very similar to what counts disclosed here that if our contract manufacturers don't supply our product our revenues could be affected in fact that risk disclosure can fly the company  could that could be problematic for rabbits and so that disclosure would not be enough if the company knows at the time of the disclosure to a near certain purchase they purchase certainly at the risk identified well occur it seems to me your position that there is material in th the reason why i want to refer back to all the problems with norwich is that this is just doesn't come out in a vacuum the company is aware of it more which has been having problems since day one so which is specific point as i understood it your client person has shares on july th of two thousand and sixteen prior to that purchase the company had disclosed that it had a single supplier and that if they had any if they were to limit or terminate production or otherwise fail to meet quality development requirements the company could suffer a loss of revenue so it had disclosed that fact the single supplier if it discussed the generic risk what what was then the grand canyon order that they knew about at that time that they were about to step into because you have sated the that two week supply issue but that was back in march and that never they they continued well more than two weeks  acknowledge that restore problem attic you know that it could become very you know if if roche were to limit or terminate production that would be a good deal but at that point unfortunately to change at the time of the disclosure in april that was the history was it not well the production got problems into two thousand and sixteen got worse never really alleged no facts we've said why or she turned hypothetical because there had been as mr black admitted no impact on patient supply no revenue impact and there is no basis upon which to conclude that there was a near certainty that that risk was going materialize in the future and even if the plaintiff could somehow overcome the fundamental problems of not being able to meet the hill cheater pretty standard and not being able to allege facts sufficient to meet the grand canyon standard requirement there still also a fundamental problem and there's been no allegations that are sufficient to meet that requirement no direct evidence of it missions or warnings that the disclosures were inadequate that anybody had concluded that and no indirect evidence their reply brief the plaintiff's remarkably asked this court to declare the risk disclosures that were just talked about and cited by the district court as misleading as a matter of law even though they never made that argument below those risk disclosures are not cited in the one hundred and twenty page proposed rd amended complaint and no are they never asked the district court to find the specific disclosures misleading mr bloch says well those are our defense the c disclosures was misleading insufficient they had an obligation to allege it particularly where it relates to the same subject matter alleged manufacturing risk impacting revenues that are the subject of their complaint oh well yeah tell me what why is about it and that cured it does the plaintiff automatically lose because they failed to also allege the alleged curative one even though they didn't think it cured well i think your honor the issue is yes because their position isn't just that it's not curative they're saying it's not curative because they're saying that statement is itself misleading and the p s l or a says if you're alleging something is misleading you have to disclose it and this is their rd bite at the apple and they still don't allege it moreover we specifically referenced it before they filed that proposed rd amended complaint their motion to amend we have specifically referenced that language in our motion for judgment on the pleadings and in opposition to their motion to  amend we specifically cited this language and they still didn't come back and say wait a minute this language is misleading since you have not raised it below and then to come in and ask this court to declare it misleading we submit is problematic it is a fundamental the going beyond that the district court's decision was correct on the merits and i think several members of the the panel excuse me have already pointed out i think the fundamental problem here mr black admits that the risk of a patient supply interruption impacting revenues did not materialize until august of two thousand and sixteen he tries you admit the standard is that it had to be near certainty that that risk was going to materialize in the future he tries to suggest that something happened in april that crossed the barrier into a near certainty and we submit the record simply doesn't support that if you look at the actual documents cited in the complaint which  incorporated by reference wasn't wasn't north able to manufacture the high dosage of the drug and even though there was enough supply in the in the chain that doesn't problem with a large batch a p i they pivot it's using small that and continued and were producing and produced large volumes of product in april there's this reference that they were down to two week supply would suring april the inventory double they were up to a month they had every reason as was was referenced prior to believe that any manufacturing issues in norwich would be solved just as they always had been in the past because they had never impacted revenues and there was no allegation here that there were internal forecasts coming to an opposite conclusion and saying why q hadn't cablevision in other cases where there's fictitious sales or somebody saying we've got one set of books that we're keeping internally and one that we're keeping an externally here all the evidence all the all the documents cited in the complaint still say that they're projecting as of april two thousand and sixteen that they're going to have enough product running through the end of two thousand and sixteen and it's not until a new problem emerges in july different problem than had previously that it had caused the issues in march and april that that changed and as soon as that changed and then the company came to the conclusion that a patient supply interruption was imminent it hadn't yet occurred but once it came to the conclusion that it was a near certainty it sent a letter to the f d a asking them to expedite approval of an alternate supplier and the very next business day august st they disclosed that that impending supply interruption to the market so it's only with the benefit of hindsight which is impermissible as a matter of wa that anyone can suggest that something had changed in april mr block slate's that july f d a letter saying well at that time they acknowledged that some of the supply constraints that occurred in march and people started to reduce inventory and that had an impact when the later problems emerged into light but there is no allegation that anybody could have known that as of the april th two thousand and sixteen disclosure which is the last disclosure that was made in the brief that that was the middle of a five week supply interruption it wasn't the middle only with the benefit of hindsight if somebody reports to you the day before you have an isolated issue you have no way of knowing and there's no allegation that anybody in the company knew that that particular stoppage was going to last for five weeks and moreover even though that stoppage did last for five weeks they still had enough product they still overcame the issue they restarted producing and they continued into june into july and it wasn't until july when a new problem arose and there's no allegation nor could there be that anybody within the company knew or even should have known which isn't the standard here but even could or should have known as of april two thousand and sixteen that this time was going to be different that this problem was going to emerge in july which was going to you ultimately lead to this patient supply and counsel you prefer into a new problem i thought that was a crime it was a contamination problem there was some perhaps cracking taking place that was provided which suggested there was some kind of contamination problem i thought that was there are instances of they tried to to sixty nine dollars of the proposed rd amended complaint but it was referenced that there were a couple of batches that had that issue but then there's no allegation in the complaint of that issue a rising again intil july of two thousand and sixteen and norwich produce substantial volumes of product in the interim saying that you once had a cracking problem it was dealt with production stopped restarted they continued supplying continued meeting patient demand there's no allegation that as of april of two thousand and sixteen when the last disclosure was made that that cracking issue was ongoing or that anybody knew that it was going to arise again in july and certainly doesn't meet the near certainty standard of tutor perrine and of you know don't have enough allegations in the record to come anywhere close to meeting the standard necessary for say answer and essentially this court has held that there's two ways that you can meet science or the boston scientific standard talks about you need to have it missions confidential witness statements things of that nature showing either that the individual defendants not only had it dition all knowledge of material facts but they knew that the decision not to disclose those was something that was misleading and you need either warnings by subordinates saying hey our disclosures might be inadequate should we be disclosing this or somebody internally admitting that they have despite having received the luminous discovery in this document discovery in this case they don't allege anything like that and of course under the p s l array you're not entitled to any discovery they had the benefit of doubt because they had the prior operative complaint they still don't come forward with any of that and yet in talks the recent decision by this court in yen talks very specifically about that it's not enough to allege you knew some additional facts that you didn't disclose you've got to be able to show that that disclosure was misleading that you knew at the time you didn't disclose it that failure to disclose it was going to be misleading to the market and then he answers the other way you can if you don't have that direct evidence is through motive evidence if there were allegations of insider trades or that the company was in the middle of ongoing and undergoing a financing so that it knew all right well we know this information in april but we're going to wait to disclose it because we want the financing to close we want to get our stock bonus that's triggered on some particular date then you might have something that would support the inference of say answer but here essentially their allegations make no sense they're saying that as and sixteen the situation was so dire that everybody knew that there was going to be a patient supply interruption even though there's nothing in the record to support that but if that's the case what incentive would management have not to disclose that because if we did it it would inevitably come to light and on page fifty six of their brief the plaintiffs admit it really wasn't the case they say look the executives knew that a supply interruption was possible not that it was nearly certain and they were trying to manage around the norwich problems well that just confirms that they can't meet the grand canyon test you don't manage around the grand canyon if you know the grand canyon is there you're falling into it there's no way to manage around it white shooter  cheater perini the court found that there were documents showing that the defendants had come to the conclusion that the a r a s market was going to fail not that it was possibly going to fail it was going to fail and not only that they were in the process of trying to unload their own a r s holdings so that's the reason why they were doing they had an incentive even though they knew it was going to fail if they could keep the hope alive for another month another few weeks they could try to unload their auction rate securit holdings at the expense of the plaintiff there's no evidence at all no allegations accusing no allegations of that type of conduct here and it's really very similar gand what they're saying i mean in the end the company warned that there's a risk that we're going to be found in f d a noncompliance and at the time they made that disclosure they received an f d a warning letter saying you're not in compliance right now and they didn't disclose that for five months and the court still found no sign answer because the company  made the general warning and the company still believed that it could overcome the issues that the f d a had identified in that warning letter and so as a result there was no obligation disclose that there was no evidence nothing new allegations that would support the notion that that this was misleading as opposed to just information that they didn't think they had to disclose and as the court said and yet it most what happened here at most is that management might have been reasonably optimistic we submit they weren't on reasonably optimistic because norwich always overcome these issues in the past and there was no reason to believe at the time of april two thousand and sixteen that this would be a different but even if they were too optimistic even if maybe different management would have come to a different conclusion that is not securities fraud and so for that reason as well we submit that the the district court's judgment should be affirmed either on waiver grounds on the grounds that it was decided or in the alternative on science or grounds unless the court has any further questions i'll rest on my  so we think that creates what's what's false misleading about this case just isn't about you know also like ali argue what incentive do they have to not reveal in hope two thousand and sixteen that concludes the arguments for today this session of the auto united states court of appeals us now recessed until the next session of the court god save the united states of america and this honorable court