must wait till the courtroom is cleare going to summarize and say this quickly focus on the four discrete issues for your consideration and then argue those points and the timing of these statements is critical in terms of the dates and the fiscal year the company was in the first t say the z issue is whether they're forward looking or currently the first one was able to twenty six two thousand and seven where the company discussed its plan to reduce the p n d the person on that occasion devices inventories in europe they said they plan to reduce them to a normal level by a year rent which is june thirtieth of june thirty fiscal year is already at the end of april ten months into the year and that they plan their forecast sales of six hundred eighteen thousand units for fiscal year zero seven and the key language is and they said and that plan is proceeding then they went on to talk about what the inventory would scale down to in the next three months the second statement is that september twenty seventh statement which is right at the end of the first quarter of the next fiscal year and in describing the first quarter sales are only three days left the company's talked again about the p n d business and said we continue the growth and expansion of that business primarily in europe the third statement which is not an issue of current versus forward looking  really whether the statement is material or immaterial puffery as the district court found is from paragraph eighty two of the complaint a statement in the form ten k of the fiscal year ending june thirty needed aug twenty ninth so this is a statement very important then look at them as forward looking and then see if they would have company by meaningful question or your language which is the only way they could be exempt from liability and if you find they're not as we contend you should reverse also the question raised whether you should consider state of mind in making that determination which is kind of a subdivision if you believe yes that you should can consider this for on appeal which i believe you can then it's up to you to decide those first two statements are current or forward looking if you believe they are current which we believe they are given the language that was talking about current conditions again i think you must reverse on those two statements and you need not even get into all the nuances of forward looking statement and meaningful cautionary l has a lot of discretion on whether to consider an issue for the first time on appeal and the various factors are considered in order to prevent manifest injustice exceptional circumstances if it's a straightforward legal issue to be determined unresolved which is now fully on appeal and this serial card vs forward looking has just been an evolving area you can tell from the briefs there are decisions going both ways on statements that are present tense whether it's current go forward looking and there's a lot of confusion you're absolutely right we did argue the other way and if the court believes we cannot argue now on we waive that right then i would go with the other argument if in fact you believe under review within your discretion because again this is really a procedural rule to promote the ends of justice not to defeat them and the court could give some guidance to the district courts of what is current and forward looking and if you look at the two statements and i can't tell what went into our mind back and always remember these breeds were written long prime goal you're one of the torture history of the earth and what we would think you know we have a war was on current forward looking there's been a lot of development but when they say the planets are sitting just to me that's a clear description of current business whether they will meet the forecast of reducing inventory and selling units that they had said before it was a lot of new projection nothing about it was forward looking and i believe it is currently the same way in september when they talked about we're going to continue the growth and expansion of p and these sales that we're talking about something that happened that quarter so we are in our strongest argument then for the exception is the fact that the law is on settled and evolving and therefore in those extraordinary circumstances we should itself includes some caution if you will about burn some inventory and so i guess i'm what's a caution that they should have made that they didn't make ok you want what they did of that your question what they did make and we emphasize repeatedly and this is why i say they really were boilerplate and not meaningful posts or statements they made statements that any company in america could talk about any product they said the market's extremely competitive there could be pricing pressure that could be shifting consumer demand were going to compete with competitors products they said that three straight years of a row nothing no changes your want of what they should have said is we have serious problems with obsolete inventory that we don't think we can sell your comment about what they did say is claiming to reduce it is not of course very stable it is their plan of what's going to happen over the next few months a cautionary statement would have been we and again the facts are important here because we have good confidential witnesses who polled us who work there and told us all about the obsolete inventory and their inability to sell it the company knew it they didn't tell the market there's not one word about obsolescence in any of their warnings but they did everything short of that didn't i don't believe what they said you want to give the market and the investors understanding that this is or could be a serious problem that we've got excess  inventory we can't sell because it's out of date they didn't really say anything like that they talked about we may be the lead in developing new products well that doesn't mean you can't sell the old products we'd have the problems was they worry about  buying the four people you're arguing against yourself because i was thinking that yeah as they're telling their investors we have people competition we haven't had yet me keep developing new models there's a tension there because as they develop new models they render their inventory more and more sleek and therefore they're failing to balance and you're saying oh well they're not actually rendering their inventory obsolete i don't think you can make that leap your honor that as you develop a new product the older one will not sell you sell them at less money and you sell them there's a big difference between you know lots of people develop new products all the time and they still sell the old ones so the problem is that they didn't divulge that the the fancy expensive full price new inventory either they had to sell it at the huge discount or they couldn't sell it at all well that's what i'm looking at that i mean standard business would be you get a new new model and you're going to sell the older ones at somewhat of a discount and the older they get the discount is only will be higher and higher and higher and then ultimately you may have to discard some and just take a loss and let you go at that that's standard business operation isn't it yeah except you're right they didn't tell the investors that they didn't give the investor the warning and in fact one evidence we have where they have a cross at the three hundred fifty dollars per unit they finally tried to sell it at two hundred forty three and they couldn't sell it when they finally sold it then it got returned in a few months because it was obsolete well they say for instance in this first statement you're quoting you're relying on is that the inventories in europe have grown substantially and that competition is fierce and we've got to work hard all that sort of stuff and that's why i say the law seems to be developing in the area that maybe i'll just jump ahead and say you know you can't misrepresent historical facts but you don't have to say everything so long as you're giving what i'll call the tailored not boilerplate and significantly similar to what actually happened and so i don't think that's that's key here yeah i mean they repeat the same thing three years and the evidence in the record has to be taken as true from all the confident what witnesses is how obsolete everything was and they couldn't sell a product they never told the market that i'd like to move to the other argument going to which i think it's a very powerful one very interesting this language of what is very strong mean and whether it's year that just completed so lots of times you see what they call puffery corporate optimism we expect everything's been a great word amazing company all those types of statements or different we are talking about a past event here they were describing in august what occurred in the year that ended in june and what's critical here are two supreme court decisions that really term in this case i believe in our favor you're wrong there's because puffery is basically about the materiality as the district court said another and the question is is this statement material now very strong in a different context someone might say that isn't material i think really facts are very important here because materiality is a mix question of fact in law but the supreme court  unanimous decision t s p versus northway in one nine hundred seventy six written by justice marshall talked about why it is to be material it's one and omitted fact is material if there is a substantial likelihood of a reasonable shareholder would consider it it must have assumed actual significance in the deliberations of a real share of a reasonable shareable there's a significant likelihood that the soldier would have been viewed by a reasonable shareholder investor as having significantly altered the total mix of investors to look at the state of mind the knowledge of the defendants i understand the arguments and again the word it's this junk given all of that but you can still look at the state of mind in considering whether it's a meaningful cautionary statement and if they know something that is not what they're telling the public how can you say it's meaningful so i think you have to be able to consider what they know i mean if we have no facts you're on our right you know we'd be dead but we had a lot of facts you're saying they knew they had obsolete inventory they couldn't sell if that wasn't in the complaint i'd say well you know how my going to argue that it wasn't meaningful but we have facts to show it wasn't me so i think the  going through and assessing what the right was low should be what the courts so i think back to north where for a second the word there that was a dish was the word substantial just to give a context of what we're talking about here to so easy to look at very strong and say  what does that mean but the supreme court found the word substantial was a word that could be tested at material in that setting whether there was a substantial premium offered as was alleged in that case that was one nine hundred seventy six the next critical decision from the supreme court is the well known virginia banks your space in two thousand and seven one nine hundred ninety one there the supreme court was confronted with the issue of whether a statement of reason opinion or belief and the material in the court with resoundingly answer of yes and what's interesting there again the language being used in that case is one other was that whether the merger was fair and that's the word that was critical fair to the shareholders and whether the value was high those were the words allegedly misstated in the supreme court said yes words like that are kind of conclusory but when they're used in a commercial context everybody understands they have meaning behind  and they rest on a factual basis and the factual basis is either accurate justifies them is accurate or they can be misleading and thus they qualify as material they even actually cited the d c circuit case in one nine hundred seventy six  they versus avery were a law firm describe the merger of whether they'd be worse off and that was found to be optional by this court but i think here again the facts are so critical because the facts here is remember my the original allegedly forward looking statement in april said we're going to sell six hundred eighteen thousand units by the end of june they are only sold three hundred thousand by the end of march they never told the public how many they  complaint or on paragraph fifty five and then fifty six and eighty six d so what they sold they were short by two hundred thousand units that's like a third of the projection s not like two percent or five percent a third paragraph eighty six these says they missed their projections for the year by eighty five million dollars one third of what they forecasted and then there were other allegations about how they had the large inventory in they knew what they couldn't sell and so on so you're an investor think about it you heard in april you know that what we expect to sell by june six hundred eighteen thousand you never told what happens and then you hear in wealth your honor there were again it was causation as you know from the supreme court's decision in doors a very minimal standard corrective disclosure whether it ties into the misstatement the corrective disclosure if you had three elements and one of the key three elements with five points the first drop seven the second i'm not your honour's i cannot say and i won't say if this case goes back we can collect all those damages because there are multiple things at one of that drop but definitely from a causation standpoint at least part of that  will be sold for a loss because there are absolutely no court has ever required a company to disparage its own products in order to have a meaningful cautionary statement and no court has ever required such specificity in in in recent months this sector has experienced significant pricing pressure affecting the entire industry as a generous luxury the first direct disclosure extreme industry wide pricing pressure here's the february disclosure products and the sale of older products at substantial discounts and i want to stop there because there's a lot of language being thrown around about obsolescence in un saleability that's not the actual risk that was realized the end of your sentence they were sold a higher discount than harman a appreciated variances fake so it was it was an it was extreme margin pressure that they knew there'd be margin pressure but it was even worse than they realize so against earlier conference calls that the p n t environment in europe was not as margin challenge as it is in the united states but that we could surely anticipate that there was a reasonable course side in that observation in the recent quarter the european market has become extremely competitive we're working extraordinarily hard to increase sales and the maintaining at the margins in that environment later in the call and this is at page two forty seven of the appendix he's asked a question by an analyst about the pricing pressure why it's happening step back here because personal abrogation devices seem quaint now that we all have google google maps on our i phones but at the time this was a revolutionary cutting edge product in emerging technology market  money into the inventory oh really and that inventory is going to be it's going to be more discounted they talk a little bit inventory and they talk about the need to stay ahead of the curve but it by the very competitive nature by which they were born and it's going to come obsolete and i hear a lot about the compact competition not so much about the just in time production demands and how they are concerned about that so let me point you to starts dramatically changing technology and equally dramatically changing marketplaces dictate more creative and shorter product cycles those shorter cycles here is significant challenges and grist shorter and more frequent product cycles clearly management risk the loss of all product that originally generated along with that loss of product profit equal dangerous the lost momentum the loss of reputation that's at three seventy or one of the joints and it is exactly the risk that you were just discussing the secondary question is do they have to go further they have to say oh and by the way our inventory is really really old and we got a whole bunch of it ever going to have to sell it at a massive discount that's what plaintiffs say and that level of account and moving forward we've made our production schedule more nuanced and leaner that seems pretty standard in terms of disclosure with the second problem is you don't know how much the pot is going to sulk or until you sell it and these pricing pressures the extent of pricing pressures did not materialize until the second quarter of fiscal year zero eight that's when you can't move the stuff the paradigm case which is what they're talking about is is june and they sold that and they sold it at a decent margin and that actually did not impact the bottom line and that your gross profits and sales go up over that over that quarter it's not until you get to the second second  eight that they that and they're they're selling that that should get the actual market price realization and you can have an argument that following entirely because i thought the complaint pleaded that they came in two hundred thousand units short but they they have true they didn't they did mr interpret actions so then the question becomes do they have a duty to correct the forward looking production the statute answers that for you it's subsection d fifteen it could be what about what's on page one seventy six of the joint appendix which is year over year sales and in that context it's true so because you don't have the benchmark and there's there's a big gap in time between what you're talking about with the sales projection and this you know maybe the more logical inference is that they're talking about year over year sales and those were very strong because you don't have a benchmark that's why you can't hang materiality on disjunctive everybody agrees you have to give each part of the safe harbor mean so the state department has to exist it has to be able to operate in a world where you have a false and misleading statement you have actual knowledge and you have a to reality and so you start importing c enter into the safe harbor it doesn't have any sense of independent operation and you know there's a lot of legislative history flying around but the legislative history and this is the joint conference report on this safe harbor could not be any clearer this page forty four of the conference report the conference committee says that's advise that the cautionary statement identify important factors to provide guidance to issuers and not to provide an opportunity for plaintiff counsel to conduct discovery what factors were known to the issue at the time the forward looking statement was made the use of the words meaningful and important factors are intended to provide a standard for the types of cautionary statement court may decide a motion to dismiss with out examining the state of mind of the defendant but the conference report also says a cautionary statement that misstates historical facts is not covered by the safe harbor there is no misstatement of it's page two fifty two fifty it's disclosed in that color they sold three hundred thousand units and they disclosed their plan to six eighteen importantly there is no allegation of the three hundred numbers wrong there is no allegation the three hundred number was not to plan so everything every current fact is correct but plaintiffs are attacking is the are you going to make the six eighteen and that's all the forward looking parts of it it's not a primary argument but you do make the argument that if you look at the definition of forward looking statement depending on which one you're an the first one says a statement containing and so that suggests that could be read to mean so long as the statement contain projection the whole statement is covered but i don't think you need to get there because there is no dispute in this case about the current fact it's all forward looking that's being and that's what distinguishes this case from from make a case for example in make sure you gap and it's in that context where they say look you can see you're still going strong when you're populated gabs and you and your sales numbers are a primitive really wrong because your channel stuff and you can't do that that's not the case here three hundred thousand  gives the nine hundred fifty million dollars sales number that is an estimate the growth question comes out when a when the when the analysts ask what's driving when i can get the actual what's driving why is your sales number so high in the first quarter and then he states the assumption underlying the estimate and the assumption is hinted that we will continue the growth and expansion of that t business primarily in europe so we asked the question and i think you've got to read the whole the whole love exchange between the analysts and mr brown because the analyst is asking what's the assumption underlying this estimate and then he gives it can i get back to the what the only way you run into a problem is you start examining state upon and the statute tells you congress tells you you don't want a state of mind you're you should be allowed shortfall they try to say very strong may have meant they could mean referring to prior years of prior quarters but again put yourselves in the shoes of a reasonable investor of what they were thinking after they were told they would make six hundred eighteen thousand units they didn't come close they still said sales were very strong when you speak you have to speak truthfully you have you can't omit much zero fucks i think the supreme court in the north where a decision said when you have critical nature of information misstated or limited there will it was never said and you could not understand that from what they did say which was the same thing every year thank