Lifson et al v. Assisted Living Concepts, Inc. et al

Filing 64

ORDER signed by Judge J P Stadtmueller on 6/21/13 granting in part and denying in part 40 and 43 Defendants' Motions to Dismiss; Pension Trust Fund for Operating Engineers Section 10(b) and Section 20(a) claims are DISMISSED to the extent th at they assert misrepresentations stemming from the defendants' statements regarding the private pay strategy and representations regarding occupancy outside of ALC's 10-K and 10-Q submissions; the Court will not dismiss Pension Trusts Sect ion 10(b) and Section 20(a) claims to the extent that those claims arise from the defendants' alleged misrepresentations regarding ALC's compliance with the Ventas Lease or occupancy data allegedly overreported in ALC's 10-K and 10-Q submissions. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
PENSION TRUST FUND FOR OPERATING
ENGINEERS and ROBERT LIFSON,
Plaintiffs,
v.
ASSISTED LIVING CONCEPTS, INC.,
and LAURIE BEBO,

Case No. 12-CV-884-JPS

ORDER

Defendants.
The lead plaintiff, Pension Trust Fund for Operating Engineers
(“Pension Trust”), filed its amended complaint on February 15, 2013. (Docket
#36). The amended complaint alleges that the defendants, Assisted Living
Concepts, Inc. (“ALC”), and Laurie Bebo (“Bebo”), violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act,” 15
U.S.C. §§ 78j(b) and 78t (a)) and SEC. Rule 10b-5. On April 1, 2013, ALC and
Bebo both separately moved to dismiss the amended complaint. (Docket #40,
#43). The parties have fully briefed the matter, and it is now ripe for decision.
(Docket #41, #44, #58, #59, #62).
1.

BACKGROUND1
The factual and legal background underlying this case is fairly

complex. Therefore, the Court provides this general overview: first,
providing some information regarding the parties involved in this suit;
second, addressing the defendants’ actions that gave rise to Pension Trust’s

1

For purposes of addressing this motion to dismiss, the Court will use the
facts alleged by Pension Trust in its motion to dismiss. The Court’s recitation of the
background does not constitute findings of fact, but instead merely serves as a
backdrop for analysis of the defendants’ motions to dismiss.

claims; and, finally, examining Pension Trust’s specific claims against the
defendants and Pension Trust’s complaint in greater detail.
1.1

Parties

ALC is a publicly-traded company that operates senior assisted living
facilities. (Compl. ¶¶ 1, 17). It oversees the operations of approximately 200
assisted living facilities, which together contain over 9,000 separate units.
(Compl. ¶ 1).
Bebo served as ALC’s President and CEO from November of 2006
until May of 2012, when she was fired as a result of the events giving rise to
this suit (which the Court will discuss in further detail below). (Compl. ¶ 18).
Pension Trust is a defined benefit plan; in connection with its
investment operations, Pension Trust owns some of ALC’s publicly-traded
stock. (Compl. ¶ 16).
1.2

Defendants’ Operations and Underlying Activity
1.2.1

Shift to Private-Pay Focus

During its early years of operation, ALC provided services to residents
on Medicaid and other government assistance programs. (See Compl. ¶ 25).
As such, the government would pay ALC for any services ALC provided to
Medicaid recipients. (See Compl. ¶ 25).
However, due to tightening budgets, the pay rates for housing
government-assistance recipients began to fall; in response to that, ALC
decided to seek more “private pay” residents. (Compl. ¶ 25). Private pay
residents are those whose bills are typically paid individually or by family
members, as opposed to being paid by governmental units. (Compl. ¶ 25).
ALC decided to switch its focus to private pay residents because private pay
revenue often provided higher profit margins (as their rates were not capped

Page 2 of 30

by the government), and enabled ALC to reduce its dependence upon
Medicaid, which ALC saw as growing less profitable and more unstable. (See
Compl. ¶ 25).
ALC succeeded in its mission of reducing the number of its
facilities that accepted Medicaid. (Compl. ¶ 25). By 2010, Medicaid recipients
accounted for only 2% of ALC’s overall revenues, while the number of ALC
residents who paid with Medicaid dropped to approximately 7.2% of the
total number of ALC’s patients. (Compl. ¶¶ 25, 27).
Unfortunately, while the number of Medicaid recipients declined,
ALC did not replace those with a proportional number of private pay
residents. (Compl. ¶ 28). The total occupancy level decline from 85% at the
2006 initiation of the private pay strategy to only 62.4% as of December 31,
2011. (Compl. ¶ 28). Of course, a portion of that decline may be attributable
to a simultaneous increase in the number of units operated by ALC, as ALC
added a total of 347 units between 2007 and 2010. (Compl. ¶ 26).
1.2.2

CaraVita Lease

While attempting to expand, ALC entered a lease agreement with
Ventas Realty (“Ventas”). Pursuant to the lease agreement—known as the
“CaraVita Lease” (also referred to in this document as “the Lease” or “the
Lease Agreement”)—ALC leased eight senior living facilities in the
Southeastern United States, consisting of a total of 541 units. (Compl. ¶ 33).
The Lease imposed a number of positive and negative obligations
upon ALC, including the following relevant obligations:

Page 3 of 30

(1)

ALC must comply with all laws and insurance requirements
(Docket #58, Ex. A, at ¶ 8.2.4),2 and would be deemed in
default if it receives either:
(a)
(b)

(2)

a written notice of any pending revocation of its licenses
or permits (Docket #58, Ex. A, at ¶ 17.1.12); or
a government determination that any facility is
operating below the required levels and is not brought
back into compliance within a certain number of days
(Docket #58, Ex. A., at ¶ 17.1.15);

ALC must affirm at the time of the lease and continue to ensure
throughout the life of the contract3 that
(a)
(b)

(3)

it is fully and validly licensed and certified to operate
the facility (Docket #58, Ex. A, at ¶ 10.9); and
it is in compliance with all laws and other safety
standards (Docket #58, Ex. A, at ¶ 10.15);

ALC must promptly notify Ventas if:
(a)

any event occurs that constitutes a breach of the Lease
or if ALC was notified (such as by a governmental

2

Although Pension Trust did not attach a copy of the Lease to its complaint,
the Court may nonetheless consider the Lease in deciding this motion to dismiss
(without the need to convert the motion to a Rule 12(c) motion), as Pension Trust
ultimately submitted the document as an attachment to its response brief (Docket
#58, Ex. A) and the document is both referenced in Pension Trust’s complaint and
central to Pension Trust’s claim. See, e.g., Brownmark Films, LLC v. Comedy Partners,
682 F.3d 687, 690 (7th Cir. 2012) (citing Wright v. Assoc. Ins. Cos. Inc., 29 F.3d 1244,
1248 (7th Cir. 1994)).
3

The Court will address this point further later in this order. Suffice it to say
that this required that ALC make certain representations and warranties upon
entering the Lease; however, the Lease also requires that ALC continue to abide by
its representations and warranties throughout the life of the contract. (Docket #58,
Ex. A, at ¶ 10 (“Tenant hereby makes the following representations and warranties,
as of the date hereof…. Tenant’s representations and warranties…shall continue in
full force and effect, and remain true and correct, and constitute continuing covenants of
Tenant, until Tenant’s obligations hereunder have been performed in full.”
(emphasis added))).

Page 4 of 30

agency) of “actual, pending, threatened or
contemplated increase” of liability or malpractice costs
(Docket #58, Ex. A, at ¶ 8.2.3(a)(ii)); or
(b)

ALC received notice of any potential litigation or
investigation of ALC that could affect ALC’s operation
of the leased facilities (Docket #58, Ex. A, at ¶¶ 8.2.3(c),
8.3);

(4)

ALC must maintain occupancy at or above 65% (75% for
trailing 12 months) (Docket #58, Ex. A, at ¶ 8.2.5(d));

(5)

ALC must keep each facility in good repair (Docket #58, Ex. A,
at ¶ 9.1.1).

(6)

ALC may not “jeopardize in any manner [its own]
participation in Medicare, Medicaid or any other Third Party
Payor Programs…” (Docket #58, Ex. A, at ¶ 8.1.11(e)); and

(7)

ALC may not make any false or misleading representations to
Ventas (Docket #58, Ex. A, at ¶ 17.1.5).

Any violation of those terms—even as to a single facility, so long as the
violation occurred for a period of 90 days or more—entitles Ventas to
terminate the entire lease, as to every facility. (Docket #58, Ex. A, at ¶¶ 17.2.1,
17.2.2).
1.2.3

Decline in Service and Inflated Occupancy at Ventas
Facilities

After entering this lease, ALC began to operate the Ventas facilities.
(See, e.g., Compl. ¶ 37). ALC continued to shift toward a private pay business
model throughout this time period. (See, e.g., Compl. ¶¶ 25, 27).
However, the total occupancy level at ALC’s facilities continued to
decline, and apparently ALC had to begin searching for ways to maintain or
increase its margins. (See, e.g., Compl. ¶¶ 28–30). This led ALC to begin
cutting costs. (Compl. ¶¶ 29, 30). Allegedly, ALC accomplished this through
understaffing its facilities and hiring less qualified employees. (Compl. ¶ 29).
Page 5 of 30

Of course, understaffing healthcare facilities is not without
ramifications, and ALC began to receive citations from authorities at the
facilities it leased from Ventas. (Compl. ¶¶ 39–117).4 Those citations stemmed
from various poor conditions within the facilities. (Compl. ¶¶ 39–117).
But those citations were not ALC’s only troubles: as already discussed,
occupancy rates continued to decline, and ALC allegedly began to falsely
report certain occupancy data.5 (Compl. ¶¶ 28, 95, 116, 119–124, 127–129). For
example, ALC allegedly would temporarily house residents for whom it
lacked the capacity to treat and rent rooms to third parties in order to
temporarily inflate their occupancy rate. (Compl. ¶¶ 95, 116, 119–123).

4

Pension Trust uses the statements of confidential witnesses to support a
vast number of specific violations it alleges occurred within the Ventas facilities.
(See, e.g., Compl. ¶ 39–117 (confidential witness statements discussed throughout)).
Those confidential witness statements do, indeed, highlight some nefarious
practices and inflame one’s passions. They do not, however, substantially change
the Court’s analysis. Rather, what is important is the simple fact that violations
occurred, for which ALC received citations. Nonetheless, the Court will give at
least some weight to these statements, as there are a large number of statements,
the statements tend to corroborate one another, and there is specific information
provided about each of the confidential witnesses, all in satisfaction of the
requirements of Makor II. Makor Issues & rights, Ltd. v. Tellabs, Inc., 513 F.3d 702,
711–12 (7th Cir. 2008).
5

ALC supports this assertion, too, with substantial confidential witness
testimony. (See, e.g., Compl. ¶¶ 95, 116, 119–124, 127–129). However, compared to
the allegations on conditions, which were separately supported by citations from
the government, this allegation lacks verifiable support, and the issue of
confidential witnesses becomes more concerning. However, even applying the
required “heavy discount” to the confidential witness statements on this allegation,
see, e.g., Higginbotham v. Baxter Int’l, Inc.,, 495 F.3d 753, 757 (7th Cir. 2007), City of
Livonia Emp.’s Ret. Sys. v. The Boeing Co., 711 F.3d 754, 759 (2013), the Court would
still find that the allegation is sufficiently supported to stand for the time being. As
mentioned above, there is strength in the number of confidential witnesses, their
corroborative aspects, and the specific descriptions of each of them. See, e.g., Makor
II, 513 F.3d at 711–12.

Page 6 of 30

1.2.4

ALC Assurances to Shareholders

Throughout this period, despite the problems discussed above, ALC
and Bebo continued to provide optimistic statements regarding its status.
(See, e.g., Compl. ¶¶ 151–193). ALC and Bebo made these statements in the
form of press releases, 10-K and 10-Q annual and quarterly reports, earning
conference calls, Sarbanes-Oxley certifications, and correspondence with the
Securities and Exchange Commission (SEC). (E.g., Compl. ¶¶ 151–193). Many
of the reports contained occupancy data, as well.
More specifically, ALC and Bebo made the following statements,
which Pension Trust alleges were fraudulent when made:
(1)

In a March 4, 2011 press release, Bebo wrote that “Operating
results continue to demonstrate the tremendous potential of
our private pay strategy” (Compl. ¶ 151);

(2)

In a March 4, 2011 earnings call with investors, Bebo stated that
ALC “remain[ed] well positioned to maintain the quality of
service our residents have come to expect, while earning strong
margins and cash flows for our investors” (Compl. ¶ 153);

(3)

In ALC’s 2010 10-K Annual Report, issued on March 10, 2011,
ALC stated that: (a) the private pay strategy gave the company
a competitive advantage and emphasized quality care to
residents (Compl. ¶ 154); and (b) that ALC was in compliance
with all of its leases (including its Lease with Ventas) (Compl.
¶ 157–58); Bebo executed a Sarbanes-Oxley (SOX) certification
attesting to the truth of this submission (Compl. ¶ 159);

(4)

In a May 2, 2011 press release, Bebo wrote that ALC made
positive strides under its private pay plan (Compl. ¶ 162);

(5)

In a May 3, 2011 earnings call, Bebo again asserted that the
private pay strategy was a success (Compl. ¶ 163);

(6)

In ALC’s first quarterly 10-Q report for the year 2011, filed on
May 5, 2011 (later amended), ALC asserted that it was in
compliance with all of its leases (Compl. ¶ 164); Bebo executed

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a SOX certification attesting to the truth of this submission
(Compl. ¶ 165);
(7)

In an August 4, 2011 press release, Bebo wrote that the private
pay strategy continued to be a success (Compl. ¶ 172);

(8)

In an August 5, 2011 earnings call, Bebo stated that: (a) the
private pay progress continued to be positive (Compl. ¶ 174);
and (b) ALC was maintaining and improving the quality of
service (Compl. ¶ 175);

(9)

In an August 5, 2011 letter response to an inquiry by the SEC
regarding the health of the Lease Agreement with Ventas, ALC
affirmed that it did not have a reasonably high risk of
breaching the Lease Agreement (this letter was signed by John
Buono, ALC’s Senior Vice President, Treasurer and Chief
Financial Officer) (Compl. ¶ 168; Docket #41, at 4–6);

(10)

In ALC’s second quarterly 10-Q report for the year 2011, filed
on August 8, 2011, ALC asserted that it was in compliance with
all of its leases (Compl. ¶ 177); Bebo executed a SOX
certification attesting to the truth of this submission (Compl.
¶ 178);

(11)

In a November 4, 2011 press release, Bebo wrote that the
private pay strategy continued to be a success (Compl. ¶ 180);

(12)

In a November 4, 2011 earnings call, Bebo stated that the
private pay progress continued to be positive and had
achieved record-level margins for the quarter (Compl. ¶ 182);

(13)

In ALC’s third quarterly 10-Q report for the year 2011, filed on
November 8, 2011, ALC asserted that it was in compliance with
all of its leases (Compl. ¶ 183); Bebo executed a SOX
certification attesting to the truth of this submission (Compl.
¶ 184);

(14)

In a March 8, 2012 press release, Bebo wrote that the private
pay strategy continued to be a success and had increased
occupancy (Compl. ¶ 186);

(15)

In a March 8, 2012 earnings call, Bebo stated that the private
pay progress continued to be positive and had achieved
record-level margins for the quarter (Compl. ¶ 187); and
Page 8 of 30

(16)

In ALC’s 2012 annual report, filed on March 12, 2012, ALC
asserted that it was in compliance with all of its leases (Compl.
¶ 191); Bebo executed a SOX certification attesting to the truth
of this submission (Compl. ¶ 192).

For ease of understanding, the Court will group these statements into
three separate categories. In essence, the Court agrees with ALC that the
representations all deal with one of the following three forms of alleged
misrepresentations: (1) misrepresentations that ALC was in compliance with
its Lease with Ventas; (2) misrepresentations that the private pay strategy
was successful; and (3) misrepresentations regarding occupancy data.
(Docket #44, at 6).
1.2.5

The Chickens Come Home to Roost

Despite these ample assurances to their shareholders, ALC was having
some difficulty, at least in terms of maintaining their facilities at the levels
required by state law. As already mentioned, numerous states investigated
conditions at ALC’s facilities and found violations. (Compl. ¶¶ 39–117).
Occupancy rates also continued to decline. (Compl. ¶¶ 28, 95, 116, 119–124,
127–129).
These issues precipitated a quick downward spiral for ALC. First,
Ventas discovered the problems in the facilities and sued ALC for breach of
the Lease Agreement between them; ALC announced this pending litigation
in a May 4, 2012 press release. (Compl. ¶ 133). At the same time, ALC
informed shareholders that it had received notices of intent to revoke ALC’s
licenses to operate three facilities in Georgia and Alabama. (Compl. ¶ 33).
ALC also disclosed that it had hired internal investigators to examine
irregularities with its Lease Agreement with Ventas. (Compl. ¶ 33).

Page 9 of 30

More trouble followed. On May 10, 2012, ALC failed to file a quarterly
report, leading to a 7% decline in its stock price. (Compl. ¶ 134). On May 14,
2012, ALC filed an 8-K report with the SEC addressing the impact of the
Ventas litigation, in which ALC reported that its annual net income would
potentially decline significantly due to the lawsuit. (Compl. ¶ 135). When
ALC finally filed its quarterly report on May 15, 2012, it included additional
details about the Ventas litigation (including allegations relating to ALC’s
default under the Lease); noted that the Ventas litigation could negatively
affect other leases, further reducing revenue; and disclosed that private pay
occupancy had decreased during the quarter. (Compl. ¶ 136).
As one might surmise, Bebo, as acting president and CEO during this
time, did not fare well: on May 29, 2012, ALC announced that it had fired her
for cause. (Compl. ¶ 137). Analysts quickly chalked the firing up to ALC’s
legal and regulatory woes, and, in the days afterward, ALC’s stock price
declined substantially. (Compl. ¶¶ 138, 139, 140).
On June 21, 2012, ALC announced that it had settled the Ventas
lawsuit. (Compl. ¶ 141). Under the terms of the settlement, ALC agreed to
pay $97 million to purchase all eight properties it had previously leased from
Ventas. (Compl. ¶ 141). The purchase price vastly exceeded ALC’s valuation
of the properties. (Compl. ¶ 141). ALC also paid an additional $3 million as
a settlement fee. (Compl. ¶ 141).
Given these myriad issues, it came as no surprise that ALC’s second
quarter of 2012 was vastly disappointing. (Compl. ¶ 142). ALC announced
on August 3, 2012, that it had sustained a net loss of $25.1 million in the
second quarter of 2012—down from $6.3 million of net income in the same

Page 10 of 30

quarter of 2011. Furthermore, ALC’s occupancy had declined slightly.
(Compl. ¶ 142).
On August 6, 2012, and August 7, 2012, ALC filed 8-K disclosures to
comply with the fair disclosure requirements of SEC Regulation FD, 17 C.F.R.
§§ 240, 243, and 249. (Compl. ¶¶ 143–144). Therein, ALC disclosed that it
would likely need to hire 800 additional employees during the third quarter
of 2012, at an expense of approximately $5 million to $6 million, and further
that the SEC was investigating ALC’s compliance with their Lease
Agreement with Ventas. (Compl. ¶¶ 143–144).
As a result of those two disclosures, ALC’s stock price dropped by
nearly 39% in two days of trading—from $12.86 per share at the close of
trading on Friday, August 3, 2012, down to $7.89 per share at the close of
trading on Tuesday, August, 7, 2012. (Compl. ¶¶ 143–144). The stock price
dipped further after ALC issued its quarterly report on August 8, 2012, in
which it made clear that it would need to make substantial staffing and other
changes to ensure that the quality of services offered would not suffer.
(Compl. ¶¶ 145–148).
1.2.6

Shareholders File This Suit Against ALC and Bebo

After the dramatic decline in ALC’s stock price, Pension Trust brought
suit on behalf of shareholders of ALC stock.6 Pension Trust alleges that ALC
and Bebo engaged in a fraudulent course of conduct by repeatedly
representing that ALC was in compliance with its Lease with Ventas, that the

6

In fact, Robert E. Lifson initially filed this suit; the Court, however,
appointed Pension Trust as lead counsel, and Pension Trust has taken charge of
filing their Amended Complaint and all motions and briefs on behalf of the
plaintiffs. (Docket #16). For purposes of addressing the defendants’ motions to
dismiss, the Court will treat Pension Trust as being the only plaintiff.

Page 11 of 30

private pay strategy was successful, and that occupancy was at positive
levels, when in fact each had reason to know that those representations were
incorrect.
The defendants have moved to dismiss the plaintiffs’ claims, and the
matter is now before the Court for decision.
2.

DISCUSSION
Pension Trust makes two claims for relief against both ALC and Bebo.
Pension Trust first claims that both ALC and Bebo violated Section

10(b) of the Exchange Act and SEC Rule 10b-5 by making fraudulent
representations to shareholders (Compl. ¶¶ 258–266). To state a Section 10(b)
claim, Pension Trust must plead the following elements:
(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.

Pugh v. Tribune Co., 521 F.3d 686, 693 (7th Cir. 2008) (citing Stoneridge Inv.
Partners, LLC v. Scientific–Atlanta, Inc., 552 U.S. 148, 157 (2008)).
Pension Trust’s second claim—that both ALC and Bebo violated
Section 20(a), because each allegedly used its position to control the actions
of the other to facilitate Section 10(b) violations (Compl. ¶¶ 267–273)—can
proceed only if the Court determines that Pension Trust adequately pled a
10(b) claim. See 15 U.S.C. § 78t(a) (“Every person who, directly or indirectly,
controls any person…shall also be liable jointly and severally with and to the
same extent as such controlled person”; in other words, if there was not a
Page 12 of 30

Section 10(b) violation by some person, then there cannot be any liability by
any allegedly controlling person); Pugh v. Tribune Co., 521 F.3d 686, 693 (7th
Cir. 2008). Of course, in addition to the Section 10(b) violation, Pension Trust
must also have pled facts that would establish either ALC’s or Bebo’s control
over the other. 15 U.S.C. § 78t(a).
With that general overview of Pension Trust’s claims set forth, the
Court will now turn to its analysis of those claims. First, the Court must
examine the standard of review it must apply in assessing whether to dismiss
any or all of Pension Trust’s claims. Thereafter, the Court will review the
substance of Pension Trust’s claims against both ALC and Bebo.
2.1

Standard of Review

In evaluating the defendants’ motions to dismiss, the Court must
determine whether Pension Trust has pled facts that show that its claim of
relief is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
562–63 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). The pleading
standard is heightened, however, in Section 10(b) cases: not only must the
plaintiff plead the above-discussed elements of a Section 10(b) claim, they
must also do so with a certain particularity. Specifically, the Court should
dismiss Pension Trust’s claims to the extent that Pension Trust has not pled
facts that could, with sufficient particularity, establish the defendants’
scienter or identify each allegedly fraudulent statement and facts that would
establish their fraudulence. See, e.g., Makor II, 513 F.3d at 704 (7th Cir. 2008)
(clarifying that plaintiff must establish scienter by showing that defendant
either actually knew of the falsity of a statement or recklessly disregarded a
substantial risk of falsity); DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.
1990) (conflating Rule 10b-5's required showing with the showing for fraud

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under Fed. R. Civ. P. 9(b), and requiring that plaintiffs plead the “who, what,
when, where, and how” of each alleged fraudulent representation); 15 U.S.C.
§ 78u-4(b)(3)(A) (requiring that Section 10(b) plaintiffs specifically identify
each misleading statement and state with particularity the facts establishing
falsity); Makor Issues & Rights, Ltd. v. Tellabs, Inc., 437 F.3d 588, 594 (7th Cir.
2006), vacated and remanded on other grounds, 551 U.S. 308 (2007) (Makor I)
(noting that the PSLRA imposes a heightened pleading requirement on
claims thereunder: “one that exceeds even the particularity requirements of
Federal Rule of Civil Procedure 9(b)”).
2.2

Substantive Analysis

In essence, there are four separate claims that the Court must analyze:
two Section 10(b) claims (one as to each defendant), and two Section 20(a)
claims (again, one as to each defendant). There is a substantial amount of
overlap between Pension Trust’s Section 10(b) claim against ALC and its
Section 10(b) claim against Bebo. Similarly, Pension Trust’s separate Section
20(a) claims against ALC and Bebo share much the same common ground.
Accordingly, the Court will address both of Pension Trust’s Section 10(b)
claims together in a single section, distinguishing between the defendants
only when necessary. The Court will do likewise with Pension Trust’s Section
20(a) claims.
2.2.1

Section 10(b) Claims

As the Court has already noted, Pension Trust asserts that ALC and
Bebo made fraudulent misrepresentations, which the Court can classify into
three separate groups: (1) statements regarding ALC’s compliance with its
Lease with Ventas; (2) statements regarding the success of the private pay
strategy; and (3) statements (or omissions) regarding occupancy data.

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(Docket #44, at 6). The parties address each of these groups separately, and
the Court will do the same. To the extent that the Court determines that
Pension Trust has not pled sufficient facts to make plausible its allegations of
fraud stemming from that group, the Court will dismiss that portion of
Pension Trust’s Section 10(b) claim, so that the scope of discovery may be
appropriately narrowed.
Additionally, the Court notes that, for the purpose of this motion to
dismiss, the defendants primarily take issue with the first and second
elements of the Section 10(b) claims. That is, the defendants argue that
Pension Trust has failed to adequately plead facts that could establish that
ALC and/or Bebo had in fact made fraudulent statements or done so with the
requisite scienter. Therefore, in addressing the motions to dismiss, the Court
will focus on those aspects of Pension Trust’s claims.
In other words, for each separate group of alleged misstatements, the
Court must ask whether Pension Trust pled facts that could establish that the
statements were fraudulent when made. And, second, if the court has found
that ALC and Bebo did, in fact, make fraudulent statements, then the Court
must next determine whether ALC and/or Bebo made the statements with
the requisite scienter (i.e. whether ALC and/or Bebo made the statements
knowing of their falsity or with reckless disregard for their falsity). Pension
Trust may not proceed on its claims unless the Court answers both questions
in the affirmative.
2.2.1.1 Alleged Misrepresentations
The Court must first determine whether Pension Trust has pled facts
sufficient to establish that the three separate groups of ALC’s and Bebo’s
statements amounted to misrepresentations.

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2.2.1.1.1 Compliance with Ventas Lease
Both ALC and Bebo repeatedly asserted that ALC was in compliance
with its Lease with Ventas. (See statements 3, 6, 9, 10, 13, and 16 from the list
in Section 1.2.4, above). Pension Trust argues that those statements amounted
to violations of Section 10(b), and the Court must determine whether Pension
Trust pled facts sufficient to establish that violation.
In doing so, the Court first must ask whether Pension Trust has pled
facts sufficient to establish that the statements were, in fact, fraudulent when
made. Pension Trust has done so.
The contract established multiple ways that it could have been
breached or defaulted upon. Specifically, it required that: ALC comply with
all laws and insurance requirements; continue to affirm its compliance
therewith; notify Ventas if there was any pending or possible litigation that
could affect its leased facilities; maintain occupancy at or above a specified
level; keep each facility in good repair; not jeopardize its participation in
Medicare, Medicaid, or other third-party payor programs; and not make any
false or misleading representations to Ventas.
Arguably, Pension Trust has pled facts sufficient to establish that ALC
was in violation of at least one of each of those requirements throughout the
class period. Of course, as Pension Trust pled, ALC received vast numbers
of communications from state agencies citing regulatory investigations and
violations throughout the class period. (See, e.g., Compl. ¶¶ 39–97). Those
items certainly raise a strong specter of very poor conditions in the leased
facilities. And, if the conditions were bad enough to warrant regulatory
investigations and citations, then, arguably, it is very possible that ALC was

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operating in violation of its lease during the class period. Indeed, such
alleged facts would support the following violations:
first, if ALC was under investigation or cited by state authorities, it
may not have been in compliance with all laws and insurance
requirements throughout the class period, and, by extension, would
have been unable to continue its affirmance of compliance (indeed,
one need not necessarily actually receive a citation to have been out of
compliance with the law—the fact that a speeding driver does not
receive a speeding ticket does not mean that the driver did not break
the law by speeding); and
second, the conditions in the leased facilities may have been
sufficiently low that litigation was possible, that the facilities may
have been deemed to be not in good repair, or that ALC may have put
its participation in Medicare, Medicaid, or other third-party payor
programs in jeopardy.7
Any of those facts would establish a violation of ALC’s Lease with Ventas.
Additionally, Pension Trust has pled sufficient facts to establish that
ALC and Bebo provided Ventas with falsely inflated occupancy numbers.
While ALC complains that Pension Trust has failed to specify the precise
amount of over-reporting (Docket #59, at 11), the Court believes that such an
argument is a red herring. The mere fact of over-reporting was likely a
breach of the contract. Thus, the fact of over-reporting alone, as adequately
alleged by Pension Trust, would establish that ALC breached its Lease with
Ventas by providing false representations.
For all of these reasons, it is clear that Pension Trust has pled facts
sufficient to establish that ALC and Bebo provided false statements when
they stated that ALC was in compliance with its Lease with Ventas.
7

On this latter note, the Court should mention that the Secretary of the
Department of Health and Human has the ability to terminate a hospital’s
participation in Medicare, for example, if he or she deems the facility to be out of
compliance with Medicare regulations. See 42 U.S.C. §§ 482.11(b) and (c), 1395x(e).

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Accordingly, the Court is obliged to analyze this claim to determine whether
Pension Trust has pled that ALC and Bebo possessed the requisite scienter
to make the claim viable.
2.2.1.1.2 Success of Private Pay Strategy
Pension Trust also identifies ALC’s and Bebo’s statements praising the
private pay strategy as misrepresentations.8 (See statements 1, 2, 3, 4, 5, 7, 8,
11, 12, 14, and 15 from the list in Section 1.2.4, above). This argument is much
more dubious.
With regard to the statements, Pension Trust argues that ALC and
Bebo lied by stating that the private pay strategy improved the business’
financial position and allowed it to maintain its quality of service, when in
fact the opposite was true. (See Docket #58, at 8–9).
Courts, however, have avoided treating “puffery” or “vaguely
optimistic statements” as material misrepresentations that could give rise to
liability. See, e.g., Silverman v. Motorola, Inc., 07-C-4507, 2008 WL 4360648, at

8

The Court must also note that Pension Trust, in its response brief, argues
that ALC and Bebo omitted material facts, which it alleges constitutes a violation
of Section 10(b). (See, e.g., Docket #58, at 8–14). In support thereof, Pension Trust
refers to the poor conditions inside of the leased facilities, as evidenced by
regulatory investigations and statements of confidential witnesses. This is a
dramatic reversal from the allegations in the amended complaint, which center
much more closely around actual statements regarding the business success of the
private pay strategy and conditions inside the facilities. This sort of quick shift in
argument is entirely inappropriate. Pension Trust has not identified any specific
omissions in its amended complaint. Moreover, ALC and Bebo disclosed the effects
of the private pay strategy to ALC’s shareholders in their 10-K forms. Thus, Pension
Trust’s claims are not actually challenging an omission, but are instead alleging
corporate mismanagement, which is not actionable under Section 10(b). See Santa
Fe Indus., Inc. v. Green, 430 U.S. 462 (1977); Fry v. UAL Corp., 895 F. Supp. 1018, at
1042–43 (N.D. Ill. 1995) (cataloging cases in which the Seventh Circuit held that
allegations of corporate mismanagement or breach of fiduciary duty cases are not
actionable under federal securities laws).

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*9–*10 (N.D. Ill. Sept. 23, 2008) (citing In re Midway Games, Inc., Sec. Litig., 332
F. Supp. 2d 1152, 1164 (N.D. Ill. 2004); Shaw v. Digital Equipment Corp., 82 F.3d
1194, 1217 (1st Cir.1996); Shields v. Citytrust Bancorp. Inc., 25 F.3d 1124,
1129–30 (2d Cir. 1994)).
That rule of law applies to many of ALC’s and Bebo’s statements in
this case. A majority of the statements identified by Pension Trust regarding
the success of the private pay strategy were merely vague corporate puffery,
which the Court should not treat as material misrepresentations. Specifically,
statements 1, 3, 4, 5, 7, 8, 11, 12, 14, and 15, all contain statements praising the
success of the private pay strategy. But each of those statements is vague, or
contains data points that Pension Trust does not argue were in error. Rather,
Pension Trust argues that, holistically and subjectively, the private pay
strategy was a failure. Indeed, the private pay strategy may have ultimately
been a bad business decision. But “[p]eople in charge of an enterprise are not
required to take a gloomy, fearful or defeatist view of the future; subject to
what current data indicates, they can be expected to be confident about their
stewardship and the prospects of the business that they manage.” Shields, 25
F.3d at 1129–30. Additionally, the Court does not believe that these
representations could possibly have been considered material, because any
reasonable investor would look beyond general statements of corporate
success when investing. That is, any reasonable investor would look at
business results of a given company’s strategy, rather than relying solely
upon representations of an employee that the strategy was a success. As the
defendants argue, such statements are simply too subjective to be deemed
material misrepresentations. Thus, here, the Court is obliged to conclude that

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ALC’s and Bebo’s statements on the success of the private pay strategy were
mere corporate puffery and not material misrepresentations.
Bebo’s statements on the quality of service at the leased facilities
presents a much closer call. Pension Trust has identified two statements
regarding quality, which it asserts constituted misrepresentations.
The first of those statements, found in statement 2 above, is not a
material misrepresentation. Bebo made this statement during an earnings
call, in which she stated that the implementation of the private pay strategy
allowed ALC to remain “well positioned to maintain the quality of service
our residents have come to expect, while earning strong margins and cash
flows for our investors.” (Compl. ¶ 153). Pension Trust argues that this was
a material misrepresentation, because the private pay strategy actually
decreased the quality of service. The defendants have not pled facts sufficient
to show that this was, in fact, a misrepresentation, though. As sad as this may
be, the defendants have not pled any facts that would establish that residents
ever expected good quality of service. As with the vague statements above,
this statement is simply too general to support a finding that it is a material
misrepresentation.
The Court must also hold that the second of the statements, found in
statement 8 above, is not a material misrepresentation. Statement 8, again
made by Bebo during a conference call, asserted that ALC had obtained cost
savings by improving “the expense side while still maintaining or improving
the quality of what we have in service or items.” (Compl. ¶ 175). This
statement is extremely nonspecific. All that Bebo asserted was that the
quality of service or items had at least remained consistent. Again, Pension
Trust has failed to provide the Court with facts to establish an adequate

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baseline. Moreover, Pension Trust has failed to show that the quality of items
in the leased facilities began to decline. Thus, the Court is obliged to conclude
that Pension Trust has not pled facts sufficient to support its allegation that
this statement was a material misrepresentation.
Finally, the Court notes that, while this detailed analysis of ALC’s
and Bebo’s statements may seem to be nit-picking, it is very important
to weed out allegations of true misrepresentations from mere
puffery or vague statements regarding quality. Practically speaking, any
corporation—whether successful or not—occasionally shades the truth
regarding the services it provides and the quality of its business model.
Every executive believes in the success of his or her own plan, and will say
as much to investors and potential investors. The Court is reluctant to hold
that such positive generalities rise to the level of material misrepresentation.
Surely, every investor must also have some responsibility to verify that
vague statements of success are, indeed, true.
For all of these reasons, the Court is obliged to conclude that ALC’s
and Bebo’s statements regarding the private pay strategy were not material
misrepresentations. Accordingly, the Court is obliged to grant the
defendants’ motions to dismiss in this regard.
2.2.1.1.3 Occupancy Data
The last of Pension Trust’s allegations centers around ALC’s and
Bebo’s alleged overstatements or omissions of the correct occupancy data. On
this topic, Pension Trust points out that Bebo asserted in a press release that
the private pay strategy had increased occupancy levels. (See statement 14
from the list in Section 1.2.4, above). Pension Trust also alleges that
fraudulent occupancy data was disclosed in two earnings calls. (Compl.

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¶¶ 152, 187). The allegations may also encompass ALC’s 10-K statements,
which included information on occupancy data. Further, in its response brief
to the Court, Pension Trust argues that ALC and Bebo failed to disclose
ALC’s practices of over-reporting occupancy, thus making a material
omission. (See Docket #58, at 15–16).
To begin its analysis on this topic, the Court must note the deficiencies
in Pension Trust’s amended complaint and response brief. In both, Pension
Trust avoids specifically identifying what it asserts to be ALC’s and Bebo’s
misstatements and omissions. Instead, Pension Trust simply asserts as many
individual facts as possible, never drawing them together into a cogent
statement of a claim.9 Moreover, Pension Trust’s response brief
simultaneously fails to bring the threads together into a cogent claim while
shifting the sands even further by arguing that ALC and Bebo omitted facts
regarding the calculation of ALC’s occupancy data. Indeed, the Court’s
identification of the alleged misstatements or omissions, above, was purely
an act of synthesis by the Court. The Court has yet to receive a submission
from Pension Trust that clearly states precisely where ALC or Bebo made
either a misstatement or omission.
This leaves the Court in the precarious position of attempting to
identify Pension Trust’s actual allegations. The fact that the Court has to
delve this deeply into identifying Pension Trust’s claims is likely grounds for
dismissal in itself. Nonetheless, the Court will do what it can to suss out and
evaluate Pension Trust’s claims.

9

This is an issue throughout Pension Trust’s Amended Complaint, but is
particularly egregious with reference to the claims regarding occupancy data.

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First, Pension Trust has failed to allege facts that would establish the
fraudulence of statements in press releases or earnings calls that reported
increased occupancy. While those statements—one in a press release and two
during earnings calls, found at paragraphs 152, 186, and 187 of the amended
complaint—did, indeed, make specific contentions about increased
occupancy, Pension Trust has not identified any fact that would establish the
statements were incorrect in any way. Therefore, the Court must conclude
that Pension Trust has failed to adequately state a claim stemming from those
representations.
Second, Pension Trust has stated a claim regarding the fraudulence of
ALC’s 10-K and 10-Q disclosures—though they have barely done so. The 10K and 10-Q forms included occupancy data. (See Docket #44, at 10–11 at fns.
11–12). But Pension Trust has not pled any facts that would establish that
those numbers were false. Certainly, Pension Trust has not pled any facts
regarding the true and correct occupancy rates for the periods. Such
information would have clearly stated a claim.
Instead, Pension Trust has taken the difficult path of using confidential
witnesses to support its claims. A number of those confidential witnesses
stated that they were aware of certain of ALC’s practices to inflate occupancy
numbers. (See, e.g., Compl. ¶¶ 45, 67, 87, 88, 92, 116, 117, 119, 120, 121, 122,
123, 125, 126, 127, 128, 129, 130, 131, 132, 200, 206, 216, 218, 224, 225, 226, 228,
230, 231, 232). However, for various reasons, many of those statements do
not provide support for Pension Trust’s allegations that the 10-K and 10-Q
statements included falsified occupancy data. To begin, a majority of the
confidential witnesses did not have contact with the 10-K and 10-Q reports
during the period in question. For example, CW 5, CW 9, and CW 12 were

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in management positions, but never made any statements that they had seen
inflated data in the 10-K and 10-Q reports. (See, e.g., 67, 119, 120, 121, 125,
126, 127, 131, 200, 206, 216, 226). Others, including CW 7 and CW 8, were not
employed by ALC during any period that Pension Trust claims ALC issued
fraudulent statements; therefore, they cannot have any knowledge of
fraudulently reported data. (Compl. ¶¶ 19(g–h)).
There are, however, two assertions that ALC overreported its
occupancy data in its 10-K and 10-Q reports. CW 2 was an accountant and
informed Pension Trust that he or she had seen reports which overreported
occupancy data. (Compl. ¶ 131). Likewise, CW 6, a regional marketing
director and later a residence director, also informed Pension Trust that he
or she had seen vast differences between ALC’s internal reports and the
numbers reported publicly, raising the specter of fraud in the 10-K and 10-Q
reports. (Compl. ¶ 123). While the Court has some reservation about
crediting these two confidential statements, its fears are assuaged by the fact
that—while the other confidential witnesses may not address over-reporting
in the 10-K and 10-Q forms—the other confidential witnesses report severe
occupancy reporting problems, all of which lend credence to CW 2’s and
CW 5’s statements regarding over-reporting on 10-K and 10-Q forms.
Accordingly, the Court is obliged to find that Pension Trust has pled facts
sufficient to establish its claim that ALC and Bebo made material

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misrepresentations regarding occupancy data by supplying incorrect data in
ALC’s 10-K and 10-Q reports.10
Third, Pension Trust’s arguments that ALC and Bebo omitted
pertinent facts regarding occupancy data fails to state a claim. (Docket #58,
at 15–16). On this matter, the Court agrees with ALC: Pension Trust has gone
too far in blurring the line between affirmative misrepresentation and
omission. (Docket #59, at 1). Effectively, Pension Trust argues that ALC and
Bebo “omitted” facts regarding how the ALC reached its occupancy data.
While technically true, this is simply another way of arguing that ALC
calculated and reported its data in a fraudulent way. Therefore, the Court
will disregard this argument.
Finally, the Court must also note that, to the extent that Pension Trust
attempts to argue that ALC and Bebo made fraudulent statements or
omissions to Ventas regarding occupancy data (Docket #58, at 16), such
contentions lie entirely inside Pension Trust’s claim that ALC and Bebo made
material misrepresentations regarding compliance with the Ventas Lease. In
essence, Pension Trust is attempting to argue that a misrepresentation to a
third party constitutes a misrepresentation to shareholders. That position is
simply untenable.
For these reasons, the Court is obliged to dismiss Pension Trust’s
claims regarding inflated occupancy levels, except insofar as Pension Trust
argues that ALC overreported its occupancy data in its 10-K and 10-Q forms.

10

In this regard, the Court notes that it has taken into account ALC’s
argument that its publicly-reported occupancy data disclosed declining occupancy
rates, and therefore was not misleading. (Docket # 59, at 2–3). While, indeed, it may
be true that ALC reported declining occupancy rates, the issue is whether those
rates were still overstated by ALC’s misreporting.

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On this latter claim, the Court must still determine whether ALC and Bebo
possessed the requisite scienter to make the claim viable.
2.2.1.2 Scienter
Having determined that Pension Trust did, indeed, plead facts
sufficient to establish actual misrepresentations as to the lease and 10-K
occupancy report claims, the Court must next determine whether Pension
Trust also pled facts sufficient to establish scienter on their behalf. If Pension
Trust has not pled facts sufficient to establish scienter, then the Court must
dismiss Pension Trust’s remaining claims.
Scienter is a state of mind “embracing intent to deceive, manipulate,
or defraud,” and includes reckless disregard for the truth in the Seventh
Circuit. Tellabs, 551 U.S. at 319; S.E.C. v. Jakubowski, 150 F.3d 675, 681 (7th Cir.
1998). However, to qualify as scienter, this recklessness must be “an extreme
departure from the standards of ordinary care…to the extent that the danger
was either known to the defendant or so obvious that the defendant must
have been aware of it.” Makor II, 513 F.3d at 704 (internal quotations omitted).
To determine whether scienter exists, the Court must examine all of the
allegations to determine whether an inference of scienter would be “cogent
and at least as compelling as any opposing inference one could draw from
the facts alleged.” Tellabs, 551 U.S. at 324. This often depends on the
plausibility of other explanations for the action; in other words, the greater
extent to which innocent explanations for an action may be ruled out, the
greater the plausibility of scienter. Makor II, 513 F.3d at 711.
To establish ALC’s scienter, the Court must look to “the state of mind
of the individual corporate official or officials who make or issue the
statement.” Makor II, 513 F.3d at 708. Further, any individual who “make[s]”

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an untrue statement of fact in connection with the purchase of securities is
liable under Rule 10b-5. 17 C.F.R. § 240.10b-5(b). Thus, because Bebo made
statements in press releases and earnings calls, the Court can attribute those
statements to ALC and also to her. Similarly, by signing SOX certifications
attesting to the truth of ALC’s 10-K and 10-Q reports, Bebo clearly took
responsibility for issuing those statements, and they can be attributed to both
ALC and to her, individually.
Given this legal backdrop, the Court finds that Pension Trust has
clearly stated facts sufficient to establish scienter on both ALC’s and Bebo’s
behalf. Pension Trust has pled facts sufficient to establish that Bebo received
practically every notice of state investigations and citations, and thus was
clearly aware of the condition issues that put ALC in violation of its lease
with Ventas. (Compl. ¶¶ 205, 206, 209, 210, 213). They have also pled facts
that establish her extremely close oversight of occupancy data, all the way
down to raising concerns about individual residents. (See, e.g., Compl. ¶¶ 31,
32, 123, 216, 222, 223). Thus, when she stated and certified that ALC was in
compliance with the Lease and provided occupancy data, she did so with at
least a reckless disregard for the truth that the ALC was, in fact, both out of
compliance and falsely overstating its occupancy data. As such, Pension
Trust has stated facts sufficient that both Bebo and, by extension, ALC acted
with scienter in issuing press releases, participating in earnings calls, and
submitting 10-K and 10-Q forms, which included false information regarding
ALC’s compliance with the Ventas Lease and overstated occupancy data.
As such, the Court is obliged to deny the defendants’ motions to
dismiss Pension Trust’s Section 10(b) claims, insofar as Pension Trust asserts
that ALC and Bebo violated Section 10(b) by making material

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misrepresentations concerning ALC’s compliance with the Ventas Lease and
falsely overstating occupancy data in its 10-K and 10-Q reports.
2.2.2

Section 20(a) Claims

Pension Trust has also alleged that both Bebo and ALC violated
Section 20(a) by controlling the other to induce the Section 10(b) violation.
(Compl. ¶¶ 267–273). ALC argues (very briefly, in its opening brief) that the
Court should dismiss this claim, because Pension Trust has failed to state any
Section 10(b) violation. (Docket #44, at 23).
The Court will not dismiss Pension Trust’s Section 20(a) claims to the
extent they rest upon Section 10(b) claims that the Court determines it
should not dismiss. As the Court has already noted, it finds that Pension
Trust has adequately stated a Section 10(b) as to a portion of its allegations.
Additionally, Pension Trust has alleged that both ALC and Bebo had the
power or ability to control the other. Those two factors are all that is required
to state a Section 20(a) claim; whether either ALC or Bebo is, in fact, a
controlling person is an issue that cannot be decided at the pleading stage.
See, e.g., In re Sears, Roebuck and Co., Sec. Litig., 291 F. Supp. 2d 722, 727 (N.D.
Ill. 2003) (citing Donohoe v. Consol. Operating & Prod. Corp., 982 F.2d 1130,
1138–39 (7th Cir. 1992); Lindelow v. Hill, 2001 WL 830956, at *9 (N.D. Ill July
20, 2001); In re Discovery Zone Sec. Litig., 943 F. Supp. 924, 943 (N.D. Ill. 1996)).
Thus, to the extent that the Court has found that Pension Trust has
adequately stated a violation—as relates to the Lease compliance and 10-K
and 10-Q issues—it may also maintain its Section 20(a) claims against both
ALC and Bebo.
Therefore, the Court must deny ALC’s motion to dismiss Pension
Trust’s Section 20(a) claims, insofar as those claims relate to Section 10(b)

Page 28 of 30

claims that the Court does not dismiss within this order. As to all other
Section 20(a) claims that Pension Trust may have raised, such as those based
upon the success of the private pay strategy or non-10-K/10-Q occupancy
statements, which the Court dismisses in this order, the Court is obliged to
grant ALC’s motion to dismiss.
3.

CONCLUSION
In sum, the Court will grant in part and deny in part both ALC’s and

Bebo’s motions to dismiss. Specifically, the Court will grant those motions as
to Pension Trust’s claims that ALC and Bebo made material
misrepresentations in their statements regarding the success of the private
pay plan or in their non-10-K/10-Q statements regarding occupancy data. To
the extent that Pension Trust’s Section 10(b) claim relied upon allegations of
that nature, they may no longer pursue that claim and the parties need not
engage in discovery to assess further facts on those issues. However, the
Court must deny ALC’s and Bebo’s motions as to Pension Trust’s claims that
assert misrepresentations stemming from statements regarding the Ventas
Lease or concerning occupancy rates, as stated in ALC’s 10-K or 10-Q
submissions.
Accordingly,
IT IS ORDERED that the motions to dismiss of Laurie Bebo and
Assisted Living Concepts, Inc. (Docket #40, #43, respectively), be and the
same are hereby GRANTED in part and DENIED in part;
IT IS FURTHER ORDERED that, pursuant to the Court’s partial
grant of the defendants’ motions to dismiss, and in accordance with the
Court’s discussion above, Pension Trust Fund for Operating Engineers’
Section 10(b) and Section 20(a) claims be and the same are hereby

Page 29 of 30

DISMISSED to the extent that they assert misrepresentations stemming
from the defendants’ statements regarding the private pay strategy and
representations regarding occupancy outside of ALC’s 10-K and 10-Q
submissions; however, the Court will not dismiss Pension Trust’s Section
10(b) and Section 20(a) claims to the extent that those claims arise from the
defendants’ alleged misrepresentations regarding ALC’s compliance with the
Ventas Lease or occupancy data allegedly overreported in ALC’s 10-K and
10-Q submissions.
Dated at Milwaukee, Wisconsin, this 21st day of June, 2013.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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