two thousand and fifteen that we had sufficiently led that he had lied on that day when he said that the a ten was performing as expected that it's performing well and that any issues are related to  had rejected the a ten due to the overheating defect and the court had two pages of findings summaries of our allegations of the cyan tour and everything the court looked to the daily reports the weekly and twice a week meetings the conference calls the emails all took place between march and december of two thousand and fourteen and all apply equally to the seven statements before january t due to the statements on that date and the apply equally since this defect was never cured to fifteen statements afterwards the district court made two mistakes it made a mistake  loss causation which erroneous lee excluded the july two thousand and two corrective disclosures as corrective disclosures and it erroneous lee wrote our complaint as he quit the catering as to when sam had determined to reject the eight hundred and ten on lost causation in fairness to the district court the mineworkers decision followed its opinion it's clear under mine workers which clarified and didn't create new law that the findings that are lost causation allegations fail quote because of the july two thousand and two disclosure does not reference the intense propensity to overheat and that a plaintiff  that the market learned of an reacted to a fraud are wrong what mineworkers said and which we did is that the plaintiff must quote trace the last back to the very facts about which the defendant lie two periods of corrective disclosure january twenty dollars twenty eight cents deal with the samsung rejection the court found we had adequately implausibly allege that that was due to the overheating defect and then we get to the point  part of your theory that the disclosure didn't say that the reason was the overheating the fact that was what the district judge said correct but if you think that's part of your last causation theory isn't it so i seems to me that you have to say in january they said that samsung is not going to use the chip but they're not admitting there's a heating problem the other manufacturers are using the chip but they're having a heating problem in the sales are bad because of the heating problem and so you get to july and now they say sales are bad and you that was all caused by the heating and i understand your idea overheating problem so what is your evidence that the on this theory i think we have to assume that when they do disclose in july that the sales are bad on the other devices that are using the chip that samsung are not selling through at the levels of customers fog and certainly some portion of a ten is part of that but so we know that means heating as opposed to something else we can't lead if you look at paragraph two hundred and eighty five and fact we know what we know from the o e m's that the overheating problem was real l g put out a public statement in january that it got a bad batch of chips and paragraph one hundred and eighty two sony publicly states this thing is overheating on us we know that there are private complaints the post sony and l g are regularly making to qualcomm and we also know that independent testing for four of the six all we ems the l g the sony the i get the h t c z t e r or the fact that we have independent tests on that apologize that everybody uses initials i'm in an era when i was used to names so we actually have plowed evidence on that now all we want is discovery you know the judge is not sitting as a trier of fact and he made findings which with his last causation mistake are sufficient to allow us to proceed to discover mask of fickle hold on please god let me ask you that because and i know that ultimately going to come back to the difference between a real twelve and a rule fifty six but we have the overlay of the p l s or a and that is that i see that there is a decline in the stock seventy by early part of this year the stock was down to fifty five dollars recently this year it was at ninety and as of yesterday it's a mid seventy's how is the district judge supposed to apply the p s misrepresentations this question is whether we factually alleged that it is now the p s l least as you look at the ninety days mean trading average afterwards i mean there's a lot that's happened settlements and they'd have major other issues so you don't look at an eternal period of time and it's going to be a matter of contesting experts retrogression analyses maybe will lose maybe they wanted summary judgment all we're saying or honors is we're entitled to get to summary judgment judge smith i think you've got to question before on the whole i would just i gone through and parse the things that you state in your complaint i'm wrestling with the compliance in both those categories as you know when you're doing chips or whatever you're doing and you're developing things it's not always a straight line up there are things that go wrong but the p s l right does not require that every little hick up be disclosed i know it's your view that overheating here was just a disaster and it needed to be disclosed but the way that the officers spoke the things that were said i'm wrestling with basically what was wrong in the sense of was this a material was just a flat out lie was it a maybe a bit of puffing a bit of concealing but not not out now to lies how would you characterize this you want to let me start by saying you understand their problems in every detail the duty under the securities laws is that when you speak you don't create and this is under good terra and under burson an impression of the state of affairs that is different than the real state of affairs now they did not have to say that the a ten is performing well well again you know you're a really smart lawyer ivory i respect you but we're dealing with a different executive officer of they have to deal with these folks they're not going to go out and say the worst possible thing it could possibly be nobody's going to do that the question is whether what they did say is of sufficient materiality and sufficiently faults if you will or misleading a better word that it means to qualification you know this is it would you agree this is a close one and that in that category your honor i agree that that's a tough standard to meet and if some of the statements are tougher than others i mean there are statements a series of statements that the rumors of overheating are rubbish unequivocal statements we have two or three of those we have a statement by some unnamed michelle laden leave in response to a question whether it over overheats there's an overheating problem and we have knows you've got a computer you know they heat every computer heat every every chip heat the question is whether it's abnormal right that's what we're talking about here record we're talking about things that are reported to be scalding temperatures of  one hundred and fifty degrees and the abnormal thermal if you statement you got to look at timing is after release i mean a lot it fifteen statements are after january th after it's in use but let's talk about the on track statements that are before it's at the same month that's being released that the month before and the month those are affirmative denials of a business career story saying that ten overheats and it's possible that a galaxy x six isn't going to use it now they could have said no comment they didn't say no comment they didn't say i think we're on the right track they said we're on track and every analyst understood that to me that at least samsung hasn't rejected it and if you go back even to know them again respectfully is that really true i mean you can have you can have a chip release and you can have some people decide design somewhere else and that would that would be a situation where the chips like going to be used but it wouldn't necessarily be tied to overheating or the amount of overheating because again these my understanding and my personal experience is all chips get hot you're absolutely right your honor the district court did find that we had plausibly alleged that the samson rejection was due to overheating and l g and sony specifically complained both publicly god i don't want about the proof of last element here let's assume for a moment that you're correct about your allegations about misrepresentation where's your proof of loss what with this isn't evidence or the stock price went down with it is the bellweather ten  and you believe that you pled that the cause of that drop was because of the misrepresentation from your perspective hidden overheating the fact was the cause of the loss that is we know from the district court's decision why samson rejected that is what we pled as to the other o e m's it's what they complained about and it's what the independent expert testing found if we were more persuaded by the january to july than the earlier part with that as a limit like las it would i do want to say though ok the last thing i want to set right i want to say the minute i have is that the on track statements could have been no comments they were not they were not i think we're on the right track how but you disagree with him it is worth looking at the at the different periods each for itself you know and the comment about the on track becomes important because of course there's no statement about overheating or anything samsung said it's going to use its own chip instead of qualcomm's and the market is the aware of that would the fact that they were going to use their own chip be enough to sink the market a little bit whether or not there was a heating problem page twenty six of the supplemental excerpts that they guy and expectations downward for the fiscal year by what amounts to about three percent like revenue revenues are around twenty seven billion dollars excuse me and it's around three percent of that for the effect of samsung plus consolidation in the market going toward the upper tiers plus this was own statement yeah saying basically we're going into the future here samsung's going to use its own chip there are various other factors we projected a drop in our revenue there's going to be some certainly there's some drop if you lose sam ung as a customer for this particular chip even though samsung is still buying other chips so i'm concerned that after that point the market doesn't know why samsung dropped and it seems to me that qualcomm makes a lot of statements t it's not because of heating it's not because of heating including things like we have brought over i read earlier we have a no no heating problem repeatedly yes but there allegedly was a heating problem see then you got to july and there are fewer sales and why is that not because these people are not buying the cell phone because overheating so your honor i think i think those are obviously the most important questions here that have your permission just to finish briefly addressing the pre important questions what i wanted to say is obviously there was never any statement pretty january that samsung is going to use chips the market may have expected that they would because they had in the past but you know you can look through all the statements there is none counsel is trying to say now that the on track statements when they could've said no comment were actually saying representing that but if you look at them in fact they did say no comment each of those on track statement is we are not going to comment on the rumors all we're saying we are going to say that it's on track to be released without delay so they only address the delay point they because people had said excuse me this may be late because of problems we're saying it is on track to be released and it was released there is no statement anywhere that anyone let alone a reasonable investor would have taken as saying yes and the idea that the market understood our statements to that effect the market at separate expectations there is nothing where the market said oh look qualcomm is saying samsung is actually going to use t now let me address all your statements i want to talk briefly about the you know the non last causation issues but then i spend most of the time in the last causation issues up on all of those statements i mean this is a a very odd theory of securities fraud because there was counsel saying something about the concealed overheating defect this is if there is i mean there's disagreement over whether it's a defect or not i mean are we supposed to assume that the markets supposed to know that when when qualcomm says we have not observed any abnormal thermal issues that they must be lying because they're the rumors so no and but what the market would understand i think is that you know these are devices that are out there right people have reviewed them people have used them cetera  there is not a problem with your overheating of course is not the chip or the device it's an interaction it's what you are trying to make the chip do it's how the other factors in the in the design view was that it continues to be there is no problem with the chip you did have to use it correctly in their opinion was that there are the chip is not defective and they expressed that opinion looking at the allegations alleged by the plaintiffs yeah did qualcomm make any false or materially misleading statements at all will talk about loss because h m later did they make any material lemus misleading statements as a look i don't think the case turns on it but i don't think they did know because i think that every all of these things saying there is no overheating problem we think it's functioning the way it's supposed to is these are all statements of the company's opinion right it's not of i mean i haven't alleged enough that it's just false i mean so they have the customers saying we're having overheating problem with your chip so so i mean maybe it turns out you can you can show that they're not that happens with every customer that always happens it's always just puffery they're trying to get a lower price i mean maybe you can show that but isn't that what discovery as well i mean i think the answer to that is no because since the question is is it overheating is there a heat issue more circumstances any phone or device will get hot there or the opinion they were expressing and there is is there is no abnormal heating issue with the chad it's a statement of opinion and then the question is is there a basis for believing that they didn't believe what they were saying knowing that people have complained about their devices getting hot doesn't mean that they didn't believe that actually there was not a problem with the chip i think anyway that's what i have to say about that i mean is there was some rumors from like us customer you know i mean an actual individual person that would be maybe one thing maybe the person is just crazy but that these are from the actual companies making the cell phones right allegedly well upon the chip itself and the way it performs a piece of a normal chip not the way it's necessarily being used by customers if they say that things are on track in terms of going to be released in time that people are buying and so on without specifying that quote that samsung going to use its own chip would they be violating the law making a material misrepresentation if they spoke of the ship as their understanding of the chip and how it was performing not how it performs with how it's being used by the customers interacting with other parts of the whatever the devices not unless there was evidence that they believed th chip was not performing appropriately so for example of whatever let's say sampling sampling use a different kind of a chip and say they've used it before right in another device but this time they put it in a television set and when they hook it up with a gadget one hundred and twenty three suddenly it bursts into flames that doesn't necessarily mean that qualcomm chip is bad it just means that when qualcomm chip is combined with the other items right the problem so anyway have my question to you is if the quick the qualcomm executive says it's on track it's performing basically as we designed it to do the fact that somebody is having a problem record samsung at the time i mean qualcomm at the time put out something demonstrating that in fact that never happened and i get it all if the cell phones i mean says these devices included so many unsharpened i mean if these they were alleging there was it says that somebody else reported as if you never reported so that's they're not alone it's not an allegation of fact it's an allegation that someone else said something that it happens isn't correct they haven't put allegation of fact right well how are they supposed to they can allege it if it really if they believe that happened they could a legit and but then they would have to you know there's no sanction for alleging that someone else said something they really had in the sort of st solar proximate cause approach number one there's a ninety requirement right you've gotta allege with specificity have there's laws of causation and last position means a substantial effect in causing the l here you have a statement from sam's from qualcomm about a lot of things contributing to lower guidance they say well there's a problem this must of caused it there's no allegation of how would have been if not for the alleged effect they did they need to put all of that in their complaint well you have to at least allege enough to just lie on the false statement side you have to allege the reasons why something is supposedly false you have to allege something establishing a reason enough reason to believe that the allegations if true establish a substantial effect here you've got a total black box certain  specified o e m had a shortfall in sales because we say it's because not because of the other market factors which we allege in our st the medic complaint but emitted from the nd complain  but because of this problem that we're seeking to focus on there's no way of even knowing even if true if it was a substantial effect and then you have the prospect of how are you supposed to determine as a court that in all of these devices whichever it is that are supposed to be having the effect that the reasons they didn't sell well is not because apple and samsung were designing better or that  don't have to prove the whole case but this is something even if it had been alleged this does not satisfy proximate cause under the federal standard of what proximate cause has to be it is so  you can imagine a case where an o e m had said oh yes it's had you know what we're not using your chip and then maybe you could conceive of proving that the reasons they weren't using the chip was were because of the of pricing or some other goal but here we're going to a very far next step of saying that we answer find they're using the chap but we're going to prove basically that defrauded the market about the prospects of these people's smartphones and tablets and that the reasons that they didn't compete as well against samsung and apple for against whatever other reasons are not because of the way they were designed or priced or marketed no expert can testify i mean a court would have to have a not just a bunch of many trials but a bunch of many trials that would be impossible to resolve in any i mean that's why proximate cause doesn't allow that level of remoteness i mean this is so if you do it over time do either michael you have any pressing issues we have lots of pleading on this lots of briefing we appreciate all  nine it's really tough when you don't have discovery but it is also true that the and the rules of set some very tough standards very difficult to plead to when you don't know all of the facts but it is also chips have no use outside of devices they go for commercial release in devices the only way they had nine months of a futile exercise to deal with an overheating problem c w three  charge of the thermal testing said never in the history of the company was he aware that it ever took more than three months to deal with this they always have to deal with this overheating has a real meaning ok we've got you a little bit over here  we thank you both this case is submitted