Police Retirement Sys. v. Intuitive Surgical, No. 12-16430 (9th Cir. 2014)
Annotate this CasePRS filed a class action against Intuitive on behalf of purchasers of Intuitive common stock, alleging violations of sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and Securities and Exchange Commission Rule 10b.5, 15 U.S.C. 78j(b), 78t(a), 17 C.F.R. 240.10b-5. PRS alleged that Intuitive, through its executives, knowingly issued false and misleading statements regarding the company's growth and financial health which caused artificial inflation of the share price. The court concluded that, read as a whole, PRS's allegations did not satisfy the heightened pleading requirements imposed in the securities fraud cases and did not identify any material misstatements made with scienter. Intuitive's statements were mostly forward-looking statements or garden variety corporate optimism, and PRS failed to suggest that the executives made false statements with knowing or reckless disregard for Intuitive's economic circumstances. Accordingly, the court affirmed the district court's dismissal of the complaint with prejudice.
Court Description: Securities Fraud. The panel affirmed the dismissal of a securities fraud action brought under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Rule 10b-5 by purchasers of the stock of a company that designed, manufactured, and marketed robotic surgical devices. The complaint alleged that through its executives the company knowingly issued false and misleading statements regarding its growth and financial health, which caused artificial inflation of the share price. The panel held that the company’s statements were, in large part, non-actionable forward-looking statements or garden variety corporate optimism. The panel also held that the complaint was deficient in suggesting that the executives made false statements with knowing or reckless disregard for the company’s economic circumstances. The panel concluded that the complaint did not meet the heightened pleading requirements under Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act of 1995.
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