# Gloster v. Standard Lithium Ltd.

> District Court, E.D. New York · September 28, 2025

URL: https://www.frixlaw.com/law-library/cases/11145941

## Case

- **Court:** District Court, E.D. New York
- **Decided:** September 28, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11145941

## How later opinions describe it (automated extraction)

- affirming dismissal of Section 20 claims “for want of a primary violation”
- rejecting the “sweeping proposition that an issuer of securities is never required to disclose publicly available information”

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------x

CURTIS ARATA,1 individually and on
behalf of all others similarly
situated, MEMORANDUM & ORDER
22-CV-507(EK)(VMS)
Plaintiff,

-against-

STANDARD LITHIUM LTD., ROBERT
MINTAK, KARA NORMAN, and
ANDREW ROBINSON,

Defendants.

------------------------------------x
ERIC KOMITEE, United States District Judge:
Standard Lithium is a Canadian company whose shares
trade on the TSX Venture Exchange in Canada and the NYSE
American Exchange. The company has attempted to commercialize a
process for extracting lithium from salt water and refining it
into lithium carbonate, for use in various products such as
lithium-ion batteries.
In 2019, Standard Lithium built a pilot lithium
extraction plant in Arkansas. The plant began operations in May
2020. Throughout 2020 and 2021, the company described, in press

1 Curtis Arata has replaced James Gloster as the named plaintiff in this
action. Compare Am. Compl. ¶ 19, ECF No. 27 (Arata as named plaintiff), with
Compl. 1, ECF No. 1 (Gloster as named plaintiff). The Clerk of Court is
respectfully directed to amend the caption of this case to reflect the new
named plaintiff.
releases and financial statements, the successful operations of
the plant and the novel nature of the lithium-extracting
technology implemented there.

According to plaintiff Curtis Arata, however, two
research firms would later put the lie to these statements. In
November 2021, a short seller called Blue Orca Capital published
a report asserting that Standard Lithium had overstated the
progress of operations at the Arkansas plant and the viability
of its technology. Standard Lithium’s shares fell by nearly
nineteen percent after publication. A few months later, another
short seller — provocatively named Hindenburg Research —
published another report disputing the novelty of Standard
Lithium’s technology. Standard Lithium’s shares then fell
nearly twenty-seven percent.
Plaintiff Arata, who first purchased Standard

Lithium’s common shares in October 2021, brought this
securities-fraud action on behalf of himself and a putative
class of similarly situated shareholders who purchased Standard
Lithium shares on the NYSE American or an over-the-counter
marketplace called OTCQX. He alleges that Standard Lithium
overstated its production capabilities, misrepresented its
progress toward achieving “proof of concept” for its brine
extraction process, and wrongly described its technology as
novel and proprietary. In addition to Standard Lithium, Arata
sues Robert Mintak, Standard Lithium’s CEO during the relevant
period; Kara Norman, its CFO during the relevant period; and
Andrew Robinson, its COO.

The complaint asserts two causes of action under the
Securities Exchange Act of 1934 (the “Exchange Act”): first, a
violation of Section 10(b) and Rule 10b-5 against all
defendants, and second, a violation of Section 20(a) — which
establishes controlling-person liability — against Mintak,
Norman, and Robinson. The defendants now move to dismiss the
complaint in its entirety, contending (among other things) that
it does not adequately allege the falsity of the asserted
misrepresentations and omissions, the scienter of the individual
defendants, or loss causation.
For the reasons set forth below, the motion is
granted, and the amended complaint is dismissed.
Background

The facts described herein are taken from the amended
complaint, as well as “statements or documents incorporated into
the complaint by reference” and “legally required public
disclosure documents filed with the SEC,” which are properly
considered at the motion to dismiss stage. See ATSI Commc’ns,
Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).2 They

2 Unless otherwise noted, when quoting judicial decisions this order
accepts all alterations and omits all citations, footnotes, and internal
quotation marks.
are assumed to be true for purposes of the defendants’ motions
to dismiss.
The complaint relies extensively on statements from

the two short-seller reports. A court may consider allegations
based on short-seller reports at the motion-to-dismiss stage.
Sask. Healthcare Emp.’s Pension Plan v. KE Holdings Inc., 718 F.
Supp. 3d 344, 382 (S.D.N.Y. 2024). Like any other allegation,
however, an allegation transplanted from a short-seller report
must be supported by sufficient factual content to state a
plausible claim. Sask. Healthcare, 718 F. Supp. 3d at 382; see
also In re Hebron Tech. Co. Sec. Litig., No. 20-CV-4420, 2021 WL
4341500, at *13 (S.D.N.Y. Sept. 22, 2021) (“The issue in each
case is whether the allegations in the complaint, taken as a
whole, state a claim.”). Of course, a publishing short seller
will have an “obvious motive to exaggerate the infirmities of

the securities” at issue, given its financial interest in the
security’s price declining. In re EHang Holdings Ltd. Sec.
Litig., 646 F. Supp. 3d 443, 459 (S.D.N.Y. 2022). Thus, courts
will “critically analyze” a short-seller report’s allegations to
determine if they are “reliable as opposed to fabricated based
on self-interest.” Id.
A. Standard Lithium’s Extraction Process and Arkansas
Demonstration Plant Project

Standard Lithium Ltd. — hereinafter Standard Lithium
or the “Company” — is in the business of extracting lithium from
brine (that is, salt water). Am. Compl. ¶¶ 2, 29. Industry
participants call this direct lithium extraction (“DLE”). Id.
¶ 2. During the class period, Standard Lithium used a
“proprietary” DLE process called “LiSTR” to extract lithium from
brine, which it then converted into lithium carbonate using
another technology called “SiFT.” Id. ¶¶ 2, 28, 38.
In May 2018, Standard Lithium commissioned a lithium
extraction demonstration plant (the “Demonstration Plant,” or
“Plant”) in Southern Arkansas, in a region called the Smackover
Formation. Id. ¶¶ 35-36. The Company commissioned the
Demonstration Plant pursuant to a memorandum of understanding
with LANXESS, a German chemical company. Id.; see also 2021
Annual Information Form 8, ECF No. 33-4. The Plant was one of
the first steps in a “phased process towards developing
commercial opportunities relating to the production, marketing
and sale of battery grade lithium products” from brine in the
Smackover Formation. 2021 Annual Information Form 8.

Several months later, in November 2018, Standard
Lithium and LANXESS signed a term sheet for “a contemplated
joint venture.” Am. Compl. ¶ 36. As part of the JV (the
“LANXESS Project”), LANXESS would contribute “lithium extraction
rights” it owned in the Smackover Formation, along with “access
to its existing infrastructure” and brine. Id. ¶¶ 35-36.

Standard Lithium would, in turn, contribute the Demonstration
Plant, its own “existing rights and leases in the Smackover
Formation” and its LiSTR extraction process. Id. ¶ 36. If
Standard Lithium successfully demonstrated “proof of concept” (a
term that, as far as the complaint tells us, Standard Lithium’s
disclosures do not define), LANXESS would fund commercial
development of the LiSTR project.3 Id. ¶ 37; 2020 Annual
Information Form 10, ECF No. 33-6.
The complaint’s description of what happened next is
jargon heavy. In early 2019, Standard Lithium conducted
“minipilot scale process work . . . to provide data for the
design of the full-scale Demonstration Plant.” Id. ¶ 38. The

complaint does not explain what the phrase “minipilot scale
process work” means. By mid-October 2019, the Company had
completed the “initial installation” of the Demonstration Plant,
though the complaint largely leaves that term, too, unexplained.
Id. In any event, in August of that year, Standard Lithium
announced that Worley (an engineering firm) had awarded the
LANXESS Project a “favorable” preliminary economic assessment

3 This funding would be subject to certain additional conditions,
including due diligence and studies as to the project’s economic viability.
Am. Compl. ¶ 37.
(“PEA”). Id. ¶ 39. This assessment was predicated, in part, on
the “assumption” that Standard Lithium would achieve a recovery
rate of “about 90%.” Id. ¶ 38. The PEA concluded that the

Project would have a net present value of just under $1 billion,
assuming certain conditions (including the assumed recovery
rate) were satisfied. Id. ¶¶ 39-40.
B. Standard Lithium’s Claimed Progress and Fundraising
On May 19, 2020, Standard Lithium announced in a press
release “that it had successfully commenced operations at the
Demonstration Plant” during the first part of that year. Id.
¶ 41. That press release touted the “successful start-up” of
the Demonstration Plant, hailing it as a “significant milestone
towards achieving proof of concept” of the Company’s
“proprietary” LiSTR technology. Id. ¶¶ 41-42.
Two additional statements in the May press release

figure prominently in the instant dispute. The release claimed
that the LiSTR process “[v]astly increases recovery efficiencies
to as much as >90%.” Id. ¶ 80. (There is some tension, of
course, inherent in placing the “greater than” symbol
immediately after the phrase “as much as.”) The press release
also stated that, because the Demonstration Plant was “designed
to continuously process an input tail brine flow of 50 gallons
per minute,” the Plant could produce “between 100-150 [tons]” of
lithium carbonate per year. Id.
In the months following the May release, Standard
Lithium documented the Demonstration Plant’s progress toward
establishing proof of concept. As noted above, this was an

important milestone because it could help unlock funding for the
LANXESS Project. In a September press release, Robinson said
the Company had been “successfully operating our first-of-its-
kind industrial scale DLE plant,” and had been “continuously
making lithium chloride product for months.” Id. ¶ 96.
Then, on December 3, 2020, Standard Lithium claimed
the Demonstration Plant had achieved “start-to-finish proof of
concept of its modern lithium processing technology.” Id.
¶¶ 48–49; see also December Press Release, ECF No. 33-5. The
release defined this achievement as containing three elements.
The Demonstration Plant had (1) “directly extracted lithium from
brine in Arkansas,” and (2) “produced a purified, concentrated

intermediate product,” which was then (3) “converted to better
than battery quality lithium carbonate” at a separate SiFT plant
in Canada. December Press Release 1. “This proof of concept,”
the release quoted Robinson as saying, “validate[d] [the
Company’s] approach.” Id. at 4.
Market participants reacted favorably to the
December 3 announcement. On December 7, H.C. Wainwright gave
Standard Lithium a “buy” rating, noting the “unquestionable
success of [its] proof of concept.” Id. ¶ 50. Cannacord
Genuity initiated coverage of Standard Lithium on January 11,
2021, and projected that the LANXESS Project was “imminent.”
Id. ¶ 51. And in a report dated January 18, Roth Capital

Partners predicted an “official signing” of the LANXESS Project
agreement. Id. ¶ 53. Between December 2 and January 19, the
Company’s share price rose seventy percent from $1.93 to $3.29.4
Around the same time, Standard Lithium announced and
conducted a public offering of common shares on the TSX Venture
Exchange in Canada. Id. ¶¶ 54-55. The Company indicated its
intent to use the offering proceeds to fund efforts at the
LANXESS Project. Id. The Company’s shares began trading on the
NYSE American exchange more than six months later, on July 13,
2021. Id. ¶¶ 8, 56-58. Before that date, the Company’s share
had traded on a U.S.-based over-the-counter marketplace called
OTCQX. Id. ¶ 8.

C. “Corrective Disclosures” and Stock-Price Declines
Blue Orca published its report on November 18, 2021.
Plaintiffs’ complaint quotes this report extensively, for
approximately three full pages. Id. ¶ 60. Blue Orca claimed
that data Standard Lithium had filed with an Arkansas regulatory
body — specifically, the Arkansas Oil and Gas Commission, or

4 See Standard Lithium Ltd. (SLI), Yahoo Finance,
https://finance.yahoo.com/quote/SLI/history (last visited September 3, 2025).
The Court “may take judicial notice of well-publicized stock prices,” even if
such prices were not mentioned in (or appended to) the complaint. See Ganino
v. Citizens Utils. Co., 228 F.3d 154, 166 n.8 (2d Cir. 2000).
“AOGC” — undermined Standard Lithium’s recovery-rate and proof-
of-concept claims. Id. ¶ 60.
Blue Orca asserted, based on its review of the AOGC-

filed data, that the Demonstration Plant had recovery rates
“significantly lower” than the ninety-percent rate Standard
Lithium had touted in its May 2020 press release. Id. The
short seller added that the Company’s recovery rate was trending
in the wrong direction, actually declining over time. Id. By
Blue Orca’s arithmetic, Standard Lithium had “achieved an
average lithium recovery rate of just 13%” over the preceding
twelve months. Id.
Blue Orca also cited AOGC data in support of its
assertion that the Demonstration Plant had produced “just 66
pounds of lithium carbonate” after eighteen months of
operations. Id. ¶ 66-67; Blue Orca Report 1, ECF No. 33-1. The

report concluded that Standard Lithium’s technology was “neither
economically viable nor scalable.” Blue Orca Report 1.
Standard Lithium’s stock price fell almost nineteen percent on
the day of the report’s publication, closing at $8.01 (in U.S.
dollars). Am. Compl. ¶ 62.
In response, Standard Lithium issued a press release
that same day. Id. ¶ 63. It asserted that Blue Orca’s
calculation of lithium recovery rates was incorrect because it
was based on incomplete information. Per the Company, the AOGC
data reflected only a portion of lithium chloride solution that
it had recovered — the portion it had “temporarily stored on
. . . site.” November Press Release 5, ECF No. 33-3. As a

result, the AOGC reports did not include the “much large[r]
volume” of lithium chloride solution that the Demonstration
Plant processed but then reinjected back into the brine
formation. Id.
On February 3, 2022, Hindenburg published its report.
Hindenburg, too, disparaged Standard Lithium’s technology,
claiming that it was based on three patent applications
purchased from a “one-man engineering shop,” two of which had
been deemed unpatentable by the U.S. Patent and Trademark
Office. Am. Compl. ¶¶ 75–76. The report went on to challenge
Standard Lithium’s claim that “proof of concept” had been
achieved. In fact, Hindenburg wrote, LANXESS had “admit[ted]

that Standard’s extraction technology has still not demonstrated
proof of concept.” Id. ¶ 77. Following publication of the
Hindenburg report, the company’s share price fell twenty-seven
percent, closing at $5.29 per share. Id. ¶ 79.
D. This Putative Class Action
Another named plaintiff, James Gloster, filed this
putative class action in January 2022. ECF No. 1. In June
2022, an amended complaint replaced Gloster as the named
plaintiff with Arata. Am. Compl. 1. The amended complaint
defines the putative class to include “all persons and entities
that purchased or otherwise acquired Standard Lithium common
stock on the OTCQX between May 19, 2020 and July 12, 2021, and

between July 13, 2021 and February 3, 2022, on the NYSE,
inclusive, and who were damaged thereby.” Id. ¶ 201.
Legal Standard
To overcome a Rule 12(b)(6) motion, a plaintiff must
plead factual allegations sufficient “to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). A claim is plausible “when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). The Court must accept all factual allegations in the
complaint as true and draw all reasonable inferences in the
plaintiff’s favor. See Lundy v. Catholic Health Sys. of Long
Island Inc., 711 F.3d 106, 113 (2d Cir. 2013).

Securities fraud cases are also subject to the
“heightened pleading requirements” of both Federal Rule of Civil
Procedure 9(b) and the Private Securities Litigation Reform Act
(“PSLRA”). In re Synchrony Fin. Sec. Litig., 988 F.3d 157, 166
(2d Cir. 2021). Rule 9(b) requires a party to “state with
particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b). “Allegations that are conclusory or unsupported
by factual assertions are insufficient.” ATSI Commc’ns, 493
F.3d at 99. The PSLRA further requires a plaintiff to “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, . . . state with particularity all facts on which that
belief is formed.” 15 U.S.C. § 78u-4(b)(1)(B).
Thus, plaintiffs “must do more than say that the
statements were false and misleading; they must demonstrate with
specificity why and how that is so.” Carpenters Pension Tr.
Fund of St. Louis v. Barclays PLC, 750 F.3d 227, 236 (2d Cir.
2014).
Discussion
Under Section 10(b) of the Exchange Act (as
implemented by Rule 10b-5), it is unlawful “[t]o 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 light of the
circumstances under which they were made, not
misleading.” 17 C.F.R. § 240.10b–5. Section 10(b) and Rule
10b-5 only apply to “transactions in securities listed on
domestic exchanges[] and domestic transactions in other
securities.” Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247,
267 (2010).
To state a Rule 10b-5 claim, a plaintiff must
demonstrate: “(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.” Stoneridge Inv.
Partners, LLC v. Sci.–Atlanta, 552 U.S. 148, 157 (2008).
A. Domesticity Under Morrison
Standard Lithium first asserts that any claims arising
from the period prior to its NYSE American listing — i.e., from
May 19, 2020, to July 12, 2021, see Am. Compl. ¶ 1 — must be
dismissed because the plaintiff has not adequately alleged that
Standard Lithium trades on OTCQX were “domestic” transactions.
A transaction is domestic if (1) it involves

“securities listed on domestic exchanges,” or (2) “domestic
transactions in other securities.” Morrison, 561 U.S. at 267.
Plaintiff argues that he adequately pleaded both options, though
(a) he makes this argument half-heartedly and without much in
the way of citation to the complaint itself, and (b) he
purchased shares only on the NYSE American exchange. See Arata
Purchase Cert., ECF No. 15-2.
1. “Domestic Exchange”

The complaint does not allege that OTCQX is an
exchange — only that it is a marketplace “for over-the-counter
trading of stocks in the United States.” Am. Compl. ¶ 21. In
opposing dismissal, however, Arata writes that OTCQX is “an
over-the-counter exchange based in the U.S.” Pl.’s Opp’n Br. 10

n.8, ECF No. 34 (emphasis added). The italicized language is an
oxymoron of sorts: “over-the-counter transactions are, by
definition, those that do not occur on an exchange.” In re
Petrobras Sec. Litig., 150 F. Supp. 3d 337, 340 (S.D.N.Y. 2015).
Plaintiff does not meaningfully contest the exchange /
over-the-counter dichotomy, or its application to OTCQX.
Instead, he argues that the defendants’ domesticity argument
should be tabled until the class-certification stage. At the
pleading stage, he contends, there “is no question” that the
sole named plaintiff — Arata, who bought shares on NYSE American
— “purchased in a domestic transaction under Morrison.” Pl.’s
Opp’n Br. 11. On this view, the defendants’ arguments about

OTCQX go to Arata’s adequacy and typicality as a class
representative under Federal Rule of Civil Procedure 23(a), not
to whether he has stated a claim under Rule 12(b)(6). The
defendants reply that Morrison’s requirement of a purchase or
sale of securities in the United States is a pleading
requirement, and that the OTCQX portion of the complaint alleges
“claims that fall outside the reach of U.S. securities laws.”
Defs.’ Reply Br. 1 & n.2, ECF No. 35.
Morrison’s domesticity requirement is indeed a
pleading requirement. 561 U.S. at 267 (it is “only transactions
in securities listed on domestic exchanges, and domestic

transactions in other securities, to which § 10(b) applies”).
And the defendants are correct on the merits: OTCQX is not a
domestic “exchange.” Petrobras, 150 F. Supp. 3d at 340. Arata
brought claims on behalf of two sets of purchasers who bought in
two different venues over two different periods. Am. Compl.
¶ 1. One set (the OTCQX set) has not stated a claim.5
2. “Domestic Transactions” Off-Exchange

The complaint also falls short of alleging a domestic
transaction that occurred off exchange. An off-exchange
transaction is “domestic” when “irrevocable liability is
incurred or title passes within the United States.” Absolute
Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60, 67 (2d
Cir. 2012). The complaint alleges that OTCQX “is the top tier
of the three marketplaces for the over-the-counter trading of

5 Rule 12(b)(6) motions are generally directed at “a single count or
claim for relief,” if not a complaint in its entirety, rather than just a
”part of a claim.” See 5B Charles Wright & Arthur Miller, Federal Practice
and Procedure § 1358 (4th ed.). Still, district courts in this circuit have
frequently “granted motions to dismiss with respect to some” allegations in
securities fraud complaints, even without dismissing an entire claim. In re
ITT Educ. Servs., Inc. Sec. Litig., 34 F. Supp. 3d 298, 301 & n.1 (S.D.N.Y.
2014) (dismissing “with respect to some allegedly misleading statements while
allowing claims as to other statements to proceed”); In re Vale S.A. Sec.
Litig., No. 19-CV-526, 2020 WL 2610979, at *19 (E.D.N.Y. May 20, 2020)
(setting out, in an appendix, lists of “actionable” and “inactionable”
statements).
stocks in the United States,” and that companies listed on it
are “subject to SEC regulation.” Am. Compl. ¶ 21. In his
brief, Arata cites the OTCQX website for the unremarkable

proposition that the platform “provides a market for foreign
listed companies to access U.S. investors.” Pl.’s Opp. Br. 10
n.9. None of this comes close to satisfying Morrison or
Absolute Activist.
This pleading shortfall is somewhat surprising. Had
plaintiff asserted his claims on behalf of U.S. purchasers,
rather than all “persons and entities that purchased or
acquired” Standard Lithium stock during the specified periods,
the outcome might be different on this issue. For such U.S.
purchasers, it is likely that both sides of the “irrevocable
liability” that Absolute Activist requires would be in the
United States. When a purchaser buys stock on OTCQX, his or her

counterparty is not the ultimate seller of the shares in
question, but rather a U.S.-based clearinghouse.6 The complaint

6 The over-the-counter trading of equities is different from other
securities in this regard, in a manner that may have important implications
for Morrison’s domesticity analysis. Morrison’s dichotomy between on- and
off-exchange trading is presumably relevant to the location of the purchase
and sale because, with a centralized exchange, irrevocable liability always
passes at the exchange itself. In contrast, in classic over-the-counter
trading, there is no central hub; instead, market participants trade directly
with one another, and at least one of the parties may be located abroad. See
Petrobras, 150 F. Supp. 3d at 340. In equities trading, however, a
purchaser’s liability does not run to the seller, but rather to a central
clearinghouse like NSCC — even in over-the-counter trading through a platform
like OTCQX. See generally Paolo Saguato, The Ownership of Clearinghouses:
When "Skin in the Game" Is Not Enough, The Remutualization of Clearinghouses,
34 Yale J. on Regul. 601, 608-13 (2017) (providing an overview of the role of
clearinghouses in securities trading).
is not restricted to U.S. purchasers, however, and the plaintiff
has not argued that the OTCQX purchases at issue were domestic
transactions. The claims based on OTCQX purchases thus cannot

survive (though the Court nevertheless addresses them in its
falsity analysis below).
B. Materially False and Misleading Misrepresentations or
Omissions
The complaint alleges that dozens of Standard
Lithium’s statements and omissions were false or misleading.
Am. Compl. ¶¶ 80-178. The alleged misrepresentations fall into
four main categories: (1) statements about the recovery rates
and production capabilities of Standard Lithium’s technology,
(2) statements about the Demonstration Plant’s achievement of
“proof of concept” for lithium extraction, (3) statements about
the scalability and commercial viability of the LiSTR process,
and (4) statements describing LiSTR as “novel,” “proprietary,”
and “protected by a series of patent applications.” See, e.g.,
id. ¶¶ 80, 164. The Court addresses each category of statements
in turn.
1. Statements About Recovery Rates and Production
Capabilities

Arata first alleges that Standard Lithium’s statements
about the performance of the Demonstration Plant were false or
misleading. Relying on the Blue Orca Report, he challenges
Standard Lithium’s ostensible claims that (1) the Demonstration
Plant’s lithium recovery rate was around ninety percent, and (2)
the Plant was producing lithium carbonate at a rate of 100-150
tons per year.7 See id. ¶¶ 60, 81. Arata contrasts these claims

with Blue Orca’s assertion (based on AOGC data) that the
Demonstration Plant’s average recovery rate was closer to
thirteen percent, and that it had only produced sixty-six pounds
of lithium carbonate in the preceding eighteen months. Blue
Orca Report 1.
These claims fail for two reasons, as set out in
greater detail below. First, Standard Lithium never said the
Demonstration Plant was achieving a ninety-percent recovery rate
or producing 100-150 tons of lithium carbonate per year.
Second, even if Standard Lithium had made those claims, Blue
Orca’s calculations would not necessarily have falsified them.
Before we reach the question of falsity, however, we pause to

address the defendants’ claim that the AOGC data cannot support
a claim of falsity because that information was in the public
domain.

7 In addition to the May 19 press release, Am. Compl. ¶ 80, these
statements appeared in several subsequent releases and SEC filings. For
instance, a September 2020 press release also stated that the LiSTR process
offered “90% recovery” rather than the “40-60%” offered by “conventional
methods.” Id. ¶ 98. Meanwhile, another September 2020 press release
repeated the annualized “100-150 tons” statement. Id. ¶ 94. So did a June
2021 Form 40-F filing. Id. ¶ 128.
a. Defendants’ argument that the information was
in the public domain fails at this stage.

As a preliminary matter, the defendants argue that the
AOGC data on which Blue Orca based its calculations was already
public, such that the Company’s failure to disclose that data
cannot have rendered its statements false or misleading. Defs.’
Br. 15-16, ECF No. 32; see also Am. Compl. ¶ 60 (describing AOGC
data as publicly available). That argument is easily dispensed
with here.
In a private civil action under Section 10(b), we
consider the issue of public availability under the rubric of
the “truth on the market” doctrine. E.g., SEC v. Honig, No. 18-
CV-8175, 2020 WL 906383, at *6 (S.D.N.Y. Feb. 25, 2020). That
doctrine — a corollary to the familiar “fraud on the market”
theory — holds that an alleged “misrepresentation is immaterial”
when the truth of the matter in question “is already known to
the market.” Ganino v. Citizens Utils. Co., 228 F.3d 154, 167
(2d Cir. 2000).
The truth-on-the-market defense, however, is
“intensely fact-specific” and will “rarely” be an appropriate
basis on which to dismiss a Section 10(b) claim at the pleading
stage. Id. Moreover, it is not enough for a defendant to argue

that it had no duty to disclose a piece of information, simply
because that information was drifting somewhere in the vast
universe of publicly available information. E.g., Litwin v.
Blackstone Grp., L.P., 634 F.3d 706, 718 (2d Cir. 2011)
(rejecting the “sweeping proposition that an issuer of

securities is never required to disclose publicly available
information”). Instead, a defendant must demonstrate that a
piece of information was “conveyed to the public with a degree
of intensity and credibility sufficient to counter-balance
effectively any misleading information created by the alleged
misstatements.” Ganino, 228 F.3d at 167; cf. In re Keyspan
Corp. Sec. Litig., 383 F. Supp. 2d 358, 377-78 (E.D.N.Y. 2003)
(information must be “readily accessible in the public
domain”(emphasis added)).8
The AOGC data does not, at this stage, come close to
meeting that standard. The complaint contains no allegations
concerning the visibility of the AOGC website to the investing

8 Courts applying the truth-on the-market doctrine have held that it
applies only to “affirmative misstatements” rather than omissions. See In re
Bank of Am. AIG Disclosure Sec. Litig., 980 F. Supp. 2d 564, 577 (S.D.N.Y.
2013). But the distinction between the two categories is often fuzzy: a
misleading statement is definitionally one that “omits the truth.” In re
Smith Barney Transfer Agent Litig., 290 F.R.D. 42, 47 (S.D.N.Y. 2013). Thus,
“in most securities fraud cases, an affirmative misstatement can be cast as
an omission and vice versa.” Id.; accord Wilson v. Comtech Telecomms. Corp.,
648 F.2d 88, 93 (2d Cir. 1981) (“The labels by themselves, therefore, are of
little help.”). Here, it is not entirely clear whether the plaintiff
challenges Standard Lithium’s purported statement that the Demonstration
Plant was achieving a ninety-percent recovery rate as (1) affirmatively
false, or (2) misleading in light of the omission to disclose at some later
point that the rate was not being realized. Because the first option is a
plausible one, the Court declines to delve into the “futile logomachical
exercise” of distinguishing affirmative misstatement from omission at this
stage. Smith Barney, 290 F.R.D. at 47.
public.9 See Honig, 2020 WL 906383, at *7 (Wikipedia page could
not satisfy truth-on-the-market doctrine without “any evidence
of promotion” of the page in question). And, importantly, the

defendants do not claim that the ostensible thirteen-percent
recovery rate was itself available on the AOGC website.
Instead, they assert only that an investor could extrapolate
that rate from public data. Put differently, the underlying
“truth of the matter,” Ganino, 228 F.3d at 167, was at most a
derivative of information ostensibly available to the public —
and a complex one to calculate, at that.
Thus, the Court will not endorse, at this stage,
Standard Lithium’s argument that the AOGC data was readily
accessible to the public or necessarily impounded into the
stock’s price. Alpha Cap. Anstalt v. New Generation Biofuels,
Inc., No. 13-CV-5586, 2014 WL 6466994, at *9 (S.D.N.Y. Nov. 18,
2014) (taking similar approach); but see Rice v. Intercept
Pharms., Inc., No. 21-CV-0036, 2022 WL 837114, at *10 (S.D.N.Y.

9 Standard Lithium notes that it told investors about AOGC in its public
disclosures. Defs.’ Br. 9 & n.6. This is true enough. The PEA noted that
Standard Lithium had to produce data to AOGC for purposes of determining a
royalty rate to landowners. See Preliminary Econ. Assessment 42-43, ECF No.
33-7. And a quarterly disclosure document from November 2019 stated, when
summarizing the information in a LANXESS report on the Smackover Formation,
that AOGC data was “on-line and easily searchable.” Management’s Discussion
& Analysis for Period Ending September 2019, at 12, ECF No. 33-9. But that
is insufficient, at this stage, both for the reasons set out above and also,
importantly, because the accuracy of Blue Orca’s calculations from the AOGC
data remains disputed. In the end, Standard Lithium cannot have it both ways
— arguing on the one hand that everyone should have been able to do what Blue
Orca did to identify the alleged overstatement in recovery rates, and on the
other hand that Blue Orca’s work makes no sense.
Mar. 21, 2022) (adverse reaction information in FDA database was
sufficiently available to the public, even though the database
contained only “raw data” files that could not be searched

without “familiar[ity] with [the] creation of relational
databases”).
b. Standard Lithium never said it was achieving a
certain recovery rate or production quota.

Arata has not adequately alleged the falsity of
Standard Lithium’s statements about the Demonstration Plant’s
performance. Here, Arata’s allegations proceed from a flawed
premise: Standard Lithium never said the Plant had achieved a
ninety-percent recovery rate, or that it was producing 100-150
tons of lithium carbonate per year.
Recovery Rates. Beginning with the recovery rate,
Standard Lithium said the Demonstration Plant was using LiSTR
technology, and that a “key feature” of the technology was that
it ”[v]astly increase[d] recovery efficiencies to as much as
>90%.” Am. Compl. ¶ 80 (excerpting May press release). But
read in context, this was a statement about the potential
capabilities of the Plant’s technology, not a statement about
the Plant’s actual performance. Indeed, the Company never
represented that the ninety-percent figure was derived from the
Demonstration Plant’s operations. Rather, as at least one of
its annual reports made clear, the ninety-percent figure stemmed
from “bench scale” testing and had “not yet been commercially
proven.” See 2020 Annual Information Form 18-19. In other
words, Standard Lithium disclosed to investors that the ninety-

percent figure was based on laboratory-scale testing, and never
said this figure had been achieved at the Plant.
At bottom, then, the statements in the complaint
reveal only that Standard Lithium told investors that the
Demonstration Plant was using LiSTR (which Arata does not
dispute), Am. Compl. ¶ 80, and that LiSTR had demonstrated a
ninety-percent recovery rate under non-commercial laboratory
conditions (also not disputed). Id. Because Arata does not
contest the veracity of those claims, he cannot allege that
these statements about the Demonstration Plant’s ongoing
operations were false or misleading.
Production Capabilities. Arata also mischaracterizes

what Standard Lithium said about the production capabilities of
the Demonstration Plant. Contrary to the complaint’s
implication, Standard Lithium did not say that the Demonstration
Plant was producing (or would produce) 100-150 tons of lithium
carbonate per year. Contra id. ¶ 95. Rather, it said the
Demonstration Plant was “designed” to process brine at a certain
per-minute rate, and that this was “equivalent to an annual
production of between 100-150 [tons]” of lithium carbonate.
E.g., id. ¶ 94 (emphasis added). This is not the same as saying
the Plant had reached, or would reach, that production target.
See, e.g., Hawes v. Argo Blockchain plc, No. 23-CV-7305, 2024 WL
4451967, at *7 (S.D.N.Y. Oct. 9, 2024) (“[S]aying that something

is ‘designed’ to achieve certain goals does not either expressly
or impliedly guarantee that those goals will be achieved.”).
Arata does not dispute that the Demonstration Plant
was “designed” to process any certain amount of brine per
minute. He simply complains that the Demonstration Plant was
not, in fact, achieving an outcome within its design parameters.
Id. ¶ 95. Because Standard Lithium never said the Plant was
doing so, Arata has not plausibly alleged that statements about
the Demonstration Plant’s annualized production were false or
misleading. See Hawes, 2024 WL 4451967, at *7.
Arata contests other stray comments in Standard
Lithium’s public statements about the performance of the

Demonstration Plant, but those are non-actionable puffery. A
“subjective statement[] that cannot be proven true or false”
cannot form the basis of a fraud action. MacNaughton v. Young
Living Essential Oils, LC, 67 F.4th 89, 96 (2d Cir. 2023).
Here, Standard Lithium described the operation of the
Demonstration Plant as a (among other things) a “major advance,”
id. ¶ 82, a “significant stride[],” id. ¶ 92, and a “key project
milestone[].” Id. These are “classic examples of puffery.”
Schaeffer v. Nabriva Therapeutics plc, No. 19-CV-4183, 2020 WL
7701463, at *9 (S.D.N.Y. Apr. 28, 2020) (labeling statement that
company had achieved “another major milestone” as puffery, and
collecting similar cases).
c. Even if Standard Lithium had made the
challenged statements, the Blue Orca Report did
not plausibly falsify them.

Even if we were to construe Standard Lithium’s
statements as claiming a certain recovery rate and production
quota, Arata’s claim would still fail. Arata’s complaint does
not plausibly allege why such statements (if they had been made)
would be false or misleading. This is because his allegations
as to the falsity of these claims are internally inconsistent.
A court “need not accept as true an allegation that is
contradicted by documents on which the complaint relies.” In re
Bristol-Myers Squibb Sec. Litig., 312 F. Supp. 2d 549, 555
(S.D.N.Y. 2004). Here, Arata relies on the Blue Orca Report’s
finding of a thirteen-percent (rather than ninety-percent)
recovery rate. Am. Compl. ¶ 60. The Blue Orca Report’s
recovery-rate calculations also underpin Arata’s challenge the
Company’s ostensible production-quota statement: if Standard
Lithium was not achieving a ninety-percent recovery rate, it
could not possibly hit the 100-150 tons target, because it would
not be extracting enough lithium chloride.
Crucially, however, Arata also relies on the
allegations in the Hindenburg Report, the entirety of which —
all fifty-one pages — the Court may deem incorporated. See id.
¶¶ 76-77 (extensively quoting Hindenburg Report); Trump v.
Vance, 977 F.3d 198, 210 n.8 (2d Cir. 2020) (where complaint

makes “clear, definite, and substantial reference” to a
document, the court may consider the entire document). And
Hindenburg contradicts Blue Orca on this point: it credits
Standard Lithium’s claim that Blue Orca’s calculations are wrong
because they disregard vast quantities of lithium chloride that
the Company had produced and reinjected back into the brine
aquifer. Hindenburg Report 47. So, Arata’s sprawling
allegations — which rely so extensively on the short sellers —
are internally contradictory.
Given this tension, the Court need not (and cannot)
credit Arata’s allegations (derived from Blue Orca) regarding
the falsity of Standard Lithium’s purported statements about the
Demonstration Plant’s operations. See In re Bristol-Myers
Squibb Sec. Litig., 312 F. Supp. 2d at 555 (court need not

accept allegations “contradicted by documents on which the
complaint relies”). The claim therefore fails as to those
statements, even assuming Standard Lithium had made those
statements in the first place.
2. Statements About Proof of Concept
Arata also challenges Standard Lithium’s December 2020
claim that the Demonstration Plant had achieved proof of
concept. In response to the Court’s question at oral argument,
Arata’s counsel stated that this was the most plainly false
statement alleged in the entire complaint. Oral Arg. Tr. 36:4-

11, ECF No. 42. The Court disagrees.
Standard Lithium touted the proof-of-concept
achievement virtually throughout the December press release.
December Press Release 2-3. The release’s long title began:
“Standard Lithium Successfully Completes Proof-of-Concept of
Modern Lithium Extraction and Crystallization . . . .” Id. at
1. Immediately below that, in a section titled “Highlights,”
the second bullet point read: “Successful proof-of-concept of
modern lithium processing technology.” Id. Then, the opening
paragraphs of the release stated that the company had
“successfully completed the start-to-finish proof of concept of
its modern lithium processing technology,” which “culminat[ed]”

in converting lithium chloride into lithium carbonate at the
SiFT plant in Canada. Id.
Arata says the proof-of-concept claim was false,
primarily because:
•
the Company’s efforts at the Demonstration Plant had
“yielded just 44 pounds of lithium carbonate, nowhere
near the 100-150 [tons] per annum repeatedly
represented”;

•
the Company was “achieving far below a 90% lithium
recovery rate,” as shown by the Blue Orca Report, and;
•
the Company “had no reasonable basis to claim that its
LiSTR technology could” achieve the recovery rate or
annual production levels mentioned above.

Am. Compl. ¶ 116. He also points to the Blue Orca Report’s
assertion that proof of concept was “critical” for Standard
Lithium because it would unlock joint-venture funding from
LANXESS. Blue Orca Report 1; see also Am. Compl. ¶ 192.
Arata has not plausibly alleged the falsity of the
proof-of-concept claim, for the straightforward reason that the
Company had not defined “proof of concept” with any precision
before issuing the December release.10 See Kuriakose v. Fed.
Home Loan Mortg. Corp., 897 F. Supp. 2d 168, 183 (S.D.N.Y. 2012)
(Freddie Mac’s public use of the word “subprime” did not give
rise to liability where that term had no “universally accepted
definition,” and where employees adopted “changing internal
definitions” of the term). Contrary to Arata’s suggestion, id.
¶ 5, Standard Lithium never defined “proof of concept” to
include a ninety-percent recovery rate or a particular
production quota — not in the December press release, and not in
any other prior statement.
The Company did, however, appear to define “start-to-
finish” proof of concept in the December release. The best
reading of that release is that it explains the three elements

10 At least one district court has described the phrase “proof of
concept” as a “vague” term that cannot be objectively falsified. See Jackson
v. Fischer, 2015 WL 1143582, at *6-8 (D. Ariz. Mar. 13, 2015).
of “start-to-finish” proof of concept. Immediately after the
opening sentence touts “start-to-finish proof of concept,” the
second sentence expounds on three elements of that phrase: (1)

direct lithium extraction, (2) conversion to an “intermediate”
product, and (3) conversion of that product to lithium
carbonate. December Press Release 1. The press release never
mentions a ninety-percent recovery rate or an annual production
target as essential prerequisites to “start-to-finish proof of
concept.” And because Arata does not dispute that the three
criteria the release does mention were in fact met, he cannot
argue that the December release was false or misleading.11 See
Gagnon v. Alkermes PLC, 368 F. Supp. 3d 750, 767 (S.D.N.Y. 2019)
(pointing to surrounding sentences in Form 10-K to define the
phrase “customary pharmaceutical company practices,” and
concluding that “[a]gainst this backdrop, the challenged

statements cannot be said to be untrue or materially
misleading”).
The release did quote the Company’s president
(Robinson) as stating that the Company had converted lithium to

11 Similar logic applies to Arata’s claim that LANXESS later disputed
Standard Lithium’s December announcement of proof of concept. The Hindenburg
Report quoted an unnamed LANXESS spokesperson as saying, in early 2022, that
there were “still some steps to go” for the LANXESS Project, and that LANXESS
and Standard Lithium would “see how we work together once proof-of-concept is
there.” Id. ¶¶ 190-91. This did not falsify the December release. The
LANXESS spokesperson never defined proof of concept or said that it required
a ninety-percent recovery rate. And Arata does not allege that Standard
Lithium materially omitted to disclose any disagreement by LANXESS about
whether and how proof of concept was achieved.
“better than battery quality” on a “large scale.” December
Press Release 4. But “large scale” is definitionally vague,
too. See Sask. Healthcare, 718 F. Supp. 3d at 385 (the word

“large” is “to a large extent neither quantifiable nor factual,
but rather subject to interpretation,” and therefore not
actionable). And the release included qualifying language that
was more specific: it stated that the Demonstration Plant was
operating at a “pre-commercial scale” and remained on the path
“towards commerciali[z]ation.” Id. ¶¶ 48-49 (emphases added).
3. Statements About Future LANXESS Project
Performance

Arata next challenges Standard Lithium’s statements
about the future commercial performance of the LANXESS Project.
Specifically, he challenges (1) the claim that the LANXESS
Project was “scalabl[e]” or “economically viable,” see Am.
Compl. ¶¶ 121-22, 130-31, 150-51; and (2) the preliminary
economic assessment’s base case estimate — which Standard
Lithium referenced in several financial disclosures — that the
LANXESS Project would be worth just under $1 billion, which
assumed (among other things) a recovery rate that “is about
90%.” Id. ¶¶ 84-85; Preliminary Econ. Assessment 159.
Importantly, the PEA did not say that the Demonstration Plant’s
recovery rate was ninety percent. Indeed, as noted above,
Standard Lithium never suggested as much. Rather, the PEA
assessed what the LANXESS Project would be worth if the Project
achieved that rate.
Statements concerning the future viability or

performance of a resource extraction project are statements of
opinion. In re Pretium Res. Inc. Sec. Litig., 256 F. Supp. 3d
459, 477 (S.D.N.Y. 2017) (projections about gold mine’s future
performance were statements of opinion), aff’d sub nom. Martin
v. Quartermain, 732 F. App’x 37 (2d Cir. 2018). So, to plead
the falsity of those statements, Arata must allege that (1) “the
supporting fact[s] [Standard Lithium] supplied were untrue,” (2)
“the speaker did not hold the belief [he or] she professed,” or
(3) “the speaker omit[ted] information whose omission [made] the
statement misleading to a reasonable investor.” Tongue v.
Sanofi, 816 F.3d 199, 210 (2d Cir. 2016). The amended complaint
contains no facts supporting the second pathway, so we focus on

the first and third.
Arata has not adequately alleged falsity. His
argument as to the first pathway hinges on Standard Lithium’s
alleged claim that the Demonstration Plant was achieving a
ninety-percent recovery rate. And his argument as to the third
pathway is that Standard Lithium omitted to mention the AOGC
data undercutting the claim of a ninety-percent recovery rate.
But as discussed above, see Part III.B.1.b, Standard Lithium
never claimed the Demonstration Plant was achieving such a rate.
Instead, the PEA merely assumed such a rate for purposes of
valuing the LANXESS Project, see Prelim. Econ. Assessment 159,
while Standard Lithium’s other disclosures said, based on lab-

scale testing, that LiSTR “increases recovery efficiencies to as
much as >90%.” Am. Compl. ¶ 80; 2020 Annual Information Form
18-19. And even if the Company had much such a statement, Arata
could not allege falsity merely by parroting the allegations in
the Blue Orca Report. See Part III.B.1.c.
Arata’s challenges to the PEA — which was incorporated
into Standard Lithium’s annual reports and other SEC filings —
also fail under the PSLRA safe harbor and the bespeaks-caution
doctrine. The safe-harbor provision forecloses liability for
certain “forward-looking statements.” 15 U.S.C. § 78u-5(c). It
defines “forward-looking statement” to include any statement
concerning the “objectives of management for future operations”;

any statement of “future economic performance; and statements
“of the assumptions underlying” those kinds of claim. Id. §
78u-5(i)(1). The safe-harbor provision shields a speaker from
liability when the speaker’s forward-looking statement is
“accompanied by meaningful cautionary statements” indicating
that “actual results [could] differ materially from those in the
forward-looking statement,” or “if the plaintiff fails to prove
that the forward-looking statement was made or approved by an
executive officer with actual knowledge by that officer that the
statement was false or misleading.” Slayton v. Am. Express Co.,
604 F.3d 758, 762 (2d Cir. 2010).
Similarly, under the bespeaks-caution doctrine, “[a]

forward-looking statement accompanied by sufficient cautionary
language is not actionable because no reasonable investor could
have found the statement materially misleading.” Iowa Pub.
Emps.’ Ret. Sys. v. MF Glob., Ltd., 620 F.3d 137, 141 (2d Cir.
2010). But “generic and mere boilerplate words of caution” do
not suffice. City of Austin Police Ret. Sys. v. Kinross Gold
Corp., 957 F. Supp. 2d 277, 301 (S.D.N.Y. 2013). Instead, the
cautionary language must “directly relate to the risk that
brought about plaintiffs’ loss.” Halperin v. eBanker USA.com,
Inc., 295 F.3d 352, 359 (2d Cir. 2002).
Here, the PEA valued the LANXESS Project at $989
million, based in part on the “assumption” — Arata’s own word —
that Standard Lithium “could achieve a lithium recovery of about

90%.” Am. Compl. ¶¶ 39, 167, 168 (emphasis added). Arata
contends that because this underlying recovery-rate assumption
was wrong, the Company must have known that the valuation was
also wrong, yet failed to tell investors as much. Id. ¶¶ 101,
137, 168, 169. But Standard Lithium’s statements regarding the
PEA contain ample cautionary language warning investors of the
assumptions that went into the valuation — including as to
recovery rate specifically — and the reasons why that valuation
might not be realized. Standard Lithium informed investors
that:
•
“The [PEA] included herein are preliminary in
nature . . ., and there is no certainty that the PEAs
will be realized.” 2021 Annual Information Form 6.

•
“The final product lithium recovery is about 90%. The
production process parameters are supported by bench
scale metallurgical testing and mini-pilot plant
testing program results. Readers are cautioned that
statements relating to the production process and
recovery are based on using a processing technology
that has not yet been commercially proven and there is
a risk that actual results, performance, prospects and
opportunities could differ materially from those
expressed or implied by such forward-looking
information.” Id. at 15–20.

•
“Exploring and developing natural resource projects
bears a high potential for all manner of risks.
Additionally, few exploration projects successfully
achieve development due to factors that cannot be
predicted or foreseen. Moreover, even one such factor
may result in the economic viability of a project
being detrimentally impacted, such that it is neither
feasible nor practical to proceed.” Id. at 38.

•
“[T]here can be no assurance that results obtained in
small-scale laboratory tests, pilot plants or the
Demonstration Plant will be duplicated in larger scale
tests under on-site conditions or during production.”
Id.
These and other cautionary statements explained the
assumptions and risks to which the PEA was subject, including
the very risks to which Arata now ascribes his losses. See
Martin, 732 F. App’x at 42 (mining company’s estimates were non-
actionable where company “emphasized the preliminary nature of
its development” and warned that its assessment “may ultimately
prove to be inaccurate”). The statements about the PEA
therefore fall within the safe harbor and the bespeaks-caution
doctrine.
4. Statements About Proprietary or Novel Technology

Finally, Arata challenges statements that Standard
Lithium had developed “proprietary” and “novel” technologies for
directly extracting lithium. See, e.g., Am. Compl. ¶¶ 94, 113.
These statements were false, he says, because the technology was
only “based on three patent applications [Standard Lithium]
purchased in December 2018 from a one-man engineering shop,” and
because the Patent and Trademark Office had denied patent
protection to LiSTR on the ground that it was insufficiently
novel. E.g., id. ¶ 159.
At the outset, the provenance of the LiSTR patent
applications says nothing about their novelty or value. A

patent application bought from a “one-man engineering shop”
could just as easily transform an industry as one bought from a
commercial-scale research laboratory. In any event, Standard
Lithium did clearly disclose the origins of the LiSTR patent
applications in its 2020 annual report to shareholders, and
therefore cannot have misled its investors about them. In re
Curaleaf Holdings, Inc. Sec. Litig., 519 F. Supp. 3d 99, 107
(E.D.N.Y. 2021) (“[D]ismissal is appropriate where the complaint
is premised on the nondisclosure of information that was
actually disclosed.”); see 2020 Annual Information Form 11.
Furthermore, Standard Lithium’s use of the word

“proprietary” was not plausibly false or misleading,
notwithstanding the prior rejection of the patent application.
“[T]he legal definition of proprietary technology is broader
than simply holding a patent . . . .” Tabor v. Bodisen Biotech,
Inc., 579 F. Supp. 2d 438, 451 (S.D.N.Y. 2008). The word simply
means “[o]f, relating to, or holding as property.” Proprietary,
Black’s Law Dictionary (12th ed. 2024). Arata does not dispute
that Standard Lithium owns the rights to the LiSTR technology,
so he cannot claim that Standard Lithium inaccurately described
it as “proprietary.”
Standard Lithium’s use of the word “novel” also was
not plausibly false or misleading. Arata relies mainly on the

fact that LiSTR was denied patent protection on novelty grounds.
E.g., Am. Compl. ¶ 159.12 But a product can be novel without
being novel enough to receive a patent. Udin v. J. Kaufman Iron
Works, Inc., 342 F. Supp. 1090, 1095 (S.D.N.Y. 1972) (“An
invention which has been made, and which is new in the sense

12 Arata also relies on the Hindenburg Report’s conclusion, based on
conversations with unnamed “industry sources,” that LiSTR was not a novel
technology. Pl.’s Opp’n Br. 24; Am. Compl. ¶ 76. But there is no evidence
that Arata independently validated those anonymous sources’ claims, so the
Court will not rely upon them. See Long Miao v. Fanhua, Inc., 442 F. Supp.
3d 774, 804 (S.D.N.Y. 2020) (refusing to credit statements in short-seller
report attributed to “anonymous interviewees” absent any independent
corroboration by counsel).
that the same thing has not been made before, may still not be
patentable if the difference between the new thing and what was
known before is not considered sufficiently great to warrant a

patent.” (emphasis omitted)). Thus, the alleged non-
patentability of LiSTR says nothing about the truth of Standard
Lithium’s assertions of novelty. In addition, the statement
that LiSTR was a “novel” breakthrough in lithium extraction was
subjective, and therefore non-actionable. See, e.g., Yan v.
ReWalk Robotics Ltd., 973 F.3d 22, 32 (1st Cir. 2020) (claim of
“breakthrough” medical device was puffery); City of Edinburgh
Council v. Pfizer, Inc., 754 F.3d 159, 173 (3d Cir. 2014) (claim
of “breakthrough drug” was puffery).
C. Scienter
Dismissal is also appropriate as to the individual
defendants because Arata fails to raise a “strong inference” of
scienter. Novak v. Kasaks, 216 F.3d 300, 306 (2d Cir. 2000).

Scienter is “a mental state embracing intent to deceive,
manipulate, or defraud.” Tellabs, Inc. v. Makor Issues & Rts.,
Ltd., 551 U.S. 308, 319 (2007). An inference of scienter is
strong only when it is “cogent and at least as compelling as any
opposing inference of nonfraudulent intent.” Id. at 314. To
raise a strong inference, a complaint must “state with
particularity facts” showing (1) that defendants had the motive
and opportunity to commit fraud, or (2) strong circumstantial
evidence of conscious misbehavior or recklessness. ECA, Loc.
134 IBEW Joint Pension Tr. v. JP Morgan Chase Co., 553 F.3d 187,
197-98 (2d Cir. 2009). Against this extremely strict legal

landscape, Arata has not made either showing.
1. Motive
Arata has not adequately alleged a specific motive to
defraud investors. In general, plaintiffs may not rely on
“motives possessed by virtually all corporate insiders,” such as
the desire to maintain a high stock price “in order to increase
executive compensation or prolong the benefits of holding
corporate office.” Novak, 216 F.3d at 307. Instead, they must
“allege that defendants benefitted in some concrete and personal
way from the purported fraud.” Id. at 307-08(emphasis added).
The “ordinary” example of adequate motive is the “desire to
profit from extensive insider sales.” Id. at 308.

Here, the complaint does not allege that the
individual defendants realized any concrete and personal benefit
from the alleged fraud, such as the sale of their own shares of
stock. See In re Gentiva Sec. Litig., 932 F. Supp. 2d 352, 372
(E.D.N.Y. 2013) (“Typically, a plaintiff must show that officers
made false statements in order to sell their own shares at a
profit.”). Instead, Arata primarily alleges that the defendants
“were motivated to issue materially false and misleading
statements so that Standard Lithium could raise cash at inflated
levels to infuse much needed funds into the Company” based on
Standard Lithium’s need for fundraising to remain a going
concern. Am. Compl. ¶ 194; see also id. ¶¶ 192–96. But the

need to raise capital and stave off a company’s collapse is the
type of generalized motive that is insufficient to allege
scienter. In re PXRE Grp., Ltd., Sec. Litig., 600 F. Supp. 2d
510, 532–33 (S.D.N.Y.) (collecting cases), aff’d sub nom. Condra
v. PXRE Grp. Ltd., 357 F. App’x 393 (2d Cir. 2009); see also
Tabak v. Canadian Solar Inc., 549 F. App’x 24, 28-29 (2d Cir.
2013).
2. Conscious Misbehavior or Recklessness
Arata also has not adequately alleged that the
defendants’ actions constituted conscious misbehavior or
recklessness. When a complaint has “failed to demonstrate” an
adequate motive to defraud, it “must produce a stronger

inference of recklessness,” and “the strength of the
circumstantial allegations must be correspondingly stronger.”
Kalnit v. Eichler, 264 F.3d 131, 142–43 (2d Cir. 2001).13
Reckless conduct means “conduct which is highly unreasonable and
which represents an extreme departure from the standards of

13 While the applicable standard involves “conscious misbehavior or
recklessness,” the case law treats the two terms as synonymous. See, e.g.,
In Re Carter-Wallace, Inc. Sec. Litig., 220 F.3d 36, 39 (2d Cir. 2000) (“To
survive dismissal under the ‘conscious misbehavior’ theory, the appellants
must show that they alleged reckless conduct by the appellees ....”); Kalnit
v. Eichler, 85 F. Supp. 2d 232, 243 n.5 (S.D.N.Y. 1999) (“Although courts
often refer to ‘conscious misbehavior’ or ‘recklessness,’ the terms appear to
be legally interchangeable.”).
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.” Novak, 216 F.3d at 308. That is, a plaintiff

must allege that the defendant acted with “a state of mind
approximating actual intent, and not merely a heightened form of
negligence.” Stratte-McClure v. Morgan Stanley, 776 F.3d 94,
106 (2d Cir. 2015).
Arata alleges that the individual defendants “knew”
their statements were false “[b]ecause of their positions with
Standard Lithium, and their access to material information.”
Am. Compl. ¶¶ 26, 182. But “conclusory allegations that a
corporate officer had access to information that contradicted
the alleged misstatements are insufficient to raise a strong
inference of recklessness.” Kinsey v. Cendant Corp., No. 04-CV-
582, 2005 WL 1907678, at *5 (S.D.N.Y. Aug. 10, 2005) (collecting

cases).
The complaint’s allegation that the individual
defendants had knowledge of the fraud because it “concerned
Standard Lithium’s core operations,” Am. Compl. ¶ 183, fares no
better. Under the “core operations” theory, “a court may infer
that a company and its senior executives have knowledge of
information concerning the core operations of a business, such
as events affecting a significant source of revenue.” In re
Aegean Marine Petroleum Network, Inc. Sec. Litig., 529 F. Supp.
3d 111, 174 (S.D.N.Y. 2021). This theory, however, may provide
only “supplemental support for an inference of scienter.” Id.
It is not “independently sufficient to raise a strong inference
of scienter.” Okla. Firefighters Pension & Ret. Sys. v. Lexmark
Int’l, Inc., 367 F. Supp. 3d 16, 37 (S.D.N.Y. 2019). The

plaintiff still must “have adequately alleged facts indicating
that defendants might have known their statements were false or
inaccurate.” Id. at 38.
Under either theory, Arata’s arguments for scienter
hinge on Standard Lithium’s disclosure of data to the AOGC that
allegedly contradicted its public statements. Am. Compl.
¶¶ 186–88. But the fact that Standard Lithium submitted this
data to a public entity with knowledge that it would be publicly
available (at least in some form) undercuts — rather than
bolsters — any inference of scienter. See In re Pretium Res.
Inc. Sec. Litig., No. 18-CV-8199, 2020 WL 953609, at *6

(S.D.N.Y. Feb. 27, 2020) (“Given that the waste rock data would
ultimately become available to the public, Defendants had
virtually no incentive to disclose conflicting data to investors
. . . .”); see also Glaser v. The9, Ltd., 772 F. Supp. 2d 573,
593 (S.D.N.Y. 2011) (“It defies reason that an entity looking to
profit on a fraudulently inflated stock price would hold close
to ninety percent of its shares as share prices fell, while
knowing that the information illuminating the fraud was seeping
into the market.”).
D. Section 20 Claims Against Individual Defendants

The plaintiff also brings claims against Mintak,
Norman, and Robinson under Section 20 of the Exchange Act, which
establishes liability for individuals exercising control over
“any person liable” under that statute or any rule or regulation
promulgated pursuant thereto. 15 U.S.C. § 78t(a). To establish
a prima facie case under Section 20(a), a plaintiff must show:
“(1) a primary violation by a controlled person; (2)control of

the primary violator by the defendant; and (3)that the

controlling person was in some meaningful sense a culpable
participant in the primary violation.” Boguslavsky v. Kaplan,
159 F.3d 715, 720 (2d Cir. 1998).
Because Plaintiff has failed to allege any
misstatements or omissions by Standard Lithium or the individual
defendants that survive a motion to dismiss — in other words, a
primary violation — the Section 20 claims against Mintak,
Norman, and Robinson must also be dismissed. See ECA, 553 F.3d
at 206-07 (affirming dismissal of Section 20 claims “for want of
a primary violation”).
Conclusion
For foregoing reasons, the defendants’ motion to
dismiss the amended complaint is granted. The Clerk of Court is

respectfully directed to enter judgment and close this case.

SO ORDERED.

/s/ Eric Komitee
ERIC KOMITEE
United States District Judge

Dated: September 28, 2025
Brooklyn, New York

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11145941. Public record. Not legal advice.