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Reilly v. U.S. Physical Therapy, Inc.

United States District Court for the Southern District of New York

July 23, 2018, Decided; July 23, 2018, Filed

17 Civ. 2347 (NRB)

Opinion

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD

UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This federal securities class action was filed on behalf of all persons and entities who purchased or otherwise acquired the securities of defendant U.S. Physical Therapy, Inc. ("USPH" or the "Company") between November 6, 2014 and March 16, 2017, inclusive (the "Class Period"). Plaintiffs1 alleged that USPH and four individual defendants, Christopher J. Reading, Lawrance W. McAfee, Glenn W. McDowell, and Jon C. Bates, violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, and that the individual defendants violated Section 20(a) of the Exchange Act. Before the Court is defendants' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).2 Because plaintiffs failed to adequately plead scienter, the motion to dismiss is granted.

II. BACKGROUND

The following allegations are drawn from plaintiffs' second amended complaint ("SAC") (ECF No. 26), and are [*2]  assumed to be true for the purposes of this motion. See Glob. Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 154 (2d Cir. 2006). We also consider any statements or documents incorporated into the AC by reference, legally required public disclosure documents filed with the Securities and Exchange Commission ("SEC"),3 and documents possessed by or known to the plaintiffs and upon which they relied in bringing this action.4 See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).

A. Factual Background

1. USPH

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2018 U.S. Dist. LEXIS 123324 *; 2018 WL 3559089

SEAN REILLY, individually and on behalf of all others similarly situated, Plaintiff, - against - U.S. PHYSICAL THERAPY, INC., CHRISTOPHER J. READING, LAWRANCE W. MCAFEE, JON C. BATES, and GLENN W. MCDOWELL, Defendants.

CORE TERMS

non-controlling, redeemable, scienter, stock, redemption, non-restricted, bonus, bonuses, correspondence, classified, partnership, temporary, therapists, covenants, consolidated, termination, recklessness, calculation, mandatorily, disclosure, acquisition, salary, certifications, revaluation, conscious, permanent, auditors, clinics, entity, suspicious