend [in the class action] and motions to dismiss
[in another opt-out action].” 	Id. at 376. 	Similarly, in Kuwait
Investment Office, the court found that the opt-out case was
proceeding as a single action with the class action because the
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defendants voluntarily produced discovery material already
produced in the class action, “frequently drew upon decisions
and litigation events in the Class Action,” and, in fact, were
subject to a case management order disallowing them from raising
grounds for dismissal that had already been rejected in the
class action. 	128 F. Supp. 3d at 812-13.
For similar reasons, we conclude that the instant case
and In Re Vale are proceeding as a single action for at least
some sufficient purpose. 	First, Orbis requested — and received
— a judicial determination that this action is “related” to the
Class Action. 	See Motion for Reassignment, ECF No. 11; Order
Reassigning Case dated Apr. 25, 2022. 	Second, the parties have
agreed to abide by prior rulings in the class action. 	See,
e.g., Defs.’ Mot. 1. 	Indeed, Orbis repeatedly relies on
decisions made in the Class Action. 	See, e.g., Defs.’ Br. 1,
12.11 	Third, the parties have coordinated discovery across both
cases, including by stipulating that plaintiffs will accept “all
documents and other discovery materials produced in the Class
Action” and by obtaining permission for plaintiffs to “attend
any depositions of defense witnesses and nonparties taken in the
Class Action.” 	ECF No. 10-1 at 3–4; Docket Order dated Apr. 19,
11 See also Compl. ¶¶ 27, 248, 251, 254, 257, 261, 264, 269, 272, 278,
281, 284, 287, 290, 293, 296, 300, 303, 306, 310, 314, 318, 322, 325, 329,
333, 336, 375, 398, 402, 405, 410, 411, 417, 445, 453, 478, 490, 499, 508
(referencing holdings in the class action).
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2022 (so-ordered stipulation). 	This case, together with the
class action, therefore qualifies as a “covered class action”
under SLUSA. 	Plaintiffs’ common law fraud claim is barred.
Conclusion
For the reasons set forth above, the motion to dismiss
is granted in part. 	Plaintiffs’ common law fraud claim is
dismissed in its entirety, as is their Section 10(b) claim
against defendant Poppinga. 	We also dismiss plaintiffs’ Section
10(b) and 20(a) claims based on the statements related to
disclosure controls and procedures, as well as their claims
based on scheme liability. 	The Section 10(b) and 20(a) claims
may otherwise proceed, except that each defendant’s liability
under Section 10(b) will be limited to the statements they
individually made. 	Finally, we dismiss plaintiffs’ Section 18
claim based on the loss-causation event described in paragraphs
454-59 of the amended complaint. 	The motion is denied in all
other respects.
SO ORDERED.
/s/ Eric Komitee__________
ERIC KOMITEE
United States District Judge
Dated: 	March 10, 2026
Brooklyn, New York
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