NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 21 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
KWOK KONG, No. 22-15396
Plaintiff-Appellant, D.C. No. 4:20-cv-06617-PJH
and MEMORANDUM* REENA SAINT JERMAIN,
Plaintiff,
v.
FLUIDIGM CORPORATION; et al.,
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California Phyllis J. Hamilton, District Judge, Presiding
Argued and Submitted February 6, 2023 San Francisco, California
Before: BYBEE and BUMATAY, Circuit Judges, and BENNETT,** Senior District Judge.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Richard D. Bennett, United States Senior District Judge for the District of Maryland, sitting by designation. In this putative class action, Plaintiff-Appellant Kwok Kong brings securities
fraud claims against a lab equipment manufacturer and two of its executive officers
based on several financial projections made to investors throughout fiscal year 2019.
In the operative Second Amended Complaint (“SAC”), Kong alleges violations of
Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, which
prohibit material misrepresentations or omissions in relation to the purchase or sale
of corporate securities. 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5. The district court
dismissed the SAC, finding that the Appellees’ challenged statements were not
materially misleading, and that Kong failed to plead a strong inference of scienter.
We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
Defendant-Appellee Fluidigm Corporation, Inc. (“Fluidigm”) manufactures
microfluidics and mass cytometry equipment. Fluidigm’s mass cytometry enterprise
expanded between 2018 and 2019, and its stock price nearly doubled during this
timeframe. However, Fluidigm’s mass cytometry sales declined sharply during the
second half of 2019, resulting in a substantial drop in the company’s stock price.
According to the SAC, Fluidigm and its top executives received internal reports in
October and November 2018 projecting that this decline would occur. Kong alleges
that Fluidigm CEO Christopher Linthwaite and CFO Vikram Jog (the “Individual
Defendants”) concealed these projections and made several statements on quarterly
2 revenue calls that misled investors to believe that the company’s mass cytometry
pipeline would remain profitable and continue to grow.
Section 10(b) of the Securities Exchange Act of 1934 proscribes the use of
“any manipulative or deceptive device” in violation of “such rules and regulations
as the [Securities and Exchange] Commission may prescribe.” 15 U.S.C. § 78j(b).
Implementing this directive, SEC Rule 10b-5 prohibits material misrepresentations
and omissions “in connection with the purchase or sale of any security.” 17 C.F.R.
§ 240.10b-5. To state a claim under these provisions, a securities fraud plaintiff must
allege, as relevant here, “a material misrepresentation or omission by the defendant,”
and scienter. Macomb Cnty. Emp. Retirement Sys. v. Align Tech., Inc., 39 F.4th 1092,
1096 (9th Cir. 2022) (quoting Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S.
258, 267 (2014)). We hold that Kong’s claim falls short at the first hurdle, as none
of the statements challenged in the SAC constitute material misrepresentations or
omissions that may sustain a securities fraud claim. Accordingly, we affirm on the
first issue and need not reach the question of scienter.
First, Kong challenges revenue and growth forecasts that are shielded by the
safe harbor provision of the Private Securities Litigation Reform Act (“PSLRA”),
15 U.S.C. § 78u-5. “The PSLRA’s safe harbor provision exempts from liability
forward-looking statements accompanied by [meaningful] cautionary language.” In
re Atossa Genetics Inc. Sec. Litig., 868 F.3d 784, 798 (9th Cir. 2017). Many of the
3 statements at issue “are classic growth and revenue projections, which are forward-
looking on their face.” Police Retirement Sys. of St. Louis v. Intuitive Surgical, Inc.,
759 F.3d 1051, 1058 (9th Cir. 2014). During investment calls in Q1, Q2, and Q3
2019, the Individual Defendants made statements such as: “We have certainly strong
growth throughout the back half of the year in general;” “[w]e see no reason why
the trend lines won’t continue to revert back towards the norm;” and “we think Q4,
given what’s setting up right now, is going to be a very strong cycle for placements
of instruments and order placements.” These statements assess “how various future
events will play out”—they do not describe “specific, concrete circumstances that
have already occurred.” Wochos v. Tesla, Inc., 985 F.3d 1180, 1192 (9th Cir. 2021)
(emphasis in original). Additionally, these comments were accompanied by
meaningful cautionary language in Fluidigm’s SEC filings and analyst calls, which
warned investors of the potential for increased competition and market fluctuations.
Second, while some statements fall outside the safe harbor, most constitute
puffery that is not actionable as a matter of law. Ordinarily, “‘vague statements of
optimism like good, well-regarded, or other feel good monikers,’ are not actionable
because ‘professional investors, and most amateur investors as well, know how to
devalue the optimism of corporate executives.’” Intuitive Surgical, 759 F.3d at 1060
(quoting In re Cutera Sec. Litig., 610 F.3d 1103, 1111 (9th Cir. 2010)). Throughout
Q1 and Q2 2019, the Individual Defendants lauded Fluidigm’s mass cytometry
4 enterprise, assuring investors that “[m]ass cytometry adoption is robust” and
“thriving;” that “the mass cytometry portfolio has done outstanding;” that “the mass
cytometry franchise has grown extremely strongly;” and that “the funnel is, on the
whole, very deep.” These generalized, optimistic remarks are precisely the kind of
“feel good monikers” that this Court has characterized as puffery. Intuitive Surgical,
759 F.3d at 1060. Cf. Macomb, 39 F.4th at 1098–99 (characterizing as puffery
comments regarding a “great growth market” and “huge market opportunity” for the
defendant’s products).
Third, and finally, Kong challenges a few present-tense statements involving
trends in the mass cytometry market. “[A] statement is misleading if it would give a
reasonable investor the ‘impression of a state of affairs that differs in a material way
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 21 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
KWOK KONG, No. 22-15396
Plaintiff-Appellant, D.C. No. 4:20-cv-06617-PJH
and MEMORANDUM* REENA SAINT JERMAIN,
Plaintiff,
v.
FLUIDIGM CORPORATION; et al.,
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California Phyllis J. Hamilton, District Judge, Presiding
Argued and Submitted February 6, 2023 San Francisco, California
Before: BYBEE and BUMATAY, Circuit Judges, and BENNETT,** Senior District Judge.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Richard D. Bennett, United States Senior District Judge for the District of Maryland, sitting by designation. In this putative class action, Plaintiff-Appellant Kwok Kong brings securities
fraud claims against a lab equipment manufacturer and two of its executive officers
based on several financial projections made to investors throughout fiscal year 2019.
In the operative Second Amended Complaint (“SAC”), Kong alleges violations of
Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, which
prohibit material misrepresentations or omissions in relation to the purchase or sale
of corporate securities. 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5. The district court
dismissed the SAC, finding that the Appellees’ challenged statements were not
materially misleading, and that Kong failed to plead a strong inference of scienter.
We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
Defendant-Appellee Fluidigm Corporation, Inc. (“Fluidigm”) manufactures
microfluidics and mass cytometry equipment. Fluidigm’s mass cytometry enterprise
expanded between 2018 and 2019, and its stock price nearly doubled during this
timeframe. However, Fluidigm’s mass cytometry sales declined sharply during the
second half of 2019, resulting in a substantial drop in the company’s stock price.
According to the SAC, Fluidigm and its top executives received internal reports in
October and November 2018 projecting that this decline would occur. Kong alleges
that Fluidigm CEO Christopher Linthwaite and CFO Vikram Jog (the “Individual
Defendants”) concealed these projections and made several statements on quarterly
2 revenue calls that misled investors to believe that the company’s mass cytometry
pipeline would remain profitable and continue to grow.
Section 10(b) of the Securities Exchange Act of 1934 proscribes the use of
“any manipulative or deceptive device” in violation of “such rules and regulations
as the [Securities and Exchange] Commission may prescribe.” 15 U.S.C. § 78j(b).
Implementing this directive, SEC Rule 10b-5 prohibits material misrepresentations
and omissions “in connection with the purchase or sale of any security.” 17 C.F.R.
§ 240.10b-5. To state a claim under these provisions, a securities fraud plaintiff must
allege, as relevant here, “a material misrepresentation or omission by the defendant,”
and scienter. Macomb Cnty. Emp. Retirement Sys. v. Align Tech., Inc., 39 F.4th 1092,
1096 (9th Cir. 2022) (quoting Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S.
258, 267 (2014)). We hold that Kong’s claim falls short at the first hurdle, as none
of the statements challenged in the SAC constitute material misrepresentations or
omissions that may sustain a securities fraud claim. Accordingly, we affirm on the
first issue and need not reach the question of scienter.
First, Kong challenges revenue and growth forecasts that are shielded by the
safe harbor provision of the Private Securities Litigation Reform Act (“PSLRA”),
15 U.S.C. § 78u-5. “The PSLRA’s safe harbor provision exempts from liability
forward-looking statements accompanied by [meaningful] cautionary language.” In
re Atossa Genetics Inc. Sec. Litig., 868 F.3d 784, 798 (9th Cir. 2017). Many of the
3 statements at issue “are classic growth and revenue projections, which are forward-
looking on their face.” Police Retirement Sys. of St. Louis v. Intuitive Surgical, Inc.,
759 F.3d 1051, 1058 (9th Cir. 2014). During investment calls in Q1, Q2, and Q3
2019, the Individual Defendants made statements such as: “We have certainly strong
growth throughout the back half of the year in general;” “[w]e see no reason why
the trend lines won’t continue to revert back towards the norm;” and “we think Q4,
given what’s setting up right now, is going to be a very strong cycle for placements
of instruments and order placements.” These statements assess “how various future
events will play out”—they do not describe “specific, concrete circumstances that
have already occurred.” Wochos v. Tesla, Inc., 985 F.3d 1180, 1192 (9th Cir. 2021)
(emphasis in original). Additionally, these comments were accompanied by
meaningful cautionary language in Fluidigm’s SEC filings and analyst calls, which
warned investors of the potential for increased competition and market fluctuations.
Second, while some statements fall outside the safe harbor, most constitute
puffery that is not actionable as a matter of law. Ordinarily, “‘vague statements of
optimism like good, well-regarded, or other feel good monikers,’ are not actionable
because ‘professional investors, and most amateur investors as well, know how to
devalue the optimism of corporate executives.’” Intuitive Surgical, 759 F.3d at 1060
(quoting In re Cutera Sec. Litig., 610 F.3d 1103, 1111 (9th Cir. 2010)). Throughout
Q1 and Q2 2019, the Individual Defendants lauded Fluidigm’s mass cytometry
4 enterprise, assuring investors that “[m]ass cytometry adoption is robust” and
“thriving;” that “the mass cytometry portfolio has done outstanding;” that “the mass
cytometry franchise has grown extremely strongly;” and that “the funnel is, on the
whole, very deep.” These generalized, optimistic remarks are precisely the kind of
“feel good monikers” that this Court has characterized as puffery. Intuitive Surgical,
759 F.3d at 1060. Cf. Macomb, 39 F.4th at 1098–99 (characterizing as puffery
comments regarding a “great growth market” and “huge market opportunity” for the
defendant’s products).
Third, and finally, Kong challenges a few present-tense statements involving
trends in the mass cytometry market. “[A] statement is misleading if it would give a
reasonable investor the ‘impression of a state of affairs that differs in a material way
from the one that actually exists.’” Retail Wholesale & Dep’t Store Union Local 338
Ret. Fund v. Hewlett-Packard Co., 845 F.3d 1268, 1275 (9th Cir. 2017) (citation
omitted) (alteration in original). A statement may be misleading if it omits “a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.” Matrixx Initiatives v.
Siracusano, 563 U.S. 27, 37 (2011).
The Individual Defendants made several concrete statements about trends in
the market and the competitive landscape. These include assertions such as “mass
cytometry adoption continues at a brisk pace, including an uptick in new customer
5 adoption;” “there’s not a fundamental change in the overall competitive landscape
as we see it right now;” and “we’re seeing no real trend change in the mass cytometry
business overall.” Kong contends that these statements are misleading, as the
Individual Defendants failed to disclose the reports they received in 2018 projecting
an impending downturn. However, the Individual Defendants did not conceal “real-
time financial information” indicating that the market was deteriorating—rather,
Fluidigm was experiencing record growth at the time they made these comments.
Cf. Macomb, 39 F.4th 1099 (“Significantly, at the time Align’s executives made the
six challenged statements, the company’s sales were still growing in China, albeit at
a diminished rate.”). Accordingly, we hold that their statements were not materially
misleading when made.
AFFIRMED.