issue the cases that are relied upon by the district court in the defendant's rupie the right joel stack and day hour all cases where the section eleven statements are also section ten statements but in the third amended complaint that's not the case anymore the section eleven statements are no longer section ten statements and in fact as was pointed out in day out in this case there is negligence of lives so i don't think that the rule in the rule nine analysis applies to any of the section eleven claims and the extent that it did in any event investors to see the gaiety what you're supposed to do is to strike out the the fraud allegations and figure out what you have left and whether or not that's a question and we think that all of these claims  sufficient based on that analysis the district court was really focused on the allegation in the second amended complaint about the the use of the i p o to raise money for the for the defendants if you strike that out the section eleven claims personalized mobile internet experience to approximately thirty five million consumers and then below that heading there are three indented bullet points the third of which is the entire internet through immobile optimized experience so that's a representation that not that the carriers are getting the entire internet themselves alone but also that thirty five million consumers were and that statement is simply false now the district court's analysis of that statement focused on you know various statements in the registration statement not one of which ever said that the thirty five million consumers are not getting access to the entire internet if i could just give just a few examples awful before we leave that they'll get in the registration statement also informed public that the the mobile data providing industry was changing rapidly and f mart phones were increasingly answering the market and providing the city's product are getting access to the entire internet the fact that there was competition between the carriers the motor city served and the smart phone manufacturers doesn't tell people that the competition is based upon the lack of internet access on the part of this carriers customers it doesn't tell them that all they could be competing on a number of things mean cars compete all the time but they don't compete on what roads they get the drive on so people aren't necessarily going to know from the mere fact that there is competition that the mo tricity carriers are basically fighting with one hand behind their back because of a lack of internet access and again this that that type of statement is one from which and a potential investor would have to make an inferen from there is competition to it must be on the fact that there's not internet access but again we're trying to counteract or they're trying to counteract a specific representation in the registration statement itself that says that hey the thirty five million people are getting access to the entire internet that's by statements like actual human user interfaces vary in appearance doesn't tell anybody that they vary in internet access they say that an experience is customized doesn't say that it's compromise internet access to say it's a carrier branded experience doesn't say that it's a carrier limited experience and every single one of the statements that the district court relied upon you can do that exact same analysis you know they they have this functionality they can take this in they can take that out they never say that what's taken out is access to the entire internet which they would need to do very specifically to counteract the specific representation that they've made so you know i don't think that any of those any of those  to enable the company's principal shareholders to sell eleven million worth of their own stock at artificially inflated prices so what misrepresentations or emissions underline your securities acts claims are separate and distinct from this game well first of all in the it just seems that you've got one scheme going on and so on and the district court then held you to rule eight right that helps to rule nine yet and i'm sorry yes you're on the point is  that in the second in the third amended complaint there is no incorporation in the section eleven claim any allegation like that your honor it's just not done so these claims are in a situation where they're sitting there separate and we've actually alleged that that the preparation of the registration statement was negligent so we're not making that claim as to the section eleven statements and that type of situation is not what you have in the cases that the district court a lot upon you like day out and in those cases there was no differentiation but here we have that so i think that serves to distinguish well ok but so it was negligent not to put in about the lack of interest internet access if you had to me are claiming that's now we're claiming that it's negligent and we know we have basically cordoned off those section eleven statements in the in the third amended complaint then isn't it fraudulent later isn't that part of your claim of fraud there are later statements that are made during after the registration statement that are made between that and the ultimate failure of the of the various contracts so yes i mean that our status or less later on but we have as we're entitled to do differentiated these with respect to section eleven which basically eliminates the analytical basis of the of the cases that the defendants and the district court relied upon but if the same statements are relied upon for the negligence and the misrepresentation claims you would agree that nine a would apply well you think now in a subset subject to best vs siva get see the guiding which is not easy to pronounce that actually says that what you do is the second stage analysis but in the in the third amended complaint the section eleven statements are not allege as section ten statement so that that factual predicate simply doesn't exist if i'm if i may i'd like to move on to the second section eleven statement which is the one regarding the item three zero three disclosure  this instance defendant wertz was asked about a quote a little bit of a shift going on between who owns the customer whether it be the device manufacturer that sells or the service provider and that's at paragraph thirty eight of the third amended complaint and then the response to that was about fourteen months ago we started seeing the shift happen and quite dramatically in the smartphone business now the district court read that as not being a statement regarding what was known in the past because fourteen months ago would put that six months ahead of the registration statement meaning that in january of two thousand and ten they were aware of this dramatic shift but with all due respect that's not a reasonable reading of the statement about fourteen months ago we started seeing so about fourteen months ago a past tense predicate started seeing and then what they started seeing was the shift happen which references the initial question and then the shift is dramatic now i am three o three and this court's decision in step and make clear that if there's a trend that has the potential to have significant material effect it has to be disclosed they didn't disclose any dramatic change in the the ability of their customers i registrants market share that that's material and must be disclosed so it just requires entire analysis on this claim was basically to say that it didn't refer to the past but where in tile they have the complaint read in our favor and that clearly read in the past we started seeing fourteen months ago so that's the second item through three claim and then i see the second section eleven claim in the third section eleven claim is that defendants claimed that they had a flexible modular architecture that enables them to deliver one in a highly stable scalable and highly reliable carrier branded experience again that's not true either we've got the confidential witness one that says that in fact it wasn't a flexible modular structure it was seriously rewritten both for eighteen t and then later on extensively and at great expense for verisign so the the flexible modular aspect no longer existed and that was important to investors because they knew that there's this contract with xcel oxiana and they needed to do customization in order to fulfill that but they're in a situation where it was far far more difficult for them to do that because they didn't have a flexible modular product anymore they had one that would be extensively rewritten and would require extensive revisions again so that in very important to investors clearly contradicted by c w one so that's that's the third section eleven claim are these allegations that you're putting forth to read that that motor motor trip motor city was on track you know that's a separate claim and i'll go to that one right now there are also statements from a tricity that they are on track with respect to their the xcel oxiana contract now on track statements are not always considered to be sufficient in the district court found they were vague so i just want to briefly address the fact that those statements were made in response to very specific questions and analysts conferences regarding whether or not there were delays whether or not things were moving forward and the defendants particularly in the august ninth and november twelfth statements responded to these questions about whether there were delays or problems in that contract by saying that they were on track so we're not talking about the sort of a more fist discussion in a case like a via where you're talking about with respect to their projections here we're now if they were false at that they have to be false at the time they were made right if that's correct yeah hindsight and analysis that's correct but what what we have here is a situation where for instance the last day was made on november twelfth as of december thirty first the xcel oxiana contract was cancelled and that's you know just a month and a half later as of january nineteenth all of their asia contracts are canceled and as of january twenty fourth announces that its subscribers can now use an entirely different search service now under resources malone and the fifth circuit's decision in plotkin and the second circuit's decision in m f global courts can infer from something that happened you know so quite recently after the statements were made that in fact the statements were false when they were made and that they were made with cyan or in addition to that the sander we also have the fact that this is a crucial aspect of their business so that the core executives they sell their stock is that circumstantial evidence of science or yes it is circumstantial evidence and kaplan versus roe supports that is never been overruled and i think if you look at the analysis and south ferry it talks about to speak for the underwriter and so roughly i'm going to try to leave him around five minutes to clean up so who whose are you prepared to talk about the registration stadium your honor all right well i think that's where you're the appellant's council started and at the beginning of the registration statement there's a full page advertisement with color graphics and everything we power the mobile internet and entire internet through a mobile optimize experience and then ninety pages later there's something that explains that mcor service delivery platform enables wireless carriers to to sign configure customize and implement mobile data us data services so one of your earlier statements about carrier customisation don't seem to be as explicit as this statement why should we accept that a disclosure buried in the registration statement is fair notice to a reasonable investor that it was possible for a subscriber not to have unlimited access to the internet runner to begin with every word of the registration statement has to be read and it has to be read all together so the fact that something's on page eighteen versus page eighty doesn't really matter here it's a legal document and it's got to be read in its totality now i think the i think probably the most clear disclosure that really says what plaintiffs are saying what is plaintiff's complaint really all about it's really about you guys are being overtaken by smartphone and you're not going to go to some of the stuff to a carrier customers because the carrier customers have you have to go through the carrier through their portal and now smartphone has come along and you can escape that whole route and you can go directly to the internet that is what much of the registration statement talks about it decries the fact that smartphone is making advances it talks about the fact that there's been a one hundred percent increase in two years in smartphone absorbtion went from six percent in two thousand and seven nine percent in two thousand and eight to twelve percent in two thousand and nine in other words it had doubled in two years at that rate of growth it's go it's going to go exactly where we saw it go and much of the red stripe misstatement is saying smartphone isn't our system that's an open system remember that's the phrase that's used several times in the registration statement that under smartphone you get open paragraph under the title our strength assange says we also provide various interfaces to enable our wireless carrier customers to directly manage the content and presentation of their mobile data service experience so how does that negate the inference that that the customer has access to the entire you know now managed man while to begin with what we say is you get access to the mobile depends on pun whether you know in the registration just kind of instruction statement where in the registration statement this is actually throughout your honner in distinguishing the the mobile internet but to come back to your first question which i never i never answer and i don't want to dodge question when you ask how does the sentence mr canal you read originally show that there has been some limitation you know you can't manage the content and presentation and that somehow expands what you're going to get on the obviously it's it's it's some delimiting factor righted some in some way it's different from the open access a fair reading here where if an investor took the time to actually read all of this which the investment community actually does  you could not escape the conclusion that the much tricity system is a carrier fed system going through a portal that in which content is managed and that is in contradistinction to the smart phone system which is coming on strongly and has completely open access you know recall that in the registration statement what much risk he says is you know if the if if our carriers don't start responding to this threat customers are not going to find it as compelling and they're going to go the smartphone route and indeed that's exactly what befell the industry this just so i understand your position you're saying they're registering their registration statement that the entire internet through a mobile exactly how the system works when you get into into the entirety of the registration statement but moreover we never say never say that our customers i have to give the entire internet what we say is we make available to our customers what we say on the page the much heralded advertisement which isn't even a number pages it's a glossy that before the start the text when it counts it counts absolutely we're not running away from it what it says is that have entire internet access to a mobile optimize expression that is what we give to our customers who are customers the the four big wireless carriers eighteen to rise and t mobile and sprint and we disclose that our customers aren't the thirty five million people who have subscribe to their services those are customers of the carriers are only customers are wireless carriers and what we say is we make available to them complete access to the internet and we do that's not a statement th of challenge every time plaintiffs talk about there being a limited experience what they're saying is as limited by the carriers they understand and do not plead that mobile that that much tricity did anything less than provide to the carriers complete access to the internet and then it was up to the carriers as the registration statement says what are you going to make mr carrier available to your customers the subscribers and what the registration statement ultimately makes clear if you do a thorough reading is what our customers are doing the carriers is limiting that access because they're cutting off that example adult web sites and the result is it's different from the smartphone experience  when ninety nine appears to port to be to the direct consumer because it's safe much riseth to deliver a halle personalize mobile in an experience to approximately thirty five million consumers you don't stay through carriers you say to the consumers your honor ultimately the consumers are beneficiaries of the im core product but that's what this is this is we deliver to approximately thirty five million that their actual customers are i think it was a little disingenuous for you to try to limit the registration statement only to the carriers when it specifically things here on this page that is to the consumers ultimately the consumers get the benefit we don't quibble with that that's true but they get it through the carriers and if a complete reading of the registration statement makes it clear cut the touch on a couple of other points in a few seconds  do with your opponent's argument about discovery disclosing that there were trends in erosion of the customer database fourteen months before the i was issued what the principal response there on the known trend is that the disclosure is made i know we've talked a lot in the about the brief of what mr wertz really need mean when he said long after the i p o that we started seeing a trend fourteen months before but the bottom line is this your to go to page two of the registration statement we see that smartphones quote are capturing an increasing portion of the market close quote very clear so the plainest point is you guys should disclose if there's an adverse trend page two we disclose the adverse trend not only do we do that we gave the yankee study to potential investors saying you when they went from six percent to nine percent to twelve percent you know anybody who can do math and every all of us can do the simple math it shows that this is a really dangerous trend so the disclosure was made i don't think it's even worth quibbling about trying to pars what mr ward said the fact is i think a fair reading of what he said is we started to see a trend slightly before the i p o but there's nothing in the statement that says we found the trend at that point you know before the i p o we didn't find the trend at that point to be the skyrocket that it ultimately became i mean everybody in the industry later said here's the crazy thing you know everybody knew exactly how the industry worked because putting aside what's in the registration statement or is not in the registration statement carriers posted on their websites and judge really probably took judicial notice of this the carriers posted on their websites that were limiting access to our customers this would be the craziest fraud in the craziest way to end to trick the investment community  heard of when you've got it posted on the web all the over the place you know in excruciating detail how the system works and the market absorbs all that information it's a crazy notion that there's some scheme of fraud going on here but that's the plaintiffs allege that's one reason r ninety applies here if the court were going to write a a published opinion in this and you want to grapple with a ninety versus a i think what you could focus on is there's a common nucleus of facts here this is a says this is what a plaintiff challenging  tricity you lied to us about what your capabilities were and whether they put that in the rule eleven claims or the rule or the ten b claims that's still what they're saying you lied to us i know i have to honor my commitment to thank you may please the court jeff hamel for the underwriter defendants and i appreciate the indulgence of allowing me to speak so are there any arguments raised by much a city that you do not going well we only face the section eleven claim securities i think any of the arguments that they made he just agree with any of their argument we do not disagree with any of their arguments i was going to hopefully just point the court to make a few points since i don't want to waste the court's time i heard plaintiff counsel both here and in their briefs rely heavily for the rule eight nine distinction on the best case i would just point out to your honor's that the best case is not a securities case it's a california consumer legal remedies act case and i'm not sure it speaks either to the law or to the alleged facts here where quite clearly what we have is allegations of misrepresentations on the same subject matter beginning with the registration statement and continuing there after during the class period which if that's not a unified course of conduct under this court's law i'm not sure what is that's point one point two is that i'm not going to repeat what my colleague said about the disclosures but the registration statement is crystal clear that  ones to whom they directly sell their product other wireless carriers that e r to a one our customers include four of the top ten wireless carriers it says and it names them the registration statement then makes clear and this is that we are page two zero two the wireless carriers can select from some or all of our services to construct and deliver a customized product and so i believe it's quite clear that the registration statement discloses that we sell our product is on a disputed delivers the complete internet to the wireless carriers judge zilly found in his fifty page opinion dismissing the second amended complaint this is that page nineteen of the record that the point is have never disputed that that the product delivers the entire internet to the wireless carriers then the ad registration statement disclose that the wireless carriers implement it as they see fit and so while the rip the disclosure may not be perfect certainly in the white hot glare of litigation six years later the securities laws don't demand perfection in disclosures they demand reasonable disclosures and i believe the disclosures i pointed the court to are reasonable my third and next to final point is the item three o three point this has to do with the adoption of smartphones much is made in the briefing about the statement by the c e o of march in march of two thousand and eleven one that's post the i p o and the pla to take that statement to show that the c e o was admitting that prior to the i p o he knew that there was a dramatic shift in the smartphone adoption rates if you actually read what the c e o said and that is in the record and that's pages eight one one one two the quote is not accurate as quoted by the plaintiffs and the court can take a look at that but i believe that if you read the quote accurately and in context it cannot be interpreted even on a contract their point is that the product was not sufficiently scalable and that's why it wasn't profitable to have this asian contract at page e r two twenty it's disclosed that our international experience was limited that it was going to  great deal of time and customization and expense to do that and so consumers were fully on notice or investors were fully on notice that this project could be you know much more expensive than dissipated and with that i'll sit down if the panel has no more questions thank you counsel and council says that you know that the problem with the competition's already disclosed but no dramatic shift was disclosed and that's the point here there's a dramatic shift i did three o three requires trends this is a new trend that they started seeing six months before the i p o and it had a serious potential to erode their business so that's with respect to the the i p o counsel has suggested that the court beyond the registration statement but this court's decision in miller versus fein says that you don't do that in fact if you look to footnote two which is appended to the statement that we've quoted they draw distinction between fraud on the market type section ten b five cases and section eleven cases because section eleven cases don't involve the fraud of the market theory because reliance is presumed in section eleven cases so you don't look beyond the registration statement investors are entitled to look at this registration statement and evaluate whether or not they're going to invest in a particular offering the a lot of the things that were said in councils in councils presentation i think judge rawlinson pointed out at least one of them basically add things to the various disclosures and that's really the entire theme of this case if you look at the district court's order to same thing quote something that they just that was said in the registration statement and then conclude that this tells people that the entire internet was not going to the customers of the carriers but it never actually says that so when they say that you know that managed means that it limits the entire internet it doesn't say that but it very explicitly says in big bold letters in the front of the registration statement that that's exactly what they