Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_19-cv-04529/USCOURTS-azd-2_19-cv-04529-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Kui Zhu, et al.,

Plaintiffs,

v. 

Taronis Technologies Incorporated, et al.,

Defendants.

No. CV-19-04529-PHX-GMS

ORDER 

Pending before the Court is Defendants Taronis Technologies, Inc.1(“Taronis” or 

“Company”), Robert L. Dingess, Scott Mahoney, Ermanno P. Santilli, Kevin Pollack, and 

William W. Staunton (collectively “Defendants”) Motion to Dismiss First Amended Class 

Action Complaint. (Doc. 45.) The Court held oral argument on this matter on February 21, 

2020. Having read the parties briefing and heard their arguments, the Motion will be 

granted in part and denied in part. 

BACKGROUND

This action concerns an alleged fraudulent scheme to artificially inflate the market 

price of Taronis common stock by deceiving the investing public about the existence of a 

material contract between Taronis and the City of San Diego. This federal securities class 

action is brought on behalf of all persons or entities who purchased or otherwise acquired 

Taronis common stock between January 28, 2019 and February 12, 2019 (“Plaintiffs”)

when the stock prices were allegedly artificially inflated. 

1 Taronis Technologies, Inc. was formerly named MagneGas Applied Technology 

Solutions, Inc. The Company changed its name on January 31, 2019. 

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Taronis is an energy company that offers technology solutions to create, process, 

and produce hydrogen-based fuel.2 Taronis has had difficulty maintaining its listing on 

NASDAQ. On May 7, 2018, NASDAQ informed Taronis that to avoid delisting it needed 

to, among other things, maintain its common stock price above $1.00 for ten consecutive 

business days. To ensure compliance, Taronis’s Board of Directors obtained the consent of 

Taronis’s majority stockholders to approve a reverse stock split of the outstanding common 

stock and treasury stock. The reverse stock split was anticipated to result in an immediate 

increase in the market price of the common stock to an average of $4.20—well above the 

Nasdaq $1.00 minimum. The reverse stock split went into effect on January 30, 2019. 

Plaintiffs concede this method of boosting Taronis’s stock price was lawful.

However, Plaintiffs allege Defendants were simultaneously planning a fraudulent 

means of inflating the stock price. On January 28, 2019 Taronis disclosed in an SEC filing 

and related press release (“Press Release”) that the City of San Diego (the “City”) elected 

to use Taronis’s MagneGas2 as its fuel of choice. In pertinent part, the Press Release stated:

City of San Diego Adopts MagneGas Metal Cutting Fuel

Major New Client Win Southern California

TAMPA, Fla., Jan. 28, 2019 -- MagneGas Applied Technology Solutions, 

Inc. (“MagneGas” or the “Company”) (NASDAQ: MNGA), a leading clean 

technology company in the renewable resources and environmental solutions 

industries, announced today that the City of San Diego has elected to use 

MagneGas as its metal cutting fuel of choice, marking the first major city

contract for the adoption of our metal cutting fuels. The City of San Diego 

has historically used acetylene to maintain a wide range of equipment used 

for waste removal, maintenance and infrastructure support and as of this 

contract, the City will immediately begin adoption of MagneGas’ cleaner and 

safer fuel products. . . .

(Doc. 36 at 8.) Plaintiffs allege that the market price of Taronis common stock promptly 

increased over 25% after news of the San Diego contract was published.

However, the day after the Press Release was published, the City’s Senior Public 

Information Officer requested that the Press Release be immediately removed. The City 

2 Defendants Dingess, Mahoney, Santilli, Staunton, and Pollack (collectively “Individual 

Defendants”) sit on Taronis Board of Directors. Defendant Mahoney served as Taronis 

Chief Executive Officer and President. Defendants Dingess, Pollack, and Staunton also 

served on the Board’s Audit Committee.

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Officer explained, “while the product has been tested the City of San Diego does not have 

any procurement contract or any agreement with [Taronis] to purchase any of its products.” 

(Doc. 36 at 15.) Plaintiffs also cite internal emails from the City stating that “[t]he [Taronis] 

news release . . . is incorrect. The City of San Diego does NOT have a contract with this 

company. . . . This is appalling that they’d get this so wrong.” (Doc. 36 at 14.)

Pursuant to the City’s request, the Press Release was later removed from Taronis’s 

website, but no corrective disclosure was filed with the SEC. Investors quickly commented 

on social media regarding the sudden disappearance of the Press Release from the 

Company’s website. One investor noted, “[t]he announcement on the website disappeared 

though. . . . What happened?” Another explained, “I was told they published news that they 

signed a deal with the city of San Diego & the mayor made them take down the news 

because it wasn’t true. Beware.” By February 11, 2019 Taronis stock price again fell below 

the NASDAQ $1.00 minimum. On February 12, 2019, Taronis filed a Form 8-K/A with 

the SEC that explained,

On January 28, 2019, Taronis Technologies, Inc., formerly known as 

MagneGas Applied Technology Solutions, Inc. (the “Company”) issued a 

press release and filed a corresponding Current Report on Form 8−K with 

the SEC, which stated that the City of San Diego had elected to use 

MagneGas2 as its metal cutting fuel of choice and that this was the first major 

city contract for the adoption of the Company’s metal cutting fuels. The 

Company has determined that it is necessary to correct its prior disclosure. 

The Company has an approval and a written authorization from the City of 

San Diego’s Fleet Operations to move forward with the procurement of gas 

and other hard goods from the Company at three different locations within 

the City. This procurement covers more than one division within the

municipality, and was received from a city official with sufficient authority 

to approve the procurement process. In the welding supply and gas 

distribution business purchases and sales of hard goods and gases are 

typically made through a process whereby a purchaser receives a quote for 

goods from the seller and then places an order which is later memorialized 

in a purchase order. The Company treats purchase orders as contracts and 

made its prior disclosure with that treatment in view, however, the Company

does not have any formal binding contracts, agreements or long−term 

purchase commitments with the City of San Diego beyond the existing 

approval, nor any commitment that any of the Company’s products will be 

purchased as the products of choice for their respective applications.

(Doc. 36 at 18.)

Plaintiffs rely on the quoted materials to allege that “the Company’s disclosure 

about the contract with the City of San Diego was entirely false. Taronis had not entered 

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into any contract with the City of San Diego for its proprietary metal-cutting fuel; nor was 

the City adopting the Taronis product as its metal-cutting fuel of choice.” (Doc. 36 at 2-3.)

Plaintiffs claim that Defendants knew the Press Release was false but released it to 

artificially inflate the common stock price. Plaintiffs allege that Defendants waited until 

February 12, 2019 to clarify the Press Release in an attempt to obtain compliance with 

NASDAQ’s minimum bid price for the required ten consecutive business days. 

Consequently, the First Amended Complaint (“FAC”) alleges claims for (1) violations of 

Section 10(b) of the Exchange Act and SEC Rule 10b-5(b) against Defendant Taronis and 

Defendant Mahoney (Count I); and (2) violations of SEC Rule 10b-5(a) &(c) (Count II) 

and Section 20(a) of the Exchange Act (Count III) against the Individual Defendants. 

Defendants move to have Counts I and II dismissed pursuant to Federal Rule Civil 

Procedure 12(b)(6).3

DISCUSSION

I. Legal Standards

A. Motions to Dismiss Pursuant to Rule 12(b)(6)

When considering a motion to dismiss pursuant to Rule 12(b)(6), “a court must 

construe the complaint in the light most favorable to the plaintiff and must accept all wellpleaded factual allegations as true.” Shwarz v. United States, 234 F.3d 428, 435 (9th Cir.

2000). A court, however, is “not bound to accept as true a legal conclusion couched as a 

factual allegation.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan 

v. Allain, 478 U.S. 265, 286 (1986)).

To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain 

“enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “A claim has 

facial plausibility when the plaintiff pleads factual content that allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009). Dismissal under Rule 12(b)(6) may be “based on the lack 

3 Defendants ask the Court to dismiss Plaintiff’s Amended Complaint, but Defendants’ 

motion does not assert any arguments against Count III. Because Count III is not addressed 

in the briefing the Court declines to consider its dismissal.

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of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable 

legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

B. Pleading Standard for Securities Fraud Claims

Securities fraud claims must satisfy the dual pleading requirements of Rule 9(b) and 

the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Zucco Partners, LLC v. 

Digimarc Corp., 552 F.3d 981, 990 (9th Cir. 2009). Under Rule 9(b)’s heightened pleading 

requirement, “a party must state with particularity the circumstances constituting fraud.” 

This standard is satisfied if a pleading identifies “the who, what, when, where, and how of 

the misconduct charged, as well as what is false or misleading about the purportedly 

fraudulent statement, and why it is false.” Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 

F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks and brackets omitted).

The PSLRA requires “that a complaint plead with particularity both falsity and 

scienter.” Ronconi v. Larkin, 253 F.3d 423, 429 (9th Cir. 2001). A complaint must “specify 

each statement alleged to have been misleading, [and] the reason or reasons why the 

statement is misleading.” 15 U.S.C. § 78u–4(b)(1). The complaint must also “state with 

particularity facts giving rise to a strong inference that the defendant acted with the required 

state of mind.” 15 U.S.C. § 78u–4(b)(2). To qualify as “strong” under this statute, “an 

inference of scienter must be more than merely plausible or reasonable—it must be cogent 

and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs, Inc. 

v. Makor Issues & Rights, Ltd., 551 U.S. 308, 314 (2007).

II. Analysis

A. Defendants Taronis and Mahoney

To state a claim under Section 10(b) and Rule 10b-5, Plaintiffs must show with 

particularity (1) a material misrepresentation or omission of material fact; (2) scienter; (3) a 

connection with the purchase or sale of a security; (4) reliance; (5) economic loss; and 

(6) loss causation. Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341–42 (2005). Defendants 

assert that Plaintiffs have failed to adequately plead a material misrepresentation, scienter, 

and loss causation.

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1. Material Misrepresentation

Defendants claim that Plaintiffs have failed to allege a material misrepresentation 

or omission of material fact with respect to the Press Release because Taronis did have a 

contract with the City. Defendants explain, as they did in their February 12 Form 8-K/A, 

that they had a purchase order from the City,

4

and under basic contract law, purchase orders 

submitted after the purchaser received a quote are contracts. 

However, “a statement is misleading if it would give a reasonable investor the 

impression of a state of affairs that differs in a material way from the one that actually

exits.” Berson v Applied Signal Technology, Inc., 527 F.3d 982, 985 (9th Cir. 2008) 

(internal quotes and citations omitted). “[A] statement that is literally true can be 

misleading and thus actionable under the securities laws.” Brody v Transitional Hospitals 

Corp., 280 F.3d 997, 1006 (9th Cir. 2002). Thus, Defendants’ argument that they 

technically had a contract is not dispositive.

Plaintiffs have adequately alleged that the Press Release was misleading because it 

gave reasonable investors the false impression that Taronis had secured a long-term 

contract with the City. The language of the Press Release that the City had “elected to use 

MagneGas as its metal cutting fuel of choice” considered in conjunction with the reference 

to a newly formed contract may create in the minds of a reasonable juror the impression of 

a durable long-term, majority-type relationship. The City’s alleged response to the Press 

Release further supports this interpretation. Plaintiffs assert that the City promptly

requested the Press Release be removed due to its inaccuracy and that Defendants complied

with the City’s request. Plaintiffs also alleged the contents of internal City emails 

commenting on the Press Release’s falsity. While, as Defendant argues, these allegations

may not prove falsity, that is not the question before the Court. When the facts alleged are 

assumed to be true, the City’s reaction to the Press Release supports the inference that the 

4 Plaintiffs contest whether Defendants had secured a purchase order at the time of the 

Press Release. Because the Court is required to construe all facts in favor of Plaintiffs on a 

motion to dismiss, the Court is not assuming the truth of Defendants’ assertion. The Court 

is merely illustrating that even if Defendants had a purchase order, Plaintiffs have still 

alleged that the Press Release was misleading under Section 10(b).

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Press Release gave reasonable investors the impression that Taronis had a more significant

agreement with the City than an “approval and a written authorization . . . to move forward 

with the procurement of gas.” (Doc. 45 at 7.) Plaintiffs have sufficiently alleged a material 

misrepresentation under Section 10(b) and Rule 10b-5.

2. Scienter

A defendant acts with scienter for purposes of Section 10(b) and Rule 10b-5 if he 

acts with “intent to deceive, manipulate, or defraud” or with “deliberate recklessness.” City 

of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Align Tech., Inc., 856 F.3d 605, 

619 (9th Cir. 2017). “[D]eliberate recklessness is an extreme departure from the standards 

of ordinary care . . . which presents a danger of misleading buyers or sellers that is either 

known to the defendant or is so obvious that the actor must have been aware of it.” Id.

(alterations in original) (internal quotations omitted). General facts demonstrating motive 

and opportunity are not sufficient. Id. To be a “strong” inference, as required by the 

PSLRA, the inference of scienter must be “at least as compelling as any opposing inference 

one could draw from the facts alleged.” Tellabs, 551 U.S. at 314.

In this Circuit there is a dual inquiry to determine the sufficiency of a plaintiff’s 

scienter pleadings. First, the court must determine “whether any of the allegations standing 

alone, are sufficient to create a strong inference of scienter.” Dearborn Heights, 856 F.3d 

at 620 (quoting N.M. State Inv. Council v. Ernst & Young LLP, 641 F.2d 1089, 1095 (9th 

Cir. 2011)). “[I]f no individual allegation is sufficient, we conduct a ‘holistic’ review of

the same allegations to determine whether the insufficient allegations combine to create a 

strong inference of intentional conduct or deliberate recklessness.” Id. (alterations in 

original). However, where, as here, “falsity and scienter are ‘strongly inferred from the 

same set of facts,’ we may ‘incorporate[ ] the dual pleading requirements of 15 U.S.C. 

§§ 78u-4(b)(1) and (b)(2) into a single inquiry,’ asking ‘whether particular facts in the

complaint, taken as a whole, raise a strong inference that defendants intentional or [with] 

deliberate recklessness made false or misleading statements to investors.’” In re Allied 

Nevada Gold Corp. Securities Litigation, 743 F. App’x 887 (9th Cir. 2018) (alterations in 

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original) (quoting Ronconi v. Larkin, 253 F.3d 423, 429 (9th Cir. 2001)).

Defendants assert Plaintiffs allege “little more than . . . general corporate motive 

and opportunity, which courts routinely reject.” (Doc 45 at 17.) However, in support of its 

theory that Defendants acted with knowledge, intent, or deliberate recklessness in making 

and disseminating misleading statements in the Press Release, Plaintiffs allege that 

Defendants knew the contents of the Press Release were false or misleading; Defendants 

received an email, on January 29, from the City of San Diego (the purported counter-party 

to the contract) asking for the Press Release to be “immediately removed[d]” because the 

city did “not have any procurement contract or any agreement with [Defendants].” (Doc. 

36 at 15); Defendants did not issue a corrective statement about the Press Release until 

February 12; and, that motive and opportunity for fraud are also evident because 

Defendants were working to maintain the Company’s listing on NASDAQ.

Thus, contrary to Defendants’ assertions, Plaintiffs’ allegation of scienter is based 

on more than a general allegation of motive and opportunity. While Defendants claim they 

innocently believed the Press Release was true and had no motive to mislead investors in 

light of the approved reverse stock split, the facts alleged give rise to an inference that 

Defendants intentionally or with deliberate recklessness made false or misleading 

statements to investors. Plaintiffs have adequately alleged scienter.

3. Loss Causation 

“To prove loss causation, the plaintiff must demonstrate a causal connection 

between the deceptive acts that form the basis for the claim of securities fraud and the 

injury suffered by the plaintiff.” Curry v. Yelp Inc., 875 F.3d 1219, 1225 (9th Cir. 2017) 

(quoting Ambassador Hotel Co., Ltd. v. Wei–Chuan Inv., 189 F.3d 1017, 1027 (9th Cir. 

1999)). “This inquiry requires no more than the familiar test for proximate cause.” 

Mineworkers Pension Scheme v. First Solar Inc., 881 F.3d 750, 753 (9th Cir. 2018). In the 

securities fraud context, “[t]he burden of pleading loss causation is typically satisfied by 

allegations that the defendant revealed the truth through corrective disclosures which 

caused the company’s stock price to drop and investors to lose money.” Lloyd v. CVB 

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Financial Corp., 811 F.3d 1200, 1209 (9th Cir. 2016) (internal quotations omitted). A 

causation theory based on revelation of the fraud is not the only means of establishing loss 

causation. First Solar, 881 F.3d at 754 (“[T[here are an ‘infinite variety’ of ways for a tort 

to cause a loss.”). However, when the complaint relies on a revelation theory of loss 

causation, allegations relying on the mere risk or potential for fraud are insufficient. Curry, 

875 F.3d at 1225.

Defendant first argues that the FAC improperly alleges that the mere risk or 

potential for fraud caused Plaintiffs claimed loss. The Ninth Circuit has consistently held 

that when the purported theory of loss causation is based on the market’s revelation of the 

alleged fraud “the mere announcement of an investigation” or some other analogous event

“is insufficient to establish loss causation because it does not reveal fraudulent practices to 

the market.” Curry, 875 F.3d at 1225 (citing Loos v. Immersion, Corp., 762 F.3d 880, 890

(9th Cir. 2014)). The Ninth Circuit, however, recently held that a viable loss causation 

theory can be based on such an event “if the complaint also alleges a subsequent corrective 

disclosure by the defendant.” Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1210 (9th Cir. 

2016).

In Lloyd, the defendant’s largest borrower informed defendant it would be unable 

to make its payments and was contemplating bankruptcy. Id. at 1202. The defendant 

nonetheless represented that there was no basis for serious doubt about the debtor’s ability 

to repay its borrowings. Id. The defendant was later served a subpoena from the SEC 

seeking information about its loan underwriting methodology and allowance for credit 

losses. Id. The day after the defendant announced its receipt of the subpoena, its stock 

dropped over 20%. Id. A month later, the defendant announced that the debtor was unable 

to repay its loans. Id. In response, the stock price dropped less than one percent. Id. at 1205.

The complaint in Lloyd, asserting violations of Section 10(b) and Rule10b-5, alleged 

that (1) the announcement of the subpoena caused the defendant’s stock price to drop 

precipitously; (2) the market perceived the subpoena to be related to the defendant’s alleged 

misstatements about the debtor’s ability to pay; (3) the market’s fears about the subpoena 

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were confirmed by a subsequent disclosure; and (4) the subsequent disclosure’s minimal 

effect on the defendant’s stock price indicated that the previous substantial drop reflected, 

at least in part, the market’s concerns about the alleged misstatements. Id. at 1210–11.

Based on these allegations, the court concluded that the plaintiff had “adequately pleaded 

a causal connection between the material misrepresentation and the loss.” Id. at 1211.

The FAC closely resembles the complaint in Lloyd. It alleges that (1) market 

uncertainty about the existence of a contract resulting from Taronis’s removal of the Press 

Release from its website led to the decline in Taronis’s stock price; (2) the market perceived 

the removal of the Press Release to be related to its contents, i.e. Taronis’s relationship 

with San Diego; (3) the market’s fears about the disappearance of the Press Release were 

confirmed when the alleged fraud was “fully and finally revealed” by the February 12 

announcement; and (4) the February 12 announcement had a minimal effect on Taronis’s 

stock price. Thus, contrary to Defendant’s assertion, the FAC does not rely on the market’s 

speculation of fraud derived from the removal of the Press Release alone. Plaintiffs theory 

of a “slow leak” revelation is nuanced, but this Circuit has recognized that there are an 

infinite number of ways to allege loss causation. First Solar, 881 F.3d at 754. The 

allegations in the FAC, viewed together, adequately allege a viable loss causation theory. 

C.f. Loos, 762 F.3d at 890 (holding that the complaint’s omission of two subsequent 

disclosures confirming the market’s fears of fraud was “fatal to [plaintiff’s] ability to 

plausibly allege loss causation).

5

5 Defendant also argues that Plaintiffs’ loss causation theory must fail because the timing 

of the drop in Taronis’s stock value more aptly lines up with the announcement and 

execution of the reverse stock split. However, the Court is not presently tasked with 

determining the actual cause of Plaintiffs claimed loss. When the facts alleged in the 

complaint are assumed to be true, Plaintiffs have adequately pleaded a causal connection 

between the material misrepresentation and the loss. See Metzler Inv. GMBH v. Corinthian 

Colleges, Inc., 540 F.3d 1049, 1062 (9th Cir. 2008) (“A plaintiff does not, of course, need 

to prove loss causation in order to avoid dismissal; but the plaintiff must properly allege 

it.”); see also In re Impinj, Inc., Sec. Litig., 414 F. Supp. 3d 1327, 1337 (W.D. Wash. 2019) 

(“Plaintiffs have the burden of showing that the misrepresentation was a substantial cause 

of the loss, but need not show that it was the sole reason for a drop in share price.”) (citing 

Nuveen Mun. High Income Opportunity Fund v. City of Alameda., 730 F.3d 1111, 1119 

(9th Cir. 2013)).

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B. Individual Defendants

The FAC fails to state a claim against the Individual Defendants for violations of 

Rule 10b-5(a) and (c). “To state a claim under Rule 10b–5(a) and/or (c), a private plaintiff 

must allege facts showing (1) that the defendant committed a deceptive or manipulative 

act, (2) in furtherance of the alleged scheme to defraud [in connection with the purchase or 

sale of securities], (3) with scienter, [ ] (4) reliance[,] (5) economic loss, and (6) loss 

causation.” In re CytRx Corp. Sec. Litig., No. CV14-1956GHK(PJWX), 2015 WL 5031232 

(C.D. Cal. July 13, 2015) (internal quotations omitted). The facts alleged to support a Rule 

10b-5(a) or (c) claim, however, cannot be the same facts that form the basis of a Rule 

10b-5(b) claim. WPP Luxembourg Gamma Three Sarl v. Spot Runner, Inc., 655 F.3d 1039, 

1058 (9th Cir. 2011) (“A defendant may only be liable as part of a fraudulent scheme based 

upon misrepresentations and omissions under Rules 10b–5(a) or (c) when the scheme also 

encompasses conduct beyond those misrepresentations or omissions.”).

Here, the FAC does not allege any facts that are separate from those already alleged 

in the Rule 10b-5(b) claim. Plaintiffs merely add that the Individual Defendants 

“participated in the scheme to defraud” by participating in the issuance of the Press Release 

and in the decision to delay issuing a corrective disclosure. This is not enough. C.f. In re 

CytRx Corp. Sec. Litig., No. 14-cv-1956, 2015 WL 5031232, at *12 (C.D. Cal. July 13, 

2015) (holding that a complaint alleged a Rule 10b-5(a) or (c) claim when, in addition to 

the misrepresentation that was the basis for the Rule 10b-5(b) claim, the complaint also 

“included conduct beyond said statements, including the hiring of promoters, planning and 

editing well-timed article releases with targeted content to artificially inflate the value of 

company stock and raise revenue, and covering up the Company’s involvement.”); Rabkin 

v. Lion Biotechnologies, Inc., No. CV 14-1956-GHK (PJWx), 2018 WL 905862, at *16-17 

(N.D. Cal Feb. 15, 2018) (similar); In re Galena Biopharma, Inc. Sec. Litig., 117 F. Supp. 

3d 1154, 1166–67 (D. Or. 2015) (similar). Plaintiffs’ Rule 10b-5(a) and (c) claim against 

the Individual Defendants (Count II) is dismissed.6

6 The Individual Defendants remain subject to this action under Count III.

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CONCLUSION

The FAC adequately pleads a violation of Section 10(b) and Rule 10b-5 against 

Defendant Taronis and Defendant Mahoney. However, the FAC falls short with respect to 

its Rule10b-5(a) & (c) claim asserted against the Individual Defendants. Accordingly,

IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss First Amended 

Class Action Complaint (Doc. 45) is GRANTED in part and DENIED in part. Defendant’s 

Motion to Dismiss with respect to Count I is denied. Defendant’s Motion to Dismiss with 

respect to Count II is granted.

Dated this 8th day of April, 2020.

Case 2:19-cv-04529-GMS Document 54 Filed 04/08/20 Page 12 of 12