In re Vicor Securities Litigation

• Court: District Court, N.D. California
• Decided: June 6, 2025
• Docket: 3:24-cv-04196
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 10 IN RE VICOR SECURITIES LITIGATION Case No. 24-cv-04196-RS

11 ORDER GRANTING MOTION TO 12 DISMISS 13

15 I. INTRODUCTION 16 In this case, a putative class of short-sellers have sued a publicly traded corporation over 17 alleged misrepresentations that spurred a dramatic rise in values. Plaintiffs aver that, when these 18 alleged misrepresentations came to light, stock prices plummeted. Having had to cover their short 19 positions in light of the initial rise, Plaintiffs seek damages under the Exchange Act. Defendants 20 move to dismiss the allegations, contending that no misrepresentations were made and that, at any 21 rate, they lacked the necessary scienter to be found liable. For the reasons explained below, 22 Defendants’ motion is granted, and the operative complaint is dismissed with leave to amend. 23 II. BACKGROUND 24 According to Plaintiffs’ first amended complaint (“FAC”), Dkt. No. 27, Defendant Patrizio 25 Vinciarelli is the founder and CEO of Defendant Vicor Corporation, which designs, develops, 26 manufactures, and markets modular power components and power systems for deployment in 27 areas such as high-performance computing, industrial equipment automation, robotics, satellites, 1 revealed that Nvidia, another tech company, would not be using Vicor’s designs in its new 2 artificial intelligence (“AI”) computer chips. Previously, Vicor’s two largest customers had been 3 Nvidia and Google. By May 2023, the company was reporting decreased net revenues and 4 accounts receivable—leading Plaintiffs to take short positions on the company’s stock. 5 On July 25, 2023, Vicor released its second quarter earnings report, which featured the 6 following statement, attributed to Vinciarelli:

7 Q2 bookings remained weak, ahead of production release of an AI platform with a 8 Lateral Power Distribution Network (‘PDN’) using a 4G Chipset, now expected to ramp in Q4. The same 4G Chipset will support a more adept Lateral-Vertical 9 PDN, enabling a reduction of nearly 100W in total power consumption at heavy workloads and superior processor performance. 10 FAC ¶ 32 (emphasis added). Later that day, Vinciarelli spoke to investors and analysts on an 11 earnings call. One analyst asked whether the expected “ramp” was from a new customer. 12 Vinciarelli responded: 13 It’s an existing customer. It’s a new generation for the existing customer. And 14 it’s a chipset that can be deployed either in a lateral PDN, which is substantially 15 handicapped from a power system perspective to the point that it limits power delivery, power capability, process of performance, in that it gives rise to large 16 losses within the copper of the substrate to the GPU, that it powers. It gives rise to further losses within the system itself, or into the limitations of lateral power 17 delivery applied at the 1,000 amp level. With a 4G chipset, we can enable a lateral solution with the same handicaps, or with a vertical element using the same 18 chipset, a lateral vertical solution, which is unique, highly differentiated, in that it 19 improves system efficiency by about 10%. And it improves a number of limitations relating to process of performance. 20 Id. ¶ 36 (emphasis added). When another analyst inquired about the “lateral vertical opportunity” 21 described in the press release, Vinciarelli elaborated that, “Based on customer input expectation, 22 as of now . . . the lateral implementation will go first. And that’s the one we’re anticipating for Q4 23 ramp. I can’t tell you when the lateral vertical was going to production, but my expectation is that 24 it would be after the lateral.” The analyst asked, “is this going to be a significant customer or is 25 this more of an incremental volume that you’re going to expect?” Vinciarelli answered, “This is a 26 significant customer.” Id. ¶ 38. 27 1 Plaintiffs aver that the above statements—the press release, the earnings call statement 2 about an existing customer, and the related statement about the customer being a significant one— 3 “gave the unmistakable impression that a concrete deal had been reached for an existing—not 4 speculative—large customer of a significant number of purchases in the fourth quarter, which 5 would have reversed Vicor’s trend of declining and weak sales.” Id. ¶ 43. The market apparently 6 reacted: whereas stocks closed on July 25, 2023 at $59 per share, they opened the next morning at 7 $77.40 and closed at $93.70—after more than 4.5 million shares had changed hands, 5x more than 8 average. Plaintiffs, who had shorted Vicor stock, claim that they were forced to cover their 9 positions at a significant loss of $35 per share on average, plus approximately $15 per share they 10 think they would have realized but for the need to cover. Id. ¶¶ 45–47. 11 Everything changed a few months later, when Vicor held its third quarter earnings call in 12 October 2023. Asked about the significant, existing customer that it had touted as driving the 13 expected fourth quarter ramp, Vicor’s VP of Sales Phil Davies said “we’re having substantial 14 conversations now with customers that will diversify us away from the two big guys that we’ve 15 been doing business with[.]” Id. ¶ 53. Another analyst chimed in, asking, “with the one major 16 customer though, do they have two different designs with you? . . . two different GPUs that are 17 going to be used, in one using lateral, the other’s going to be using lateral-vertical?” and 18 Vinciarelli responded by addressing the analyst by name: “John, we’re not going to talk about any 19 one customer. I’m sorry but bear with us, that’s not a level of specificity we want to get involved 20 with.” The analyst, John Dillon from Goldman Sachs, reiterated the question about “a major GPU 21 customer,” and Davies answered him as follows: 22 So what we talked about there was that we have lateral and lateral-vertical solutions for not just one customer. We are bringing that solution forward, and we 23 have customers looking at that, both of those solutions. And certainly, the number 24 of customers looking at lateral deployment is a little bit higher than the number with lateral-vertical, but we have both. 25 Id. ¶ 55. A different analyst later chimed in about the “major customer,” asking about the 26 “Dynamics relative to your last call,” and Vinciarelli said, “I think I made clear that we really 27 1 don’t want to go into the level of detail. And to be clear, well, I appreciate the reason for the 2 interest, the curiosity, it’s really got very little to do with Vicor’s opportunity in the medium and 3 long term. And that’s what we’re really focused on.” Id. ¶ 56. 4 After the October 2023 call, investors fled. Vicor stock dropped over 20% and closed at 5 $53.19 per share that day; the next day, trading opened at $39.01. Nearly a year later—and after 6 the filing of the instant litigation—Vicor put out a press release explaining that its July 2023 7 announcement was true: it had “booked” $30 million in “non-cancellable, non-returnable” orders 8 from the customer, and its statement reflected what Vicor “understood to be” the customer’s 9 “allocation for a new program.” Id. ¶ 63 (discussing September 2024 press release). 10 Plaintiffs assert two claims: one claim under Section 10(b) of the Exchange Act and Rule 11 10b-5(b), and a separate claim (against Vinciarelli personally) under Section 20 of the Exchange 12 Act. As to the first claim, Plaintiffs aver manipulation or deception that was material and “in 13 connection with” the purchase or sale of securities, made with scienter in a way that caused 14 damages. As to the second claim, Plaintiffs aver that Vinciarelli acted as the controlling person of 15 Vicor and made misrepresentations with scienter such that he is liable personally as a control 16 person. 17 Defendants move to dismiss the complaint on four grounds: 18 1. No facts pleaded support any inference that any statement by Vicor or Vinciarelli 19 was false or misleading when made; 20 2. No facts pleaded support any inference of scienter, much less the strong inference 21 required under the PSLRA; 3. No plausible theory in which Plaintiffs, all short-sellers betting against Vicor, could 22 have relied on Defendants’ allegedly misleading statements; and 23 4. Failure to state a “control person” claim under Section 20(a) of the Securities 24 Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78t(a). 25

27 1 III. LEGAL STANDARD 2 A complaint must contain “a short and plain statement of the claim showing that the 3 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While “detailed factual allegations” are not 4 required, a complaint must include sufficient facts to “state a claim to relief that is plausible on its 5 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the pleaded factual content allows the 6 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 7 A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests 8 the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus. v. Symington, 9 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal under Rule 12(b)(6) may be based either on the 10 “lack of a cognizable legal theory” or on “the absence of sufficient facts alleged under a 11 cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). 12 When evaluating such a motion, the court must accept all material allegations in the complaint as 13 true, even if doubtful, and construe them in the light most favorable to the nonmovant. Twombly, 14 550 U.S. at 570. “[C]onclusory allegations of law and unwarranted inferences,” however, “are 15 insufficient to defeat a motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy 16 Co., 83 F.3d 1136, 1140 (9th Cir. 1996); see also Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. 17 at 555 (“Threadbare recitals of the elements of the cause of action, supported by mere conclusory 18 statements, do not suffice.”)). 19 Complaints in securities fraud cases must also meet the pleading standards set forth by the 20 Private Securities Litigation Reform Act (“PSLRA”). The PSLRA mandates that “securities fraud 21 complaints ‘specify’ each misleading statement; that they set forth the facts ‘on which [a] belief’ 22 that a statement is misleading was ‘formed’; and that they ‘state with particularity facts giving rise 23 to a strong inference that the defendant acted with the required state of mind.’” Dura Pharm., Inc. 24 v. Broudo, 544 U.S. 336, 345 (2005) (alterations in original) (quoting 15 U.S.C. §§ 78u–4(b)(1)– 25 (2)). Furthermore, securities claims which are “grounded in fraud” must meet the pleading 26 requirements of Rule 9(b). In re Rigel Pharms., Inc. Secs. Litig., 697 F.3d 869, 886 (9th Cir. 27 2012). “To satisfy Rule 9(b), a pleading must identify the who, what, when, where, and how of 1 the misconduct charged, as well as what is false or misleading about [the purportedly fraudulent] 2 statement, and why it is false.” Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 3 1047, 1055 (9th Cir. 2011) (internal quotation marks omitted) (alteration in original). 4 IV. DISCUSSION 5 A. Section 10(b) and Rule 10b-5 6 “To be viable, a claim brought under § 10(b) and Rule 10b-5 must contain six essential 7 elements: ‘(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a 8 connection between the misrepresentation or omission and the purchase or sale of a security (4) 9 reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.’” 10 Retail Wholesale & Dep’t Store Union Local 338 Ret. Fund v. Hewlett-Packard Co., 845 F.3d 11 1268, 1274 (9th Cir. 2017) (quoting Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37–38 12 (2011)). Defendants argue that Plaintiffs’ complaint fails to meet that standard in three specific 13 ways: (1) failure to plead any material, misleading statement; (2) failure to plead scienter; (3) 14 failure to plead reliance on the allegedly misleading statements. 15 1. Material, Misleading Statements 16 To plead falsity adequately under the PSLRA, “the complaint shall specify each statement 17 alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an 18 allegation regarding the statement or omission is made on information and belief, the complaint 19 shall state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(1). 20 This means “Plaintiffs must plead with particularity which statements were made, when they were 21 made, why they were false at the time they were made, and how the Defendant who made the 22 statement acted with scienter at the time the statements were made.” Veal v. LendingClub Corp., 23 423 F.Supp.3d 785, 819 (N.D. Cal. 2019). Defendants contend that Plaintiffs’ complaint fails 24 plead with particularity why the statements described in the complaint were false when they were 25 made. 26 Plaintiffs respond with a lengthy explanation of how, when Defendants said they “expected 27 to ramp in Q4” an AI platform with a 4G ChiP-set, they gave the false impression that Vicor had 1 an actual customer who had agreed to make new purchases. Opp. Br., Dkt. No. 37, at 12–15. 2 Plaintiffs believe this message was cemented by Vinciarelli’s subsequent statements about a 3 significant, existing customer driving the ramp. This message must have been clearly delivered, 4 Plaintiffs claim, given the stock trading that occurred on the heels of the call. The complaint states 5 “Vicor represented it had contracts with an existing significant customer that were related to 6 Vicor’s newest product and which Vicor would deliver starting in Q4 2023.” FAC at ¶ 78. See 7 also id. at ¶ 40 (“had agreed to make product purchases”), ¶ 43 (“concrete deal”). Yet, according 8 to Plaintiffs, this was all a lie—there was no such concrete deal with an existing customer. 9 Defendants rightly highlight that many of the above characterizations are incorrect: they 10 never said anything about contracts or agreements or concrete deals. To the contrary, they were 11 clear that they only “expected” to ramp—i.e., they had “anticipat[ion]”— based on “customer 12 inputs.” As Defendants fairly summarize, “This lawsuit is based purely on the disclosure of an 13 anticipated future business opportunity that did not materialize in the expected time frame.” Mot. 14 at 12. Once the recharacterizations in the operative complaint are stripped away, the allegedly 15 misleading statements at issue reduce to the following: (1) that Vicor “Expected to ramp in Q4” a 16 new AI platform using a 4G ChiP-set; (2) that the platform was a “new generation for the existing 17 customer” and (3) that the customer was a “significant” one. 18 Plaintiffs contend that these disclosures must have been false when made because, during 19 the subsequent October 2023 call, Vicor’s top brass backed away from discussing the Q4 ramp 20 and signaled, apparently for the first time, a plan to diversify its customer base. Framing this 21 retreat as a “cover up”, Plaintiffs provide one relevant case as support for the proposition that 22 allegations supporting the existence of an alleged cover-up of a fraud are relevant to inferring 23 falsity. See SEC v. Dropil, Inc., No. 20-cv-00793-SBD-FMX, 2020 WL 7348021, at *6 (C.D. Cal. 24 Oct. 23, 2020). The cited language, however, describes how a detailed explanation “of allegedly 25 material misrepresentations that define the contours of the scheme and subsequent cover up” can 26 support an “inference of scienter”. Id. That statement does not support the premise that alleging a 27 cover-up satisfies the material misrepresentation element of a PSLRA claim; to the contrary, it 1 suggests that a cover-up allegation, combined with details about allegedly false statements, can 2 suffice to satisfy the scienter element. In that case, the SEC detailed four ways in which the 3 Defendant had misrepresented aspects of its securities’ offerings. Id. at *2. Those allegations, 4 taken together with related allegations of fabricated responses to subpoenas, sufficed to state a 5 claim. In the present case, such details and allegations are entirely absent. The mere averment 6 that Defendants changed their tune in Q3 does not suffice to allege material misrepresentations 7 occurred in Q2. 8 Moreover, even if it were true that alleging a cover-up supports the inference of falsity, no 9 facts in the complaint plausibly aver anything to cover-up. Plaintiffs seem to suggest that the July 10 2023 announcement was a market manipulation to enable insider trading. FAC ¶ 100 (averring 11 that, following the announcement, “Vicor insiders . . . sold well over $1 million in Vicor shares”); 12 ¶ 102 (“Vinciarelli attempted to prevent his own and other Vicor shares from being loaned to short 13 sellers. Using whatever means Defendants could to increase the value of Vicor’s shares was 14 obviously intended, at least in part, to lift the price of the stock as a way to self-enrich as well as to 15 combat short sellers, creating a short squeeze.”) These speculative and conclusory allegations, 16 however, fail to aver plausibly a material misstatement. Indeed, they do not explain why it is not 17 equally as plausible that Vinciarelli was being optimistic. See In re Daou Sys., Inc., 411 F.3d 18 1006, 1021 (9th Cir. 2005) (concluding that statements regarding the defendant’s expectations 19 may have been “overly optimistic when made,” but they did “not rise to the level of material 20 misrepresentation actionable after enactment of the PSLRA”). Even taken as true, the averment 21 that insiders traded heavily following the July 2023 call does not, standing alone, suggest that the 22 news on the call was false; it just as easily suggests that the insiders who allegedly traded believed 23 the news to be true. 24 Plaintiffs next contend that, even if Vicor never technically used the terms “orders” or 25 contracts,” it is still liable if it “gave a misleading impression” as alleged in the complaint. Opp. 26 Br. at 18. Yet, the cases Plaintiffs cite in support of that notion are inapt. In one, the Ninth Circuit 27 simply confirmed that, where a complaint identified four confidential witnesses who would testify 1 as to the falsity of certain statements, the material misrepresentation element was met. See Berson 2 v. Applied Signal Tech., Inc., 527 F.3d 982, 985 (9th Cir. 2008). No such facts are present here. 3 In the other, the Ninth Circuit acknowledged that “even if a statement is not false, it may be 4 misleading if it omits material information.” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 5 1008–09 (9th Cir. 2018). Here, there is no plausible averment in the complaint that Defendants’ 6 announcement of expectations omitted material information. Plaintiffs claim Vicor “never 7 disclosed the truth about the customer or the nature of their discussions, and only later disclosed 8 that it had nothing concrete at the time and had merely announced the deal with the significant 9 customer without a placement of firm orders.” Opp. Br. at 18. This conclusory allegation is 10 unsupported—the complaint provides no basis on which to conclude that Vicor “had nothing 11 concrete” or that it hid that fact such that it committed any material omission. 12 Finally, it bears mentioning that the PSLRA provides a safe harbor for forward looking 13 statements, such as “a projection” of revenues, a “statement of the plans and objectives of 14 management for future operations,” or “any statement of the assumptions underlying or relating 15 to” any forward-looking statement. See 15 U.S.C. § 78u-5(i)(1); see also, Harris v. Ivax Corp., 16 182 F.3d 799, 805 (11th Cir. 1999) (affirming finding that a statement was a “forward-looking 17 statement” because it was a statement that meant “things were looking up”). This safe harbor 18 applies where a statement is “accompanied by meaningful cautionary statements identifying 19 important factors that could cause actual results to differ materially from those in the forward- 20 looking statements” or where the statement is “immaterial.” 15 U.S.C. §§ 78u-5(c)(1)(A). To 21 satisfy the safe harbor, cautionary language must only appear once per presentation or document, 22 not directly before every single statement being challenged. Wenger v. Lumisys, Inc., 2 F. Supp. 23 2d 1231, 1242 (N.D. Cal. 1998). 24 Defendants provided appropriate cautionary language with both the press release and 25 during the July 2023 call. The language was clear: “Any statement in this press release that is not 26 a statement of historical facts is a forward-looking statement” and is “based upon management’s 27 current expectations and estimates as to the prospective events and circumstances that may or may 1 not be within the company’s control and as to which there can be no assurance.” Vinciarelli Decl. 2 Ex. 3, Dkt. No. 32-4 at 5. At the beginning of the call, investors and the public were warned that 3 “various remarks we make during this call may constitute forward-looking statements for purposes 4 of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995 . . . we 5 can offer no assurances that any forward-looking statement will, in fact, prove to be correct. 6 Actual results may differ materially from those explicitly set forth in or implied by any of our 7 remarks today….” Vinciarelli Decl. Ex. 4 at 1:26–2:51. ‘ 8 Plaintiffs halfheartedly suggest that Defendants fail to explain the forward-looking nature 9 of the at-issue statements, but on their face, the statements are necessarily forward looking; they 10 came in Q2 yet concerned Q4, and they revolved around the words “expect” and “anticipate.” The 11 statements about an existing, significant customer are only relevant to these forward-looking 12 projections of what was to come. Plaintiffs next try to recharacterize what was said—“Vicor 13 announced it had a deal with Nvidia or Google for Vicor’s new ChiP-set, which was concrete 14 enough that Vicor acknowledged the Q4 ramp,” Opp. Br. at 20—but, as noted supra, nothing of 15 the sort was actually said. Defendants announced that they expected a Q4 ramp due to inputs from 16 an existing, significant customer; that’s it. The press-release disclosure specifically says words 17 like “expects” or “anticipates” are ones that “identify forward-looking statements.” Dkt. No. 32-4 18 at 5. The call disclosure stated that “any statements regarding current and planned products, 19 current and potential customers . . . as well as management’s expectations for sales growth . . . are 20 forward-looking statements . . . we can offer no assurances that any forward-looking statement 21 will, in fact, prove to be correct.” Dkt. No. 32-5 at 1:26-2:51. Combined, these disclosures and 22 the forward-looking nature of the at-issue statements place them outside the ambit of the PSLRA. 23 Ultimately, Plaintiffs fail to allege facts giving rise to a plausible inference that material 24 misstatements were made. The actual verbiage used by Vicor and Vinciarelli was plainly forward- 25 looking, and there is nothing in the complaint to support a finding that those forward-looking 26 statements were false when made. 27 2. Scienter 1 To plead scienter adequately under the PSLRA, the complaint must “state with 2 particularity facts giving rise to a strong inference that the defendant acted with the required state 3 of mind.” 15 U.S.C. § 78u-4(b)(2)(A) (emphasis added). A “strong inference” exists “if a 4 reasonable person would deem the inference of scienter cogent and at least as compelling as any 5 opposing inference one could draw from the facts alleged.” Tellabs, Inc. v. Makor Issues & 6 Rights, Ltd., 551 U.S. 308, 324 (2007). A dual inquiry applies for assessing whether the strong 7 inference standard is met: the court first “determines whether any one of the plaintiff’s allegations 8 is alone sufficient to give rise to a strong inference of scienter; second, if no individual allegations 9 are sufficient, it conducts a ‘holistic’ review to determine whether the allegations combine to give 10 rise to a strong inference of scienter.” Glazer Cap. Mgmt., L.P. v. Forescout Techs., Inc., 63 F.4th 11 747, 766 (9th Cir. 2023) (quoting Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 992 (9th 12 Cir. 2009)). 13 None of the complaint’s allegations, standing alone, give rise to a strong inference of 14 scienter. It primarily contends that element is proven by the specificity of Defendants’ statements 15 and the fact that they would have had records to clue them into the uncertain nature of the 16 expected Q4 ramp. Yet, these averments are insufficient plausibly to allege the scienter required 17 by the PSLRA. “Plaintiffs do not provide any specific facts, documents, reports, or sources to 18 show that Defendants had information contrary to what was projected in their press release 19 statements. Without such specifics, the Court cannot ascertain whether there is any basis to the 20 allegations that Defendants had actual or constructive knowledge” of adverse facts.” Stocke v. 21 Shuffle Master, Inc., 615 F.Supp.2d 1180, 1188 (D. Nev. 2009) (internal citation omitted). Even a 22 holistic review of the allegations fails to give rise a strong inference of scienter. 23 Plaintiffs argue in the alternative that Vicor’s statements were made with reckless 24 disregard of their falsity. “For a deal of this magnitude and importance to fall apart so quickly 25 strongly suggests that Defendants lacked any basis warranting the unqualified assertions of fact 26 made on the [call].” FAC ¶ 95. See also id. ¶ 106 (“If Vicor did not have actual knowledge of the 27 1 misrepresentation and/or omissions alleged, then it was reckless in failing to obtain such 2 knowledge.”). These allegations suffer fatal flaws. First, they mischaracterize what Vicor 3 actually said, which was merely that it expected to ramp up production of a new system for an 4 existing, substantial customer—not that there was a done deal of particular magnitude and 5 importance. Second, they rely on an unfounded premise that the news must have been false 6 because the expected ramp did not occur as expected. It is just as plausible that the news was true 7 and then things changed.1 8 At bottom, Plaintiffs’ complaint is rife with conclusory allegations about Defendants’ 9 knowledge and intent in making the July 2023 statements. Once such conclusions are set aside, 10 the remaining allegations in the complaint fail plausibly to aver that Defendants acted with 11 scienter. 12 3. Reliance 13 Reliance is generally presumed when the statement in question was issued to the public, 14 though that presumption is rebuttable where it is completely implausible that any reasonable 15 investor could have relied on the statement in purchasing the securities. See In re Infineon Techs. 16 A.G. Sec. Litig., 266 F.R.D. 386, 395 (N.D. Cal. 2009) (“A presumption of reliance cannot exist 17 where such a presumption would be unreasonable.”). Because Plaintiffs are short-sellers, 18 Defendants contend that they could not have relied on the market price for Vicor stock nor 19 Defendants’ statement—they were betting against the company. See Zlotnick v. TIE Commc’ns, 20 836 F.2d 818, 823 (3d Cir. 1988) (declining to presume reliance on the part of a short seller and 21 stating that “since [the plaintiff] decided that the market price was not an accurate valuation of the 22 stock at the time of his short sale, we should not presume that it was reasonable for him to rely 23

24 1 Plaintiffs also aver that Vinciarelli had scienter because he is the Chairman of the Board and 25 CEO of Vicor. FAC ¶ 97. Scienter, however, may not be inferred solely from an individual defendant’s position within the company. See Zucco Partners, 552 F.3d at 998. Nor may it be 26 inferred solely from the fact that he signed certain financial statements. Id. at 1003–04. As for the hinted-at insider trading allegations, the Complaint never connects Vinciarelli or any identified 27 individual to the alleged trading. 1 upon the market price at the time of his purchase.”). Plaintiffs respond that, although they rely on 2 a fraud on the market theory for class-wide reliance, the named Plaintiffs have pleaded direct 3 reliance on the July 2023 statements. See FAC at 9115-17. Defendants suggest that whether 4 short-sellers are entitled to the presumption of reliance, and whether they can even assert a 5 securities fraud claim as a putative class, may be open questions in the Ninth Circuit. See Mot. at 6 || 21n.23. 7 Because the complaint fails to allege plausibly both the material representation and scienter 8 elements of the claim, this order does not reach the question of whether reliance was sufficiently 9 alleged to state a claim. 10 B. Section 20 11 Defendant also argues that Plaintiffs fail to state a “Control Person” claim pursuant to 15 12 || U.S.C. § 78t(a). “Under Section 20(a), a defendant employee of a corporation who has violated 13 || the securities laws will be jointly and severally liable to plaintiff, as long as the plaintiff 14 || demonstrates a primary violation of federal securities law and that the defendant exercised actual 3 15 power or control over the primary violator.” Inchen Huang v. Higgins, 443 F.Supp.3d 1031, 1059 a 16 (N.D. Cal. 2020) (internal quotation marks and citation omitted). 3 17 For the reasons explained above, Plaintiffs have failed to plead plausibly that there was a 18 || primary violation of federal securities law in this case. As a result, the control person claim 19 against Vinciarelli necessarily fails in parallel. 20 V. CONCLUSION 21 Because the operative complaint fails to aver plausibly any material misstatements or 22 || scienter as required by the PSLRA, Defendants’ motion to dismiss is granted with leave to amend. 23 24 || ITISSO ORDERED. 25 Dated: June 6, 2025 26 RICHARD SEEBORG 27 Chief United States District Judge 28 ORDER GRANTING MOTION TO DISMISS CASE No. 24-cv-04196-RS