In Re Philip Morris Int'l Inc. SEC. Litig.

89 F.4th 408

• Court: Court of Appeals for the Second Circuit
• Decided: December 26, 2023
• Docket: 21-2546
• Status: Published

Opinion

21-2546 In re Philip Morris Int’l Inc. Sec. Litig.

United States Court of Appeals For the Second Circuit

August Term 2022

Argued: February 8, 2023 Decided: December 26, 2023

No. 21-2546

IN RE: PHILIP MORRIS INTERNATIONAL INC. SECURITIES LITIGATION

UNION ASSET MANAGEMENT HOLDING AG, Intervenor-Appellant,

TEAMSTERS LOCAL 710 PENSION FUND, Movant-Appellant,

v.

PHILIP MORRIS INTERNATIONAL INC., ANDRÉ CALANTZOPOULOS, MARTIN G. KING, JACEK OLCZAK, PATRICK PICAVET, MANUEL C. PEITSCH, FRANK LÜDICKE, Defendants-Appellees. *

Appeal from the United States District Court for the Southern District of New York No. 18-cv-8049, Ronnie Abrams, Judge.

* The Clerk of Court is respectfully directed to amend the official case caption as set forth above. Before: KEARSE, PARKER, and SULLIVAN, Circuit Judges.

Union Asset Management Holding AG and Teamsters Local 710 Pension Fund (together, the “Investors”) – co-lead plaintiffs in this putative securities-fraud class action against Philip Morris International Inc. (“PMI”) and several of its current and former executives (together with PMI, the “Defendants”) – appeal from the district court’s orders (1) dismissing their first amended complaint, (2) denying reconsideration of such dismissal, and (3) dismissing their second amended complaint. In both complaints, the Investors alleged that Defendants made a series of false and misleading statements about PMI’s “IQOS” smoke-free tobacco products, in violation of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5.

On appeal, we are tasked with deciding two matters of first impression in this Circuit. First, are a securities-fraud defendant’s statements that its scientific studies complied with a methodological standard that is published and internationally recognized, but stated in general and inherently subjective terms, properly analyzed as statements of opinion, rather than fact? Second, where a securities-fraud defendant’s challenged statements express an interpretation of scientific data that is ultimately endorsed by the Food and Drug Administration, are such statements per se “[]reasonable” (i.e., supported by “meaningful inquiry”) as a matter of law under Tongue v. Sanofi, 816 F.3d 199, 210, 214 (2d Cir. 2016) (quoting Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund, 575 U.S. 175, 188 (2015))? Answering both of these questions in the affirmative, and finding that the record otherwise requires dismissal under existing Circuit precedent, we AFFIRM the judgment of the district court.

AFFIRMED. JEREMY A. LIEBERMAN, Pomerantz LLP, New York, NY (Emma Gilmore, Brian Calandra, Pomerantz LLP, New York, NY; Samuel H. Rudman, David A. Rosenfeld, Robert D. Gerson, Mark T. Millkey, Robbins Geller Rudman & Dowd LLP, Melville, NY; Andrew S. Love, Robbins Geller Rudman & Dowd LLP, San Francisco, CA, on the brief), for Appellants.

KEVIN M. MCDONOUGH, Latham & Watkins LLP, New York, NY (James E. Brandt, Jooyoung Yeu, Matthew P. Valenti, Latham & Watkins LLP, New York, NY; Kenneth J. Parsigian, Latham & Watkins LLP, Boston, MA; Andrew B. Clubok, Brent T. Murphy, Latham & Watkins LLP, Washington, DC, on the brief), for Appellees.

RICHARD J. SULLIVAN, Circuit Judge:

Union Asset Management Holding AG and Teamsters Local 710 Pension

Fund (together, the “Investors”) – co-lead plaintiffs in this putative

securities-fraud class action against Philip Morris International Inc. (“PMI”) and

several of its current and former executives (the “Individual Defendants”; together

with PMI, the “Defendants”) – appeal from the district court’s orders

(1) dismissing their first amended complaint, (2) denying reconsideration of that

dismissal, and (3) dismissing their second amended complaint. In both

3 complaints, the Investors alleged that between July 26, 2016 and April 18, 2018 (the

“Class Period”), Defendants made a series of false and misleading statements

about PMI’s “IQOS” smoke-free tobacco products, in violation of sections 10(b)

and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C.

§§ 78j(b), 78t(a), and Securities and Exchange Commission (“SEC”) Rule 10b-5,

17 C.F.R. § 240.10b-5.

On appeal, we are tasked with deciding two matters of first impression in

this Circuit. First, are a securities-fraud defendant’s statements that its scientific

studies complied with a methodological standard that is published and

internationally recognized, but stated in general and inherently subjective terms,

properly analyzed as statements of opinion, rather than fact? Second, where a

securities-fraud defendant’s challenged statements express an interpretation of

scientific data that is ultimately endorsed by the Food and Drug Administration

(the “FDA”), are such statements per se “[]reasonable” (i.e., supported by

“meaningful inquiry”) as a matter of law under Tongue v. Sanofi, 816 F.3d 199, 210,

214 (2d Cir. 2016) (quoting Omnicare, Inc. v. Laborers Dist. Council Const. Indus.

Pension Fund, 575 U.S. 175, 188 (2015))? Answering both of these questions in the

affirmative, and finding that the record otherwise requires dismissal under

4 existing Circuit precedent, we conclude that the district court properly dismissed

the Investors’ complaint. As a result, we affirm the judgment of the district court.

I. BACKGROUND

A. Facts

PMI is one of the largest cigarette and tobacco manufacturing companies in

the world. While PMI’s business is limited to consumer markets outside the

United States, its stock is publicly traded on the New York Stock Exchange, and

its products are marketed and sold in the United States by its former parent

corporation. As global cigarette sales have declined, PMI has shifted its focus

from cigarettes to the development and commercialization of smoke-free

alternatives, known as “reduced-risk products,” that are marketed as safer than

traditional, combustible cigarettes. To that end, PMI has stated that its “future is

in products that have been scientifically demonstrated to be less harmful than

cigarettes,” J. App’x at 1895 ¶ 37, and that its “ambition is to lead a full-scale effort

to ensure that non-combustible products ultimately replace cigarettes to the

benefit of adult smokers, society, [PMI,] and [its] shareholders,” id. at 1885 ¶ 3.

At the center of this litigation is PMI’s flagship reduced-risk product,

“IQOS.” IQOS is an electronic device that heats – but does not combust – tobacco

5 contained in proprietary, single-use cartridges marketed by PMI as “HeatSticks,”

releasing a flavorful, nicotine-containing aerosol inhaled by the user without fire,

ash, or smoke.

PMI first introduced IQOS in Japan, with a limited 2014 launch in the city of

Nagoya, followed by a nationwide launch in 2016. IQOS initially performed very

well in Japan, capturing a 94% share of the Japanese “heat-not-burn” tobacco

market – which nearly tripled in size from 2016 to 2017. Likewise, IQOS’s share

of the overall Japanese tobacco market grew steadily, gaining from 7.1% in 1Q17 to

16.3% in 1Q18. 1 Throughout the Class Period, Japan was the only country where

PMI sold IQOS on a nationwide basis.

Around the same time, PMI began the process of seeking FDA authorization

to market IQOS in the United States – and, more ambitiously, to market IQOS here

as a safer, healthier, and less risky alternative to cigarettes. Between December

2016 and March 2017, PMI applied to the FDA for authorization to market IQOS

in the United States either (1) generally (i.e., unaccompanied by any claims about

health benefits relative to conventional cigarettes), (2) as a “reduced-exposure”

1 In this Opinion, we use the shorthand “1Q17” to refer to the first quarter of fiscal year 2017 (and

so forth).

6 tobacco product, or (3) as a “reduced-risk” tobacco product.” See 21 U.S.C.

§ 387k(g)(1)–(2) (setting forth standards for FDA authorization of reduced-

exposure and reduced-risk claims). 2 In support of these applications, PMI

submitted to the FDA a variety of clinical and non-clinical studies that it had

commissioned to assess IQOS’s toxicological profile and effects on human users.

PMI made the results, methodological protocols, and raw data from all such

studies available to the public. After submitting its applications, PMI continued

to conduct additional studies, the results of which it shared with the FDA in

subsequent amendments to its applications.

Meanwhile, PMI and the Individual Defendants expressed optimism about

the prospects of both (1) continued sales growth in Japanese markets and (2) FDA

approval of PMI’s applications. See infra Sections III.A (analyzing Defendants’

statements regarding scientific studies underlying FDA applications), III.B

(analyzing Defendants’ statements regarding projected sales in Japan).

2 A “reduced-exposure” tobacco product refers to a “tobacco product that reduce[s] exposure to

harmful chemicals,” whereas a “reduced-risk” tobacco product refers to a “product that reduce[s] the risk of tobacco-related diseases.” J. App’x at 1934.

7 On both fronts, however, PMI soon encountered setbacks. In December

2017, while PMI’s applications to the FDA remained pending, Reuters published

an article reporting on a former PMI scientist’s criticisms of – and allegations of

serious “irregularities” in – the IQOS clinical studies. J. App’x at 2035 ¶ 419.

On the day of the Reuters article’s publication, the price of PMI stock dropped by

3.47%. In January 2018, the Tobacco Products Scientific Advisory Committee (the

“TPSAC”), the advisory panel convened by the FDA to conduct a preliminary

review of the IQOS studies, issued non-binding recommendations that the FDA

grant PMI’s application for a reduced-exposure order but deny its application for

a reduced-risk order. After the New York Times reported on TPSAC’s

recommendations in an article headlined “F.D.A. Panel Rejects Philip Morris’s

Claim That Tobacco Stick Is Safer Than Cigarettes,” PMI’s share price again

dropped, this time by 2.81%. Id. at 1887–88 ¶¶ 9–10. And then, on April 19, 2018

– the day after the end of the Class Period – PMI announced its 1Q18 earnings,

disclosing that while IQOS’s share of the Japanese tobacco market was still

growing quarter-over-quarter, “HeatSticks sales, which come as a lagging

indicator to [IQOS] device sales,” id. at 1176, were “down 39% from [4Q17] and

8 well below consensus estimates,” id. at 1954 ¶ 191. The day of that

announcement, the price of PMI stock dropped by 15.58%.

In April 2019, the FDA authorized PMI to market IQOS in the United States,

and in July 2020, it further authorized PMI to do so with “reduced-exposure”

claims. In the “Scientific Reviews” accompanying these orders, the FDA found

PMI’s “[s]cientific studies” to have “shown that switching completely from

conventional cigarettes to the IQOS system significantly reduces [the] body’s

exposure to harmful or potentially harmful chemicals.” Id. at 3004 (emphasis

omitted). The FDA further found that, “[a]lthough [PMI] ha[d] not demonstrated

that [IQOS] . . . will significantly reduce harm and the risk of tobacco-related

disease to individual tobacco users,” such “dramatic changes in exposure relative

to combusted cigarettes are reasonably likely to . . . translate to lower risk of

tobacco‐related morbidity and mortality.” Id. at 3007–08. Accordingly, the FDA

determined that “a measurable and substantial reduction in morbidity or

mortality among individual tobacco users is reasonably likely in subsequent

studies.” Id. at 3008.

9 B. Procedural History

In September 2018, the City of Westland Police and Fire Retirement System

(“Westland”), on behalf of a putative class of all those who purchased PMI stock

during the Class Period, filed this action against PMI and three of the Individual

Defendants. Westland’s original complaint asserted primary claims under

section 10(b) of the Exchange Act and SEC Rule 10b-5, as well as control-person-

liability claims against three of the Individual Defendants under section 20(a) of

the Exchange Act. In February 2019, the district court consolidated this action

with three related ones and appointed the Investors as co-lead plaintiffs. A few

months later, the Investors filed a consolidated amended class-action complaint,

naming all Defendants and otherwise asserting the same legal claims as

Westland’s original complaint.

In a February 2020 opinion and order, the district court granted Defendants’

motion to dismiss the Investors’ first amended complaint, finding that the

Investors had failed to adequately “allege[] that any of the [Defendants’

challenged] statements . . . were false or misleading,” Sp. App’x at 21–22, or that

“any Defendant acted with the requisite scienter,” id. at 36. At that time, the

district court granted the Investors leave to amend their complaint as to claims

10 “related to Defendants’ [alleged] failure to timely disclose . . . four [2016–2017 non-

clinical] studies” of the toxicological makeup of IQOS aerosol, id. at 30, while

dismissing the remainder of the first amended complaint “with prejudice,” id. at

42.

The Investors then moved for reconsideration of the district court’s

February 2020 dismissal order, which the district court denied. After the

Investors filed their second amended complaint, Defendants again moved to

dismiss. In September 2021, following a full round of briefing and oral argument,

the district court granted Defendants’ motion – once again finding that the

Investors had “failed to adequately plead falsity,” id. at 85, or “to adequately plead

scienter,” and once again concluding that each such finding “provide[d] an

alternate basis for dismissal of [the Investors’] claims under [s]ection 10(b)” and

Rule 10b-5, id. at 89. In light of that conclusion, the district court also dismissed

the Investors’ “derivative” claims under section 20(a). Id. at 90. This time, the

district court’s dismissal was “with prejudice.” Id.

The Investors timely appealed.

11 II. STANDARD OF REVIEW

We review de novo the district court’s dismissal for failure to state a claim

under Federal Rule of Civil Procedure 12(b)(6), as well as for failure to meet the

heightened pleading standards imposed on securities-fraud claims by Rule 9(b)

and the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), 15 U.S.C.

§ 78u-4(b). See ECA & Loc. 134 IBEW Joint Pension Tr. of Chi. v. JP Morgan Chase

Co., 553 F.3d 187, 196 (2d Cir. 2009). “To survive a motion to dismiss [under

Rule 12(b)(6)], a complaint must plead ‘enough facts to state a claim to relief that

is plausible on its face.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007)) (other citation omitted). Pursuant to Rule 9(b), a complaint sounding in

fraud also “must state with particularity the circumstances constituting fraud,”

Fed. R. Civ. P. 9(b), and under the PSRLA, it must “specify each statement alleged

to have been misleading[] [and] the reason . . . why the statement is misleading,”

and “state with particularity facts giving rise to a strong inference that the

defendant acted with the required state of mind,” 15 U.S.C. § 78u-4(b)(1), (2)(A).

III. DISCUSSION

To state a private securities-fraud claim under section 10(b) and Rule 10b-5,

a plaintiff must plead “(1) a material misrepresentation or omission by the

12 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, Inc., 552 U.S. 148, 157 (2008); see also

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 319 (2007) (defining scienter

as an “intent to deceive, manipulate, or defraud”) (internal quotation marks

omitted). The latter four elements are not at issue in this appeal. Here, the

Investors alleged that Defendants made false or misleading statements regarding

both (1) the results and methodology of scientific studies that PMI conducted in

support of its application to the FDA for permission to market IQOS as a

“reduced[-]exposure” and/or “modified[-]risk” tobacco product, and (2) the

outlook for IQOS’s sales performance in Japanese markets. For the reasons

explained below, we hold that, with respect to each of the statements challenged

by the Investors, the Investors have either failed to plead material falsity or

abandoned their challenges on appeal. As a result, we need not reach the merits

of the district court’s alternative holding on scienter.

13 A. Challenged Statements Regarding PMI’s Scientific Studies of IQOS

1. Statements Regarding the Studies’ Methodology

The district court found that many of Defendants’ challenged statements

about the IQOS studies – characterizing their methodology as “rigorous,”

“extensive,” “thorough,” “systematic,” “unique in . . . completeness and

transparency,” “the best science,” and “very advanced,” and the scientists who

performed them as “expert” and “world-class,” J. App’x at 1959–2011 ¶¶ 208–09,

212–14, 216–17, 224–25, 228–29, 234, 239, 243, 249, 253, 260, 267–68, 282, 287–88,

291–92, 294, 297–98, 304–05, 313–14, 319, 322, 324, 331, 349, 361, 363, 367 – are

inactionable as “mere puffery,” Sp. App’x at 23–24. We agree. Because these

“vague descriptions” of the studies’ methodology “offer only generally optimistic

opinions,” they “are too general to cause a reasonable investor to rely upon them

and therefore are precisely the type of puffery that [we] have consistently held to

be inactionable.” In re Synchrony Fin. Sec. Litig., 988 F.3d 157, 170 (2d Cir. 2021)

(emphasis added; internal quotation marks omitted); see, e.g., ECA, 553 F.3d

at 205–06 (finding puffery where defendant characterized its “risk[-]management

processes” as “highly disciplined” and “set[ting] the standard for integrity”

(internal quotation marks omitted)); Lasker v. N.Y. State Elec. & Gas Corp., 85 F.3d

14 55, 58–59 (2d Cir. 1996) (finding puffery where defendant stated that it “would not

compromise its financial integrity,” was “commit[ed] to creat[ing] earnings

opportunities,” and that its “business strategies would lead to continued

prosperity” (internal quotation marks and alteration omitted)).

The Investors dispute the district court’s conclusion, arguing that “these

statements were ‘determinate, verifiable statements,’” as opposed to puffery.

Investors Br. at 40 (quoting Omnicare, 575 U.S. at 184) (alteration omitted).

But their argument is undermined by the very case they purport to rely on. In

Omnicare, the Supreme Court gave the following example of “a determinate,

verifiable statement”: “[t]he TVs we manufacture have the highest resolution

available on the market.” 575 U.S. at 183–84. “[I]f a competitor had introduced

a higher resolution TV,” then that would be an objectively “untrue statement of

fact”; if no competitor had introduced a higher resolution TV, then it would be a

“verifiabl[y]” true statement of fact. Id. Here, by contrast, the Investors cannot

point to any objective, black-and-white standard by which to verify whether PMI’s

scientific studies were in fact “rigorous,” “very advanced,” or “the best science.”

The district court was therefore justified in concluding that the statements about

the IQOS studies were not actionable.

15 In a similar vein, the district court found that another broad swath of

challenged statements – namely, Defendants’ various representations that PMI’s

IQOS studies were “conducted according to Good Clinical Practice (‘GCP’),”

J. App’x at 1902 ¶ 54; see id. at 1962–2011 ¶¶ 218, 224, 226, 269, 287, 291, 300, 306,

308, 310–11, 361 – “constitute[d] inactionable statements of opinion,” Sp. App’x

at 28. On appeal, the Investors argue that, since Defendants “did not couch those

statements with words such as ‘we think’ or ‘we believe,’” they “were statements

of fact, not opinion.” Investors Br. at 42 (citing Omnicare, 575 U.S. at 183).

Once again, however, the Investors’ reliance on Omnicare is misplaced. In

the passage cited by the Investors, the Supreme Court was rejecting a

securities-fraud plaintiff’s argument that a “statement that ‘we believe we are

following the law’ conveys that ‘we in fact are following the law.’” Omnicare, 575

U.S. at 183. Considered in that context, the Court’s point was that language like

“we believe” or “we think” is sufficient – not necessary – to render a statement one

of opinion rather than fact. Indeed, the Court went on to clarify that where a

statement expresses an “inherently subjective . . . assessment,” that is also

sufficient to render it one “of pure opinion.” Id. at 186. Thus, the materiality of

“Defendants’ . . . statements about their compliance with GCP” turns on whether

16 they were “inherently subjective” (as Defendants argue), Defendants Br. at 38, or

ones whose objective, “fact[ual]” truth or falsity could be ascertained “with

certainty” (as the Investors argue), Investors Br. at 42. See, e.g., Fait v. Regions Fin.

Corp., 655 F.3d 105, 110, 113 (2d Cir. 2011) (contrasting “matters of objective fact”

with “inherently subjective” judgments that cannot be measured under an

“objective standard”), abrogated on other grounds by Omnicare, 575 U.S. 175, as

recognized in Abramson v. Newlink Genetics Corp., 965 F.3d 165 (2d Cir. 2020).

Defendants have the better of this argument. The Investors assert that

“‘GCP’ is a technical term [that] investors consider to be a verifiable fact that can

be relied upon.” Investors Br. at 27. Likewise, they repeatedly refer to PMI’s

putative “GCP violations,” Investors Br. at 2, 5, 7–9, 28, 43, 47–48, 65 (emphasis

added), ostensibly suggesting that GCP is a set of hard-and-fast rules, of which

violations could be established as a “matter[] of objective fact,” Fait, 655 F.3d

at 110; see also Omnicare, 575 U.S. at 183 (“[A corporation]’s statement that . . .

‘we . . . are following the law’ . . . is materially false, no matter what the

[corporation] thinks, if instead it is violating an anti-kickback statute.” (other

internal quotation marks omitted)). Defendants, on the other hand, analogize

GCP to “generally accepted auditing standards” whose “general and often

17 inherently subjective nature” is such that an “auditor’s statement of compliance

with generally accepted auditing standards ‘cannot properly be characterized as a

statement of fact.’” Defendants Br. at 38 (quoting In re Lehman Bros. Sec. & ERISA

Litig., 131 F. Supp. 3d 241, 250 n.44 (S.D.N.Y. 2015)).

Defendants’ view is confirmed by the Investors’ own complaint, which

defines the “requirements” of GCP as follows: “clinical trials should be

scientifically sound”; “individual[s] involved in conducting a trial . . . should be

qualified by education, training, and experience”; and “[t]he investigator should

have adequate resources to properly conduct the trial[] [and] should be

thoroughly familiar with the appropriate use of the investigational product(s).”

J. App’x at 1904 ¶ 58 (quoting Int’l Council for Harmonisation of Tech.

Requirements for Pharms. for Hum. Use, Integrated Addendum to ICH E6(R1):

Guideline for Good Clinical Practice E6(R2) 9 (2016), available at

https://database.ich.org/sites/default/files/E6_R2_Addendum.pdf) (other

citations, internal quotation marks, and alterations omitted). Whether a clinical

trial is “sound,” whether a researcher is “qualified,” and whether resources are

“adequate,” id., are all questions that require “inherently subjective . . .

assessment[s],” Omnicare, 575 U.S. at 186, and thus do not lend themselves to

18 resolution as “matters of objective fact,” Fait, 655 F.3d at 110. So too, then, is the

ultimate question of whether PMI’s clinical trials of IQOS complied with or

violated GCP.

As a practical matter, we see no meaningful daylight between a statement

that “we complied with Good Clinical Practices” and a statement that “our clinical

practices are good” – the latter of which would obviously be a statement of opinion.

Indeed, the point is well illustrated by the factual record of this case. Whereas

the Investors rely heavily on a “former PMI scientist[’s]” statements “confirming

GCP violations” for a 2017 Reuters investigative report, Investors Br. at 8 (emphasis

added), the FDA identified no GCP violations in its own extensive Scientific

Review of PMI’s IQOS studies – which it conducted after being provided with the

full findings of the 2017 Reuters investigation. As a result, Defendants’ statements

regarding GCP compliance are necessarily statements of opinion.

The Investors nevertheless press on to argue that, even if Defendants’

“repeated statements about . . . compliance with GCP” were properly classified by

the district court as “statements of . . . opinion,” they nevertheless “are actionable

because they omitted facts that rendered [them] misleading.” Investors Br. at 42–

43 (citing Abramson, 965 F.3d at 176). But this alternative argument fails for

19 substantially the same reasons as the Investors’ primary argument regarding the

GCP statements.

The Investors point to putative “GCP violations” as the “facts” that

“[D]efendants knew of,” but “omitted” from, their “statements about . . .

compliance with GCP.” Investors Br. at 43. But as explained above, the

Investors’ view that “the [IQOS clinical] trials were marred by . . . violations of

GCP,” id. at 40, is no less an “inherently subjective . . . assessment” – no less a

“statement of pure opinion,” Omnicare, 575 U.S. at 186 – than the Defendants’ (and

FDA’s) view that the trials were GCP-compliant. And while “a statement of

opinion” is actionable “when [it] implies . . . the absence of contrary facts[] and the

speaker knows or reasonably should know of different material facts that were

omitted,” Abramson, 965 F.3d at 175 (emphasis added), we have never held that a

statement of opinion can be rendered actionable by the speaker’s failure to

mention the possibility of contrary opinions. Such a holding would violate the

fundamental principle that the securities laws do not “require[]” the “[p]eople in

charge of an enterprise . . . to take a gloomy, fearful[,] or defeatist view of the

future,” and instead allow them “to be confident about their stewardship and the

prospects of the business that they manage.” Rombach v. Chang, 355 F.3d 164, 174

20 (2d Cir. 2004) (internal quotation marks omitted). We reject the Investors’

invitation to violate that principle here.

2. Statements Regarding the Studies’ Results

We next turn to the challenged statements regarding the results of PMI’s

IQOS studies, which fall into two broad categories. The first comprises

statements about the long-term health effects that could be inferred from the

totality of the evidence collected in PMI’s short-term clinical trials and non-clinical

toxicology studies. The second comprises statements regarding unfavorable

findings from PMI’s non-clinical toxicology studies of the aerosol produced by

IQOS devices. We address each in turn.

Exemplary of the first category is the following statement made by PMI’s

Chief Scientific Officer for Reduced-Risk Products, Manuel Peitsch, on a

September 2016 call with investors and analysts:

[T]he scientific research conducted across a range of studies demonstrates that IQOS has a wide array of benefits compared to smoking cigarettes. We have focused on the health effects of the product and its potential to reduce risk . . . . [T]he totality of the evidence generated to[ ]date supports our conclusion that IQOS has the potential to reduce the risk of smoking-related diseases in adult smokers who switch to it completely.

21 J. App’x at 1998 ¶ 328 (emphasis omitted); see also id. at 2003 ¶ 341 (“Studies

conducted to date clearly indicate that IQOS is likely to present less risk of harm

compared to smoking.” (alteration and emphasis omitted)), 2004 ¶ 343 (“The study

. . . clearly indicates areas of significant risk reduction[,] which we are currently

confirming through a longer[-]term study.” (emphasis omitted)), 2009–10 ¶ 359

(“Findings to date show that switching completely to IQOS is likely to present less

risk of harm than continued smoking . . . . These results give us confidence that

switching fully to IQOS is likely to present less risk of harm than continuing to

smoke.” (emphasis omitted; capitalization standardized)). Principally, the

Investors argue that these statements were revealed to be false when the TPSAC

found that “the evidence is not sufficient to demonstrate substantiation of either

of the claims about reduced risk of tobacco-related disease or harm.” Id. at 2973.

We have “rejected” the proposition that a mere “dispute about the proper

interpretation of data” can form “a basis for liability” under section 10(b) and

Rule 10b-5. Tongue, 816 F.3d at 214. That is, where “[plaintiffs] (and others) . . .

take issue with” a defendant’s “view regarding . . . the results [of the defendant’s

scientific studies],” but the “defendant’s competing analysis or interpretation of

data is itself reasonable, there is no false statement.” Kleinman v. Elan Corp., plc, 706

22 F.3d 145, 154 (2d Cir. 2013) (emphasis added). We also have previously

suggested in dicta – and now hold – that where “the FDA eventually accept[s]” a

“[d]efendant[’s] interpretation of the data,” that interpretation is per se

“[]reasonable” as a matter of law. Tongue, 816 F.3d at 214. Moreover,

“[d]efendants’ statements about the [implications of their data] cannot be

misleading merely because [a regulatory body] disagreed with the [defendants’]

conclusion”; rather, “so long as [the defendants] conducted a ‘meaningful’ inquiry

and in fact held th[e] view” they expressed, their statements will not be deemed to

“mislead in a manner that is actionable.” Id. (quoting Omnicare, 575 U.S. at 188–

90).

Applying the framework we set out in Tongue and Kleinman, the district

court found that “the FDA essentially endorsed Defendants’ statements about

[their] scientific data,” Sp. App’x at 79, in its June 2020 Scientific Review of the

IQOS studies and its July 2020 order granting PMI’s application to market IQOS

as a “reduced-exposure” product, see J. App’x at 2221 (FDA stating that PMI’s

“[s]cientific studies have shown that switching completely from conventional

cigarettes to the IQOS system significantly reduces [the] body’s exposure to

harmful or potentially harmful chemicals”). The district court further found that,

23 in any event, “Defendants’ statements appear[ed] to be supported by their

‘meaningful inquiry’ into the health benefits of IQOS.” Sp. App’x at 27 (quoting

Tongue, 816 F.3d at 214) (capitalization standardized).

On appeal, the Investors argue that the district court’s reliance on the FDA’s

Scientific Review and reduced-exposure order was both factually and legally

erroneous. As to the facts, the Investors argue that “even if [PMI’s] clinical trials

showed a . . . reduction in exposure to harmful chemicals in IQOS compared to

cigarette smoke,” that “is not directly linked to a reduction in risk of harm.”

Investors Br. at 50 (capitalization standardized); see also id. at 45 (“[D]efendants

repeatedly misrepresented . . . the data by falsely equating a finding of lower

exposure to some chemicals with lower risk of harm . . . .”). But this argument

misconstrues what both the FDA and the Defendants actually said about the

correlation between reduced exposure and reduced risk.

The FDA concluded that PMI’s studies “ha[d] shown that switching

completely from conventional cigarettes to the IQOS system significantly reduces

[the] body’s exposure to harmful or potentially harmful chemicals” – and that

“such dramatic changes in exposure relative to combusted cigarettes are reasonably

likely to . . . translate to lower risk.” J. App’x at 2221, 3008 (emphasis added). To

24 be sure, the FDA found that PMI’s short-term studies (i.e., the “scientific

evidence . . . available without conducting long‐term epidemiological studies”)

had not conclusively “demonstrated that [IQOS] . . . will significantly reduce harm

and the risk of tobacco‐related disease.” Id. at 2974, 3007. But the FDA

nevertheless concluded that PMI “ha[d] demonstrated that . . . measurable and

substantial reduction in morbidity or mortality among individual tobacco users is

reasonably likely in subsequent studies.” Id. at 2975 (second emphasis added); see also

id. at 3008 (FDA reaffirming that conclusion).

These conclusions by the FDA essentially mirror Defendants’ carefully

measured statements about the IQOS studies’ implications for long-term health

outcomes. See, e.g., id. at 1997–98 ¶ 328 (“[T]he evidence generated to[ ]date

supports our conclusion that IQOS has the potential to reduce the risk of

smoking-related diseases . . . . ” (other emphasis omitted)), 2003 ¶ 341 (“Studies

conducted to date clearly indicate that IQOS is likely to present less risk of

harm . . . .” (alteration and other emphasis omitted)), 2004 ¶ 343 (“The study . . .

clearly indicates areas of significant risk reduction[,] which we are currently

confirming through a longer[-]term study.” (other emphasis omitted)). Since “the

FDA eventually accepted” the Defendants’ “interpretation of the data” from the

25 IQOS studies, any allegation “that Defendants’ interpretation of the data was

irrational or unreasonable . . . would have little merit.” Tongue, 816 F.3d at 214.

Unable to refute the fact that “the FDA ultimately endorsed PMI’s view of

the data,” the Investors argue that it was legally “erroneous[]” for the district court

to rely on the FDA’s 2020 findings in assessing “the contemporaneous falsity of

the [D]efendants’ statements and omissions made years earlier.” Investors Br.

at 51. Such reliance, they urge, violated the principle that “the securities[-]laws

approach matters from an ex ante perspective: just as a statement true when

made does not become fraudulent because things unexpectedly go wrong, so a

statement materially false when made does not become acceptable because it

happens to come true.” Id. (quoting Pommer v. Medtest Corp., 961 F.2d 620, 623

(7th Cir. 1992)) (alteration omitted). But Pommer is clearly inapposite. There, a

corporate executive had “told [investors] that [his company] had a patent” when

the company did not, in fact, have such a patent, and the Seventh Circuit held that

“it does not matter that [the company] obtained the patent two years later.”

Pommer, 961 F.2d at 623. Pommer, then, stands for the proposition that if a

statement of objective fact is objectively false when made, it is irrelevant that the

statement would have been objectively true if made on some later date.

26 Here, by contrast, we are dealing not with statements of fact, but with

statements “about the proper interpretation of data.” Tongue, 816 F.3d at 214.

Accordingly, the question before us is not whether Defendants’ statements were

factually false when made, but whether they expressed an “interpretation of the

data” that was objectively “irrational or unreasonable” when they were made. Id.

And much as the Investors use the later-published Reuters article to suggest that

Defendants’ statements about their interpretation of the data were

contemporaneously unreasonable, the district court simply used the later-issued

FDA orders and Scientific Reports to confirm that they were contemporaneously

reasonable. Under our precedents, that was undoubtedly proper. See id.

(reasoning that “an[y] allegation” that “[d]efendants’ interpretation of the data

was irrational or unreasonable . . . would have little merit . . . as the FDA eventually

accepted [it]” (emphasis added)).

Indeed, as noted above, the FDA’s ultimate endorsement of Defendants’

interpretation of the clinical-studies data conclusively establishes that Defendants’

statements were reasonable, and therefore not actionable, under Tongue and

Omnicare. After all, the Investors’ theory of materiality is that PMI’s “future

depended on” securing “FDA[] approval not only to sell IQOS, but also to market

27 it as . . . a product significantly safer than conventional cigarettes,” and that the

material effect of Defendants’ challenged statements was thus “to assure . . . wary

investors . . . . that PMI’s clinical trials” could persuade the FDA to grant such

approval. Investors Br. at 2, 6 (internal quotation marks omitted; capitalization

standardized). Within that context, all that matters is that the FDA found PMI’s

interpretation of its data to be reasonable. It is immaterial that contrary views

were held – and even published – by individuals and entities with no say over the

regulatory process that PMI’s “future depended on.” Id. at 6 (internal quotation

marks omitted). At bottom, then, the district court properly found that

“Defendants’ statements about the results of [PMI’s] clinical studies were not

[affirmatively] misleading.” Sp. App’x at 27.

The Investors also argue that even if these statements were not affirmatively

misleading, they were misleading by omission. Namely, they contend that “a

reasonable investor would understand [these] statements to mean that PMI had

disclosed all material information in its possession relevant to determining

whether IQOS had a reduced risk of harm compared to cigarettes,” when in fact,

PMI “had not [yet] disclosed [four] studies revealing that IQOS contained

significant increases of more than a dozen harmful chemicals compared to

28 cigarettes.” Investors Br. at 46 (capitalization standardized). But an opinion

statement about the “interpretation of . . . data” is “not misleading simply because

the [speaker] ‘knows, but fails to disclose, some fact cutting the other way.’”

Tongue, 816 F.3d at 210, 214 (quoting Omnicare, 575 U.S. at 189). Instead, such a

statement is “misleading and actionable” only “[w]hen [the] omitted contrary facts

substantially undermine the conclusion [that] a reasonable investor would reach from

[the] statement.” Abramson, 965 F.3d at 177 (emphasis added). That is not the

case here.

Once again, the Investors’ own theory of materiality is that these statements

conveyed to investors that the findings of PMI’s scientific studies were sufficient

to persuade the FDA to allow PMI to sell IQOS in the United States and market it

as a safer alternative to conventional cigarettes. After reviewing the results of the

four so-called “aerosol studies” – discussed in greater detail below, in the context

of affirmative statements that Defendants made about them – the FDA did just

that. It is therefore clear that Defendants’ broadly optimistic statements about the

prospects for FDA authorization were not “substantially undermine[d]” by their

failure to disclose certain unfavorable data points from the aerosol studies. Id.

29 Next, we turn to the challenged affirmative statements that Defendants made

about the aerosol studies – non-clinical toxicology studies of all chemical

compounds present in the aerosol produced by IQOS devices – that PMI

conducted in 2016 and 2017. On appeal, the Investors focus on two statements

that PMI made about these studies in its May 2017 “Scientific Update for Smoke-

Free Products.”

First, the Investors challenge PMI’s statement that “the harmful chemicals

found in tobacco smoke are reduced on average by 90–95%” in IQOS aerosol.

J. App’x at 2005 ¶ 347 (emphasis omitted). This statement, however, is verifiably

true as a matter of objective fact. In its April 2019 Scientific Review, the FDA

found that on average, the concentration of FDA-recognized harmful or

potentially harmful constituents (“HPHCs”) in IQOS aerosol was reduced by

92.825% compared to reference cigarette smoke, and by 90.8625% even after

normalizing HPHC concentrations relative to nicotine yield. This sort of “true

statement[,]” of course, is not “actionable.” In re Lululemon Sec. Litig., 14 F. Supp.

3d 553, 571 (S.D.N.Y. 2014) (citing Basic Inc. v. Levinson, 485 U.S. 224, 238

(1988)), aff’d, 604 F. App’x 62 (2d Cir. 2015).

30 Second, the Investors take issue with PMI’s statement that “our . . . results

from the non-clinical assessment[s]” of “the [IQOS] aerosol” – “compared with

cigarette smoke” – “reveal reduced toxicity and no new hazards.” J. App’x at 2006

¶ 351 (other emphasis omitted). For starters, the “reduced-toxicity”

representation is not actionable since it too was a true statement of fact. Indeed,

the FDA found that overall “[]toxicity [levels] for the [IQOS aerosol] [were]

reduced by ~95% (per stick)[,] and ~90% when normalized to nicotine content[,] . . .

compared to [reference cigarette smoke].” Id. at 2882.

PMI’s statement that the “results” of the aerosol studies “reveal . . . no new

hazards,” id. at 2006 ¶ 351 (emphasis omitted), presents a closer question. The

Investors allege that this statement is false and misleading because “the results of

the [aerosol] [s]tudies . . . identified [eighty] compounds to be of ‘higher

concentration or new’ in IQOS when compared to a conventional cigarette, of

which ‘[four] compounds are classified mutagens/carcinogens’ and ‘[eight]

compounds present potential genotoxic concerns.’” Investors Br. at 52 (quoting

J. App’x at 1919 ¶ 98) (capitalization standardized).

But once again, the relevant inquiry turns on the reasonableness of PMI’s

interpretation of the data from the aerosol studies and its representation that the

31 data indicated no hazards that were new. See Hazard, Merriam-Webster,

https://www.merriam-webster.com/dictionary/hazard (last visited September 12,

2023) (defining “hazard” as a “source of danger” and synonymous to “risk”); New,

Merriam-Webster, https://www.merriam-webster.com/dictionary/new (last

visited September 12, 2023) (defining “new” to mean “having recently come into

existence” or “being other than the former or old”). PMI’s interpretation –

namely, that the aerosol studies revealed no risks or sources of danger that were

not previously in existence – was reasonable in light of the FDA’s determination

that the “IQOS aerosols contain[ed] considerably lower levels of potential

carcinogens and toxic chemicals that can harm the respiratory or reproductive

systems,” J. App’x at 2221, and “fewer toxic chemicals than cigarette smoke,” id.

at 2226. Notwithstanding the Investors’ contrary conclusions about the

aerosol-studies data, “a dispute about the proper interpretation of data” cannot

render PMI’s otherwise reasonable interpretation false and misleading.

Tongue, 816 F.3d at 214; see also Kleinman, 706 F.3d at 154 (explaining that “there is

no false statement” under our securities laws so long as a defendant’s

“interpretation of data is itself reasonable”).

32 The Investors nevertheless pivot to a different interpretation of PMI’s

statement, insisting that “no new hazards” must mean no increases in the

concentrations of hazardous chemical compounds that were already present in

cigarette smoke to begin with. According to the Investors, any increase in the

level of a previously present hazardous compound would make PMI’s

representation of “no new hazards” a false statement. But clearly, that is not what

“a reasonable investor would have understood” PMI’s statement to mean. IWA

Forest Indus. Pension Plan v. Textron Inc., 14 F.4th 141, 146 (2d Cir. 2021). In short,

the Investors must do more than allege an abstract percentage-point increase in

certain chemical-compound concentrations in the IQOS aerosol as compared to

cigarette smoke. They must instead allege that such increases were actually

hazardous – i.e., that they posed greater risk or were sources of danger. Properly

framed, the Investors’ newfound theory of falsity fails for the simple reason that

the FDA ultimately concluded that “[a]lthough some chemicals of potential

concern (not on FDA’s HPHC list) may be higher in IQOS, the increase in these

constituents does not impact the conclusion that the substantial reductions in

HPHCs and findings from the toxicological evidence are reasonably likely to

33 translate to lower risk of tobacco-related morbidity and mortality.” J. App’x

at 2976.

In the alternative, the Investors argue that the “no-new-hazards” statement

meant that the aerosol studies did not reveal the existence of any hazardous

chemical compounds not previously present in cigarette smoke. But, as a

“determinate, verifiable” issue of fact, Omnicare, 575 U.S. at 184, the hazardous

chemical compounds that the Investors identified from the results of the aerosol

studies – that is, the four compounds classified as mutagens/carcinogens and the

eight compounds classified as potentially genotoxic – are among those already

present in reference cigarette smoke, see J. App’x at 1920–22 ¶¶ 101, 103. Thus,

they cannot be new “source[s] of danger.” Hazard, Merriam-Webster. For all of

these reasons, we find no falsity in PMI’s statement that the “results from the non-

clinical assessment[s]” of “the [IQOS] aerosol reveal . . . no new hazards,”

“compared with cigarette smoke.” Id. at 2006 ¶ 351 (emphasis omitted).

B. Challenged Statements Regarding Projections for IQOS Sales in Japan

We now turn to Defendants’ statements regarding their projections for

IQOS’s Fiscal Year 2018 sales performance in Japanese markets. The Investors

claim that (1) André Calantzopoulos, PMI’s then-CEO, affirmatively

34 misrepresented PMI’s internal projections during a February 2018 earnings call

with investors; and (2) PMI materially omitted, from the SEC 10-K and 10-Q Forms

it filed throughout the Class Period, disclosures regarding unfavorable consumer

trends that it was required to make under Items 303 and 105 (formerly 503) of SEC

Regulation S-K, 17 C.F.R. §§ 229.303, 229.105. We address each claim in turn.

First, the Investors assert that “[o]n February 8, 2018, Calantzopoulos

informed investors ‘there’s nothing in the horizon that would . . . cause any change

in what happened in the previous years’ with regard to HeatStick [sales] volume

in Japan,” during which time PMI “had enjoyed a huge surge in HeatStick-related

growth in Japan.” Investors Br. at 29 (quoting J. App’x at 2018–19 ¶ 379). That

statement, the Investors contend, was revealed “a mere ten weeks” later to have

been materially false when made. Id. at 30. In particular, they point to an April

2018 earnings call in which then-CFO Martin King, fielding investors’ questions

about lower-than-expected HeatStick shipments to Japan in 1Q18, acknowledged

“anticipating that we would reach some sort of a plateau later in the year, given

that we knew the consumer dynamics that we had – close to saturating the early

adopters and innovators” – and explained that “[i]t’s just coming a bit earlier in

the year than what we had foreseen.” J. App’x at 1176.

35 In its decision dismissing the Investors’ first amended complaint, the district

court found that Calantzopoulos’s February 2018 statement “fall[s] under the

PSLRA’s safe harbor for ‘forward[-]looking statements.’” Sp. App’x at 30 (citing

15 U.S.C. § 78u-5). On appeal, the parties vigorously debate the correctness of

that legal conclusion. The Investors argue that “Calantzopoulos’[s] present-tense

statement – ‘there is nothing in the horizon’ – is . . . not forward[-]looking, as it

expressed his current understanding that there was nothing ‘in the horizon’ at that

moment that would negatively affect HeatStick volumes in Japan.” Investors Br.

at 29, 31 (quoting J. App’x at 2018–19 ¶ 379) (emphasis added; alteration omitted);

see also id. at 25 (“[The Investors] do not allege that [D]efendants should have

anticipated future events and made certain disclosures earlier, but rather that

[D]efendants had already anticipated future events and failed to disclose their

then-present awareness.” (emphasis added)). Defendants criticize that

“grammatical parsing of Calantzopoulos’s statement” as “tortured,” and maintain

that “[w]hen viewed in context, Calantzopoulos plainly was providing his outlook

on the future of the . . . Japan[ese] market.” Defendants Br. at 41 (emphasis

added).

36 We need not reach the parties’ heady debate over the philosophy of

language and time, however, as we find that Calantzopoulos’s challenged

statement was not false at all – thus mooting the question of whether it qualifies as

a forward-looking statement for purposes of the PSLRA’s statutory safe harbor.

While the Investors now characterize Calantzopoulos as stating that “‘there’s

nothing in the horizon that would . . . cause any change in what happened in the

previous years’ with regard to HeatStick [sales] volume in Japan,” Investors Br. at 29

(quoting J. App’x at 2019 ¶ 379) (emphasis added), that characterization is belied

by the record. The transcript of the February 2018 earnings call – as reproduced

in the Investors’ own complaint – reflects that Calantzopoulos made the

challenged statement in direct response to an investor who had asked, “what [are

you] thinking in terms of the combustible [cigarette] plus the HeatStick volume

outlook for Japan?” J. App’x at 2018–19 ¶ 379 (emphasis added).

Calantzopoulos answered that “our . . . projection for [the] total [tobacco] market in

Japan, including obviously HeatSticks,” is that “there’s nothing in the horizon . . .

that would cause any change in what happened in the previous years.” Id. at 2019

¶ 379 (other emphasis omitted). Indeed, at the beginning of the earnings call,

PMI’s Vice President of Investor Relations had emphasized that any subsequent

37 “references to total industry[,] total market, PMI volume[,] and PMI market[-]share

performance [would] reflect cigarettes and heated tobacco units.” Id. at 1087

(emphasis added).

Considered in that fuller context, the effect of Calantzopoulos’s challenged

statement is unambiguous. He merely represented that he saw “nothing in the

horizon that would . . . cause any change in what happened in the previous years,”

id. at 2019 ¶ 379 (emphasis omitted), with regard to PMI’s projected sales volume

in the total Japanese market for “cigarettes and heated tobacco units,” id. at 1087

(emphasis added) – not “with regard to HeatStick volume in Japan” alone,

Investors Br. at 29. That representation is fully consistent with King’s later

statement about “anticipating that [IQOS demand] would reach some sort of a

plateau” upon PMI’s “saturating the early adopters” and “reaching . . . more

conservative . . . smoker[s]” who would be “likely to display . . . a slower pace” in

transitioning to “the [smoke-free-tobacco] category.” J. App’x at 1173, 1176

(emphasis added). Meanwhile, the Investors have not alleged that the volume of

the total Japanese market for combustible and heated tobacco products was any

smaller in 2018 than it had been in previous years. Nor, for that matter, have they

pointed to any statement suggesting that Defendants anticipated the total volume

38 of the Japanese tobacco market to shrink in 2018. As a result, the Investors have

failed to plausibly allege any falsity in Calantzopoulos’s challenged statement.

Next, the Investors come at King’s statement about “anticipating . . . some

sort of a plateau [in IQOS demand],” id. at 1176, from a slightly different angle.

They argue that even if King’s admission did not render Calantzopoulos’s

“nothing-in-the-horizon” statement an actionable falsehood, it would establish

that PMI violated its disclosure obligations under Items 303 and 105. More

specifically, the Investors contend that under those Items, PMI had a duty “to

disclose [in its SEC Forms 10-K and 10-Q] the known uncertainty about ‘the level

of saturation among the early adopters and innovators in Japan and how that

would impact IQOS and HeatStick sales in 2018.’” Investors Br. at 36 (quoting

J. App’x at 2030 ¶ 402) (capitalization standardized); see 17 C.F.R. § 229.303(b)(2)(ii)

(imposing obligation to “[d]escribe any known trends or uncertainties that . . . are

reasonably likely to have a material . . . unfavorable impact on net sales or revenues

. . . from continuing operations”); id. § 229.105(a) (imposing obligation, “where

appropriate,” to “provide . . . a discussion of the material factors that make an

investment in the [company] speculative or risky”).

39 But the Investors overlook the fact that PMI’s 10-K and 10-Q Forms

throughout the Class Period did disclose the very trend that King alluded to

“anticipating” – namely, that “more conservative consumers” in “the

age[-fifty]-plus smoker segment” would “likely . . . display . . . a slower pace in

entering the [smoke-free-tobacco] category” than the relatively younger

consumers “in the innovators and early adopters groups.” J. App’x at 1173, 1176.

For example, in the “Risk Factors” section of its Form 10-K filed January 31, 2018,

PMI explained: “[w]e face intense competition, and our failure to compete

effectively could have a material adverse effect on our profitability and results of

operations. We compete primarily on the basis of . . . , increasingly, adult[-]smoker

willingness to convert to our [smoke-free tobacco products].” Id. at 172 (emphasis

added). Similarly, PMI explained that “[t]o be successful, we must . . . convince

adult smokers to convert to our [smoke-free tobacco products].” Id. at 173 (emphasis

The Investors argue that these disclosures amounted to “boilerplate,” and

that Defendants should have more specifically and affirmatively stated that they

“knew they were close to reaching” a “plateau in IQOS demand . . . in Japan . . . as

a result of the saturation of the younger IQOS user base.” Investors Br. at 26

40 (internal quotation marks omitted; capitalization standardized). But we agree

with the district court that any distinction between the disclosures PMI actually

made and the disclosures the Investors insist PMI should have made is a distinction

without a difference: “[a]lthough Defendants did not explicitly frame their

disclosure in terms of the risk of saturating the market of early adopters and

innovators, their disclosure that they ‘increasingly’ compete on the basis of

‘adult[-]smoker willingness to convert to their [smoke-free products]’ describes

the flipside of the very same coin.” Sp. App’x at 53 (quoting J. App’x at 172)

(alteration omitted). As a result, we also agree with the district court’s conclusion

that the Investors failed to plead any violation of Items 303 or 105 – let alone one

that would be actionable under section 10(b) or Rule 10b-5. See Stratte-McClure v.

Morgan Stanley, 776 F.3d 94, 102 (2d Cir. 2015) (“The failure to make a required

disclosure under Item 303 . . . is not by itself sufficient to state a claim for securities

fraud under [s]ection 10(b)” or “Rule 10b-5,” which “make[] only ‘material’

omissions actionable.” (quoting 17 C.F.R. § 240.10b-5(b))).

In an apparent afterthought, the Investors also assert that (1) “Defendants’

other statements about growth in Japan were similarly false and misleading . . . .

by virtue of [D]efendants’ failure to disclose the known slowdown in HeatStick

41 shipments to Japan by approximately seven billion units in 1Q18,” and (2) “[e]ven

assuming that any of these statements contain forward-looking aspects,

[D]efendants’ knowledge of falsity renders them actionable.” Investors Br. at 35

(citing J. App’x at 2015–27 ¶¶ 372, 376, 381, 385, 391–93). By “[m]erely

mentioning” Defendants’ other statements about growth in Japan “in [such] a

perfunctory manner, unaccompanied by some effort at developed

argumentation,” the Investors have abandoned their argument that such

statements were actionable. Niagara Mohawk Power Corp. v. Hudson River-Black

River Regul. Dist., 673 F.3d 84, 107 (2d Cir. 2012) (citations omitted); see also Gross

v. Rell, 585 F.3d 72, 95 (2d Cir. 2009); Tolbert v. Queens Coll. 242 F.3d 58, 75 (2d Cir.

2001).

To be clear, we do not invoke abandonment as a technicality to justify

sidestepping otherwise-meritorious arguments regarding Defendants’ other

statements about projected growth in Japanese markets. On the contrary, we

deem that issue to be abandoned precisely because the Investors have failed to make

any meaningful – let alone meritorious – argument as to how the district court

erred in analyzing it. When Defendants argued that the issue should be “treated

42 by this Court as waived,” Defendants Br. at 44 – or, more precisely, abandoned 3 –

the Investors responded that the “other statements made by [D]efendants about

Japan” were actionable “for the same [putative] reasons as the in-the-horizon

statement,” and that accordingly, they had “no reason to repeat the earlier-made

arguments applicable to [such] statements,” Reply Br. at 16 (emphasis added).

We disagree.

In its February 2020 opinion dismissing the Investors’ first amended

complaint, the district court found all of Defendants’ challenged Japan-related

statements to be inactionable based on either (1) the PSLRA’s statutory safe harbor

for forward-looking statements or (2) our closely related doctrine “refus[ing] to

allow plaintiffs to proceed with allegations of fraud by hindsight.” Bayerische

Landesbank, N.Y. Branch v. Aladdin Cap. Mgmt. LLC, 692 F.3d 42, 62 (2d Cir. 2012)

(internal quotation marks omitted). And indeed, many such statements were

worded with quintessentially forward-looking language. Compare, e.g., J. App’x at

2015 ¶ 372 (“Continued investment behind IQOS in 2018 is expected to further drive

3 See United States v. Graham, 51 F.4th 67, 79–80 (2d Cir. 2022) (discussing distinction between

waiver, forfeiture, and abandonment); see also United States v. Campbell, 26 F.4th 860, 871–75 (11th Cir. 2022) (en banc) (discussing same, in greater detail).

43 its positive momentum [in Japan].” (other emphasis omitted)), and id. at 2020 ¶ 381

(“[T]he increasing demand for HeatSticks [in Japan is] anticipated to further

increase in the first quarter of 2018.” (other emphasis omitted)), with 15 U.S.C.

§ 78u-5(i)(l)(A)–(C) (PSLRA defining “forward-looking statement[s]” as those

regarding “projection[s] of revenues, income . . . , [or] earnings”; “future economic

performance”; or “the plans and objectives of management for future operations”),

and In re Bear Stearns Cos. Sec., Derivative, & ERISA Litig., 763 F. Supp. 2d 423, 493

(S.D.N.Y. 2011) (“As a general rule, statements whose truth cannot be ascertained

until some time after the time they are made are ‘forward-looking statements.’”

(internal quotation marks omitted)).

Having assessed Calantzopoulos’s “nothing-in-the-horizon” statement as

presenting the closest call, the Investors made the strategic decision (both in their

district-court motion for reconsideration, see Dist. Ct. Doc. No. 126 at 9–11, and

now in their appellate briefs) to focus on that statement to the exclusion of

Defendants’ other Japan-related statements. Thus, in challenging the district

court’s analysis of the PSLRA safe harbor and fraud-by-hindsight doctrine, the

Investors have specifically relied on the particular language of the “nothing-in-the-

horizon” statement – arguing that it “recalls precisely ‘the Grand-Canyon

44 scenario[] where a defendant sees disaster looming on the horizon but opts to

whitewash reality,’” and that it actionably “implie[d] that no . . . problems were on

the horizon even [though] a precipice was in sight.” Investors Br. at 34 (first

quoting Tutor Perini Corp. v. Banc of Am. Sec. LLC, 842 F.3d 71, 91 (1st Cir. 2016);

then quoting In re Harman Int’l Indus., Inc. Sec. Litig., 791 F.3d 90, 102–03 (D.C. Cir.

2015)) (first emphasis added; other internal quotation marks omitted); see also id.

at 25 (arguing same). These arguments are not “applicable” to the “other

statements made by [D]efendants about Japan.” Reply Br. at 16.

In sum and substance, then, the Investors have failed to present us with any

reason to doubt the correctness of district court’s analysis of those statements. It

is not for us to play the “initiating role” of conjuring up such reasons on their

behalf. United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020); see also id.

(“[O]n appeal, we rely on the parties to frame the issues for decision and assign to

courts the role of neutral arbiter of matters the parties present.” (internal quotation

marks and alteration omitted)). Accordingly, we will not disturb the district

court’s well-reasoned conclusion that the balance of “Defendants’ positive

projections about growth in Japan” either “fall within . . . the [PSLRA] safe harbor

for forward-looking statements” or cannot be challenged but by the

45 “fraud[-]by[-]hindsight approach” that we have “firmly rejected.” Sp. App’x

at 11, 32, 36 (quoting Lopez v. CTPartners Exec. Search Inc., 173 F. Supp. 3d 12, 24

(S.D.N.Y. 2016) (citing Stevelman v. Alias Rsch. Inc., 174 F.3d 79, 85 (2d Cir. 1999)))

(capitalization standardized; other internal quotation marks omitted).

C. Control-Person Liability

Finally, we address the Investors’ claim under section 20(a) of the Exchange

Act, which imposes joint and several liability on “[e]very person who, directly or

indirectly, controls any person liable under any provision of [the Exchange Act] or

of any rule or regulation [promulgated] thereunder.” 15 U.S.C. § 78t(a). In their

operative complaint, the Investors claimed that the Individual Defendants are

liable under section 20(a) because they controlled the alleged section 10(b)

violators. Because we affirm the district court’s dismissal of the Investors’ claims

under section 10(b) and Rule 10b-5, we must also affirm the dismissal of their claim

under section 20(a). ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108

(2d Cir. 2007) (holding that because “a plaintiff must show . . . a primary violation

by the controlled person” in order to “establish a prima facie case of

control[-]person liability,” a plaintiff who “fails to allege any primary violation . . .

cannot establish control[-]person liability”).

46 IV. CONCLUSION

As far as Defendants’ challenged statements about the IQOS studies are

concerned, the Investors’ argument boils down to a charge that PMI engaged in

bad science: that the IQOS studies’ results were not compelling enough, or their

methodology not sound enough, to demonstrate that IQOS is fit to be sold in the

United States as a healthier alternative to cigarettes. Certainly, there are

scientists – including some of those who conducted the IQOS studies – who share

the Investors’ view. But the FDA scientists who granted PMI’s application for a

marketing order, granted PMI’s application for a reduced-exposure order, and

found that PMI was “reasonably likely” to demonstrate eligibility for a

reduced-risk order “in subsequent studies,” J. App’x at 2975; see id. at 3008, are not

among them. In a consumer-protection case, a mass tort case, or an

administrative-law challenge to the FDA’s orders, the views of those FDA

scientists might be open to challenge. But in this securities-fraud case, they are

conclusive.

All along, the Investors’ theory of materiality has been that PMI’s “future

depended on” securing “FDA[] approval not only to sell IQOS, but also to market

it as . . . a product significantly safer than conventional cigarettes,” and that the

47 material effect of Defendants’ challenged statements was thus “to assure . . . wary

investors . . . . that PMI’s clinical trials” could persuade the FDA to grant such

approval. Investors Br. at 2, 6 (internal quotation marks omitted; capitalization

standardized). To the extent that Defendants’ challenged statements were

material, the FDA’s ultimate rulings proved them to be true. To the extent that

Defendants’ statements were otherwise false, they were immaterial. That is fatal

to the Investors’ securities-fraud claim: it is axiomatic that “[n]either immaterial

false statements nor material true statements are actionable.” In re Lululemon,

14 F. Supp. 3d at 571 (citing Basic, 485 U.S. at 238), aff'd, 604 F. App’x 62.

As to Defendants’ statements about their projections for IQOS’s

performance in Japanese markets, the Investors’ argument reduces to a charge that

Defendants should have “take[n] a [more] gloomy, fearful[,] or defeatist view of

the future” and expressed less “confiden[ce] about their stewardship and the

prospects of the business that they manage.” Rombach, 355 F.3d at 174 (internal

quotation marks omitted). We have repeatedly rejected the notion that the

securities laws require the “[p]eople in charge of an enterprise” to adopt such a

view, and we reject it again here. Id. (internal quotation marks omitted)

For the foregoing reasons, we AFFIRM the judgment of the district court.