complicated number at some point to tell you if you would take a state that you are alleging in this action and explain how it is it is a false statement of fact by the person made and how it isn't which is it is not how it isn't actionable opinion and kind of do do if you do one and work it through at some point that might help explain rather than doing a lot of where you can say well here  i think that that's a perfect final approach so let's start with the beginning which is the u t c or you t x to pay where you go with a initials or the ticker symbol issued guidance on december early december twenty four and it's prototypical opinion statement no argument under on the care that prototypical statement can be false because it omits material information that is necessary to make the statement guidance they have an earnings conference call they talk about it those things i mean for example i think it was mr hayes that said you know this is challenging i'm sure mr sad it will go into that some to tell but what didn't they tell the investors and these are things which we learned i'll be it after the class period but which are confirmed by things they knew at the time so it's not what you would call a you know post hoc rationalization case or anything like that so why is a pure guidance statement falls because they didn't tell investors things that investors needed to know i mean typically guidance is generated work at up from the bottom bubbles up in from the information from the bottom of the company is taken up by the senior executives who do their thing and put in the guides what did mr hayes tell us on july th things that one that the key guides which dealt with the aerospace division in particular what they call the after market services parts slash all sorts of things dealing with their servicing of airplanes primarily what you call commercial jets he told us that we forced or we exactly say in july back when we gave you that guidance in june in december we didn't tell you that but by the way we pushed it down on the aerospace guys his terminology and the aerospace systems he said it was without basis or without substantial bas it down to people that's the st thing to oil he also said what was their basis for well all we did was assume that the trends that had been going forward would continue to afford that is not obviously in itself and reasonably now so that's the st piece of it so he's mr hayes is up there admitting he's not just saying oh gee i can you know we you know in retrospect it was how the district court judge saw it he said oh yeah they're just sort of admitting post hoc what they learned at the end of it no mr hayes was giving you and us the investors at that point time specific facts we pushed it down we based it solely on an expectation of continuation of prior trends what does the complaint tell you about what they knew in december and then the other one is i'm sure if i take up a lot of time because i you might make up for money doing with your time is not or will you hear the discussion on some discussion about  the right word and here the i'm trying to get it's one thing to talk about whether what he said in july was an opinion or a fact and in the but the statement in december's what we like to be false the statement in july is what they call in the parlance a corrective disclosure the truth has come out and what he's explaining is not just that oh gee what's right not saying that what he's saying in july is wrong you're saying what he said in july makes it clear that what he said in december was was a false misleading with the knowledge with the c s r zakkai what i'm saying ye at the same time mr hayes said the the right we quotation you're using has said at the end of the day it turned out that this was not accurate so what that means is at the end of the day we look back and find out we should've done that and in terms of pushing down i mean that's what that's what managers are supposed to do isn't it to tell people this is your goal this is the goal i mean the people at the top  is that we pushed it down we put down on the aerospace guys three hundred million dollars we didn't have a good basis for he says later that we only did it based on trends but what he knew and i'd like t these tells but what they knew was that they had no real basis to believe that those trends would continue mr goodman a number another of the defendants had received guidance from below saying that look high up or single digit growth isn't happening is going to the wisdom of mr peres not to be denied but i think because i mean look let's just fix one of them they said at the end which is what our effie's were saying the beginning is seven hundred and eighty seven dollars provisioning was going to be a major driver they thought it was going to be up i believe a little bit and it ended up being down forty percent well the f e d s are telling them this is you know we argue common knowledge effectively within the aerospace division of the company that seventy seven is sort of gone through its st phase and that just wasn't going to continue they knew that fact we allege going in we don't have full discovery but we have i think a good faith basis for alleging that at the end and if you look at mr savage briefing pages i think eighteen and nineteen the they explained what they ultimately  one of the biggest causes in other words facts that they knew coming in in december so we admit those facts that at the end we say knew them to the fry he also admits we forced it down just look at trends without taking advantage we argue that is effectively you know when they knew or should have known with real facts in front of them that this guy just wasn't good enough and i think if i may continue as i think it a point a sticking point for everyone in this case of why would they do it why would he have done this and i can't give you a motive that this court has said is enough to make a modem i mean i'm owed an opportunity casey but aren't you supposed to supply evidence of c an't yes but we're and we're doing it  stock and what i'd like to say the board as you remember mr hazen you mean if they bought stock based on their expectation they would most money the company bought back stock i'm sorry i misspoke and said the company bought back stock which would argue that they wouldn't that they didn't want line but i would argue i think that he consciously ignored that advice as one of the analysts said at the end you know that he admitted you know we'd hoped it would be everything would be better and hope is not a strategy i would argue hope is conscious recklessness and i've been well over so i should corporate optimism is not a core cause of action it is not a basis to create an inference of fraud hope may not be a strategy i don't know that i can tell you with a lawyer that hope is not a cause of action and that is essentially what is alleged in this case as this court has repeatedly put the point a plaintive may not allege fraud by hindsight that principle governs this appeal defendants here made good faith projections they cautioned in making them that they would be challenging to meet they updated the market and sales came in below expectations and they lowered the guidance promptly when it became clear on the basis of a half year of performance that they wouldn't be met the complaint seeks to convert the sequence of events into a cause of action for fraud claiming a great case chief executive officer was confessing judgment when the in july two thousand and fifteen he made self critical observations in retrospect about the cause of the earnings miss these allegations don't up add up to fraud under any standard we submit certainly not under the exacting pleading standards that control this case the district court's rulings can be affirmed on multiple related grounds all addressed those substantive issues in also seek to address plaintiff's objections regarding the district court's proceeding i was going to take issue st your honour's because in a sense it provides the clearest lens to review the decision below a p s l plaintiff has to allege particularize facts to create a strong inference of fraud there are two ways to do that most commonly a plaintive tries to allege facts showing motive an opportunity to commit fraud plaintiff here does not even try does not even try to allege motive there is none there is none alleged at the very end of his presentation my friend mr jarvis offered the supposition that there was a motive because mr hayes had recently entered his position at his un and it does not stand logical reason either it is not a basis for motive and it deserves emphasis here no motive at all is pleaded and that leaves the plaintiff in the position of seeking to allege fact the facts that evidence conscious misbehavior that pleading standard is high it allows the plaintiff to proceed only upon a showing of highly unreasonable conduct that represents an extreme departure from standards of ordinary care translated to ordinary english the standard requires the complaint to plead hard actual facts that powerfully support the conclusion that the speaker intended to mislead the hearer and the standards even higher on this appeal i say that because the statement being challenged are all forward looking as my friend has essentially conceded meaning that the complaint must show that defendant actually knew that their statements were false the standard is one of actual knowledge so what facts are needed here to satisfy this this pleading burden boiled down in december two thousand and fourteen as the court has heard has projected that you would target three to six percent growth in two thousand and fifteen that was way down over the preceding  down from the ten percent growth the company had achieved the year before that reduced target was based in part on the projection of high single digit growth for commercial aftermarket sales in the aerospace division which is called you tess has emphasized as mr jarvis recognized that even this reduced growth would be challenging the target he said appeared to achieve a bull but was going to be challenging then in early march twenty one thousand fifteen dollars u t c disclosed that you test after market sales were weaker than expected and should be considered a watch item so what you have here is the company vigilantly and promptly reporting weakness as it was happening in the marketplace in june two thousand fifteen must get lynn also defended the guy who runs you tess disclosed bluntly all of this is set out in the papers that commercial aftermarket sales would not hit the projected high single digit growth target and in thousand and fifteen as mr jarvis discussed with the court at some length announced would you reduce projections let me say a word about what mr pace told the market in july two thousand and fifteen he said that the change in the forecast reflected actual results for the half year that had just ended he explained that the company determined it wouldn't hit the projections after internal meetings that had just happened in the preceding days in which management management digested  half results he explained further that orders anticipated in late june always a big month for orders hadn't materialize which would make it not possible to hit the projected numbers hayes then added a self critique which became the centerpiece  plaintiff's complain at the end of the day they said it turned out there wasn't a strong basis for u t c earlier belief in the strength of the aftermarket business he observed that he pushed the teams to formulate plans to deliver strong growth that didn't pan out given the business environment i don't want to say that he didn't say he pushed projections down that's not what he said he said we pushed them we pushed them because we thought we could get up to three hundred million and the truth is three hundred million was it was when the projections said it was a lower number than that and it was a very substantial reduction over the year before and he's went on to say that even though the company had estimated sales on a power airline basis and adjusted projections downward against previous years he criticized himself for having not delved deep enough into the assumptions underlying the projections that were announced in december that is in essence the story here and there's nothing in it that adds up to fraud  lead argument that appears in plaintiff's papers and it was ventilated in mr jarvis is discussion is that the july st statement of mr hayes ought to be construed as an admission respectfully we don't think that's a reasonable interpretation as context makes clear those were retrospective observations specifically made as he said at the end of the day specifically made only after the team reviewed the st half results that caused the numbers to be taken down and after  significant business expected hoped for at the end of june didn't materialize nothing in that supports the idea that this was essentially a confession to fraud six months earlier did the sale of sikorsky have anything to do with this because that would have not because of the confirmation of softness in the commercial but because of the divestment of the sikorsky business and i should add because i think it's domain that months earlier u t c had taken its guidance down for the year for other reasons having to do with parents the rate fluctuations in and pension costs and i emphasize all this because when it was clear that the numbers had to come down took the numbers did it twice even before it got to july albeit for other reasons so of course that's correct as for plainness assertion that you just assume that future provisioning sales would be the same as past sales that's just just plainly wrong on the record before the court the projections were derived from market trends four hundred makes that clear the projections for you tess were already significantly lower than in two thousand and fourteen forecasting ten percent growth down from one thousand percent again formulated on a pair airline assessment of expected after market purchases respectfully with all of that and view we don't think that the inference that the july st statements were a confession of knowing fraud makes sense is a reasonable one i do want to say a word about the reliance of plaintiffs on confidential witnesses st of all an overarching point none of these former employees are ever alleged to have ever of communicated any of their abuse to any defendant in any way orally or in writing december th projections were made but his judgment observed evi six was two or three levels removed from mr get with the allegation thus reduces to the idea that this every six gave a forecast concerning  single small slice of you to ask his business to his boss who presented that to his boss's boss during a meeting that every six didn't even attend and then get lean reviewed the day realize that his own forecast expectations were wrong but you do my best but i need to say that in some sense mr jarvis might be able to help you more because there are folks with whom he and his client have spoken to they are confidential and anonymous to us they are we don't know we only know who they are to the extent your honour's do from what's been said out in the papers  and none of them f e six included give any particular ised allegations about how the projections were wrong and so notable that the ultimate guidance wasn't even very different than what effie six said the guy hadn't should be as to the other effie's in the numbers one through five here again none of them ever talk to any defendant it's not alleged that any of them had visibility into anything other than a tiny slice of the business and the allegations attributed to every six which anticipated growth for the aftermarket business is entirely inconsistent with what plaintive now wants to put in the mouths of its other f e d s and for those reasons we don't think that the allegations ultimately can carry the day award quickly want to tell labs case which we plaintiffs theory here requires the court to assume that hayes in the other defendants purposely misled the market in two thousand and fourteen that they intentionally lied about their projections knowing they were false that they did that knowing those lies were going to cost them money because their pay was based on meeting their projections not missing them that over the course of the ensuing month used t c said that the projections were a watch item might not be made even though they were trying to sponsor what my friends call a deceit and then in july two thousand and fifteen hayes just admitted the deceit having achieved nothing by it that inference fails as a matter of common sense why would anyone do it it fails as a matter of law this court has held sensibly that corporate managers don't commit fraud for a short respite from an inevitable day of reckoning here's an alternative inferential chain after a planning process that spanned months u t c management perceived an achievable pathway to maintaining some of the growth that it had seen in the market in two thousand and fourteen knowing that it would be challenging disclosed exactly that to the market in december two thousand and fourteen during the st half of the ensuing year u t c warned the market of softness in those areas that it was a watch item took its guidance down twice and that we need expected orders failed to materialise management met together realized the outlook was worse than expected and promptly so advised the market we submit that is the only compelling inference it's the only plausible inference it's not remotely a story of fraud and that analysis governs the entirety of the case because if the plaintiffs haven't sponsored inferential theory that is at least as compelling as that one whether i can envision it as i stand here today i can't think of anything i like to think as a resourceful lawyer i could come up with something if necessary here is i think the critical point no such argument has been ventilated no argument has been raised there's been no indication of any prejudice from the procedure below and if there were an argument worth making and i would emphasize i would emphasize responding to you i can envision an argument worth making that hasn't been made and i say that because there's been one hundred pages of briefing on this court in a matter that is predominately if not entirely legal in character and if there was an argument to be made it should have been made it would have been made and it's weaved if it wasn't and for that reason we are hard pressed to see that there is any any prejudice flowing from whatever the plaintiff may have to say about its objections to judge maria was procedure below if the court has no further questions we retrospectively musing or two maybe some of that he's also telling you facts about what the process was that they did in december in the period leading up to it and you could have read that and that's just not retrospective musing that's like i was there telling you what happened and i think that the court has to credit that and inferences all went to defendants on efi six similarly he was in the business development and planning group yes he was a couple of blue defendants but he was one of the people who developed objections superiors would have told him how his projections were received and that they in fact were made is not increased reverence we didn't get it and i'd like to switch gears just slightly and then i'll end up on the procedural point raised by you on there's a sort of two arguments here one we've been dealing with a lot right initial projections back into december and what happened but on june th at the paris air show when they mentioned st time  as some negative things they also reaffirmed their guides that basically reaffirmed that the basic guidance for the company in particular aerospace because that was a fair paris air show was going to be continued down in july about five weeks later five weeks later we could have reduced it in june we did because we wouldn't have reduced it enough and what he says is and this is what the district court credited well we were hoping some stuff would come in the last two weeks and jim and it didn't come in and so we wouldn't take it down enough he never says ever that we wouldn't have taken it down at all just that we wouldn't have taken it down enough so they knew in june that they were going to have to reduce guidance they wanted to see by how much but they didn't tell the market until july oh by the way we could have reduced we did and now we are i'm out of time but i would like to at least respond to the question that you presented to council these do the question was what could we have said before judge morello that we have not presented is so i think yours are you no harm no foul right even though the procedure is made out of a great you know no harm no foul and you're going around virtually every argument that could have been made to the district courts on i'd like you to tell me if you had a redo what is that you would ask the district court to consider that you're not asking us to consider because you haven't had that opportunity what we would have done if we'd known i think that that was going to be our one shot as we would have probably spent more time in making and we only had three pages so there's only so much one can do but in the st instance the court and the district court as you know we argued made all these inferences against offended in favor defense against us we would have tried to at least point out that those that we deserved all those entrances so that the st instant we were we doing it here but we would have done it there and we could have changed i think the issue is not necessarily whether you dredges will be able to see it all but whether in the st instance we would have been able to convince judg differently i don't know that we would have but we might well have i mean remember they had a full thirty five page brief and a three page letter they had thirty days on one hundred and twenty of the other we had a week to prepare three pages and then they got a rebuttal after that and could we have made a case for inference is it i mean given the balance i doubt we could have i mean if we'd had a full opportunity below let's say we had a bit of a brief we got a chance to respond address in that brief every inference that they wanted to make in their favor by filing a new operative complaint whether it isn't the case and i i don't know the answer to this in my own head at this point you pays your money and you takes your choice you are talking about but give me i know what your views will be but want to tell them why i don't think it's a case of pay it take your money for your chances i mean you get a chance to see a motion to dismiss try to repair what you can and then argue to the district court judge that what you have repaired is sufficient plus all the other arguments that may have been raised maybe you didn't repair but you just want to make sure that they're put in the proper context when i can use and why isn't the opportunity to follow an amended complaint when you know because it's been sent out all of the objections that have been into posed by your adversary a better mechanism for defeating an adverse judgment than a thirty five page  brief i think you can you can respond you can respond with allegations you can blow up everything they're saying just by falling into many complaint that cures any of the defects in that a being that are being raised and i think we believe that the extent that we have this information that we could credibly allege we did that but this case i understand that that that is the opportunity that you had and some respects it seems like opportunity then and then and then then generating additional briefs mary especially disagree or i would argue that in a case like this where we're in the business and you're the district court judges in the business of drawing inferences from pl facts and determining whether those inferences along with the pledge facts are sufficient to meet an exacting legal standard that to do that without anyone i believe cannot and should not make that sort of legal argument and here's how you steal the inference of the cases and here's how  the cases should the case all of the circuit explains how the inference should be dealt with is not the kind of thing one should do in a complaint i think you know the concept of prolix preplanning is is much better to about our complaints are grossly long sometimes as it is given the requirements and then include into that sort of legal say ok here's an inference i want by the way under these six cases you judge a credit is inference which is essentially what we would do in a brief is not the sort of thing we should do in a complaint we should get the opportunity to explain to the court why those facts  the inference is reasonably drawn therefrom meet the exacting standard thank you very much thank you both will reserve decision in this case