Dresner v. Silverback Therapeutics Inc et al, No. 2:2021cv01499 - Document 42 (W.D. Wash. 2022)
Court Description: ORDER granting Defendants' 34 Motion to Dismiss for Failure to State a Claim without prejudice. Should Plaintiffs choose to file an amended complaint, they must do so within thirty (30) days of this Order. Failure to do so will result in a dismissal of Plaintiffs' claims with prejudice. Signed by Judge Marsha J. Pechman. (SB)
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Dresner v. Silverback Therapeutics Inc et al Doc. 42 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 BENJAMIN DRESNER, individually and on behalf of all others similarly situated, 14 15 16 17 18 19 ORDER ON MOTION TO DISMISS Plaintiff, 12 13 CASE NO. C21-1499 MJP v. SILVERBACK THERAPEUTICS, INC., LAURA K. SHAWVER, JONATHAN PIAZZA, RUSS HAWKINSON, PETER THOMPSON, VICKIE L. CAPPS, ROBERT HERSHBERG, SAQIB ISLAM, ANDREW POWELL, JONATHAN ROOT, THILO SCHROEDER, and SCOTT PLATSHON,, Defendants. 20 21 22 23 This matter comes before the Court on Defendants’ Motion to Dismiss (Dkt. No. 34). The Court, having reviewed the Motion, Plaintiffs’ Opposition (Dkt. No. 37), the Reply (Dkt. No. 38), and all supporting materials and documents, GRANTS the Motion. 24 ORDER ON MOTION TO DISMISS - 1 Dockets.Justia.com 1 BACKGROUND 2 Plaintiffs bring this case as a potential class action alleging negligence and securities 3 fraud based on the premise that Silverback, and the individually named Defendants, knew or 4 should have known that their developmental drug was not safe or effective as an anti-tumor drug. 5 Therefore, the filings with the Securities and Exchange Commission (“SEC”), press releases and 6 other reports made by Defendants were false and misled investors. Silverback Therapeutics is a biopharmaceutical company that seeks to develop treatments 7 8 for cancer, chronic viral infections, and other serious diseases that express a protein called 9 HER2. (First. Am. Compl. (“FAC”) ¶ 37 (Dkt. No. 29): Mot. to Dismiss (“Motion”) at 3 (Dkt. 10 No. 34).) Silverback developed its lead drug candidate, SBT6050, as a novel treatment for these 11 diseases. (Motion at 3.) SBT6050 is an Antibody-Drug Conjugate that targets tumors, such as 12 breast, gastric, and non-small cell lung cancers. (FAC ¶ 38.) The drug is designed to activate 13 myeloid cells, a class of immune cells that can make up to 10% of the cells in a tumor, and in 14 doing so, promote direct tumor killing and recruitment of other immune cells that can also have 15 tumor killing properties. (Motion at 4.) In order for SBT6050 to be sold commercially, it must first undergo a clinical trial 16 17 involving three phases of human testing. Phase 1 trials are designed to determine the 18 pharmacologic actions of the drug in humans, the side effects associated with increasing doses, 19 and “if possible, to gain early evidence on effectiveness.” 21 C.F.R. § 312.21. This case arises 20 out of Silverback’s disclosures surrounding the Phase 1 testing of SBT6050. 21 A. 22 23 SBT6050 Phase 1 Clinical Trial and Silverback’s Initial Public Offering In July 2020, Silverback began a Phase 1 clinical trial that would “monitor key [pharmacodynamic (“PD”)] biomarkers in both the blood and the tumor which have been 24 ORDER ON MOTION TO DISMISS - 2 1 associated with tumor regression in [the] preclinical mouse studies and was observed in [the] 2 preclinical NHP [non-human primate] studies.” (FAC ¶ 42.) The trial would evaluate biomarkers 3 of immune cell activation and anti-tumor activity of SBT6050 in patients that have failed all 4 other available therapies, as well as test the safety and tolerability of SBT6050. (Id.; Declaration 5 of Koji Fukumura, Exhibit A at 3 (Dkt. No. 34-30).) Phase 1 of the trial was broken up into four 6 different parts. Part 1 involved SBT6050 monotherapy dose-escalation and expansion. (FAC ¶ 7 1.) Part 2 focused on monotherapy dose expansion in tumor-specific cohorts. (Id.) Part 3 tested 8 pembrolizumab (a type of cancer drug) combination dose-escalation. (Id.) And Part 4 looked at a 9 pembrolizumab combination dose expansion cohort. (Id.) In Part 1 of Phase 1, which began in 10 July 2020, Silverback enrolled six patients and administered SBT6050 every two weeks at 0.3 11 mg/kg each dose. (Fukumura Decl. Ex. A at 130.) 12 Five months into Part 1 of the Phase 1 trial, on December 3, 2020, Silverback issued 13 common stock that began trading publicly at $21.00 per share. (FAC ¶¶ 4- 5.) At the same time 14 Silverback filed a registration statement and a prospectus with the SEC. (FAC ¶¶ 3-4.) Plaintiffs 15 refer to these documents as the “Offering Documents.” (FAC ¶ 4.) Plaintiffs allege the Offering 16 Documents were negligently prepared, contained untrue statements of material fact or omitted 17 facts necessary to make the statements not misleading, and were not prepared in accordance with 18 the rules and regulations governing their preparation. (FAC ¶ 5.) 19 The December 2020 Offering Documents stated, among other things, that thus far in the 20 trial, Silverback observed changes in pharmacodynamic markers in the first dose cohort and 21 anticipated providing an update on the interim data from the Phase 1 dose-escalation cohorts in 22 the second half of 2021. (FAC ¶ 47.) The Offering Documents also discussed the adverse events 23 (side effects) seen thus far in the clinical patients, as well as risk factors investors should be 24 ORDER ON MOTION TO DISMISS - 3 1 aware of, and Silverback’s beliefs and goals for SBT6050’s marketability. (FAC ¶¶ 47-52; 2 Fukumura Decl. Exs. A, B, C, and D.) The First Amended Complaint highlights certain portions 3 of the Offering Documents’ statements of marketability, in particular Silverback’s statements 4 that the drug had been designed differently from other anti-tumor drugs, meaning that it could be 5 used in combination with other drugs that are otherwise not typically available for combination 6 treatment. (FAC ¶¶ 50-51.) Silverback believed that, ideally, this would allow the drug to be 7 used in early-line standard of care regiments. (Id.) 8 B. 9 Silverback’s Statements from March 2021 – August 2021 Silverback issued and filed with the SEC its first annual report to investors on March 29, 10 2021. (FAC ¶ 55.) Much of the report contained information previously disclosed in the Offering 11 Documents. (FAC ¶¶ 55-58.) For instance, the March filing contained the same paragraphs 12 explaining how SBT6050 differed from other anti-tumor drugs, that Silverback anticipated 13 providing an update on the interim data from Phase 1 single agent dose-escalation cohorts in the 14 second half of 2021, and that Silverback had observed changes in patients’ pharmacodynamic 15 markers in the first dost cohort. (FAC ¶¶ 55-60) The filing also stated that investors could expect 16 an update from Phase 1, SBT6050 plus pembrolizumab combination, in the first half of 2022, 17 and that enrolled treatment had been initiated in Part 3 of the Phase 1 study. (Fukumura Decl. Ex. 18 E at 24.) 19 20 21 At the same time, Silverback issued a press release, which stated in the pertinent part: 2020 was an extraordinary year for Silverback, with the initiation of our first clinical study for SBT6050, in which pharmacological activity was observed in the first dose cohort, the advancement of each of our preclinical programs, expansion of our strong team, and the successful closing of our IPO in December. . . 22 (FAC ¶ 62.) 23 24 ORDER ON MOTION TO DISMISS - 4 1 The press release further stated that “[c]hanges in pharmacodynamic markers consistent 2 with potential mechanism of action have been observed in patients treated in the first 3 monotherapy dose cohort.” (Id.) 4 Silverback again reported to investors in May and August of 2021, when it filed its first 5 and second quarterly reports for 2021 with the SEC. (FAC ¶¶ 64, 67.) Silverback’s May report 6 stated that SBT6050 “continues to advance through monotherapy and pembrolizumab 7 combination dose escalation arms of the Phase 1/1b clinical study” and that it was “on track to 8 deliver interim clinical data from the monotherapy dose escalation arm of the study in the second 9 half of 2021.” (FAC ¶ 65.) In August, Silverback issued a press release along with its quarterly 10 filing. (FAC ¶ 67.) The press release stated that Silverback had “observed pharmacodynamic 11 markers in the first monotherapy dose cohort” and that the trial was progressing with “continued 12 robust enrollment.” (Id.) 13 Each time Silverback issued a report or statement, it disclosed that the statements contain 14 “certain forward-looking statements that involved risks and uncertainties that could cause actual 15 results to be materially different from historical results or from any future results expressed or 16 implied by such forward-looking statements.” (See Fukumura Decl. Exs. G, H, I, and J.) 17 C. 18 Silverback’s Statements from September 2021 – March 2022 In September 2021, Silverback issued a press release unrelated to any SEC filing. The 19 press release directed investors to an abstract that disclosed the interim results of its monotherapy 20 and combination therapy dose-escalation studies. (FAC ¶ 69.) The abstract explained that “[a]s 21 of 4 April 2021, 18 patients across 10 tumor types were treated at 4 dose levels.” (FAC ¶ 70.) 22 The most frequent adverse effects were chills, diarrhea, fatigue, hypotension, injection site 23 reactions, nausea, pyrexia, and vomiting. (Id.) Dose levels greater than 0.6 mg/kg were evaluated 24 ORDER ON MOTION TO DISMISS - 5 1 and dose limiting toxicities were resolved with supportive care. (Id.) Based on this data, 2 Silverback concluded that SBT6050 alone or in combination with pembrolizumab had a 3 manageable safety profile. (Id.) However, among these evaluable patients, only one 4 demonstrated a partial response and three others demonstrated stable disease. (Id.) In response to 5 this news, Silverback’s stock price dropped approximately 23% from $19.44 per share to $14.90 6 per share. (FAC ¶ 71.) 7 Three days later, Silverback gave an investor presentation that discussed in further detail 8 the data Silverback had collected as of August 1, 2021. (Fukumura Decl. Ex. L. at 9.) Again, 9 Silverback reiterated that SBT6050 had a manageable safety profile and that the common 10 adverse effects were consistent with immune activation. (Id.) Silverback stated that the trial 11 demonstrated “[e]arly signals of anti-tumor activity in a heavily pre-treated heterogenous 12 population.” (Id.) Silverback further explained that among 18 evaluable patients, one patient had 13 a partial response, and seven others demonstrated a stable disease. (Id.) 14 In November 2021, Silverback filed its third quarter report with the SEC. (FAC ¶ 72.) 15 Silverback reiterated findings from its September report, including that the data collected as of 16 August 1, 2021, indicated “proof-of-mechanism through SBT6050’s ability to activate myeloid, 17 T and NK cells,” as well as “early signs of anti-tumor activity, and no dose limiting toxicities.” 18 (Id.) Silverback went on to report that higher SBT6050 dose levels in combination with 19 pembrolizumab showed dose limiting toxicities in three patients, two of whom were able to 20 continue the study at a lower dose, but the third ultimately passed away. (Id.) 21 On March 31, 2022, Silverback filed its fourth quarter results for the 2021 fiscal year 22 with the SEC. (FAC ¶ 75.) Silverback announced that “the most recent data showed limited 23 monotherapy anti-tumor activity and cytokine-related adverse events that limited the dose in 24 ORDER ON MOTION TO DISMISS - 6 1 combination with pembrolizumab.” (Motion at 9.) Basically, SBT6050 did not have sufficient 2 anti-tumor activity when used alone, and an effective dosage for anti-tumor activity in 3 combination therapy could not be used due to the severity of the adverse effects. (Id.) As such, 4 Silverback was discontinuing the development of SBT6050, as well as another development 5 drug, SBT6290, because it has a similar clinical profile as SBT6050. (FAC ¶ 75.) As a result of 6 this news, Silverback’s stock declined 8.55% to $3.20 per share. (FAC ¶ 76.) The Plaintiffs in this action filed their original complaint on November 5, 2021. Plaintiffs 7 8 formulated their claims as actions under Sections 11 and 15 of the Securities Act of 1933 9 (“Securities Act”); Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange 10 Act”); and SEC Rule 10b-5. Plaintiffs’ Securities Act claims pertain only to the Offering 11 Documents, which Plaintiffs allege were prepared negligently. Plaintiffs’ Exchange Act claims 12 encompasses all filings, press releases, and statements made during the entire class period from 13 December 3, 2020, to March 31, 2022. With regard to this claim, Plaintiffs allege that 14 Defendants “engaged in a plan, scheme, conspiracy and course of conduct. . . which operated as 15 a fraud and deceit upon Plaintiffs.” (FAC ¶ 104.) Similar to their Section 11 claim, Plaintiffs 16 premise this argument on the basis that Defendants knew the trial findings were indicative of the 17 drug’s eventual failure, yet they continued to highlight only the positive findings giving the false 18 impression that the trial was going to be successful. Plaintiffs claim that once the drug’s limited 19 success became known, the stock dropped and Plaintiffs experienced financial losses. 20 21 22 23 ANALYSIS A. Incorporation by Reference and Judicial Notice Generally, district courts may not consider material outside the pleadings when assessing the sufficiency of a complaint under Rule 12(b)(6). Lee v. City of Los Angeles, 250 F.3d 668, 24 ORDER ON MOTION TO DISMISS - 7 1 688 (9th Cir. 2001). However, “[t]here are two exceptions to this rule: the incorporation-by- 2 reference doctrine, and judicial notice under Federal Rule of Evidence 201.” Khoja v. Orexigen 3 Therapeutics, Inc., 899 F.3d 998 (9th Cir. 2018); see also Tellabs, Inc. v. Makor Issues & Rights, 4 Ltd., 551 U.S. 308, 322 (2007) (noting documents incorporated by reference and “matters of 5 which a court may take judicial notice” are properly considered when ruling on a motion to 6 dismiss). 7 “Incorporation-by-reference is a judicially created doctrine that treats certain documents 8 as though they are part of the complaint itself.” Khoja, 899 F.3d at 1002. A defendant may seek 9 to incorporate a document into the complaint “if the plaintiff refers extensively to the document 10 or the document forms the basis of the plaintiff’s claim. U.S. v. Ritchie, 342 F.3d 903, 908 (9th 11 Cir. 2003). “The doctrine prevents plaintiffs from selecting only portions of documents that 12 support their claims, while omitting portions of those very documents that weaken – or doom – 13 their claims.” Khoja, 899 F.3d at 1002. 14 Here, Defendants and Plaintiffs have each requested that the Court incorporate by 15 reference a number of documents, mostly SEC filings and press releases, which form the basis of 16 Plaintiffs’ complaint. Plaintiffs’ request that Exhibits A-C be incorporated by reference are 17 documents that are also included in Defendants’ request as well. Defendants’ Exhibits A-P are 18 incorporated by reference in the Complaint. Neither party opposes consideration of the 19 documents, and these documents form the basis of Plaintiffs’ claims. The Court GRANTS 20 Plaintiffs request to incorporate by reference Exhibits A-C, and Defendants’ request to 21 incorporate by reference Exhibits A-P. 22 A court may take judicial notice of facts that are “not subject to reasonable dispute,” Fed. 23 R. Evid. 201(b), as well as documents that are referred to in the complaint, that are central to the 24 ORDER ON MOTION TO DISMISS - 8 1 plaintiff’s claims, and whose authenticity is not disputed. See, e.g., Branch v. Tunnell, 14 F.3d 2 449, 454 (9th Cir. 1994) overruled on other grounds by Galbraith v. Cty of Santa Clara, 307 F.3d 3 1119, 1127 (9th Cir. 2002). A court may also take judicial notice of public documents filed with 4 the SEC, Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1065 n. 7 (9th Cir. 5 2008), undisputed matters of public records, Lee, 250 F.3d at 689, records and reports of 6 administrative bodies, Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 7 1986), overruled on other grounds by Astoria Fed. Sav. And Loan Ass’n v. Solimino, 501 U.S. 8 104, 110-11 (1991), and accounting standards, In re Asyst Tech, Inc. Derivative Litig., No. C-06- 9 04669 EDL, 2008 WL 2169021, at *1 n. 1 (N.D. Cal. May 23, 2008). 10 Plaintiffs and Defendants request the Court take judicial notice of several analyst reports 11 (Plaintiffs’ Exhibits D and E, and Defendants’ Exhibits R-T). Courts have regularly taken 12 judicial notice of analyst reports, not for the truth of the matter asserted, but “for the purpose of 13 showing that particular information was available to the stock market.” Helitrope Gen., Inc. v. 14 Ford Motor Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999); see also, In re Apple Inc. Sec. Litig., 15 No. 19-cv-02033-YGR, 2020 WL 2857397, at *6 (N.D. Cal. June 2, 2020) (noting that courts 16 routinely take judicial notice of analyst reports and providing list of cases). Neither Party objects 17 to or disputes the authenticity or accuracy of the reports. The Court GRANTS Plaintiffs’ request 18 to take judicial notice of Exhibits D and E, and Defendants’ Exhibits R-T. 19 Finally, Defendants request the Court take judicial notice of Exhibits Q and U. Exhibit Q 20 is the description of Silverback’s clinical trial for SBT6050 that is available at ClinicalTrials.gov, 21 a resource provided by the U.S. National Library of Medicine. The information contained in 22 Exhibit Q is not in dispute, therefore the Court GRANTS Defendants’ request to take judicial 23 notice of Exhibit Q. Exhibit U is the U.S. Food and Drug Administration’s information page on 24 ORDER ON MOTION TO DISMISS - 9 1 clinical research, which discusses the different phases of clinical trials. While Exhibit U is not 2 disputed by Plaintiffs, Defendants appear to want to use this information to counter Plaintiffs’ 3 claim that SBT6050 Phase 1/1b trial was designed to and did evaluate efficacy, which is in 4 dispute. The Court cannot take judicial notice of this without potentially making a finding on a 5 disputed fact. As such, the Court DENIES Defendants’ request to take judicial notice of Exhibit 6 U. 7 B. 8 Motion to Dismiss 1. Legal Standard 9 Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an 10 action for failure to state a claim upon which relief may be granted. In order to survive such a 11 motion, a plaintiff must allege “enough facts to state a claim for relief that is plausible on its 12 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In determining whether to dismiss 13 a complaint under Fed. R. Civ. P. 12(b)(6), the Court must accept all well-pleaded allegations as 14 true, South Ferry LP, No. 2. v. Killinger, 542 F.3d 776, 782 (9th Cir. 2008), and draw all 15 reasonable inferences in favor of the plaintiff, Twombly, 550 U.S. at 555. In other words, “[t]o 16 survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, 17 to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 18 (internal quotation omitted). However, these tenets are “inapplicable to legal conclusions.” Id. A 19 pleading that only offers “labels and conclusions” or “a formulaic recitation of the elements of a 20 cause of action will not do.” Twombly, 550 U.S. at 555. If the plaintiff “ha[s] not nudged [its] 21 claims across the line from conceivable to plausible, [the] complaint must be dismissed.” Id. at 22 570. “Dismissal without leave to amend is improper unless it is clear, upon de novo review, that 23 24 ORDER ON MOTION TO DISMISS - 10 1 the complaint could not be saved by any amendment.” Gompper v. VISX, Inc., 298 F.3d 893, 2 898 (9th Cir. 2002) (internal quotation and citation omitted). 3 4 2. Section 11 Claim Defendants move to dismiss Plaintiffs’ Section 11 claim on the theory that it is subject to 5 the heightened pleading standard of Federal Rule of Civil Procedure 9(b), but that even if Federal 6 Rule of Civil Procedure Rule 8(a) applies, Plaintiffs still cannot meet that standard. The Court 7 agrees with Defendants. Plaintiffs’ Section 11 claim is comprised of paragraphs taken from the 8 Offering Documents and a concluding paragraph stating the claims are false and misleading. 9 Plaintiffs do not attempt to explain what in the paragraphs from the Offering Documents are 10 false and misleading, let alone why they are material. Plaintiffs’ failure to do so means that the 11 claim does not clear even Rule 8(a) pleading standards. 12 a. 13 14 15 16 17 18 19 20 21 22 23 Elements of Claim Section 11 of the Securities Act creates a private remedy for any purchaser of a security if the registration statement published in connection with the offering “contain[s] an untrue statement of a material fact or omit[s] to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a). To prevail on a Section 11 claim, a plaintiff must prove “(1) that the registration statement contained an omission or misrepresentation, and (2) that the omission or misrepresentation was material, that is, it would have misled a reasonable investor about the nature of his or her investment.” In re Daou Sys., Inc., 411 F.3d 1006, 1027 (9th Cir. 2005) (internal quotation and citation omitted). Under Section 11, “[l]iability against the issuer of a security is virtually absolute, even for innocent misstatements,” if the plaintiff can show a material misstatement or omission. Herman & MacLean v. Huddleston, 459 U.S. 375, 382 (1983). 24 ORDER ON MOTION TO DISMISS - 11 b. 1 Applicable Pleading Standard Typically, Federal Rule of Civil Procedure 8(a) applies to a Section 11 claim because 2 3 they do not require an allegation of scienter. Daou, 411 F.3d at 1027. But if the Section 11 claim 4 sounds in fraud, the complaint must satisfy the particularity requirements of Federal Rule of 5 Civil Procedure Rule 9(b). Rubke v. Capital Bankcorp LTD, 551 F.3d 1156, 1161 (9th Cir. 6 2009). 7 “To ascertain whether a complaint sounds in fraud, we must normally determine, after a 8 close examination of the language and structure of the complaint, whether the complaint alleges 9 a unified course of fraudulent conduct and relies entirely on that course of conduct as the basis of 10 a claim.” In re Rigel Pharms, Inc. Sec. Litig., 697 F.3d 869, 885 (2012) (internal quotation and 11 citation omitted). When a complaint employs the exact same factual allegations to allege 12 violations of Section 11 as it uses to allege fraudulent conduct under Section 10(b) of the 13 Exchange Act, we can assume that it sounds in fraud. See Daou, 411 F.3d at 1028. A plaintiff 14 cannot escape the requirements of Fed. R. Civ. P. 9(b) with a general disclaimer that a claim is 15 based on negligence rather than fraud. Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 16 1278 (11th Cir. 2006); In re Stratosphere Sec. Litig., 1 F.Supp.2d 1096, 1104 (D. Nev. 1998). Rule 9 applies to Plaintiffs’ Section 11 claim. Though Plaintiffs explicitly disclaim any 17 18 allegation of fraud, recklessness or intentional misconduct, the facts alleged by Plaintiffs indicate 19 that they rely on the same allegations to support their Section 11 claim as the Section 10(b) fraud 20 claim. 21 There are two main problems with Plaintiffs’ arguments. First, the Offering Documents 22 that Plaintiffs base their Section 11 negligence claim on are also part of their Section 10(b) fraud 23 claim. The class period for the 10(b) claim begins on December 3, 2020, the same day the 24 Offering Documents became effective, and Silverback’s common stock began trading. (FAC ¶¶ ORDER ON MOTION TO DISMISS - 12 1 1, 3, 4.) Plaintiffs’ claim that during the class period, Defendants engaged in a course of conduct 2 which operated as fraud. (FAC ¶ 104.) The same Offering Documents Plaintiffs claim are based 3 in negligence also serve as the starting period for the fraudulent course of conduct under 4 Plaintiffs’ Section 10(b) claim. And Plaintiffs did not refute this during oral argument. Rather, 5 Plaintiffs specified that the Offering Documents underpin both the Section 11 claim and the 6 Section 10(b) claim. As such, Plaintiffs allege a unified course of conduct and provide no basis 7 for why their Section 11 claim is grounded in negligence. 8 Second, many of the statements Plaintiffs allege are false and misleading in the Offering 9 Documents are repeated verbatim in Silverback’s later SEC quarterly filings. Plaintiffs identify 10 these statements as false and misleading, but claim they were made through a fraudulent course 11 of conduct in order to support their Section 10(b) claim. (Compare FAC ¶¶ 50,56; 51, 57; and 52, 12 58.) Essentially, Plaintiffs are alleging the same set of facts are fraudulent in one claim, but 13 negligent in another. And Plaintiffs do not attempt to provide a rationale for why the statements 14 iterated in the Offering Documents are negligent, but fraudulent when made later or as part of 15 their Section 10(b) claim. 16 Because Plaintiffs fail to provide an adequate rationale for why their Section 11 claim is 17 based on negligence, and the same documents are part of their Section 10(b) fraud claim, the 18 Court finds Fed. R. Civ. P. 9(b) applies to Plaintiffs’ Section 11 claim. 19 c. Plaintiffs’ Section 11 Claim Fails to Satisfy Rule 9(b) 20 In order to satisfy Rule 9(b)’s pleading requirements, Plaintiffs must “state with 21 particularity the circumstances constituting fraud. . .” Fed. R. Civ. P. 9(b). In other words, the 22 complaint must “set forth what is false or misleading about a statement, and why it is false.” 23 Yourish v. Cal. Amplifier, 191 F.3d 983, 993 (9th Cir. 1999). 24 ORDER ON MOTION TO DISMISS - 13 1 Plaintiffs have failed to satisfy these requirements. As an initial matter, Plaintiffs’ 2 Complaint is “puzzle pled,” which makes it difficult to determine what specifically they allege is 3 misleading. In oral arguments, Plaintiffs clarified that there are four categories of misstatements 4 that they allege were present in the Offering Documents and during the class period. 5 The first category and what appears to be the crux of Plaintiffs’ claim is Silverback’s 6 statements that it “observed changes in pharmacodynamic markers in the first dose cohort,” 7 associated with tumor regression. (FAC ¶¶ 47, 49, 50.) Plaintiffs claim that this is misleading 8 because Silverback did not disclose that despite seeing these changes, it observed limited anti- 9 tumor activity. But Plaintiffs fail to demonstrate why this statement is false or misleading. 10 Rather, Plaintiffs appear to equate Silverback’s statements that it “observed changes in 11 pharmacodynamic markers” to Silverback claiming SBT6050’s efficacy. Plaintiffs do not 12 explain how Silverback’s statements are the same as stating efficacy, and critically, Plaintiffs fail 13 to contextualize the statement. 14 For example, Paragraph 49 of the First Amended Complaint contains a large block quote 15 from the Offering Documents. Within this, it states that “[c]hanges in pharmacodynamic markers 16 consistent with the potential mechanism of action have been observed in treated patients where 17 data are available.” (FAC ¶ 49.) The paragraph continues to state explicitly what these changes 18 were: “This includes increases in plasma levels of CRP (C-reactive protein), a marker of 19 inflammation, increases in MCP-1, IP-10 and IL-6, which are indicative of myeloid cell 20 activation, increases in IFNg, which is a marker for T and NK cell activation, and decreases in 21 hemoglobin which we believe to be due to macrophage phagocytosis.” (Id.) As such, not only 22 does Silverback state that the changes are consistent with potential mechanism of action, but it 23 also explains exactly what changes were observed. Nowhere in this statement did Silverback 24 ORDER ON MOTION TO DISMISS - 14 1 represent that this means the drug is efffective. And Plaintiffs do nothing to explain why the 2 statements are false in the Complaint. In their Opposition to the Motion to Dismiss, Plaintiffs 3 retreat from their Complaint’s allegations, arguing that “[w]hether Defendants had indeed 4 observed changes in pharmacodynamic markers. . . is beside the point.” (Opposition at 12 5 (“Opp”) (Dkt. No. 37).) This appears to be a concession that the statement is not false, and 6 Plaintiffs have failed to demonstrate its falsity. 7 Plaintiffs also fail to demonstrate that the statement was misleading. After Plaintiffs walk 8 back their claim that the statement is false, they pivot to argue that the statement contains an 9 omission, thereby giving investors the false impression that they observed “promising signs of 10 efficacy.” (Opp. at 13.) In support of this argument, Plaintiffs argue that all of the six patients 11 enrolled in the trial at the time of the IPO later discontinued the study due to disease progression. 12 (Id.) The problem with this argument is that the data supporting this assertion was presented to 13 investors in September 2021, nine months after the initial public offering, and Plaintiffs do not 14 allege that the data was available at the time of the IPO. (See Declaration of Tamar Weinrib, 15 Exhibit A (Dkt. No. 37-1).) In contrast, the Registration Statement, approved by the SEC on 16 December 3, 2020, disclosed that of the six patients initially enrolled, two did not complete the 17 dose-limiting toxicity period and had to be replaced. (Fukumura Decl. Ex. C at 129.) The 18 statement further reported that as of November 25, 2020, only two patients from the first cohort 19 had formal reassessments of their tumor status. (Id.) One showed stable disease, the other 20 showed a reduction in the tumor size. (Id.) So at the time the statement was made in December 21 2020, there is no indication that it was misleading, and Plaintiffs fail to demonstrate otherwise. 22 23 The second category of misstatements Plaintiffs identified in their oral argument is Silverback’s statements regarding the development of a second drug SBT6290, that was 24 ORDER ON MOTION TO DISMISS - 15 1 designed to work using the same mechanism as SBT6050. But a review of the Amended 2 Complaint demonstrates that Plaintiffs only identify statements regarding SBT6050 for their 3 arguments as to misstatements made in the Offering Documents. (See FAC ¶¶ 47-53.) Plaintiffs’ 4 failure to identify any statements regarding SBT6290 made in the Offering Documents dooms 5 any arguments that they have met the pleading standards under Rule 9(b). 6 Plaintiffs’ third identified category has to do with safety. In the Amended Complaint, 7 Plaintiffs identify a large block quote from the Offering Documents that discusses adverse events 8 and concludes that at the time of the IPO, no dose limiting toxicities had been observed and the 9 most common adverse events were flu-like symptoms and redness and swelling at the injection 10 site. (FAC ¶ 49.) Critically, Plaintiffs’ concluding paragraph that references all of the statements 11 identified from the Offering Documents fails to mention any false or misleading statements that 12 have to do with safety, which means Plaintiffs fail to even allege that the Offering Documents 13 contain false or misleading statements regarding the safety of SBT6050. As such, they cannot 14 meet Rule 9(b) standards for this category of statements. 15 Finally, Plaintiffs’ fourth category refers to Silverback’s statements regarding SBT6050’s 16 addressable market. Again, Plaintiffs extract a large block quote from the Offering Documents 17 that discusses current treatments on the market and their contrast to SBT6050. (See FAC ¶ 52.) 18 Following this, Plaintiffs have the concluding paragraph that states “(i) SBT6050 showed limited 19 anti-tumor activity in patients treated with only SBT6050 in Phase 1/1b; (ii) accordingly, the 20 Company had overstated SBT6050’s commercial and/or clinical prospects. . .” (FAC ¶ 53.) 21 These conclusory allegations hardly suffice to state what specifically is false or misleading about 22 the preceding paragraph and why. Therefore, Plaintiffs’ fail to meet Rule 9(b) standards for this 23 category of statements as well. 24 ORDER ON MOTION TO DISMISS - 16 1 Plaintiffs’ allegations regarding the Offering Documents contains a patchwork of block 2 quotes taken from the Offering Documents with a conclusory paragraph that declares all the 3 previous paragraphs false or misleading. Plaintiffs make no attempt to explain what is false or 4 misleading about these statements and why they are false. As such, Plaintiffs have failed to meet 5 their burden under Rule 9(b). The Court DISMISSES without prejudice Plainitffs’ Section 11 6 claim for failure to meet the pleading requirements under Fed. R. Civ. P. 9(b). 7 8 9 10 d. Plaintiffs’ Section 11 Claim Fails to Satisfy Rule 8(a) It bears mentioning that regardless of whether Rule 9(b) applies, Plaintiffs’ Section 11 claims still fails under Rule 8(a). Defendants argue that Plaintiffs engage in improper “puzzle pleading.” The Court agrees. 11 “Puzzle pleading” places “the burden on the reader to sort out the statements and match them 12 with the corresponding adverse facts to solve the ‘puzzle’ of interpreting Plaintiffs’ claims.” 13 Wenger v. Lumisys, Inc., 2 F.Supp.2d 1231, 1244 (N.D.Cal. 1988). Even under Rule 8(a), 14 Plaintiffs must set forth a short and plain statement containing plausible allegations that: (1) the 15 registration statement contained an omission or misrepresentation, and (2) the omission or 16 misrepresentation was material. Daou, 411 F.3d 1027. Courts in this Circuit have held that 17 “puzzle pleadings” fail to satisfy Rule 8 because they fail to set forth a short and plain statement. 18 In re Splash Tech. Holdings, Inc. Sec. Litig., 160 F.Supp.2d 1059, 1075 (N.D.Cal. 2001); 19 Wenger, 2 F.Supp.2d at 1244. 20 Here, Plaintiffs identify six paragraphs from the Offering Documents that are purportedly 21 false or misleading. (See FAC ¶¶ 47-52.) All but one of these paragraphs consist of large block 22 quotes. (Id.) The block quotes contain technical language about the SBT6050 and the trial. The 23 one paragraph that is not a block quote simply states: 24 ORDER ON MOTION TO DISMISS - 17 1 2 Moreover, Defendants touted the advantage of SBT6050 over untargeted TLR8 small molecule therapeutic candidates from other companies which “have resulted in an adverse event profile that we believe has limited achieving a dose level sufficient to produce the desired therapeutic benefit.” 3 (FAC ¶ 48.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Following the block quotes is a generalized list of reasons of why the Offering Documents made “false and/or misleading statements and/or failed to disclose.” (FAC ¶ 53.) So not only does the Complaint fail to explain what from the block quotes is misleading and why it was material, but it also fails to explain whether the statements contain an omission or are misleading for other reasons. In opposing the Motion to Dismiss, Plaintiffs do little to clarify what language from the block quotes contains misrepresentations or omissions. (See Opp.) Plaintiffs try to paper over this by claiming that their “[c]omplaint is carefully organized, alleges each misleading statement and related omission, including date and the author thereof, and after each group of misstatements, lists the reasons why those statements were misleading.” (Opp. at 20.) This bold proposition does not come close to describing the actual Complaint. The lists of reasons as to why the statements in the Offering Documents are misleading are generalized and for the Section 10(b) claim, the reasons are copied and pasted verbatim after each section. Plaintiffs do not provide adequate allegations as to what is misrepresented or omitted from each statement. Even if the Court were to accept all “well pleaded factual allegations as true” Plaintiffs do nothing more than take Silverback’s SEC filings and press releases and add a legal conclusion to them, thus creating a claim based only on “labels and conclusions.” See Twombly, 550 U.S. at 555. The Court finds Plaintiffs’ failure to meet the pleading standards under Fed. R. Civ. P. 8(a) as an additional reason for dismissing Plaintiffs’ Section 11 claim. 23 24 ORDER ON MOTION TO DISMISS - 18 1 3. Section 10(b) and SEC Rule 10b-5 Claim 2 Section 10(b) and 10b-5 claims are subject to heightened pleading standards under the 3 Private Securities Litigation Reform Act of 1995 (“PSLRA”) and Rule 9(b). Defendants argue 4 that Plaintiffs have failed to meet this standard. The Court agrees. Plaintiffs’ pleading for the 5 10(b) claim follows the same format as their Section 11 claim, and therefore contains all of the 6 same issues. The difference is here, Plaintiffs cannot skirt the higher pleading requirements. 7 Because Plaintiffs fail to allege the particularities of why Defendants’ statements are false and 8 misleading, as well as allegations of scienter, they fail to satisfy the heightened pleading 9 standards. 10 a. Elements of Claim 11 Section 10(b) provides, in part, that it is unlawful “to use or employ in connection with 12 the purchase or sale of any security. . . any manipulative or deceptive device or contrivance in 13 contravention of such rules and regulations as the [SEC] may prescribe. . .” 15 U.S.C. § 78j(b). 14 SEC Rule 10b-5 makes it unlawful for any person to use interstate commerce: 15 (a) To employ any device, scheme, or artifice to defraud, 16 (b) To make any untrue statement of a material fact or to omit to state a material fact 17 necessary in order to make the statements made, in light of the circumstances under 18 which they were made, not misleading, or 19 20 21 22 (c) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 C.F.R. § 240.10b-5. To prevail on a Section 10(b) claim, a plaintiff must prove “(1) a material 23 misrepresentation or omission of fact, (2) scienter, (3) a connection with the purchase or sale of a 24 security, (4) transaction and loss causation, and (5) economic loss.” Daou, 411 F.3d at 1014. At ORDER ON MOTION TO DISMISS - 19 1 the pleading stage, a complaint stating claims under Section 10(b) and Rule 10b-5 must satisfy 2 the dual pleading requirements of Rule 9(b) and the PSLRA. Id. 3 4 5 6 b. Falsity Defendants primarily argue that Plaintiffs failed to plead a material misrepresentation or omission of fact. The Court agrees. Under the PSLRA, “the complaint shall specify each statement alleged to have been 7 misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding 8 the statement or omission is made on information and belief, the complaint shall state with 9 particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(1). “By requiring 10 specificity, the PSLRA prevents a plaintiff from skirting dismissal by filing a complaint laden 11 with vague allegations of deception unaccompanied by a particularized explanation stating why 12 the defendant’s alleged statements or omission are deceitful.” In re Nektar Therapeutics Sec. 13 Litig., 34 F.4th 828, 835 (9th Cir. 2022) (internal quotation and citation omitted). 14 The Ninth Circuit has affirmed dismissals due to lack of falsity where plaintiff’s 15 allegations are based on general statements. See Metzler Inv. GMBH v. Corinthian Colleges, 16 Inc., 540 F.3d 1049, 1070 (9th Cir. 2008) (noting that the Ninth Circuit “has consistently held 17 that the PSLRA’s falsity requirement is not satisfied by conclusory allegations. . . based on the 18 plaintiff’s allegations of fraud generally.”); Ronconi v. Larkin, 253 F.3d 423, 429-32 (9th Cir. 19 2001). In Ronconi, the Ninth Circuit affirmed the dismissal of a securities action where plaintiffs 20 challenged the defendants’ statements to analysts that the company’s sales growth was 21 accelerating. The complaint alleged that this was false when made because the sales growth was 22 not accelerating. The Ninth Circuit found that the statement was material and the complaint 23 properly stated why it was false. Id. at 430-31. But the Ninth Circuit still affirmed the dismissal 24 because plaintiffs simply asserted that statement was false at the time it was made without ORDER ON MOTION TO DISMISS - 20 1 putting forth specific facts or evidence that demonstrated the falsity of the statement and that 2 defendants were aware or should have been aware that it was false. Id. As such, plaintiffs’ 3 conclusory allegations were insufficient to meet the PSLRA’s pleading requirements. Id. at 431. As in Ronconi, Plaintiffs have failed to demonstrate falsity. Plaintiffs utilize block quotes 4 5 taken from Silverback’s quarterly filings and press releases without stating what part of the 6 statements are false, why they are false and any allegations of scienter. After each section of 7 block quotes related to a filing, Plaintiffs repeat verbatim the same vague conclusory allegation 8 that: The foregoing statements were false and misleading because (i) SBT6050 showed limited anti-tumor activity in patients treated with only SBT6050 in Phase 1/1b; (ii) an overwhelming percentage of trial participants withdrew from the trial due to disease progression; (iii) SBT6050 did not have a manageable safety profile; and (iv) accordingly, the Company had overstated SBT6050’s commercial and/or clinical prospects. 9 10 11 12 (FAC ¶¶ 63, 66, 68.) 13 Absent an explanation as to why the statements are false or misleading, Plaintiffs’ 14 claimed reasons fail to demonstrate what about the block quotes are false or misleading. This is 15 further demonstrated by the act that several times the block quote contains information that is 16 irrelevant to Plaintiffs’ conclusion. For instance, Plaintiffs highlight the two following 17 paragraphs from Silverback’s 10-Q filing and associated press release: 18 In our first quarter as a public company, our team continues to execute on Silverback’s mission to bring tissue targeted therapies to patients in need,’ said Laura Shawver, Ph.D., chief executive officer of Silverback. We are on track to report interim clinical data for SBT6050 in the second half of this year, and we are equally excited about the progress and preclinical data emerging from SBT6290 and SBT8230, highlighting the broad applicability of our ImmunoTAC platform. 19 20 21 22 23 And SBT6050 (HER2-TLR8 Immuno TAC) continues to advance through monotherapy and pembrolizumab combination dose escalation arms of the Phase 1/1b clinical 24 ORDER ON MOTION TO DISMISS - 21 1 study. Silverback is on track to deliver interim clinical data from the monotherapy dose escalation arm of the study in the second half of 2021. 2 (FAC ¶ 65.) 3 4 5 6 7 8 9 10 11 Nothing in these two paragraphs discusses the efficacy of SBT6050, the continued enrollment of participants, or its safety profile. It does not even appear to fall into one of Plaintiffs’ four categories of misstatements. Plaintiffs say nothing about what specifically is false or misleading about these two paragraphs and why. And the information contained in the paragraphs hardly seems material to investors – it simply tells investors when to expect an update. Though the Court acknowledges that some of the block quotes contain more relevant information, at no point do Plaintiffs plead specific facts or put forth documentation articulating why these block quotes are materially misleading or that the statements were false and misleading when made. 12 13 14 15 16 17 18 19 20 21 22 23 Because Plaintiffs fail to specify what statements within the block quotes are misleading, along with the reason the statement is misleading, they fail to meet their burden to plead falsity. The Court GRANTS Defendants’ Motion to Dismiss the Section 10(b) claim for failure to plead falsity. c. Scienter Plaintiffs also fail to advance sufficient allegations of scienter. A Section 10(b) fraud complaint must also “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u4(b)(2)(A). “The court must determine whether all the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.” Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 991 (9th Cir. 2009) (internal citation and quotation omitted). When “determining whether the pleaded facts give rise 24 ORDER ON MOTION TO DISMISS - 22 1 to a ‘strong’ inference of scienter, the court must take into account plausible opposing 2 inferences.” Id. Essentially, a complaint survives a motion to dismiss “if the malicious inference 3 is at least as compelling as any opposing innocent inference.” Id. To adequately demonstrate that the “defendant acted with the required state of mind,” a 4 5 complaint must “allege that the defendants made false or misleading statements either 6 intentionally or with deliberate recklessness.” Daou, 411 F.3d 1014-15 (internal citation 7 omitted). Critically, deliberate recklessness is more than recklessness or motive to commit fraud 8 – it is “an extreme departure from the standards of ordinary care,” which “presents a danger of 9 misleading buyers or sellers that is either known to the defendant or so obvious that the actor 10 must have been aware of it.” Zucco Partners, 552 F.3d at 991 (emphasis in the original). Plaintiffs’ claims are premised on their belief that Defendants knew SBT6050 was not 11 12 effective and did not have a manageable safety profile yet continued to omit that information 13 every time they issued a statement. Plaintiffs base this argument on the fact that the trial was 14 “open label” and therefore Defendants “had access to trial data in real time from day one.” (Opp. 15 at 21.) Plaintiffs also put forth a Confidential Witness (“CW”) 1 in support of their argument, 16 who states that Defendant Shawver (Silverback’s CEO and Director) held company wide 17 meetings every two weeks to report and discuss trial data. (FAC ¶ 44.) Though CW1 states these 18 meetings were companywide, Plaintiffs do not put forth any evidence that all the Defendants 19 attended these meetings, let alone every single one, and whether at any point during these 20 meetings it became apparent that SBT6050 was ineffective and lacked a manageable safety 21 profile. 22 23 During oral argument, Plaintiffs claimed that the logical inference from these meetings is that SBT6050’s safety and efficacy were discussed. But the Court is unwilling to make this 24 ORDER ON MOTION TO DISMISS - 23 1 assumption. Despite having a confidential witness who attended the meetings, Plaintiffs do not 2 allege that CW1 can confirm what data was discussed, that safety and efficacy were discussed, 3 when they were discussed, and what documents and data were presented at these meetings. 4 Plaintiffs do nothing more than state CW1 attended the meetings and the likely inference from 5 these meetings is that safety and efficacy were discussed. This argument is unconvincing. 6 Plaintiffs rely primarily on In re Amgen Inc Sec. Litig., No. CV072636PSGLAX, 2014 7 WL 12585809 (C.D. Cal. Aug. 4, 2014) (not reported) in support of their assertion that an open 8 label trial and biweekly meetings support a strong inference of scienter. In Amgen, plaintiffs 9 filed securities fraud claims against the company, along with its officers and directors, alleging 10 that they made a series of misleading statements and omissions concerning the safety of two of 11 Amgen’s flagship drugs. Id. at *1. On its face, Amgen and this case sound similar, but the facts 12 are very different. In Amgen, the FDA concluded the company had misstated the results of two 13 completed studies that defendants had previously submitted to the FDA. Id. at *3. Additionally, a 14 trial of the drug conducted by an outside group was discontinued due to poor health outcomes, 15 which defendants failed to inform investors of . Id.at *2. Plaintiffs also had specific statements 16 from meetings that contradicted the findings from these studies and demonstrated that these 17 statements were made after the studies were concluded. Id. at *2-3. The court found that 18 “[w]here a strong inference suggests that a defendant was on notice of clinical findings before 19 making contradictory public statements, the defendant’s conduct is at least “deliberately 20 reckless” under Section 10(b).” Id. at *9. 21 Here, Plaintiffs put forth no evidence suggesting that Defendants were on notice of 22 clinical findings that contradicted their public statements at the time those statements were made 23 other than to point to the trial’s “open label.” As Defendants rightfully argue, the trial proceeded 24 ORDER ON MOTION TO DISMISS - 24 1 in distinct parts involving different patient cohorts and different dosages. (Motion at 5.) Meaning 2 that each part of the trial produced new and different data that was not previously available. (Id.) 3 Plaintiffs’ claims that Defendants had to have known SBT6050 was not effective or safe simply 4 because the trial was open label is hardly demonstrative of a strong inference of scienter absent 5 evidence that the information was actually available when Defendants made the statements. 6 Additionally, whereas here, Plaintiffs seek to hold individual defendants and Silverback liable, 7 the Ninth Circuit requires Plaintiffs to allege scienter with respect to each of the defendants. 8 See Oregon Pub. Emps. Ret. Fund v. Apollo Grp. Inc., 774 F.3d 598, 607 (9th Cir. 2014). 9 Plaintiffs do not attempt to allege scienter with respect to each of the Defendants other than to 10 point to the company wide meetings. And it is not clear that the public statements and filings are 11 false, let alone “so dramatically false that they would create a strong inference that at least some 12 corporate officials knew of the falsity upon publication.” Id. at 607-08. 13 A holistic view from the Court similarly does not save Plaintiffs. The only facts Plaintiffs 14 put forth in support of scienter are the biweekly meetings and the trial’s open label. Plaintiffs 15 supply no additional facts regarding pertinent information that arose during the meetings or that 16 data became available to Defendants that would contradict later statements. These facts are 17 insufficient to give rise to a strong inference of scienter. 18 The Court finds Plaintiffs’ failure to plead scienter as an additional ground to GRANT 19 the Motion to Dismiss. 20 4. 21 22 Section 15 and Section 20(a) Claims Section 15 and Section 20(a) both require underlying primary violations of the securities laws. 15 U.S.C. §§ 77o, 78t(a); Rigel Pharms, 697 F.3d. Because Plaintiffs have failed to 23 24 ORDER ON MOTION TO DISMISS - 25 1 adequately plead a violation of the federal securities laws, Plaintiffs’ Section 15 and Section 2 20(a) claims are DISMISSED without prejudice. 3 4 CONCLUSION Plaintiffs’ First Amended Complaint fails to allege with the requisite particularity that 5 Silverback and the individually named Defendants made materially misleading statements and 6 omissions in the Offering Documents and during the class period in violation of Section 11 of the 7 Securities Act and Section 10(b) of the Exchange Act. The Court therefore GRANTS 8 Defendants’ Motion to Dismiss without prejudice. 9 Should Plaintiffs choose to file an amended complaint, they must do so within thirty (30) 10 days of this Order. Failure to do so will result in a dismissal of Plaintiffs’ claims with prejudice. 11 The clerk is ordered to provide copies of this order to all counsel. 12 Dated November 4, 2022. 13 A 14 Marsha J. Pechman United States Senior District Judge 15 16 17 18 19 20 21 22 23 24 ORDER ON MOTION TO DISMISS - 26
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