Thomas Cunningham v. Identiv, Inc.

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 23 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

THOMAS CUNNINGHAM, Individually No. 17-15220 and On Behalf of All Others Similarly Situated, D.C. No. 3:15-cv-05775-CRB

Plaintiff-Appellant, MEMORANDUM* v.

IDENTIV, INC.; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Charles R. Breyer, District Judge, Presiding

Argued and Submitted March 13, 2018 San Francisco, California

Before: FERNANDEZ and McKEOWN, Circuit Judges, and BENITEZ, ** District Judge.

In this putative class action, lead plaintiff Thomas Cunningham appeals the

district court’s dismissal of his Second Amended Complaint alleging securities

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Roger T. Benitez, United States District Judge for the Southern District of California, sitting by designation. fraud by Identiv Inc., Identiv’s former CEO Jason Hart, and Identiv’s former CFO

Brian Nelson in violation of Sections 10(b) and 20(a) of the Securities Exchange

Act of 1934. See 15 U.S.C. §§ 78j(b), 78t(a); 17 C.F.R. § 240.10b–5. Because the

parties are familiar with the facts, we do not recite them here. We have jurisdiction

under 28 U.S.C. § 1291, and we affirm.

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

under Federal Rule of Civil Procedure 12(b)(6). Colony Cove Props., LLC v. City

of Carson, 640 F.3d 948, 955 (9th Cir. 2011).

Cunningham failed to adequately plead scienter as required by Federal Rule

of Civil Procedure 9(b) and the Private Securities Litigation Reform Act of 1995.

Fed. R. Civ. P. 9(b); 15 U.S.C. § 78u-4(b); see also Erica P. John Fund, Inc. v.

Halliburton Co., 563 U.S. 804, 809–10 (2011) (listing the required elements of a

private securities fraud claim). Cunningham failed to allege specific facts giving

rise to a strong inference, “at least as compelling as any opposing inference,” that

the defendants acted with contemporaneous intent to defraud investors. Tellabs,

Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 314, 324 (2007).

Nor did Cunningham adequately plead loss causation. See Lloyd v. CVB

Fin. Corp., 811 F.3d 1200, 1209 (9th Cir. 2016). Cunningham failed to establish a

“causal connection between [a] material misrepresentation and the loss” faced by

the plaintiffs. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 342 (2005). The second

2 amended complaint lacked specific facts indicating that “the decline in the

defendant’s stock price was proximately caused by a revelation of fraudulent

activity rather than by changing market conditions, changing investor expectations,

or other unrelated factors.” Loos v. Immersion Corp., 762 F.3d 880, 887 (9th Cir.

2014).1

We adopt the detailed and well-reasoned analysis in the district court’s order

entered January 4, 2017.

AFFIRMED.

1 Because Cunningham fails to allege a primary violation, his claim for control person liability under Section 20(a) also fails. Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1035 n. 15 (9th Cir. 2002); 15 U.S.C. §78t(a).