Full opinion text
OPINION AND ORDER (1) DENYING DEFENDANTS REDDY ICE HOLDINGS, INC, WILLIAM P. BRICK AND STEVEN J. JANTJ-SEKS MOTIONS TO DISMISS (DKT NO. 78); (2) DENYING DEFENDANT JIMMY C. WEAVER’S MOTION TO DISMISS (DKT. NO. hi); (3) GRANTING DEFENDANT RAYMOND D. BOOTH’S MOTION TO DISMISS (DKT. NO. 39); AND (I) GRANTING DEFENDANTS’ MOTION TO SUPPLEMENT (DKT. NO. 82) PAUL D. BORMAN, District Judge. This matter is before the Court on Defendants Reddy Ice Holdings, Inc. (“Reddy Ice”), William P. Brick (“Brick”) and Steven J. Janusek’s (“Janusek”) Motion to Dismiss (Dkt. No. 43 redacted at Dkt. No. 78), Defendant Jimmy C. Weaver’s (‘Weaver”) Motion to Dismiss (Dkt. No. 41) and Defendant Raymond D. Booth’s (“Booth”) Motion to Dismiss (Dkt. No. 39). Plaintiffs have filed responses. (Dkt. Nos. 48, 47 and 46.) Defendants have filed replies. (Dkt. Nos. 58, 59 and 57.) The Court held a hearing on October 22, 2010. For the reasons that follow, the Court DENIES Defendants Reddy Ice, Brick, Janusek and Weaver’s motions to dismiss and GRANTS Defendant Booth’s motion to dismiss. The Court further GRANTS Defendants Reddy Ice, Brick and Janusek’s Motion for Leave to Supplement Pending Motion to Dismiss, (Dkt. No. 82), based upon the parties’ briefs and without necessity for oral argument. See E.D. Mich. L.R. 7.1(f). I. BACKGROUND A. The Packaged Ice Litigation On June 5, 2008, the United States Judicial Panel on Multidistrict Litigation (“MDL”) assigned to this Court a number of related civil antitrust actions against the three dominant players in the Packaged Ice Industry, Reddy Ice Holdings and its wholly owned subsidiary Reddy Ice Corporation (“Reddy Ice”), Arctic Glacier Income Fund and its wholly owned subsidiary Arctic Glacier, Inc. (“Arctic Glacier”) and the Home City Ice Company (“Home City”). Those cases are now consolidated in In re Packaged Ice Antitrust Litig., No. 08-MD-01952 (E.D.Mich.2008). On July 1, 2010, this Court denied the Defendants’ motion to dismiss the Direct Purchaser’s Consolidated Amended Class Action Complaint in the antitrust litigation. (In re Packaged Ice Antitrust Litig., Dkt. No. 260.) The instant securities fraud class action, Chamberlain v. Reddy Ice Holdings, Inc., Case No. 08-13451, originally filed on August 8, 2008 and reassigned pursuant to E.D. Mich. L.R. 83.11 to this Court on August 14 2008, is a tag-a-long case to the multidistrict antitrust litigation. On July 17, 2009, this Court consolidated Chamberlain with two related securities cases, Coffey v. Reddy Ice Holdings, Inc., et al., Case No. 08-13670 and Neal v. Reddy Ice Holdings, Inc., et al, Case No. 08-14036. (Dkt. No. 26.) On July 27, 2009, the Court appointed Lawrence Diamond and the Southeastern Pennsylvania Transportation Authority (“SEPTA”) interim lead Plaintiffs in this action and appointed Schiffrin Barroway Topaz & Kessler, LLP (now Barroway Topaz Kessler Meltzer & Check LLP) interim lead counsel and Zausmer, Kaufman, August, Caldwell & Taylor, P.C. as interim liaison counsel for the class. (Dkt. No. 28.) On November 2, 2009, Plaintiffs filed a Consolidated Class Action Complaint (“CCAC”) alleging violations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and of Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240 (Count I) and of § 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t(a) (Count II). The CCAC alleges that Defendants knowingly and recklessly omitted material information regarding allegedly unlawful market allocation agreements in the Packaged Ice Industry among Reddy Ice, Arctic Glacier and Home City. The CCAC alleges that these omissions and failures to disclose material information resulted in significant financial losses to Plaintiffs, purchasers of Reddy Ice securities between August 10, 2005 and September 15, 2008, after the truth behind these omissions became known to the market and Reddy Ice stock suffered a precipitous decline in market value. Defendants Reddy Ice, William P. Brick (“Brick”), Steven J. Janusek (“Janusek”), Jimmy C. Weaver (“Weaver”) and Raymond D. Booth (“Booth”), now move to dismiss the CCAC pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b) and the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4 et seq. (“PSLRA”). Reddy Ice, Brick and Janusek filed their motion to dismiss (Dkt. No. 78) and Defendants Weaver and Booth filed separate motions to dismiss (Dkt. Nos. 41 and 39 respectively), joining in the motion of Reddy Ice, Brick and Janusek and arguing separately as to the Plaintiffs’ failure to plead scienter specifically as to them. Plaintiffs filed separate responses to each motion. (Dkt. Nos. 48, 47, 46) and Defendants filed replies (Dkt. Nos. 58, 59 and 57.) The Court will address all three motions jointly in the instant opinion and order. B. The Allegations of the CCAC 1. Summary of the allegations. Plaintiffs are purchasers of Reddy Ice’s publicly-traded securities between August 10, 2005 and September 15, 2008. The CCAC alleges that Reddy Ice is the “nation’s largest packaged ice manufacturer” with “locations in 31 states and the District of Columbia” selling packaged ice in 7-50 pound bags to “supermarkets, convenience stores and retail outlets.” (CCAC ¶¶ 1, 2, 34.) According to the CCAC, in August 2005, Reddy Ice conducted an initial public offering (“IPO”) of its stock, issuing 11.7 million shares at $18.50 per share, raising over $190 million and paying to its controlling shareholders, which included Weaver, Janusek and Booth, $56.5 million in proceeds. In a follow-on secondary offering nine months later (“the Secondary Offering”), Reddy Ice sold an additional 4.59 million shares of common stock to investors at $21.55 per share, generating an additional $98.9 million that was “paid to the controlling shareholders, including Defendants in this action.” (CCAC ¶ 3, 37, 38.) The CCAC alleges that following the IPO and Secondary Offering, Reddy Ice grew and touted an “aggressive business plan,” loyal customer base “generated through quality, service and price,” a “large geographic footprint” that gave Reddy Ice “a competitive advantage in its primary markets.” Reddy Ice simultaneously expressed its “strict adherence” to a company code of ethics which expressly prohibited violating the antitrust laws and “was signed by the Company’s executive officers.” (CCAC ¶ 4.) Reddy Ice reported revenues in 2005, 2006 and 2007 of $317 million, $346 million and $339 million, respectively. (CCAC ¶40.) The CCAC alleges that while making these representations regarding it business operations and competitive position in the packaged ice market, Reddy Ice and the other Defendants knowingly and recklessly omitted and failed to disclose the fact that it was a party to unlawful and deceptive agreements with its major competitors, Arctic Glacier and Home City, to allocate customers and markets in violation of the U.S. antitrust laws. The CCAC alleges that because of these illegal agreements, Reddy Ice was able to raise, fix and maintain the price of packaged ice. (CCAC ¶ 42.) The CCAC alleges that these unlawful agreements gave Reddy Ice, and the other packaged ice participants in the market allocation agreement, control over price competition in the nationwide market for packaged ice, resulting in an artificial increase in Reddy Ice’s business and revenues, driving the Company’s stock price “as high as $31.18 per share during the class period.” (CCAC ¶¶ 5-7, 42.) The CCAC alleges that on March 5, 2008, just a few months after news that Reddy Ice had abandoned a potential merger with a hedge fund drove Reddy Ice stock down to $22.34 per share, the FBI executed a search warrant and raided Reddy Ice’s Dallas, Texas headquarters. The following day, on March 6, 2008, Reddy Ice issued a press release announcing that “federal officials executed a search warrant at the Company’s office in Dallas on March 5, 2008” and that the “Company [was] cooperating with the authorities.” On March 7, 2008, Reddy Ice issued a follow-up press release disclosing that “[t]he execution of the search warrant was directed by the Antitrust Division of the United States Department of Justice (the “DOJ”) in connection with an investigation of the packaged ice industry.” (CCAC ¶¶ 6-10, 61, 126-128.) Following this news, on March 7, 2008, according the CCAC, Reddy Ice’s stock price declined, on unusually heavy trading volume, “from approximately $23.57 per share to $15.38, for a one-day market capitalization loss of $180 million.” (CCAC ¶ 11.) The CCAC alleges that Reddy Ice disclosed in its Annual Report for fiscal 2007 that Reddy Ice had received grand jury subpoenas seeking information in connection with the DOJ’s packaged ice industry investigation. (CCAC ¶ 61.) According to the CCAC, Reddy Ice denied knowledge of any unlawful behavior, stating in March, 2008 that “Senior Management is not aware that the Company has engaged in anticompetitive behavior, or other activities, which would violate that antitrust laws.” (CCAC ¶ 129.) The CCAC alleges that Reddy Ice continued to deny any improprieties despite news and other disclosures discussing the allegedly unlawful conduct, including an August 7, 2008 Wall Street Journal article that described an interview with Martin McNulty, a former vice president of sales with Arctic Glacier, who alleged that he had provided prosecutors with evidence of an agreement among Reddy Ice, Arctic Glacier and Home City to divide up customers and stay out of each other’s sales regions. On this same day, after news of McNulty’s interview, Reddy Ice shares fell an additional $2.40 per share to close on August 7, 2008 at $10.99 per share, “again on unusually high trading volume.” (CCAC ¶¶ 12-13.) On September 15, 2008, Reddy ice announced that it had suspended its Executive Vice President of Sales and Marketing, Ben D. Key, on a finding that Mr. Key had “violated Company policies in connection with the antitrust violations under investigation by the DOJ.” (CCAC ¶ 14, 64, 126-127, 129, 151.) As a member of Reddy Ice’s management team, Key attended meetings of the International Packaged Ice Association (“IPIA”) and the Western Ice Association (“WIA”) and held positions as an officer of both associations. (CCAC ¶ 64.) Also on September 15, 2008, according to the CCAC, “Reddy Ice announced that it was suspending its dividend because of ‘weaker than expected operating results and costs related to the ongoing antitrust investigations and related litigation.” (CCAC ¶ 19.) That day, following news of “Key’s implication in the criminal activities under investigation by the DOJ and the related adverse impact on Reddy Ice’s financial condition, the Company’s shares fell an additional $1.09 per share” to close at $6.75 per share and falling the next day, September 16, 2008, a further 34.8 percent to close at $4.40 per share, again on extremely heavy trading volume. According to the CCAC, “Reddy Ice’s shares have not recovered and currently trade in the $4.00 range.” (CCAC ¶ 19,152.) The CCAC alleges that the Defendants failed to disclose material information, specifically that Reddy Ice: (1)had engaged, and continued to engage in illicit business practices with its competitors in the packaged ice industry and had unlawfully joined with its competitors in the packaged ice industry in colluding and agreeing to allocate territories and customers in the United States’ packaged ice market: (2) had agreed with its competitors in the industry to fix, raise, maintain and stabilize prices for packaged ice in the United States market and that Reddy Ice’s revenue and earnings had been artificially increased through the use of such illicit business practices, and as a result, the Company’s financial statements were false and misleading at all relevant times; (3) had engaged in illicit business practices that exposed the Company to risks of criminal and civil liability and penalties that threatened its existence and continuing business practices; (4) had falsely certified that it had adequate internal and financial controls and operated under and ensured strict compliance with a code of ethics that expressly prohibited agreements that violated the U.S. antitrust laws; and (5) had repeatedly issued statements about the Company’s competitive position, financial well-being and future business prospects that were lacking in any reasonable basis when made. (CCAC ¶ 20.) Plaintiffs claim that the revelation of this wrongful conduct caused a direct and precipitous decline in the market value of Reddy Ice stock and a concomitant significant financial loss to Plaintiffs and all class members. 2. Evidence of the allegedly illegal scheme. The CCAC alleges that the conspiracy to allocate markets, territories and customers and to fix prices was described by a former Arctic Glacier employee, Martin McNulty, in McNulty’s complaint in a related whistleblower case, also pending before this Court, McNulty v. Reddy Ice, et al., Case No. 08-cv-13178 (E.D.Mich.2008). (CCAC ¶ 44.) According to the CCAC, McNulty claims in his complaint to have been informed by Arctic Glacier’s then Vice-President of Sales, Keith Cor-bin, that Arctic Glacier, Reddy Ice and Home City “unlawfully allocated markets between themselves for the exclusive sales of packaged ice.” (CCAC ¶ 45.) The CCAC claims that McNulty was told by Mr. Corbin that “the conspiracy with Reddy Ice extended throughout the United States,” each backing away from or staying out of the other’s territory, enabling Reddy and Arctic Glacier to “get their prices up.” (Id.) The CCAC refers to McNulty’s Complaint in his whistleblower action where he alleges detailed first-hand conversations with Arctic Glacier’s Vice President of Sales, Keith Corbin, in which Corbin described in the agreements between Reddy Ice and Arctic Glacier to stay out of each other’s territories, enabling them each to “get their prices up.” (CCAC ¶¶ 13, 44-45, 65, 144; Pis.’ Resp. Ex. 1, Declaration of Lauren Wagner Pederson, McNulty Compl. ¶¶ 34-38.) The CCAC alleges the following with respect to several confidential witnesses (CWs) whom Plaintiffs claim corroborate the McNulty allegations and offer further proof of Plaintiffs’ claims of an illegal market allocation agreement: Confidential Witness Number One CW1 is a former Reddy Ice employee who held the position of National Purchasing and Contracts Manager for Reddy Ice from mid-1997 to late-2004. CW1 became aware during his tenure with Reddy Ice, through discussions held in his presence and in the presence of other employees at Reddy Ice’s Dallas headquarters, that “Reddy Ice agreed not to compete against Arctic Glacier in California, and that Arctic Glacier in exchange for the right to service California without competition from Reddy Ice, agreed to “stay out” of Arizona, a market serviced by Reddy Ice.” (CCAC ¶ 46.) Confidential Witness Number Two CW2 is a former Reddy Ice employee who held the positions of internal auditor, area controller and utilities specialist from January 2006 through March 2008. Through his positions in the financial sector of Reddy Ice, CW2 was privy to highly sensitive information relating to financial performance and business practices, such as revenue, expenses and budget data for all of the manufacturing plants in his assigned territory. CW2 learned of an agreement between Reddy Ice and Arctic Glacier to allocate territories and markets and was personally told of this agreement by Defendant Weaver. CW2 also was told by other Reddy Ice employees that Defendant Brick entered into the agreement with Arctic Glacier to allocate territories. CW2 was told that Reddy Ice agreed to sell its California manufacturing operations to a consortium of companies in California with the understanding that Arctic Glacier would subsequently acquire the consortium of companies, giving Arctic Glacier access to all of the packaged ice manufacturing facilities that had been acquired from Reddy Ice. CW2 attended an annual plant managers meeting in February 2006 or 2007 where the agreement was discussed by several management attendees, including Weaver and Janusek. (CCAC ¶¶ 49-52.) According to CW2, it was regularly discussed amongst various Reddy Ice employees that Home City was a party to the agreement to divide up markets and that CW2 was told by other Reddy Ice employees that Reddy Ice and Arctic Glacier had agreed to stay out of certain Midwest states where Home City had a presence. CW2 learned first hand that Defendants Weaver and Janusek knew of the agreement with Home City. (CCAC ¶¶ 52-53.) According to CW2, he was informed by an area controller with first hand knowledge that Reddy Ice would manipulate prices, lower them dramatically to drive out a particular competitor until the smaller company went out of business. (CCAC ¶ 58.) Specifically, CW2 knew of a plan to drive a competitor in Arizona out business by dramatically reducing its prices in the area served by the competitor but that this plan was never realized due to the raid on Reddy Ice’s headquarters in March 2008. (CCAC ¶ 60.) Confidential Witness Number Three CW3 is a former Reddy Ice internal audit manager employed at Reddy Ice’s Dallas headquarters from June 2005 through July 2008. CW3 was responsible for overseeing internal audits and Sarbanes-Oxley testing and for reporting confidential information to the audit committee. CW3 states that he has knowledge of the purchase of the Reddy Ice California manufacturing operations by a consortium of California companies through his audit responsibilities. According to CW3, Reddy Ice and the consortium of companies entered into a covenant not to compete whereby Reddy Ice agreed to purchase from the consortium a manufacturing plant in Arizona. According to CW3 he was told by other Reddy Ice employees that Defendants Janusek and Brick, and Reddy Ice’s Vice President of compliance, Nancy Green, along with Ben Key, attended a meeting in 2006 to discuss Arctic Glacier’s purchase of the California consortium that had previously purchased the majority of Reddy Ice’s California manufacturing operations. (CCAC ¶¶ 54-56.) Conñdential Witness Number Four CW4 is a former Reddy Ice plant manager for one of Reddy Ice’s large manufacturing facilities in Arizona from mid-2007 through late-2008. According to CW4, he was told by other Reddy Ice employees that Reddy Ice and Arctic Glacier had “management meetings” during which a deal was struck whereby Arctic Glacier agreed to leave California while Reddy Ice agreed to stay out of Arizona. 3. Government investigations of Reddy Ice and criminal guilty pleas by Arctic Glacier and Home City. The CCAC further alleges that, following the March 5, 2008 execution of a search warrant by the DOJ Antitrust Division at Reddy Ice’s Dallas headquarters, Reddy Ice disclosed in its Annual Report for 2007 that employees of Reddy Ice, including members of management, had received grand jury subpoenas to appear in the United States District Court for the Eastern District of Michigan in connection with the criminal probe of the packaged ice industry. (CCAC ¶ 61.) Reddy Ice also disclosed that the Attorneys General for the states of Florida and Arizona had issued “civil investigative demands” for documents “as part of a multi-state antitrust investigation of the packaged industry.” (CCAC ¶ 63.) On June 18, 2008, the United States District Court for the Southern District of Ohio unsealed a guilty plea that had been entered into on October 30, 2007 by Home City in which Home City, through its president and CEO Thomas Sedler, pled guilty to participating in a conspiracy to suppress and eliminate competition by agreeing “with other packaged ice manufacturers to allocate customers and territories” in Southeastern Michigan. (CCAC ¶ 62.) On or about October 13, 2009, Arctic Glacier and three of its top executives pled guilty to the same charges, admitting that during the period March 1, 2005 (January 1, 2001 in the case of Arctic Glacier) to July 17, 2007 these defendants knowingly violated the antitrust laws by participating in a conspiracy to suppress and eliminate competition by agreeing with other packaged ice manufacturers to allocate customers in Michigan. According to the CCAC, Home City’s guilty plea and the ongoing investigations into Reddy Ice and Arctic Glacier “spawned over ninety civil antitrust laws suits against Reddy ice and its competitors alleging that these companies conspired with one another to allocate territory and fix or stabilize the price of packaged ice sold in the United States and Canada.” (CCAC ¶ 63.) 4. The allegedly materially false and misleading statements issued by Reddy Ice during the class period. The CCAC alleges that Reddy Ice made numerous false and misleading statements during the class period (August 10, 2005 to September 15, 2008) in various public SEC filings as well as in press releases and annual reports, which caused Reddy Ice shares to trade at inflated prices. Plaintiffs claim that Reddy Ice deceived the investing public by stating in multiple public disclosures that its financial success was due to lawful competition, when in fact Reddy Ice’s success was the result of the above-described anticompetitive behavior and by expressly disavowing in those public disclosures participation in any customer or market allocation agreements with its competitors. The allegedly misleading statements include: • SEC Prospectus filed on August 10, 2005 in connection with the IPO claiming that Reddy Ice was the largest manufacturer of packaged ice in the United States, claiming competitive strengths including a unique multi-state presence, a leading market position in the Sun Belt and other markets, and a strong incentivized management team. The Prospectus identified business strategies including enhancing revenue growth from existing customers, selectively pursuing acquisitions and continuing efficiency improvements. The Prospectus identified a highly competitive market as one of the main business challenges faced by Reddy Ice. (CCAC ¶¶ 66-70.) • November 1, 2005 earnings release claiming increased revenues for the third quarter of 2005 over the third quarter results in 2004 and increased net income, decreased net loss per share and aggressive acquisitions for the quarter. (CCAC ¶ 73-74.) • Form 10-Q filed with the SEC on November 4, 2005, signed by Janusek and Brick, indicating that Reddy Ice faced many competitors in the packaged ice industry and competed primarily on price, service and quality. Brick and Janusek certified the veracity of the Form 10-Q pursuant to the requirements of the Sarbanes-Oxley Act of 2002 (“Sarbanes Oxley”), indicating their responsibility for establishing and maintaining the company’s disclosure controls and indicating that all of the information in the Form 10-Q “fairly presents, in all material respects, the financial condition and results of operations of the Company.” (CCAC ¶ 75-76.) • 2005 Form 10-K indicating Reddy Ice’s competitive pricing and market position as the sole supplier of packaged ice to the top twenty retail ice customers. The 2005 Form 10-K indicating a highly competitive market and strong customer relationships to whom Reddy Ice was the sole supplier. (CCAC ¶ 81-83.) • On March 16, 2006, Reddy Ice disclosed that it complied with the Company’s Code of Business Conduct and Ethics (the “Ethics Code”), which Brick states in the forward that he has personally taken the time to study “carefully” and which is required to be signed by all Reddy Ice employees. The Ethics Code expressly acknowledges that “[s]ome of the most serious antitrust offenses occur between competitors, such as agreements to fix prices or divide customers, territories or markets. Accordingly, it is important to avoid discussions.” The Ethics Code further recognizes that unlawful agreements need not be written and that “any agreements with possible antitrust implications should be made only with the prior approval of legal counsel.” (CCAC ¶ 86-87.) • February 23, 2006 press release indicating increased revenues for the fourth quarter of 2005, indicating that “typical market forces” led to the financial results. • May 5, 2006 Registration Statement and Prospectus filed with the SEC in connection with Reddy Ice’s Secondary Offering, largely repeating the same disclosures regarding business, prospects, strategy and risks as provided in the IPO Prospectus. (CCAC ¶¶ 92-95.) According to the allegations of the CCAC, for the next eight quarters, Reddy Ice made similar public disclosure statements, indicating increasing revenues in a “highly competitive” environment, repeatedly acknowledging the company’s compliance with its Ethics Code and specifically addressing its obligation to comply with antitrust laws, and containing substantially similar Sarbanes-Oxley required certifications and 10-Ks signed by Defendants Brick, Janusek and Weaver. (CCAC ¶¶ 89-91, 97-99, 102-103, 106-109, 111-114,115-117,118-120,122-125.) 5. Revelations of the DOJ investigation and related corporate internal investigations, guilty pleas by competitors and news of claims of a nationwide conspiracy in the packaged ice industry affect the price of Reddy Ice stock. The CCAC further alleges that on March 14, 2008, Reddy Ice filed its Form 10-K for Year Ended 2007 with the SEC. While disclosing the March 5, 2008 search warrant execution on its headquarters by the DOJ, Reddy Ice did not disclose its alleged agreements with Arctic Glacier and Home City to divide up territories. In fact, the Form 10-K stated that “Senior Management is not aware that the Company has engaged in anticompetitive behavior, or other activities, which would violate the antitrust laws.” Reddy Ice continued to maintain that the packaged ice industry was “highly competitive” but also added that it was “closely monitoring industry developments and trends,” indicating that it was facing some new forms of competition from free-standing ice vending machines. Reddy Ice still indicated, as it had in previous years, that it was in full compliance with its Ethics Code and with all antitrust laws and was engaging in fair dealings with its customers. According to the CCAC, despite the drop in share price to $15.38 per share on March 7, 2008 following disclosure of the DOJ investigation, as a result of these continued false assurances, Reddy Ice’s shares continued to trade at an inflated price. (CCAC ¶¶ 126-133.) On April 30, 2008, Reddy Ice filed with the SEC an earnings release for its quarter ended March 31, 2008, indicating decreased revenues and stating that competition in the packaged ice industry was “challenging” in light of the DOJ’s ongoing investigation. According to the CCAC, in an earnings conference call with analysts on April 30, 2008, Defendant Brick refused to answer questions about the DOJ investigation and reiterated that the competitive environment was not “radically different,” and stated that the recent operating results were driven by weather and competition from free standing vending machines. (CCAC ¶¶ 135-137.) The CCAC alleges that because of these continued false assurances and failures to disclose the underlying anticompetitive conduct, Reddy Ice shares, although falling in price per share to $13.24, continued to trade at inflated prices. (CCAC ¶ 139.) Reddy Ice’s May 5, 2009 Form 10-Q continued to attribute decreased revenues to weather and reiterated the company’s compliance with all Sarbanes-Oxley requirements. Reddy Ice indicated that it had incurred $1.2 million in expenses defending itself against shareholder lawsuits as well as the DOJ investigation. Reddy Ice did not disclose an active role in the alleged market allocation agreements with Arctic Glacier and Home City and stated it was unable to predict the outcome of the investigations on Reddy Ice. (CCAC ¶ 140-141.) According to the CCAC, on June 19, 2008, the Dallas Business Journal published an article disclosing the Home City guilty plea, which had been filed late in 2007 but only unsealed in June, 2008, to conspiring with competitors in Southeastern Michigan to allocate customers and territories in the packaged ice industry. On August 7, 2008, the Wall Street Journal published an article disclosing in detail McNulty’s claims that Arctic Glacier, Reddy Ice and Home City were engaged in a nationwide conspiracy to allocate customers and disclosing McNulty’s cooperation with the FBI in investigating the packaged ice industry. The article also disclosed the Home City guilty plea and the raid on Reddy Ice’s headquarters in March, 2008. (CCAC ¶¶ 143-144.) Also on August 7, 2008 Reddy Ice filed its earnings release for the period ending June 30, 2008, indicating a decrease in revenues due to “new pricing pressures” and “current economic trends” and disclosing an “exponential increase” in the costs, $4.6 million, associated with the DOJ investigation. (CCAC ¶ ¶ 145.) On this news, Reddy Ice shares fell and closed on August 7, 2008 at $10.99 per share, on unusually heavy trading volume. (CCAC ¶ 146.) On August 8, 2008, Reddy Ice filed its Form 10-Q, for the second quarter, repeating the financial results of the Form 10-K filing and attributing decreased revenue to “economic trends and weather.” This filing contained the standard statement of risk factors and Sarbanes-Oxley certifications as had been filed in previous years and did not mention Reddy Ice’s participation in any market allocation agreements with Arctic Glacier or Home City. (CCAC ¶ 147.) According to the CCAC, Reddy Ice shares traded at $10.93 on August 8, 2008 at an inflated price due to Reddy Ice’s continuing assurances of competitive behavior. (CCAC ¶ 149.) On September 15, 2008, Reddy Ice disclosed that it was suspending Ben D. Key for likely violation of company policies and Key’s association with matters under investigation by the DOJ. See infra discussion at p. 718, n. 9. On this news, Reddy Ice’s stock closed at $4.40 per share on September 16, 2008 and continued to fall the next day to $3.43 per share — a fraction of the $18.50 IPO price. (CCAC ¶¶ 151— 152.) In its quarterly report for the third quarter ended September 30, 2008, Reddy Ice disclosed that as a result of the decline in its stock price, the total stockholder’s equity exceeded its market capitalization and that the Company’s goodwill was impaired. (CCAC ¶ 153.) The CCAC alleges that during the class period, Reddy Ice’s misrepresentation and omissions, which failed to disclose that the company was recognizing significant amount of revenue from the market allocation agreements with its major competitors, resulted in an inflated share price, causing Reddy Ice stock to trade at levels up to and above $31 per share. The CCAC alleges that as a direct result of the disclosures discussed above, specifically those that occurred on March 6, August 7 and September 17, 2008, Reddy Ice’s stock price suffered material, statistically significant declines which removed the inflation from Reddy Ice’s stock causing a real economic loss of at least $13.47 per share to investors who purchased during the class period. (CCAC ¶¶ 159-164.) The CCAC alleges that magnitude and timing of this decline negates any inference that the loss suffered by the class members was due to market conditions, macroeconomic or industry factors. According to the CCAC, on March 7, 2008 when Reddy Ice stock suffered a 34% decline the Dow Jones Industrial Average was down by only 1.2% and the S & P 500 was down less than 1%. On August 7, 2008, when Reddy Ice stock suffered an 18% decline, those indices were down by less than 2% each. On September 15 and 16, 2008, when Reddy Ice stock suffered declines of 14% and 35% respectively, those indices were down 4-5% and 1.3-1.8% on those respective dates. (CCAC ¶ 165.) 6. The individual Defendants’ personal gain from the alleged market allocation agreements and their knowledge of the agreements to divide up territories. The CCAC alleges that “at the beginning of the class period, on or about August 10, 2005, the Defendants took advantage of the artificially-inflated price of the Company’s securities in connection with Reddy Ice’s IPO.” (CCAC ¶ 168.) According to the CCAC, Defendants Janusek, Weaver and Booth collectively sold 2,448,-151 shares at a price of $18.50 per share for gross proceeds of over $45 million. In connection with the Secondary Offering, these Defendants sold an additional collective 129,170 shares for gross proceeds of over $2.78 million. (CCAC ¶¶ 168-169.) In addition to these sales of stock, the individual Defendants sold stock periodically up through and including June 1, 2007, for additional collective gross proceeds of over $2.53 million. (CCAC ¶ 170.) In addition to gross proceeds received for their sales of stock, the individual Defendants also received lucrative compensation packages and bonuses tied to Reddy Ice’s performance. For the years 2006-2008, these Defendants, according to the allegations of the CCAC, earned the following annual compensation amounts: Brick — $3,533,205; Janusek — $1,606,210; Weaver — $2,535,998; and Booth— $854,426. (CCAC ¶¶ 171-173.) The CCAC alleges that the individual Defendants, “by virtue of their receipt and possession of information reflecting the true facts regarding Reddy Ice’s competitive practices and pricing, and their control over the Company’s materially misleading misstatements and their executive positions with the Company, which made them privy to confidential proprietary information concerning the Company’s illegal agreements, knowingly and recklessly participated in the fraudulent scheme.... ” (CCAC ¶ 177.) The CCAC alleges that Defendants Brick, Weaver and Janusek signed Reddy Ice’s Form 10-K for fiscal 2006 and 2007 in which Reddy Ice expressly disavowed anticompetitive behavior and touted the company’s ability to dominate the industry through legitimate, lawful competition. The CCAC alleges that each of the Defendants was involved in the day-to-day operations of Reddy Ice and caused the dissemination of the materially misleading statements. Specifically, based on CW testimony, Brick negotiated the deal with Arctic Glacier, and Janusek and Weaver had actual knowledge of the deal. (CCAC ¶¶ 180-181.) Brick publicly declared that he read and understood the Ethics Code that disavows anticompetitive behavior and Weaver, Janusek and Booth also were required to sign statements acknowledging this precept. (CCAC ¶ 182.) Brick and Janusek both signed Sarbanes-Oxley certifications attesting to the fairness of the financial information in the various SEC filings described in the CCAC. (CCAC ¶ 183.) The CCAC alleges that at all relevant times, the market for Reddy Ice securities was efficient and the market for Reddy Ice securities promptly digested all available information which was publicly available and in fact entered the marketplace. (CCAC ¶¶ 186-187.) Finally, the CCAC alleges that none of the statements described in the CCAC can properly be characterized as forward-looking statements. To the extent there were any such statements, the CCAC alleges, there were no meaningful cautionary statements which accompanied them. The CCAC alleges that the safe-harbor rules, therefore, do not apply. (CCAC ¶ 188.) II. STANDARD OF REVIEW Fed.R.Civ.P. 12(b)(6) provides for the dismissal of a case where the complaint fails to state a claim upon which relief can be granted. When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.2007). But the court “need not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.2000)). “[L]egal conclusions masquerading as factual allegations will not suffice.” Eidson v. State of Tenn. Dep’t of Children’s Servs., 510 F.3d 631, 634 (6th Cir.2007). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court explained that “a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.... ” Id. at 555,127 S.Ct. 1955 (internal citations omitted). Dismissal is only appropriate if the plaintiff has failed to offer sufficient factual allegations that make the asserted claim plausible on its face. Id. at 570, 127 S.Ct. 1955. The Supreme Court clarified the concept of “plausibilty” in Ashcroft v. Iqbal, — U.S. -, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009): To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” [Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ]. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556, 127 S.Ct. 1955. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Id., at 557, 127 S.Ct. 1955 (brackets omitted). Id. at 1948-50. A plaintiffs factual allegations, while “assumed to be true, must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief.” LULAC v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007) (citing Twombly, 127 S.Ct. at 1965). Thus, “[t]o state a valid claim, a complaint must contain either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory.” Bredesen, 500 F.3d at 527 (citing Twombly, 127 S.Ct. at 1969). In addition to the allegations and exhibits of the complaint, a court may consider “public records, items appearing in the record of the case and exhibits attached to defendant’s motion to dismiss so long as they are referred to in the [cjomplaint and are central to the claims contained therein.” Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir.2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir.2001)); Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993) (“[A] court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are based on the document.”) (citations omitted). A court may also take judicial notice at the pleading stage of certain public documents, including filings in other courts of record and publicly filed disclosure documents. See Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 360 (6th Cir.2001) (noting that a court may consider “the full text of the SEC filings, prospectus, analysts’ reports and statements ‘integral to the complaint,’ even if not attached, without converting the motion into one for summary judgment under Fed. R.Civ.P. 56.”); Lyons v. Stovall, 188 F.3d 327, 332 n. 3 (6th Cir.1999) (“[I]t is well-settled that ‘[f]ederal courts may take judicial notice of proceedings in other courts of record.’ ”) (citing Rodic, 615 F.2d at 738); Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1275-81 (11th Cir.1999) (approving practice of judicially noticing public disclosure documents filed with SEC); Cortec Indus., Inc. v. Sum Holding LP, 949 F.2d 42, 47 (2d Cir.1991) (holding publicly filed SEC documents may be judicially noticed under Fed.R.Evid. 201). In the context of a securities fraud case, a court may also judicially notice press releases and other publicly available media releases disseminated by a corporation containing “information that was publicly available to reasonable investors at the time the defendant made the allegedly false statements.” In re UnumProvident, 396 F.Supp.2d at 876 (citing Phillips v. LCI Int’l, Inc., 190 F.3d 609, 617 (4th Cir.1999), In re Copper Mountain Sec. Litig., 311 F.Supp.2d 857, 864 (N.D.Cal.2004) and In re First Union Corp. Sec. Litig., 128 F.Supp.2d 871, 883 (W.D.N.C.2001)). As to any such document, a court may consider the proffered item only for the purpose of determining what statements the documents contain, not to resolve a disputed fact. Lovelace, 78 F.3d at 1018. III. ANALYSIS A. Section 10(b) and Rule 10b-5: Prohibited Conduct and Pleading Requirements 1. Conduct prohibited by section 10(b) and Rule 10b-5. Under Rule 10b-5, codified at 17 C.F.R. § 240.10b-5, promulgated by the Securities Exchange Commission (“SEC”) under authority granted by Section 10(b) of the Securities Act of 1934, codified at 15 U.S.C. § 78j(b), it is unlawful “to 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 the light of the circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b-5. “Underlying the adoption of extensive disclosure requirements [of the 1934 Act] was a legislative philosophy: ‘There cannot be honest markets without honest publicity. Manipulation and dishonest practices of the market place thrive upon mystery and secrecy.’ H.R.Rep. No. 1383, 73d Cong., 2d Sess., 11 (1934).” Basic Inc. v. Levinson, 485 U.S. 224, 230, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). The “fundamental purpose” of the Act is to implement a “philosophy of full disclosure.” Id. (quoting Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 477-478, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977), quoting SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963)). To state a claim under Section 10(b) or Rule 10b-5, a plaintiff must allege: (1) a misrepresentation or omission; (2) of a material fact that the defendant had a duty to disclose; (3) made with scienter; (4) justifiably relied on by plaintiffs; and (5) proximately causing them injury. City of Monroe Employees Retirement Sys. v. Bridgestone Corp., 399 F.3d 651, 668 (6th Cir.2005) (citing Helwig v. Vencor, Inc., 251 F.3d 540, 554 (6th Cir.2001) (en banc)). “In order to be actionable, a misrepresentation or omission must pertain to material information that the defendant had a duty to disclose, two significant limitations to the general policy of disclosure.” Id. at 669. “Misrepresented or omitted facts are material only if a reasonable investor would have viewed the misrepresentation or omission as ‘having significantly altered the total mix of information made available.’ ” In re Sofamor Danek Group, Inc., 123 F.3d 394, 400 (6th Cir.1997) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 232, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988)). For a court to conclude that undisclosed information is immaterial, the court must find that the material withheld was “so obviously unimportant to a reasonable investor that reasonable minds could not differ on the question of [its] unimportance.” City of Monroe, 399 F.3d at 680 (quoting Helwig, 251 F.3d at 563 (emphasis in original)). “Under Rule 10b-5, ‘[w]hen an allegation of fraud is based upon nondisclosure, there can be no fraud absent a duty to speak.’ ” In re FBR Inc. Sec. Litig., 544 F.Supp.2d 346, 354 (S.D.N.Y.2008) (quoting Chiarella v. United States, 445 U.S. 222, 234, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980)). A duty to affirmatively disclose may arise when there exists “an inaccurate, incomplete or misleading prior disclosure.” City of Monroe, 399 F.3d at 669. Stated differently, “[a] duty to disclose arises whenever secret information renders prior public statements materially misleading.” In re Sotheby’s Holdings, Inc. Sec. Litig., No. 00-cv-1041, 2000 WL 1234601 at *4 (S.D.N.Y. Aug. 31, 2000) (citing In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 268 (2d Cir.1993)). A company is also obligated, once it chooses to speak on a subject, to do so fully and fairly: “Our securities laws therefore, ‘require an actor to provide complete and non-misleading information with respect to the subjects on which he undertakes to speak.’” City of Monroe, 399 F.3d at 670 (quoting Helwig, 251 F.3d at 561). Electing to volunteer information imposes an obligation to do so fully and truthfully: The question thus is not whether a [defendant’s] silence can give rise to liability, but whether liability may flow from his decision to speak ... concerning material details ..., without revealing certain additional known facts necessary to make his statements not misleading. This question is answered by the text of [SEC] Rule 10b5 itself: it is unlawful for any person to “omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading .... ” Id. (quoting Rubin v. Schottenstein, Zox & Dunn, 143 F.3d 263, 267 (6th Cir.1998) (quoting 17 C.F.R. § 240.10b-5(b))). At the same time, an obligation to disclose is not imposed simply because information is material or “because it suggests that the corporation or its employees engaged in uncharged illegal conduct.” In re FBR, 544 F.Supp.2d at 353 (citing In re Citigroup, Inc. Sec. Litig., 330 F.Supp.2d 367, 377 (S.D.N.Y.2004) (“[T]he federal securities laws do not require a company to accuse itself of wrongdoing.”)) However, “[w]hen a corporation does make a disclosure-whether it be voluntary or required-there is a duty to make it complete and accurate.” In re Marsh & Mclennan Cos. Sec. Litig., 501 F.Supp.2d 452, 469 (S.D.N.Y.2006). 2. The heightened pleading requirements in a securities fraud case. The essence of a § 10(b) claim sounds in fraud so the pleading standards of Federal Rule of Civil Procedure 9(b) apply. Indiana State Dist. Council of Laborers and Hod Carriers Pension and Welfare Fund. v. Omnicare, Inc., 583 F.3d 935, 942 (6th Cir.2009) (“Because § 10(b) claims sound in fraud, the pleading strictures of Federal Rule of Civil Procedure 9(b) apply.”); PR Diamonds Inc. v. Chandler, 364 F.3d 671, 681 (6th Cir.2004). “Plaintiffs’ complaint must ‘(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.’ ” Frank, 547 F.3d at 570 (quoting Gupta v. Terra Nitrogen Corp., 10 F.Supp.2d 879, 883 (N.D.Ohio 1998)). At a minimum, Plaintiffs must allege the time, place and contents of the misrepresentations upon which they relied. Id. In addition to the strictures of Federal Rule of Civil Procedure 9(b), the Private Securities Litigation Reform Act (“PSLRA”) imposes additional pleading requirements in a securities fraud case: Under the PSLRA’s heightened pleading requirements, any private securities complaint alleging that the defendant made a false or misleading statement must: (1) ... 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 [and] (2) ... state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind. Frank, 547 F.3d at 570 (quoting 15 U.S.C. § 78u-4(b)(l), (2), adding emphasis). Thus, Plaintiffs Complaint must state with particularity the facts underlying the alleged actionable misrepresentations and the facts supporting the intent to “deceive, manipulate or defraud.” Id. (quoting Tel-labs, 551 U.S. at 313, 127 S.Ct. 2499). In determining whether the complaint gives rise to a strong inference of scienter, the court must conduct an inquiry of the competing plausible inferences and must find scienter has been sufficiently pled as long as “a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” Tel-labs, 551 U.S. at 324, 127 S.Ct. 2499. “Thus, where two equally compelling inferences can be drawn, one demonstrating scienter and the other supporting a non-culpable explanation, Tellabs instructs that the complaint should be permitted to move forward.” Frank, 547 F.3d at 571. A strong inference is one that is “more than merely ‘reasonable’ or ‘permissible’” but rather is “cogent,” “persuasive,” and “effective.” Id. at 323-324, 127 S.Ct. 2499. “[F]aced with a Rule 12(b)(6) motion to dismiss a § 10(b) action, courts must, as with any motion to dismiss for failure to plead a claim on which relief can be granted, accept all factual allegations in the complaint as true.” Tellabs, 551 U.S. at 322, 127 S.Ct. 2499. The court must “consider the complaint in its entirety,” and ultimately inquire “whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” Id. at 322-323, 127 S.Ct. 2499 (emphasis in original). Defendants move to dismiss the CCAC arguing: (1) that Plaintiffs have failed to adequately allege any actionable misrepresentations by Defendants because they have not shown that Defendants were aware that the underlying conduct was illegal or that Defendants had a duty to disclose the legal risks of their conduct; (2) that the CCAC fails to adequately allege facts sufficient to create a strong inference of scienter, arguing that there is no evidence that Defendants knew their conduct to be illegal at the time of the allegedly false and misleading public disclosures; (3) that the CCAC has failed to adequately plead loss causation, i.e. that the Defendants false and misleading statements, rather than the mere disclosure of the investigations into the industry standing alone, cause the Plaintiffs’ financial loss; and (4) that the individual Defendants are not liable as “control persons” under section 20(a) because the CCAC fails to allege a violation of either section 10(b) or Rule 10b-5, a predicate to relief against a control person under section 20(a). B. Misrepresentations or Omissions of Material Fact The essence of Plaintiffs’ claim is that Reddy Ice represented to the market throughout the class period that Reddy Ice’s performance was attributable to its ability to effectively compete in the packaged ice industry on price, quality and service when in fact Reddy Ice had entered into illegal market allocation agreements with its major competitors, Arctic Glacier and Home City, which ensured that Reddy Ice was “impervious to the normal effects of competition within the packaged ice industry.” (Pis. Resp. 7.) Plaintiffs allege that the true source of Reddy Ice’s successes in the market were these unlawful market allocation agreements, which Reddy Ice failed to disclose to the market, which stifled competition and allowed for Reddy Ice stock to trade at artificially high prices. When the truth of these illegal agreements was ultimately disclosed, the CCAC alleges, Reddy Ice stock suffered a precipitous decline, and Plaintiffs and the class members suffered significant financial losses. 1. Plaintiffs have sufficiently pled the existence of an illegal market allocation agreement and have sufficiently pled that Defendants (except Booth) made materially false and misleading statements. Defendants rely on In re Mirant Corp Sec. Litig., No. 02-cv-1467, 2009 WL 48188 at *17 (N.D.Ga. Jan. 7, 2009) for the proposition that where a securities fraud claim is predicated on allegations of illegal conduct, “the basis for the illegality must be pled with particularity.” (Defs.’ Mot. 5.) Defendants then argue that Plaintiffs have failed to adequately allege that the 2001 covenant not to compete is unlawful and that Plaintiffs must show “that Defendants knew they had entered into an agreement that violated the antitrust laws based upon a detailed ‘rule of reason’ analysis.” (Defs.’ Mot. 5, 9.) The Court has already rejected Defendants’ attempt to recharacterize and limit Plaintiffs’ allegations to a single 2001 covenant not to compete. In fact, the CCAC alleges nationwide horizontal market allocation agreements which are a per se violation of the Sherman Act and are not analyzed under the rule of reason. Reddy Ice’s own internal Ethics Code recognizes the inherent perniciousness of horizontal market allocation agreements. Thus, the question is not whether Plaintiffs have alleged sufficient facts to support a contention that Defendants knew that a 2001 covenant not to compete was illegal but whether Plaintiffs have adequately alleged knowledge of the existence of agreements to allocate territories and customers on a nationwide basis during the class period, and to stay out of each others territories, in violation of the antitrust laws. As evidence of the underlying allegedly unlawful conduct, Plaintiffs rely in part on the allegations made in Mr. McNulty’s whistleblower litigation that he learned, through a conversation with Mr. Corbin, Arctic Glacier’s Vice President of Sales, that Arctic Glacier, Reddy Ice and Home City had agreed among themselves to allocate markets for the sales of packaged ice in the United States. Specifically, Mr. McNulty, who agreed to cooperate with the FBI in their ongoing investigation of the packaged ice industry, states in his whistleblower complaint that Mr. Corbin informed him that Arctic Glacier’s agreement not to enter the South and Southwest (where Reddy Ice was dominant) enabled Reddy Ice to get their prices up there and Reddy Ice’s agreement to stay out of the Midwest and Canada enabled Arctic Glacier to do the same in those territories. (CCAC ¶¶ 44^15.) Plaintiffs allege that these allegations are further supported by the testimony of several confidential witnesses who are former employees of Reddy Ice. Defendants argue that these confidential witness statements are non-probative hearsay, relying on the Sixth Circuit’s decision in Omnicare, where the court rejected allegations based on the testimony of a confidential witness, concluding that the witnesses’ testimony should be “steeply discounted” where the witness was identified only by the title of his position, without further foundation supporting a reasonable belief in the witness’ basis of knowledge. 583 F.3d at 946. To be sure, “[t]he Court must be able to tell whether a confidential witness is speaking from personal knowledge, or ‘merely regurgitating gossip and innuendo.’ ” In re Metawave Communications Corp. Sec. Litig., 298 F.Supp.2d 1056, 1068 (W.D.Wash.2003). However, where the allegations of a complaint give sufficient detail about a confidential witness’ position in the company such that the Court can discern the probable basis of a witness’ belief, such “anonymous sources are not altogether irrelevant.” Ley v. Visteon Corp., 543 F.3d 801, 811 (6th Cir.2008). In Institutional Investors Group v. Avaya, Inc., 564 F.3d 242 (3d Cir.2009), the court provided a thoughtful examination of the issue of “where anonymous witnesses stand in the wake of the Supreme Court’s decision [in Tellabsl” 564 F.3d at 261-262. In Ava-ya, the shareholder-plaintiffs alleged in part that defendants had repeatedly falsely assured the market that the company did not face pricing pressures when in fact the competition was forcing huge price discounts that impaired profit margins. 564 F.3d at 260. The court examined whether the allegations of the complaint regarding pricing pressures, which relied primarily on the representations of confidential witnesses, sufficiently pled falsity under the PSLRA. Considering the opinions of several sister circuits post-Tellabs, including the Sixth Circuit’s opinion in Ley, swpra, the court in Avaya first noted that “all else being equal, a complaint with named sources would be better than one with confidential witnesses, but the absence of proper names does not invalidate the drawing of a strong inference from informants’ assertions.” 564 F.3d at 262 (internal quotation marks and citations omitted). The court concluded, in agreement with the opinion expressed by the Sixth Circuit in Ley, that the discount applied to confidential witness allegations “will depend in large part on the level of detail with which they are described.” In deciding whether a complaint adequately sets forth the foundation or basis of a confidential witnesses’ knowledge, courts should consider “ ‘the position(s) held, the proximity to the offending conduct and the relevant time frame.’ ” Id. (quoting Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1240 (11th Cir.2008)). If “a complaint’s confidential witness allegations are adequately particularized, we will not dismiss them simply on account of their anonymity.” 564 F.3d at 263. The court in Avaya concluded that the shareholders had adequately pled falsity through the testimony of the confidential witnesses where the complaint described the duration of each of the witnesses’ employment, the time period during which they acquired the information and how each witness had access to such information. See also In re Marsh & Mclennan, 501 F.Supp.2d at 482 (considering allegations based on confidential witnesses where the complaint sufficiently described the personal sources of plaintiffs beliefs); In re St. Paul Travelers Securities Litig. II, No. 04-4697, 2006 WL 2735221 at *3 n. 2 (D.Minn. Sept. 25, 2006) (allegations based upon the testimony of confidential witnesses were sufficiently particularized to support an inference that defendants participated in an allegedly unlawful bid-rigging scheme, where the complaint specified that each of the confidential witnesses worked for defendants during the class period, and explained the capacity in which they worked and the incidences they experienced). The Court can also consider “ ‘the level of the detail provided by the confidential witnesses, the corroborative nature of the other facts alleged (including from other sources), the coherence and plausibility of the allegations, the number of sources, the reliability of the sources, and similar indicia.’ ” Metawave, 298 F.Supp.2d at 1068 (quoting In re Cabletron Sys., Inc., 311 F.3d 11, 29-30 (1st Cir. 2002)). Examining those allegations of the CCAC which are based upon confidential witness testimony, the Court finds that some hold a greater of indicia of reliability than others. The Court concludes, however, that collectively and viewed in light of facts alleged through other sources, the statements are sufficient to support the allegations of falsity in the instant case. Confidential witness number one (CW 1) is identified by his position as “National Purchasing and Contracts Manager for Reddy Ice from mid-1997 through late-2004.” (CCAC ¶ 46.) The CCAC further alleges that CW1 was based out of the Reddy Ice headquarters in Dallas, Texas and “became aware of the unlawful market allocation agreement between Reddy Ice and Arctic Glacier.” CW 1 stated that it was discussed in his presence and in the presence of other Reddy Ice employees that “Reddy Ice had agreed to not compete against Arctic Glacier in California, and that Arctic Glacier in exchange had ... agreed to ‘stay out’ of Arizona.” (CCAC ¶ 46.) However, the CCAC does not state who made the statements that were discussed in CWl’s “presence” and the Court cannot discern whether this may have been “water cooler talk” or statements made by senior executives. Nor does the CCAC explain how CWl’s position gave him special access to such information. The Court cannot readily discern the basis for CW