Cornielsen v. Infinium Capital Mgmt., LLC, 916 F.3d 589

39 former Infinium employees converted ~$5 million in capital-pool loans into Class B-2 equity in February–March 2012 after town-hall presentations by senior managers (Whitman, Eickbush, Johnson, Rose).
Plaintiffs allege managers made oral misrepresentations (single class of equity, untapped $20M credit line, January–February profits) contrary to written disclosures in a February 14, 2012 PPM, LLC Agreement, and Subscription Agreement (which contained a non-reliance clause).
Plaintiffs later learned (March–September 2013) that redemption rights were suspended and their investments were effectively worthless; management had given superior rights to third-party investors and had converted some debt to equity to protect other investors.
Plaintiffs sued (Jan. 2014) under §10(b)/Rule 10b-5 and for state-law fraud and breach of fiduciary duty; the district court dismissed the fifth amended complaint with prejudice for failure to state a claim.
On appeal, defendants argued the Subscription Agreement's non-reliance clause bars reliance on oral statements; the district court had also found deficiencies in pleading (Rule 9(b), PSLRA particularity and scienter, and duty to disclose).
The Seventh Circuit affirmed, holding plaintiffs failed to plead speaker-specific misrepresentations, scienter as to each individual defendant, or a duty to disclose, and that dismissal with prejudice was appropriate.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Enforceability of non-reliance clause	Clause should not bar claims based on oral misrepresentations at town halls	Subscription Agreement bars reliance on oral statements; plaintiffs were sophisticated and signed it	Court: non-reliance clause precludes reasonable reliance on the oral statements; supports dismissal
Speaker identification / Rule 9(b) particularity	Group presentations justify collective pleading; discovery needed to identify speakers	Plaintiffs failed to identify which manager made which statement; group pleading inadequate under PSLRA	Court: group pleading rejected; plaintiffs did not plead who said what with required particularity
Scienter (PSLRA strong-inference standard)	Managers knew firm was insolvent and acted to protect personal interests; inference of intent to deceive	Allegations are generalized and not tied to individual defendants; alternative inference (market losses) plausible	Court: scienter not pleaded as to each individual; allegations were not sufficiently individualized
Duty to disclose / omissions	Oral statements (e.g., $20M line) were misleading because defendants knew contrary facts; fiduciary duties existed	Alleged duties are legal conclusions; plaintiffs failed to link particular omissions to particular speakers	Court: no adequately pleaded duty to speak; omissions not pleaded with requisite particularity; state-law claims fail for same reasons

Rissman v. Rissman, 213 F.3d 381 (7th Cir. 2000) (non-reliance clauses preclude damages for prior oral statements in securities context)
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S. 2007) (PSLRA scienter standard: inference must be cogent and at least as compelling as opposing inferences)
Makor Issues & Rights, Ltd. v. Tellabs, Inc., 437 F.3d 588 (7th Cir. 2006) (group pleading doctrine rejected under PSLRA; scienter must be pleaded as to each defendant)
Iqbal v. Ashcroft, 556 U.S. 662 (U.S. 2009) (courts need not accept legal conclusions as true on a Rule 12(b)(6) review)
Bell Atlantic v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading under Rule 12(b)(6))
Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (U.S. 2011) (scienter and materiality analysis in securities fraud context)