On
Plaintiffs contended that the company made two allegedly false statements in its
The Court held that the challenged statements were statements of opinion and that plaintiffs had not made the required showing to allege any facts calling into question the basis of the opinions. Id. at 11-12. In particular, the Court emphasized that plaintiffs' allegations were largely drawn from the “unproven allegations” from the supplier's litigation, and that plaintiffs did not even have access to the agreement on which the supplier's complaint was based. Id. at 12-13. The Court rejected plaintiffs' argument that the underlying evidence was in the company's possession, explaining that “the Court cannot just accept at face value [the supplier's] characterization of the underlying evidence supposedly implicating [the company].” Id. at 13. The Court further noted that, even if plaintiffs' allegations were deemed to have a factual basis, they would fail for the independent reason that plaintiffs must point to information “in the issuer's possession at the time” in order to plead falsity under an omissions theory. Id. at 14.
In addition, the Court observed that it was “far from clear that a more-detailed disclosure of the risks posed by the [supplier's] litigation was required.” Id. at 14. The Court noted that, under Ninth Circuit precedent, a “complaint must specify the reason or reasons why the statements made by the [company] were misleading or untrue, not simply incomplete.” Id. at 14 (citing Brody v. Transitional Hosps. Corp., 280 F.3d 997, 1006 (9th Cir. 2002)). The Court emphasized that while the company stated that it did not believe it was liable in the supplier's litigation, it also “offered no assurances that it would not be found liable.”
While noting that the Court was uncertain that further amendment could “rescue” plaintiffs' claims, the Court nevertheless granted plaintiffs one “final opportunity” to amend. Id. at 18.
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