In re Massey Energy Co. Securities Litigation (883 F. Supp. 2d 597, 2012)

MEMORANDUM OPINION AND ORDER

IRENE C. BERGER, District Judge.

Lead Plaintiff, Commonwealth of Massachusetts Pension Reserves Investment Trust (“Massachusetts PRIT”) and Plaintiff David Wagner, on behalf of the putative class, allege that the price of Massey Energy Company (“Massey”) stock was artificially inflated, between February 1, 2008, and July 27, 2010, because Massey and several of its senior executives and directors misled the market about its safety and compliance record and its disregard for safety regulatory compliance. The Defendants move for dismissal of Plaintiffs’ Consolidated Amended Class Action Complaint for Violations of the Federal Securities Laws (“CAC”). (Don L. Blankenship, Baxter F. Phillips, Jr., Eric B. Tolbert and Christopher Adkins’ Motion to Dismiss Plaintiffs’ Consolidated Amended Class Action Complaint (“Officer Defs.’s Mot. to Dismiss”) (Document 94); Joint Motion of Massey Energy Company and the Outside Director Defendants to Dismiss the Consolidated Amended Class Action Complaint (“Joint Mot. to Dismiss”) (Document 96)). The Joint Motion to Dismiss is supported by the Declaration of Julie A. North and various exhibits regarding “screenshots” of webpages from the United States Mine Safety and Health Administration’s (“MSHA”) website. Plaintiffs move to strike these exhibits. (Plaintiffs’ Motion to Strike Exhibits B-H to the Declaration of Julie A. North in Support of Defendants’ Motions to Dismiss (“Mot. to Strike”) (Document 100)).

After careful review of the motions and appropriate submissions relative thereto and for the reasons that follow, the Court grants the Plaintiffs’ motion to strike and denies the Defendants’ motions to dismiss.

I.

This civil action, filed on April 29, 2010, arises out of the alleged securities fraud committed by Massey and several of its officers and directors. Massey, a Delaware Corporation with its headquarters in Richmond, Virginia, is the fourth largest coal producer in the United States and the largest coal producer in the regions of West Virginia, Kentucky and Virginia. Massey produces, processes and sells bituminous coal. On January 31, 2010, through its operating subsidiary A.T. Massey, Massey operated fifty-six (56) mines (forty-two (42) underground mines and fourteen (14) surface mines) and twenty-three (23) processing and shipping centers. The company is a publicly owned corporation traded on the New York Stock Exchange. The following officers and directors were named as Defendants: Don Blankenship, Former Chairman of the Board, Chief Executive Officer (“CEO”), President, Executive Committee Chair, who also held executive leadership roles in A.T. Massey Coal; Baxter F. Phillips, Jr., CEO of Massey, member of the Safety, Environmental and Public Policy Committee (“SEPPC”) of Massey’s Board of Directors; Eric B. Tolbert, Chief Financial Officer and Vice President of Massey; J. Christopher Adkins, Senior Vice President and Chief Operating Officer, overseeing all mining and processing operations reporting directly to Defendant Blankenship; Dan R. Moore, Massey Director since 2002, Chairman of the Audit Committee, and member of all of the Board of Directors’ committees, including the SEPPC; E. Gordon Gee, Massey Director from 2000 until July 1, 2009, member of the SEPPC and various Board of Directors’ committees; Richard M. Gabrys, Massey Director since May 22, 2007, member of the SEPPC and the Governance and Nominating Committee during the Class Period; James B. Crawford, Massey Director since 2005, member of various Board of Directors’ committees, including the SEPPC, served as Chairman of the SEPPC from July 2009 through the end of the Class Period; Robert H. Foglesong, Massey Director since February 21, 2006, member of the SEPPC and various Board of Directors’ committees; Stanley C. Suboleski, Massey Director since May, 2008, member of the SEPPC and various Board of Directors’ committees, provided mining engineering consultative services to Massey from August 2006 through the end of the class period; Lady Barbara Thomas Judge, Massey director between February 19, 2008, until she resigned on April 19, 2010, member of the SEPPC and the Governance and Nominating Committee. Lead Plaintiff, Massachusetts PRIT, a pooled investment fund with more than $41 billion in total assets under management, including assets managed for the benefit of the Massachusetts State Teachers’ and Employees’ Retirement Systems and participating county, authority, district and municipal retirement systems, and David Wagner purchased Massey common stock on the open market between February 1, 2008, and July 27, 2010. Plaintiffs filed this suit as a class action under Federal Rules of Civil Procedure 23(a) and (b)(3), to represent a class of those who purchased common stock from Massey during the class period and who were damaged as a result. The Court has reviewed the entirety of the one hundred seventy (170) page CAC, but -will only briefly detail the facts giving rise to this litigation, viewing them as true, as the Court must in its consideration of the pending Rule 12(b)(6) motions to dismiss.

On January 19, 2006, a fire claimed the lives of two miners at Alma No. 1 mine in West Virginia. At the time, Alma No. 1 mine was operated by Massey subsidiary Aracoma Coal Company. As a result, investigations were conducted by MSHA and the FBI. Plaintiffs aver that the miners died of “carbon monoxide poisoning because monitors were improperly installed and a permanent ventilation control was removed from an emergency escape passage.” (CAC, ¶ 73.) Following criminal and civil litigation, which included a derivative shareholder action, Massey pled guilty to ten criminal charges and entered into a $4.2 million settlement ($2.5 million in criminal penalties and $1.7 million in civil penalties). The settlement required, among other things, “changes to the corporation’s] governance policies and procedures relating to director oversight and conduct regarding environmental compliance and mine worker safety”; the SEPPC’s development of “goals for implementing enhancements to the Company-wide process utilized to monitor, count and report mine safety incidents and complaints (a “mine safety incident” is a lost-time injury suffered in connection with the Company’s mining activities) and near misses with high potential for injury”; reports by the SEPPC to the Board of Directors “regarding the Company’s compliance with all applicable mine safety laws and regulations!,]” including “(a) the number of mine safety incidents overall and by type (b) findings by third-party auditors, and (c) an analysis of any causal factors contributing to safety incidents”; enhancements to the safety and environmental procedures and reporting, including shareholder reporting; and annual shareholder reporting from the Board in its Corporate Social Responsibility reporting “environmental and worker safety compliance.” (CAC, ¶¶ 9, 18, 78-79, 317, 321; see also CAC, Ex. D.)

Following the 2006 miner deaths and the litigation that followed, Defendant Blankenship and Massey sought to restore the Company’s reputation and image by announcing that it had a strong company commitment to the safety of its miners and that it had begun “safety improvement initiatives.” Massey began to focus on building investor confidence and goodwill with regulators by stating its commitment to safety and affirming that its organization put the safety of its miners before its production, in its SEC quarterly and annual filings, press releases, and investor presentations. For instance, in its 2007 Annual Report, Massey declared that “a safe mine is a productive mine” and explained its “formula for success [as] S-l + P-2 + M-3 = shareholder value.” The Annual Report detailed the meaning of the equation as “safety first, production second and measurement third.” (See CAC, ¶ 82) (highlighting the 2007 Annual Report description of “S-l” as “Safety is Job One”). Additionally, on September 6, 2007, at the Lehman Brothers CEO Energy Conference, Defendant Blankenship stated that:

• NO DAYS LOST (NDL) cases (occurrences requiring only medical treatment-beyond first aid). "Incidence rates” are the number of injuries in a category times 200,000 divided by the number of employee-hours worked.

The main thing about Massey is, we have a better safety performance than the industry, whether you’re looking at underground, surface or total. And we have Si and safety programs in place that far exceed the law ...

We think this performance speaks very well for the management’s focus on safety and our SI program. A lot of safety awards ... [W]hat you often don’t see in the press is number one, how safe the industry is; number two, how safe Massey is in comparison; or number three, how many safety awards are won by our Company.

(CAC, ¶ 85) (emphasis added). In a 2008 press release, Massey emphasized that “safety first” was “not just a slogan” in its organization and, in its 2009 Corporate Social Responsibility Report, stated that “no coal company can succeed over the long term without a total commitment to safety.” Throughout the class period, Massey affirmed and restated its commitment to safety and reported to investors that a key safety measurement rate, the NFDL rate, was decreasing year after year for the company. (See CAC, ¶¶ 30, 118,134, 203, 212, 257, 270, 273-274) (Massey reported that the NFDL rates for 2007, 2008, and 2009 were 2.05, 1.93, and 1.67, respectively). In 2007 through 2010, Massey and its Directors signed SEC filings and made statements in various press releases and presentations to investors that indicated that it had a commitment to safety, that safety of its miners and the successfulness of its company were linked and that it was leading the industry in safety performance. Plaintiffs allege that Massey, in its frequent communications about its “enhanced safety protocols ... lured the members of the Class, who invested in Massey in reliance on public representations that the Company had turned a new leaf with regard to mine safety.” (CAC, ¶ 15.)

However, on April 5, 2010, twenty-nine (29) miners died in an explosion and fire at Massey’s Upper Big Branch Mine (“UBBM”) at Montcoal in Raleigh County, West Virginia. The explosion, one of the deadliest United States coal mining accidents in forty years, led to various news reports regarding Massey’s safety violations and investigations. Plaintiffs aver that according to MSHA, the cause of the explosion largely involved basic mine safety practices that were not adhered to; namely, inadequate water sprays, dull cutting bits, and extraordinary levels of float coal dust due to inadequate rock dusting. (CAC, ¶ 191). Plaintiffs further aver that the investigations into the explosion and Massey revealed that despite Massey’s public statements that it was an “industry leader in safety” and that production was secondary to safety, Massey and Defendant Blankenship, with the acquiescence of the Board of Directors, had continued to make production a priority over safety.

MSHA began to release data that showed the number and severity of violations at the UBBM increased drastically in 2009 and 2010 as production increased. Of note, in the year before the explosion, MSHA citations at the UBBM “more than doubled from 2008 to more than 500, and proposed fines more than tripled to $897,325.” (CAC, ¶ 175.) ' Additionally, in 2009, MSHA issued 202 S & S citations to UBBM, which almost equaled the number of citations the mine had received during the prior 24 months when it was “placed on pattern of violations status.” (Id.) MSHA records revealed that in 2009, MSHA had issued to UBBM sixty-one (61) withdrawal orders and shut down parts of the mine fifty-four (54) times. In the first quarter of 2010, UBBM was the subject of one hundred twenty-four (124) citations, fifty-three (53) assessed penalties totaling $188,769, numerous withdrawal orders and had been shut down seven (7) times. (CAC, ¶ 176.) The UBBM was cited “hundreds of times for ‘mine ventilation’ violations and received 37 complaints of ‘accumulations of combustible materials? ” (CAC, ¶ 179.) Contrary to Massey’s asserted claims of safety, during the class period, Massey: (1) had the worst fatality rate in the nation (fifty-four (54) deaths, which includes twenty-three fatalities before the UBBM explosion, and two since); (2) performed worse than the national average when defined by MSHA issued S & S citations, at its large mines, with at least 100 employees and (3) performed worse than the national average in terms of elevated enforcement actions. Plaintiffs allege that these violations at UBBM and other Massey mines were “red flags” to the Company about their safety compliance. However, they were ignored when measuring and reporting Massey’s safety performance to investors during the class period.

After the tragic UBBM explosion on April 5, 2010, investors began to learn the truth about “Massey’s duplicitous and deceptive schemes.” (CAC, ¶ 32.) Several current and former Massey miners began to offer insight regarding the Company’s commitment to production over safety. (See CAC, ¶ 103-105) (miners interviewed on the National Public Radio (“NPR”) and testifying before the House Labor Committee revealing ventilation problems at UBBM that were reported, but not fixed.) For example, a miner on site at the UBBM explosion testified before the House Labor Committee on July 13, 2010, regarding directives he and others received that made them work in conditions that were unsafe, and also testified about another miner who was told to falsify a report to cover up inadequate mine ventilation. (CAC, ¶ 16) (miners told to “cut coal going into our air supply ... [w]e mined this way for 2,000 feet”; “we were made to load coal before all the shields and ventilation were in place so someone could call Mr. Blankenship to say we were ‘in the coal;’ ” and another miner was told “by upper management to fix the books to proper air readings when the section had virtually no air.”)

Additionally, miners testified before the House Labor Committee on May 24, 2010, about an early notification system at UBBM where Massey guards would send signals to mine management that an MSHA inspector was on the property. (CAC, ¶ 166.) (Former Massey employee testified that “[W]hen an inspector came by the guard shack they would ... call the sections and tell them we have an inspector on the property and make sure everything was right and if it wasn’t to fix it.”) In their CAC, Plaintiffs allege that various confidential witnesses “have come forward” to corroborate this miner’s testimony. Confidential witness No. 4, a “Belt Buster” at UBBM until 2006, stated that when an MSHA inspector arrived at the “guardhouse” a call would be placed to the mine office so that any items that could be a safety violation could be fixed. (CAC, ¶ 167); see also id. ¶¶ 169-70 (confidential witnesses 8 and 6 making the same assertion about UBBM), ¶ 168(confidential witness 15, a former “Dozer Operator” between July 2006 and April 2008, detailing early notification system at Massey’s Black Castle mine), ¶ 171 (same statement from confidential witness 16, a former “Bolt Top Operator” at Massey’s Seng Creek mine between February and May 2010).

A criminal investigation at UBBM revealed that Hughie Elbert Stover, Chief of Security at UBBM, who “was very close to Blankenship and served as his personal driver during the class period, employed a secondary radio channel, called the ‘Mont-coal channel,’ to give early notification to miners of the arrival of MSHA inspectors so that they could cover up safety violations prior to inspection, and ordered the disposal of thousands of pages of documents stored in the Barracks at [UBBM]” when he knew that the FBI and MSHA officials were conducting an investigation into the criminal conduct involving the UBBM explosion. (CAC, ¶ 160.)

Miners also testified before the Senate HELP Committee on April 27, 2010, regarding a “light duty policy” at Massey that was used to prevent injured miners from completing the regulatory-required NFDL paperwork. According to a former Massey Keppler miner, “If you got hurt [at Massey], you were told not to fill out the lost time accident paperwork. The company would just pay guys to sit in the bathhouse or stay home if they got hurt— anything but fill out the paperwork.” (CAC, ¶ 31.) The miner stated that if you requested the paperwork, you would be singled out and fired. (See CAC, ¶ 31) (another miner, who survived the UBBM explosion, offered similar testimony to the House Labor Committee on July 13, 2010); id. ¶ 144 (another miner offering similar testimony before the Senate HELP Committee on April 27, 2010). On May 20, 2010, at the Senate Appropriations Committee, Cecil Roberts, President of the United Mine Workers of America, testified that his organization had witnesses and Massey employees who had informed them that when a person was injured at Massey, a human resources employee would meet the worker at the hospital and advise the employee that he or she did not have to take time off from work. (CAC, ¶ 145.) The human resources employee would offer the employee an opportunity to come back to work for light duty assignments so that the injury would not have to be reported. (Id.) Mr. Roberts further testified that Defendant Blankenship’s compensation included a bonus for reducing lost time accidents. (Id.)

Plaintiffs aver that Defendant Blankenship testified after Mr. Roberts at the May 20, 2010 hearing and did not dispute the testimony. Defendant Blankenship acknowledged that injured miners were given the opportunity to perform light duty assignments, if they were available, rather than receive only 60% of their pay while at home. (CAC, ¶ 146.) However, Defendant Blankenship did not reference the completion, or non-completion, of the requisite NFDL incident paperwork. Plaintiffs further aver that both Defendants Blankenship and Adkins received compensation packages that were calculated, in part, on the company’s NFDL rate. In response to the varied investigations that followed the explosion, eighteen (18) of Massey’s Directors and Senior executives, including Defendants Blankenship and Adkins, invoked their Fifth Amendment rights. Based on the foregoing, Plaintiffs allege the Defendants knew or should have known about the nature of the safety compliance record at Massey, but failed to disclose any of these relevant statistics and policies to investors or the market.

In their CAC, Plaintiffs assert claims for securities fraud based on the “fraud on the market” theory of reliance. Plaintiffs contend that the price of Massey common stock was inflated by their false and misleading statements and omissions about the safety of, and risks to, its mining operations. On the day following the explosion, Massey’s common stock fell from $54.69 to $48.45, a one-day drop of 11.4% in the value of the stock, and on April 7, 2010, the stock dropped another $3.23, to $45.22, as revelations of the unsafe conditions at Massey became known. In the days and weeks that followed the April 5, 2010 explosion, as the news of the explosion became nationally publicized and MSHA released information about Massey’s safety and compliance record, the stock price continued to fall. However, Massey continued to post statements on its website “firing” back at news publications asserting that its aggressive pursuit of production sacrificed miner safety. Particularly, on April 8, 2010, Massey released a statement which indicated, in part, that the safety of its miners had been and would continue to be a top priority every day, that “[m]edia reports suggesting that the UBB tragedy was the result of a willful disregard for safety regulations are completely unfounded.” They further indicated, “our lost-time incident rate has been better than the industry average for 17 of the past 19 years, improving significantly in recent years”, and that “[a]t Massey, safety is everyone’s concern.” (CAC, ¶ 340.) Plaintiffs allege that the “extent of the post-Explosion stock drop” was limited by the Defendants’ assertion that the Company would rebound after the explosion without any loss of productivity because workers were being redeployed to other mines to increase production. Massey released its 2010 first quarter financial results on April 21, 2010, wherein they disclosed, for the first time, the estimates of costs associated with the explosion, telling investors to expect $80 to $150 million in expenses for charges related to the explosion, support of family for the fallen miners, costs of recovery efforts, insurance deductibles and possible legal and other contingencies. Massey also forecasted coal production costs which were higher than previous estimates, but explained that the increase was not due to increased safety and regulatory expenses following the explosion, but rather labor and other costs with increased production. Plaintiffs cite several investment analysts who received the first quarter results favorably, and assert that, as a result of Massey’s statements to investors, the stock price continued to be inflated by the fraud perpetrated by Massey. (CAC, ¶ 354.) As more negative news reports surfaced regarding safety violations at the UBBM and other Massey mines, Defendants “condemned media reports” by reasserting “false and misleading statements about Massey’s safety and compliance record.” After a May 15, 2010 NPR report that the FBI’s investigation into “willful criminal activity” was confirmed, Massey’s stock plunged $3.71 in one day on heightened volume of 12.6 million shares. On July 27, 2010, Massey reported its second quarter earning results which indicated that it significantly missed .its production estimates and showed a higher cost of coal per ton than its previous cost guidance had provided. The financial report acknowledged that the difference in production estimates was due to lower productivity and temporary shutdowns associated with increased MSHA enforcement of safety and regulatory violations at Massey mines. (CAC, ¶ 363.) Analysts responded negatively to this news, lowered their price targets and estimated earnings for the company in 2010. (CAC, ¶ 364.) Massey’s stock tumbled on July 27, 2010, by $2.08, a one-day loss of 6.6% in value.

On September 30, 2010, Massey admitted, in a letter to shareholders, that the sole safety metric, which it had reported to investors during the class period regarding NFDL incident rates, was materially understated for 2007, 2008, 2009 due to lapses in reporting procedures determined by an independent consultant. (CAC, ¶ 30) (“Massey’s 2007 NFDL rate was increased from 2.05 to 2.63, or 28%; its 2008 NFDL rate was increased from 1.93 to 2.52, or 30%; and its 2009 NFDL rate was increased from 1.67 to 2.33, or 40%.”) Finally, on December 3, 2010, after running the company for twenty years, Defendant Blankenship resigned after public outcry for Massey’s disregard for mine safety. On January 29, 2011, Alpha National Resources, Inc., agreed to purchase Massey.

Plaintiffs allege that Massey and its Directors provided false and misleading information to its investors by reporting only one safety metric, the NFDL rate, which was later disclosed as false and manipulated by Massey’s policy of requiring injured workers to perform light duty assignments in lieu of NFDL reporting, frequently told investors that it had a commitment to safety, but failed to disclose its policy of an early notification system which announced the presence of MSHA inspectors and failed to reveal its true safety record by the measurement of its compliance with regulations. Plaintiffs further allege that Massey and its Directors were positioned to receive reports and other information about its compliance record and MSHA violations, but either ignored the reports or recklessly disregarded the reports in their pursuit to increase coal production. In light of the foregoing, Plaintiffs allege that Massey’s stock price was artificially inflated by Massey’s fraud and they suffered economic loss as a result.

Defendants’ separate motions to dismiss the CAC are fully briefed and ripe for this Court’s consideration.

II.

A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint or pleading. Francis v. Giacometti, 588 F.3d 186, 192 (4th Cir.2009); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.2008). “[T]he legal sufficiency of a complaint is measured by whether it meets the standard stated in Rule 8 [of the Federal Rules of Civil Procedure] (providing general rules of pleading) ... and Rule 12(b)(6) (requiring that a complaint state a claim upon which relief can be granted.)” Id. Federal Rule of Civil Procedure 8(a)(2) requires that a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This pleading standard requires that a complaint contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In Ashcroft v. Iqbal, the United States Supreme Court stated that to survive a 12(b)(6) 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.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A claim has facial plausibility when [a party] pleads factual content that allows the court to draw the reasonable inference that the [opposing party] is liable for the misconduct alleged.” Id. The plausibility standard “asks for more than a sheer possibility that a [party] has acted unlawfully.” Id. Rather, “[i]t requires [a party] to articulate facts, when accepted as true, that ‘show that [the party] has stated a claim entitling [them] to relief[.]” Francis, 588 F.3d at 193 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Such “factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. “Determining whether a complaint states [on its face] a plausible claim for relief [which can survive a motion to dismiss] will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950. However, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not show[n]” — “that the pleader is entitled to relief.” Id. (quoting Fed.R.CivJP. 8(a)(2)).

Prior to the Private Securities Litigation Reform Act (PSLRA) of 1995, courts considered the sufficiency of a securities fraud complaint under the standard set forth by Rule 9 of the Federal Rules of Civil Procedure. Rule 9 requires a party to “state with particularity the circumstances constituting fraud or mistake[,]”. However, the party was permitted to allege generally any “[m]alice, intent, knowledge, and other conditions of a person’s mind.” Fed. R.Civ.P. 9(b). The PSLRA superseded Rule 9(b) to the extent that it imposed a heightened pleading requirement in actions brought pursuant to Section 10(b) and Rule 10B-5. (Katyle v. Penn Nat’l Gaming, Inc., 637 F.3d 462, 471 n. 5 (4th Cir.2011); 15 U.S.C. § 78u-4(b)(1), (2)). “Under the PSLRA’s heightened pleading instructions, any private securities complaint alleging that the defendant made a false or misleading statement must: (1) ‘specify each statement alleged to have been misleading [and] the reason or reasons why the statement is misleading,’; and (2) ‘state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.’ ” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 321, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (citing 15 U.S.C. § 78u-4(b)(1), (2)) (emphasis added). While courts considering Rule 12(b)(6) motions, generally, “take into account any set of facts that could be proved consistent with the allegations of a complaint, even though such facts have not been alleged in the complaint, the PSLRA modifies this scheme (1) by requiring a plaintiff to plead facts to state a claim and (2) by authorizing the court to assume that the plaintiff has indeed stated all of the facts upon which he bases his allegation of a misrepresentation or omission.” (Teachers’ Retirement System of Louisiana v. Hunter, 477 F.3d 162, 172 (4th Cir.2007)) (citing 15 U.S.C. § 78u-4(b)(1)).

Thus, when considering a defendant’s Rule 12(b)(6) motion, the Court will (1) accept all factual allegations in the complaint as true and (2) consider the entire complaint and other sources courts ordinarily examine for such motions, particularly documents incorporated into the complaint by reference, and matters which are the proper subject of judicial notice. (Katyle, 637 F.3d at 466) (citing Tellabs, 551 U.S. at 322,127 S.Ct. 2499).

III.

Before the Court turns its attention to the pending motions to dismiss, the Court will consider Plaintiffs’ motion to strike as it concerns the scope of the Court’s review. In support of their motion to dismiss, Massey and Certain Director Defendants rely on the Declaration of Julie A. North and a plethora of “screenshots” of web-pages from MSHA’s website. Defendants contend these exhibits illustrate the manner in which data may be retrieved from MSHA’s website using the MSHA Data Retrieval System (“DRS”) and provide examples of reports generated from the DRS. In Footnote 4, of the Joint Motion to Dismiss, Defendants assert that the Court “may consider MSHA’s website and the data available through it, without converting the motion to one for summary judgment, because Plaintiffs’ extensively relied upon MSHA’s website, and the data available through it, in their Complaint.” (Joint Motion to Dismiss at 8, n. 4). Plaintiffs’ move pursuant to Rules 12(d) and 12(f) of the Federal Rules of Civil Procedure to strike from the record these various “screenshots” attached to the Joint Motion to Dismiss as exhibits B-H. The Court has considered the parties’ arguments, the applicable procedural rules and the Federal Rules of Evidence regarding judicial notice. The Court has also considered the posture of the current litigation, specifically that it is before the Court on a Rule 12(b)(6) motion. Upon consideration of the foregoing, and the law regarding matters which are proper for a court to consider on a motion testing the legal sufficiency of the complaint, the Court finds that Plaintiffs’ motion should be granted. The Court has not considered the exhibits in question as those documents would require the Court to convert the instant motions to dismiss to motions for summary judgment. Moreover, it is undisputed that the “screenshots,” provided by the Defendants, relate to web-pages and an online-search function that was not available, as represented in those exhibits, during the class period. Therefore, while the Court finds that the procedural authority upon which Plaintiffs rely, Rules 12(d) and (f), does not support their motion, the Court finds that the exhibits or extrinsic evidence should not be considered at this 12(b)(6) stage of the litigation.

IV.

Plaintiffs assert two causes of action: (1) a claim under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission, against the Defendants collectively, (CAC, ¶ 381-87) and (2) a claim under Section 20(a) of the Act, against Officer Defendants Blankenship, Phillips, Tolbert and Adkins (CAC, ¶ 388-392.) Defendants argue that Plaintiffs have filed a consolidated amended class action complaint that is void of any substantive facts to support a claim under Section 10(b) and Rule lob-5, and because the cause of action in count one is deficient, Plaintiffs’ second claim is also fatally flawed.

A. Section 10(b)

Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful for any person, directly or indirectly “[t]o use or employ, in connection with the purchase or sale of any security ..., [of] any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public interest or for the protection of investors.” The implementing regulation, SEC Rule 10b-5, declares it unlawful:

(a) To employ any device, scheme, or artifice to defraud,

(b) 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, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

17 C.F.R. § 240.10b-5. The Supreme Court of the United States has “implied a private cause of action from the text and purpose of [Section] 10(b)” for purchasers or sellers of securities injured by its violation. Matrixx Initiatives, Inc. v. Siracusano, 563 U.S.-,-, 131 S.Ct. 1309, 1317, 179 L.Ed.2d 398 (2011) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 318, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)); see also Ernst & Ernst v. Hochfelder, 425 U.S. 185, 196-97, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). The elements of a private securities fraud claim, based on violations of § 10(b) and Rule 10b-5, 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.’ ” Matrixx, 131 S.Ct. at 1317-18 (quoting Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 157, 128 S.Ct. 761, 169 L.Ed.2d 627 (2008)).

Collectively, Defendants argue that Plaintiffs have filed a 165-page pleading that is void of any substantive facts to support a claim under Section 10(b) and Rule 10b-5 and assert that Plaintiffs’ CAC fails as a matter of law for the following reasons: (1) The alleged misleading statements made by the Company about its safety compliance record, even if presumed to be true, lacked the requisite specificity to perpetrate a fraud on the market, given that accurate information about the Company’s safety compliance record was available to the market throughout the class period on the MSHA website; (2) Plaintiffs have failed to plead scienter adequately; (3) Plaintiffs are not entitled to the presumption of reliance; and (4) Plaintiffs have failed to state a coherent theory of loss causation. The Court will consider each of these challenges.

(1) A Material Misrepresentation or Omission by the Defendant

Defendants invite the Court to find that Plaintiffs’ allegations — regarding the nature and extent of Massey’s safety and compliance record or failure to disclose its regulatory violations — are insufficient to give rise to a claim for securities fraud, where such information was publically available to the market.

“To prevail on a [Section] 10(b) claim, a plaintiff must show that the defendant made a statement that was ‘misleading as to a material fact.’ ” Matrixx, 131 S.Ct. at 1318 (quoting Basic Inc. v. Levinson, 485 U.S. 224, 238, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988)). Pursuant to the PSLRA, when a plaintiffs claim is based on alleged misrepresentations or omissions of a material fact, the complaint must “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.” (15 U.S.C. § 78u-4(b)(1) (emphasis added)); see also Matrixx, 131 S.Ct. at 1318, n. 4; Teachers’ Retirement System of Louisiana v. Hunter, 477 F.3d 162, 172 (4th Cir.2007). However, “it is not enough ... [that a plaintiff] point to a false statement — the misrepresentation must concern a material fact.” Sec. Exch. Comm’n v. Pirate Investor LLC, 580 F.3d 233, 240 (4th Cir.2009) (citing Basic Inc. v. Levinson, 485 U.S. 224, 238, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988) (“It is not enough that a statement is false or incomplete, if the misrepresented fact is otherwise insignificant.”)) “Materiality is an objective concept, ‘involving the significance of an omitted or misrepresented fact to a reasonable investor.’ ” Longman v. Food Lion, Inc., 197 F.3d 675, 682-83 (4th Cir.1999) (citation omitted). Therefore, the Fourth Circuit has adopted the following standard for a court’s consideration of the materiality of any alleged misrepresentation:

[A] fact stated or omitted is material if there is a substantial likelihood that a reasonable purchaser or seller of a security (1) would consider the fact important in deciding whether to buy or sell the security or (2) would have viewed the total mix of information made available to be significantly altered by disclosure of the fact.

Longman, 197 F.3d at 683 (citation omitted); Phillips v. LCI Int’l, Inc., 190 F.3d 609, 613 (4th Cir.1999) (“If a reasonable investor, exercising due care, would gather a false impression from a statement, which would influence an investment decision, then the statement satisfies the initial element of a [Section] 10(b) claim.”) Moreover, “fraudulent corporate statements must be examined in context and in light of the ‘total mix’ of information made available to investors.” Phillips v. LCI Int’l, Inc., 190 F.3d 609, 613 (4th Cir.1999) (citing Basic Inc. v. Levinson, 485 U.S. 224, 231-32, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988)).

Plaintiffs, in forty-seven (47) pages of their CAC, allege statements made by Massey and Defendant Directors which they contend are “materially false and misleading statements and omissions regarding Massey’s regulatory compliance, the safety of its operations, its costs of production, and the ability to maintain or increase the rate of metallurgical coal production at the Company.” (CAC, ¶¶ 200.) To summarize Plaintiffs’ allegations, Plaintiffs generally assert an exception to three categories of statements made by Defendants. First, Plaintiffs allege that Defendants consistently made false and misleading statements regarding Massey’s nonfatal days lost (NFDL rate) beginning on February 1, 2008, the first day of the class period, through March 24, 2010. Second, Plaintiffs allege that during the class period, Defendants made various false and misleading statements professing Massey’s commitment to and focus on safety. For example: statements that safety is Massey’s “job one every day” (CAC, ¶203); Massey “endeavor[s] to conduct ... mining operations in compliance with applicable federal, state, and local laws and regulations” (CAC, ¶ 207); Massey’s assertion that it is a “recognized industry leader in safety” (CAC, ¶ 230); and the statement that Massey “has a strong tradition of safety excellence because we make it a priority every day” (CAC, ¶ 247). Third, Plaintiffs allege, notwithstanding Defendants’ identification of “risk factors” in its Annual SEC 10-K reporting, its statement that “violations during mining operations occur from time to time” and that Massey’s costs and liabilities were impacted by “increasingly strict federal, state, and local environment, health and safety and endangered species laws, regulations and enforcement policies” were misleading given the frequency with which Defendants violated mining regulations. (CAC, ¶¶208, 239, 244, 257). Plaintiffs allege that these categories of statements occurred throughout the entire class period and had an immediate impact on stock pricing. Plaintiffs assert that these statements and omissions “created or maintained inflation in Massey’s stock price during the Class Period, ... by preventing price declines that would have resulted from complete, accurate, and truthful disclosure of information about the safety and regulatory compliance of Massey mines and other concealed conditions of the Company’s operations.” (CAC, ¶¶ 201.)

As a threshold matter, the Court finds that Plaintiffs, in their CAC, adequately identify statements alleged to have been misleading or false. After each such statement, Plaintiffs assert the reason or reasons why the statement is misleading, and then allege a basis to support the materiality of the alleged fact. The Court will consider each category of misstatements and omissions.

As to the first category, Plaintiffs allege Defendants represented to the market that NFDL rates “are the benchmark the coal industry uses to measure safety” (CAC, ¶ 305) and reported “NFDL rates of 2.05 for the year 2007, 1.94 for the year 2008, and 1.67 for year 2009.” (See CAC, ¶¶ 184, 203, 212, 214, 219, 233, 239, 252, 257, 263, 270, 273-274, 282, 286, 291, 294, 298, 302). Plaintiffs allege that Defendants often “touted” the NFDL rate proudly in meetings with shareholders, analysts and at investment conferences, and that the NFDL rates were disseminated to the market through various modes of communications; i.e., in press releases filed with SEC Forms 8-K, conference calls with analysts, annual proxy statements filed with the SEC on a Form DEF 14A, SEC Form 10-Q quarterly reports, presentations at Coal Investment Conferences, press releases announcing receipt of “Prestigious Safety Awards,” at Massey’s Annual Meeting of Shareholders, Annual 10-K SEC filing and the recently implemented Corporate Social Responsibility Report. However, on September 30, 2010, amid “a substantial amount of scrutiny arising from the Explosion [at the UBBM], Massey acknowledged and detailed the Company’s false NFDL rates in a Letter to Shareholders.” (CAC, ¶ 134.) Massey amended its previously reported NFDL rates for 2007 through 2009 to 2.63, 2.52 and 2.33, respectively. Defendants explained that the adjustment of the security metric rates were necessary due to “lapses in its reporting procedures” determined by an independent consultant. (CAC, ¶ 30). Plaintiffs allege that the misleading nature of the NFDL rate is borne from Defendants’ failure: to explain the importance of the specific incident rate, “insofar as such rates do not measure compliance with any federal safety regulations;” to disclose that it had a “light duty work policy” that “discourage[d] miners from filling out the necessary paperwork to process an NFDL incident ... [thereby] rendering] statements like ‘we have several mines which incurred zero loss time injuries for 2007’ materially misleading”(CAC, ¶204); and to disclose the nature and extent of its federal and state regulatory violations, “significant and substantial” (“S & S”) citations, enforcement actions and its “widespread early notification system to deceive MSHA safety inspectors to hide the dangerous conditions of its mines.” The Court finds that Plaintiff has adequately alleged that the NFDL rates were false when the communications to the market were made. This is so, based on Massey’s disclosure of the more accurate information on September 30, 2010. The Court has also considered the materiality of the false statements with respect to NFDL rates. The Court finds that the Defendants’ use of the NFDL rates, in the context of its press release statements, quarterly and annual SEC filings, and in conferences with analysts, reveals the significance Defendants attached to the rate. Defendants’ various statements propounding the decline in the rate, year after year, indicated their desire to have the market find the rate relevant to their assessment of the “safety and health” of their company. (See Joint Mot. to Dismiss at 11) (“An NFDL incident rate is a ‘safety-related metric’ and Massey made no secret of it: ‘we measure our success in safety and health primarily through the use of occupational injury and illness frequency rates.’”) Consider the statement made by Defendant Blankenship at the May 13, 2008 Annual Shareholders meeting, where-he stated:

More importantly, you can see on this slide our continuing progress on improving safety over the past several years. Our SI, or Safety is Job One Program, allowed us to achieve an NFDL rate of 2.05. This was not only an all-time best for Massey. But it was also far better than the industry average, just as it has been for 15 of the past 16 years.

(CAC, ¶ 219). Additionally, Defendants have linked the NFDL rates and “its first priority” in mine safety to profitability in its communications with the market. (See CAC, ¶ 286) ■ (March 22, 2010 Preliminary Prospectus Supplement in which Massey described its safety strategy by asserting that it is “[maintaining focus on high safety standards. We believe a safe mine is a profitable mine ... ■ For the year ended December 31, 2009, we recorded an all-time Company best [NFDL] rate of 1.67.”) Moreover, disclosures of NFDL rates and statements concerning Massey’s commitment to safety, prompted market reaction as alleged in the CAC when stock prices would increase after the Defendants’ release of financial and safety results. (See CAC, ¶¶ 205, 222, 235, 238, 256, 259, 276). The Court finds there is a “substantial likelihood” that a reasonable purchaser or seller of a security would consider the NFDL rate important in deciding whether to buy or sell Massey’s security, particularly after the fatalities which occurred in 2006 and Massey’s stated renewed effort and strides to improve its safety and health. Therefore, if that rate were to be found false, a reasonable purchaser or seller would have viewed the total mix of information made available to be significantly altered by disclosure of that fact. Further, Plaintiffs have pled specific facts regarding its contention that Defendants omitted certain information about the NFDL rates each time they highlighted the rate to investors. Plaintiffs have alleged, through the statements of named and unnamed miners and the President of the United Mine Workers of America, that Defendants discouraged injured miners from completing the requisite NFDL paperwork which would have increased NFDL reporting. (See CAC, ¶¶ 31, 143-145,148).

Plaintiffs also allege that the use of the NFDL was misleading to investors in that the rate did not disclose Massey’s record of compliance with federal and state regulations. To that end, Plaintiffs have also pled statements indicating that Massey’s S & S citation rate was worse than the national industry average during the class period. (CAC, ¶¶ 123-125.) Defendants assert that the nature and extent of all citations and orders issued by MSHA to Massey were publicly available to the market, and Plaintiffs, throughout the entire class period, through MSHA’s website which contains an online database of “every violation of federal mine safety regulations.” (Defendant Massey and the Outside Director Defendants’ Mem. at 8.) Defendants assert that a reasonable investor could have used the website during the class period to assess its violation history. Plaintiffs contest the availability of the information on the website by asserting that the website was not user friendly. Defendants contend that a failure to disclose information that is already publicly available cannot give rise to a claim for securities fraud. Defendants appear to be asserting the “truth-on-the-market” defense to the instant claim. Pursuant to that theory, “a defendant’s failure to disclose material information may be excused where the information was made credibly available to the market by other sources.” Nguyen v. Radient Pharmaceuticals Corp., No. SA CV 11-0406, 2011 WL 5041959, at *6 (C.D.Cal. Oct. 20, 2011) (citation omitted); see In re Apple Computer Sec. Litig., 886 F.2d 1109, 1114 (9th Cir.1989). However, “[t]he truth-on-the-market defense is intensely fact-specific and is rarely an appropriate basis for dismissing a § 10(b) complaint for failure to plead materiality.” Ganino v. Citizens Utilities Co., 228 F.3d 154, 167 (2d Cir. 2000) (citation omitted). “Before the truth-on-the-market defense can be applied, the defendant must prove that the information that was withheld or misrepresented ‘was transmitted to the public with a degree of intensity and credibility sufficient to effectively counterbalance any misleading impression created by [their previous statements.]’ ” Nguyen, 2011 WL 5041959, at *7. The parties dispute whether the MSHA website appropriately conveyed the type of information that would have sanitized the alleged misstatements or omissions. The Court has reviewed the contentions of each party and, assuming the facts in the CAC to be true, any consideration of the interpretation of the information provided on the MSHA website, whether the MSHA website could tabulate the frequency, nature and extent of MSHA violations for Massey as a company or whether a reasonable investor would have utilized the website for such information, would necessarily involve considerations of fact which is wholly inappropriate at this stage of the litigation. Moreover, at this stage, the Court, on the record before it, cannot find that the “extent and nature” of Massey’s safety and compliance record, measured by MSHA citations, orders and enforcement actions, were disseminated to the market, in the same manner as its NFDL rate. This Court appreciates that Section 10(b) “do[es] not create an affirmative duty to disclose any and all material information.” Matrixx, 131 S.Ct. at 1322. However, disclosure of a balanced view of Massey’s safety record is required “to make ... statements made [respecting NFDL rates], in the light of the circumstances under which they were made, not misleading.” (Id.) Further, the availability of a safety and compliance record on the MSHA website would not cure the Defendants’ alleged failure to disclose to the market its practice of using an early warning system to alert miners of the presence of MSHA inspectors, which was adequately pled in the CAC. Therefore, the Court finds that Plaintiffs allegations in this respect have been adequately pled.

The next category asserted by Plaintiffs relates to statements made by Defendants concerning their commitment to safety. The Court has previously provided several examples of the nature of these statements. Plaintiffs allege that “statements professing that safety was the ‘first priority every day’ [at Massey] are “false and misleading when made because production, not safety, was the first priority at Massey during the Class Period.” (CAC, ¶204). Plaintiffs allege that the falsity of the statement “is demonstrated by unsafe working conditions at Massey mines, particularly the Company’s Large underground and surface mines, which had the worst fatality rate in the nation, and had a worse than national industry average performance as measured by MSHAissued S & S citations and Elevated Enforcement Actions.” (Id.) In support of its allegations, Plaintiffs argue that contrary to Defendants assertions that safety at its mines were improving, there were red flags, ie., above average fatality rate, S & S citation rate, and Elevated Enforcement Actions rates, that were ignored by the Defendants. Plaintiffs allege that Defendants’ statements of being an industry leader in safety are capable of being proven false given the number of safety violations found at Upper Big Branch mine alone. Plaintiffs allege in the first three months of 2010 alone, Upper Big Branch mine was the subject of “124 citations and 53 assessed penalties totaling $188,769.” (CAC, ¶ 176.) These allegations are sufficiently plead in that they exhibit the false nature of the Defendants’ statements with respect to being an “industry leader” in safety. Defendants argue that Plaintiffs’ allegations that Massey asserted false or misleading statements regarding its commitment to corporate values, or its claim of industry leadership in safety and compliance, are unavailing to the extent the statements constitute “immaterial puffery” and are not actionable in a securities fraud claim. (Joint Mot. to Dismiss at 7.) The Fourth Circuit in Hillson Partners LP v. Adage, Inc., explained that “ ‘soft,’ ‘puffing,’ statements ... generally lack materiality because the market price of a share is not inflated by vague statements[.]” Hillson Partners LP v. Adage, Inc., 42 F.3d 204, 211 (4th Cir.1994). However, “[w]hile opinion or puffery will often not be actionable, in particular contexts when it is both factual and material, it may be actionable.” Longman, 197 F.3d at 683. As the Court stated above, the truth or falsity of Defendants’ statements can be determined. They are not stated in a context of a future prediction, but generally recognize the company’s past achievements and current goals. Additionally, Defendants closely aligned their statements of commitment to safety to their productivity and success as a company, thereby lending credence to the materiality of their statements. Therefore, the Court finds that the second category of alleged misrepresentations have been sufficiently pled in the CAC.

The third category of statements identified by Plaintiffs as material misrepresentations or omissions concern the statements made by Defendants in their SEC filings with respect to the risk factor created by the mine industry and the regulation of federal and state agencies. Defendants argue that Plaintiffs’ allegations of misleading warnings, that Massey mines could be temporarily or permanently closed, or that its operations could be stopped based on Massey’s failure to comply with safety laws, are insufficient. Plaintiffs allege these warnings were misleading inasmuch as Massey had already failed to comply with the regulations. Defendants’ argument of insufficiency is based on the fact that Massey’s previous failure to comply with federal safety regulations was fully disclosed through MSHA’s website and through Massey’s corporate filings. Defendants acknowledge that their annual corporate filings included the following statement, “even with our substantial efforts to comply with extensive and comprehensive regulatory requirements, violations during mining operations occur from time to time.” (Defendant Massey and the Outside Director Defendants’ Mem. at 9 (citing CAC, ¶ 207.)) Plaintiffs have asserted that this statement is misleading because Massey violated federal law and regulations deliberately and frequently, and not “from time to time.” Defendant argues that the frequency with which they incurred mining violations was available to the market and Plaintiffs. Therefore, Defendants argue that the facts Plaintiffs claim were misrepresented in Massey’s risk warnings were publicly available, and are, therefore, not actionable. Finally, Massey argues that it warned investors of the very risk that Plaintiffs now claim was not disclosed; namely, interruptions of production and regulatory risks.

The Court has previously considered the Defendants’ “truth-on-the-market” defense and found that consideration of it and review of the MSHA website would require a factual determination that is not permissible at the 12(b)(6) stage of litigation. Therefore, Defendants’ contention that the extent and nature of its compliance record could be found on the MSHA website will not preclude the Court from finding that Plaintiffs’ allegations are sufficient to assert a Section 10(b) claim. Plaintiffs, in their allegations, are challenging the truthfulness of the statement Massey made about the frequency of its violations and the potential effect on production such violations could have. Defendants have stated that the violations occurred “from time to time,” while Plaintiffs contend that Massey received MSHA violations in a frequency far more prevalent than the sporadic nature suggested in the Massey statement. Defendants’ assertion that the market had accurate information about the risk of regulatory violations at Massey’s operations will not carry the day. Given the current motions, this litigation is not in the posture for this Court to assess the “accuracy” of the information available on the MSHA website, the one place Defendants assert the market was informed about the company’s compliance record. Additionally, Plaintiffs, in the CAC, have included a series of allegations regarding the nature and number of violations received at UBBM and various Massey mines, including instances in which portions of the mines were shut down, an event that only occurred upon a finding of a pattern of violations. Defendants’ statement that they incurred violations “from time to time” is facially inconsistent with the number of violations that MSHA reported were assessed at UBBM and other Massey mines. While it is reasonable for an investor of a mine company to assume that there will be some regulatory violations at a given mine and that various aspects of the mining industry may require temporary shutdowns of that mine (which will impact production), it cannot be said that a reasonable investor would appreciate the regulatory risk of a mining company or its impact on production when that company consistently only discloses one safety measurement metric, and has not disclosed any details about its regulatory compliance. The materiality of omitting facts about the alleged “widespread regulatory safety violations” at Massey’s mines is readily apparent when the Court considers that Massey, in its annual 10-K filings, stated that “[f]ederal and state regulations applicable to operations increase costs and may make our coal less competitive than other coal producers.” (CAC, ¶208) (citing Massey’s 2007 10-K filing). Massey has advised investors of the correlation between adherence to applicable federal and state regulations and its costs of doing business. Massey’s problems with complying with applicable safety regulations had not been detailed in any of its statements. A reasonable investor would have found the omission of an accurate frequency, in which Massey’s mines were cited by regulatory authorities for safety violations, significant to alter the total mix of information available about Massey as an investment.

In conclusion, the Court finds that Plaintiffs have sufficiently pled allegations to satisfy the heightened pleading standards of Rule 9(b) and the PSLRA in their identification of false and misleading statements.

(2) Scienter

With respect to the second element of a Section 10(b) claim, Defendants assert that Plaintiffs have failed to plead facts sufficient to support a strong inference that any of the Defendants acted with the intent to defraud. A plaintiff seeking to establish liability under Section 10(b) and Rule 10b-5 must allege a defendant “acted with scienter, ‘a mental state embracing intent to deceive, manipulate, or defraud.’ ” Matrixx, 131 S.Ct. at 1323 (internal quotations and citations omitted). “Under the PSLRA, a plaintiff must ‘state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.’ ” Matrixx, 131 S.Ct. at 1324 (citing 15 U.S.C. § 78u-4(b)(2)(A)). The Supreme Court has instructed that “[t]his standard requires courts to take into account ‘plausible opposing inferences.’” (Id.) (citing Tellabs, 551 U.S. at 323, 127 S.Ct. 2499.) To plead the necessary mental state, “negligence is not enough[,]” rather “[a] plaintiff must show either ‘intentional misconduct’ or such ‘severe recklessness’ that the danger of misleading investors was ‘either known to the defendant or so obvious that the defendant must have been aware of it.’ ” Cozzarelli v. Inspire Pharmaceuticals, Inc., 549 F.3d 618, 623 (4th Cir.2008) (citin