Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-00456/USCOURTS-cand-3_05-cv-00456-14/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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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re SILICON IMAGE, INC. SECURITIES

LITIGATION

 /

No. C-05-456 MMC

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS; DISMISSING

FOURTH CONSOLIDATED AMENDED

COMPLAINT; VACATING HEARING

Before the Court is the motion, filed May 25, 2007 by defendants Silicon Image, Inc.

(“Silicon Image”), Steve Tirado (“Tirado”), and David Lee (“Lee”), to dismiss plaintiffs’

Fourth Consolidated Amended Complaint (“4CAC”), pursuant to Rules 12(b)(6) and 9(b) of

the Federal Rules of Civil Procedure. Plaintiffs William S. Hayman, John Herlihy, and

James Donald Smallwood have filed opposition, to which defendants have replied. Having

considered the parties’ submissions filed in support of and in opposition to the motion, the

Court finds the matter appropriate for determination on said submissions, VACATES the

hearing scheduled for September 7, 2007, and rules as follows.

In its “Order Granting Defendants’ Motion to Dismiss; Dismissing Third Consolidated

Amended Complaint with Leave to Amend,” filed February 23, 2007 (“February 23, 2007

Order”), the Court found plaintiffs had failed to allege sufficient facts to support a claim that

any of the seventeen assertedly false and/or misleading statements on which the instant

action is based were false or misleading when made, and afforded plaintiffs leave to amend

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to cure the deficiencies identified in said order. By the instant motion, defendants argue

plaintiffs have failed to cure the deficiencies identified in the February 23, 2007 Order, and

that further leave to amend is inappropriate.

A. Compliance With PSLRA

As set forth below, the Court has examined each allegedly false or misleading

statement, in the order each such statement was addressed in the February 23, 2007

Order, to determine if plaintiffs have pleaded their claims in conformity with the Private

Securities Litigation Reform Act (“PSLRA”). As discussed below, the Court finds plaintiffs

have, with respect to each statement, failed to properly plead a claim.

1. June 24, 2004 Press Release

In the February 23, 2007 Order, the Court found plaintiffs failed to comply with the

PSRLA’s requirement that plaintiffs allege with particularity all facts on which they based

their allegation that the following statement contained in a June 24, 2004 press release was

false: “[T]he board and [Lee] are committed to exemplifying excellence in corporate

governance, and therefore believe it is important to separate the roles of the CEO and

chairman.” (See February 23, 2007 Order at 4:8-6:16.) In particular, the Court found

plaintiffs’ reliance on three confidential sources was insufficient: “[W]ith respect to CS1 and

CS2, plaintiffs essentially allege CS1’s opinion that Silicon Image was ‘divided’ and CS2’s

opinion that Silicon Image was a ‘dictatorship,’ but fail to allege facts suggesting the basis

for said sources’ respective opinions; with respect to CS3, plaintiffs fail to identify any

particular ‘sales’ or ‘accounting’ practices that CS3 believed was restricted to only a ‘small

circle of people’.” (See id. at 5:22-26.)

The Court finds plaintiffs, in the 4CAC, have failed to cure the deficiencies identified

in the February 23, 2007 order.

 First, plaintiffs again fail to provide a factual basis for the conclusory opinions

assertedly provided to plaintiffs by CS1 and CS2, and again fail to identify, with any

particularity, the practices CS3 believed were restricted to only a small number of people or

to explain why such assertion by CS3, if true, would establish the falsity of any statement in

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Plaintiffs allege CS4 is a “former Executive Vice President.” (See id.)

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the June 24, 2004 press release. (See 4CAC ¶ 53(b)(iv).)

Second, plaintiff’s newly-stated reliance on other information from CS2, specifically,

CS2’s belief that Lee “pushed out” Silicon Image’s former Chief Financial Officer Robert

Gargus (“Gargus”), (see 4CAC ¶ 53(b)(iii)), is unavailing. Plaintiffs fail to allege any facts to

support a finding that CS2, referred to only as a “Human Resources Generalist,” would

know the reason why Gargus left Silicon Image, particularly given that Gargus allegedly

announced his resignation on August 18, 2004, (see id.), and continued to work at Silicon

Image until April 20, 2005, (see 4CAC ¶ 85), whereas CS2 left Silicon Images in July 2004,

(see 4CAC ¶ 53(b)(iv)(3)). Further, even if Lee “pushed out” Gargus, plaintiffs fail to

explain how such occurrence establishes the falsity of any statement made weeks before

Gargus announced his resignation and months before Gargus, in fact, resigned.

Third, plaintiff’s newly-stated reliance on information provided by CS4, specifically,

CS4's opinion that “Gargus did not see eye-to-eye with defendants Tirado and Lee on

many important issues,” (see 4CAC ¶¶ 53(b)(iii)), likewise is unavailing.1

 Plaintiffs fail to

allege facts to support a finding that CS4, who left Silicon Image in November 2002, (see

id.), would know the circumstances pertaining to Gargus’s departure years later. Further,

even assuming Gargus “did not see eye-to-eye” with Tirado and Lee, plaintiffs fails to

explain how such situation renders any statement made in the June 24, 2004 press release

false or misleading.

Finally, plaintiffs’ newly-stated reliance on information provided to them by Steven

Laub (“Laub”), who began working for Silicon Image as CEO and President on November

11, 2004, (see 4CAC ¶¶ 53(b)(i), 53(b)(ii), 59(b)(i)), is insufficient to cure the previouslynoted deficiences. Although Laub assertedly provided plaintiffs with information

concerning matters occurring at Silicon Image while Laub was employed there, none of the

information provided by Laub pertains to what the Board of Directors of Silicon Image

and/or Lee “believed” on June 24, 2004, a date months before Laub was employed by

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Silicon Image.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the June 24,

2004 press release. See 15 U.S.C. § 78u-4(b)(1) (providing plaintiff must allege “with

particularity all facts” on which an allegation of falsity is made).

2. Form 10-Q Filed August 9, 2004

In the February 23, 2007 Order, the Court found plaintiff failed to state a claim based

on any statement contained in Silicon Image’s Form 10-Q filed August 9, 2004, because

plaintiffs failed to specify a theory as to why any statement therein was false or misleading

and, alternatively, assuming the claim was based on the theory that defendants were not

actually implementing the “internal measures” identified in said Form 10-Q, because

plaintiffs failed to identify a source that would have had knowledge of Silicon Image’s

internal affairs on August 9, 2004. (See February 23, 2007 Order at 6:17-7:16.)

In the 4CAC, plaintiffs confirm they are basing their claim on the theory that

defendants were not actually implementing the “internal measures” identified in said 10-Q;

specifically, plaintiffs allege that, contrary to statements in the Form 10-Q, Silicon Image

was not “in the process” of “restructuring some reporting relationships among management

and clarifying management roles and responsibilities” or “improving communication within

the management team and between the management team and the Board of Directors.” 

(See 4CAC ¶ 55.) Plaintiffs, however, fail to identify a source who purports to have

knowledge as to whether Silicon Image was implementing the subject “internal measures”

on August 9, 2004.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the Form 10-

Q filed August 9, 2004.

3. October 19, 2004 Conference Call

In the February 23, 2007 Order, the Court found plaintiff failed to state a claim based

on any statement made by Lee during an October 19, 2004 conference call, because

plaintiffs failed to allege any basis for plaintiff’s assertion that Lee made any statements

during said call, failed to specify a theory as to why any statement that may have been

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made was false or misleading, and failed to identify a source with knowledge of facts to

support a finding that any such statement was false or misleading. (See February 23, 2007

Order at 7:17-8:23.)

The 4CAC, although continuing to quote statements allegedly made by Lee during

the October 19, 2004 conference call, (see 4CAC ¶ 57), no longer alleges any statement

made during said conference was false.

Accordingly, the Court deems plaintiffs to have withdrawn any substantive claim

based on statements made during the October 19, 2004 conference call. Alternatively, the

Court finds plaintiffs, because they have not cured the deficiencies identified in the

February 23, 2007 Order, have failed to sufficiently allege a claim based on the October 19,

2004 conference call.

4. Form 10Q Filed November 5, 2004

In the February 23, 2007 Order, the Court found plaintiff failed to state a claim based

on statements made in Silicon Image’s Form 10Q filed November 5, 2004, because

plaintiffs failed to allege a theory as to why any such statements were false or misleading,

and failed to identify a source with knowledge of facts that would show said statements

were false or misleading.

In the 4CAC, plaintiffs have set forth a theory of falsity. Specifically, plaintiffs allege

(1) the statement that Silicon Image had “restructur[ed] some reporting relationships among

management and clarif[ied] management roles and responsibilities” was false because no

such restructuring or clarification had occurred by November 5, 2004, and (2) the statement

that Silicon Image had “improv[ed] communication within the management team and

between the management team and the Board of directors, including the Audit Committee”

was false when made because Silicon Image had not improved such communication by

November 5, 2004. (See 4CAC ¶¶ 58, 59(a).)

In the earlier-filed August 9, 2004 Form 10Q, Silicon Image stated it was “in the

process of implementing” measures it later identified, in its November 5, 2004 Form 10Q,

as having been “implemented.” (Compare 4CAC ¶ 54 with 4CAC ¶ 58.) Plaintiffs fail to

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allege any source with knowledge that Silicon Image had not engaged in the cited

restructuring of reporting relationships, clarification of roles, and/or improvement of

communication. Although plaintiffs now rely on Laub, Laub, as noted, began working for

Silicon Image on November 11, 2004, and there is no showing he would have had a basis

to compare the circumstances pertaining in November 2004 with the situation pertaining

prior to that time. Moreover, the statement by Laub on which plaintiffs rely cannot be

reasonably interpreted as an assertion that the restructuring, clarification, or improvements

had not occurred; rather, Laub stated that after he joined Silicon Image, Lee had attempted

to “change” Laub’s responsibilities and that issues as to Laub’s responsibilities

“unexpectedly arose” immediately after Laub began working for Silicon Image. (See 4CAC

¶¶ 59(b)(i), 59(iii).)

Plaintiffs’ newly-stated reliance on a November 17, 2004 statement by Silicon Image

announcing that two Board members had resigned likewise is insufficient. Plaintiffs assert

that a third-party financial analyst reported on April 26, 2005 that the two Board members

had resigned because of “conflicts with defendant Lee.” (See 4CAC ¶ 59(b)(ii).) The

November 5, 2004 Form 10Q, however, does not purport to claim that no conflicts existed

among the Board. The allegation that two Board members had “conflicts” with Lee is, if

ture, insufficient to establish that Silicon Image had not, as of November 5, 2004,

implemented the cited restructuring, clarification, and communication improvements.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the Form 10-

Q filed November 5, 2004.

5. November 11, 2004 Press Release

In its February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on a November 11, 2004 press release announcing Silicon Image’s appointment of

Laub as its CEO and President, and in which Silicon Images stated Laub would “be

responsible for driving the company’s business strategy, execution and overall company

performance.” Specifically, the Court found plaintiff failed to allege any facts to support a

finding that the sources on which plaintiffs relied were “in a position to know of defendants’

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intentions on November 11, 2004.” (See February 23, 2007 Order at 9:20-11:25.)

Plaintiffs offer no new facts with respect to their reliance on the sources identified in

the TCAC. The 4CAC does, however, identify new sources, specifically, “CS3‘s continuing

contacts with [Silicon Image], after CS3 left Silicon Image.” (See 4CAC ¶ 64(e).) 

According to plaintiffs, as a result of CS3's “continuing contacts,” CS3 learned that “Board

members wanted to hire Laub” in order to “keep an eye on [Silicon Image’s] financial

practices.” (See id.) Plaintiffs fail to explain why such information tends to prove it was not

defendants’ intention, on November 11, 2004, that Laub “be responsible for driving the

company’s business strategy, execution and overall company performance.” Additionally,

plaintiffs’ reliance on CS3's “continuing contacts,” an apparent reference to persons with

whom CS3 kept in touch, is plainly insufficient. See In re Daou Systems, Inc. Securities

Litigation, 411 F. 3d 1006, 1015 (9th Cir. 2005) (holding confidential sources must “be

described with sufficient particularity to support the probability that a person in the position

occupied by the source would possess the information alleged”; finding confidential

witnesses described with requisite particularity where plaintiff “described [source’s] job

description and responsibilities,” thus enabling district court to determine whether source

would be “familiar” with information provided by source).

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the

November 11, 2004 press release.

6. January 25, 2005 Press Release

In its February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on a January 25, 2005 press release announcing that Laub had resigned, citing

“issues related to the scope of his roles and responsibilities.” With respect to plaintiffs’

theory that said statement was misleading because defendants did not further disclose that

Laub’s decision “stemmed from Lee’s override of the Board’s decision to separate the roles

of Chairman and CEO and [Lee’s] efforts to redefine Laub’s responsibilities and refusal to

relinquish executive control,” the Court found the omission of details as to the internal

dispute did not create a “materially different impression” from the one that plaintiffs allege

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actually existed. (See February 23, 2007 Order at 11:26-12:21.)

In the 4CAC, plaintiffs add no new allegations that could support a finding that the

statement made, specifically, that Laub resigned because of “issues related to the scope of

his roles and responsibilities,” (see 4CAC ¶ 64(b)), created a “materially different

impression” with respect to the alleged fact that Lee was the person who attempted to limit

the scope of Laub’s roles and responsibilities. See Brody v. Transitional Hospitals Corp.,

280 F. 3d 997, 1006 (9th Cir. 2002) (holding statement not “misleading” for purposes of

federal securities law merely because it is “incomplete” but, rather, because it “affirmatively

create[s] an impression of a state of affairs that differs in a material way from the one that

actually exists”).

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the January

25, 2005 press release.

7. January 25, 2005 Conference Call

In the February 23, 2007 Order, the Court found plaintiffs failed to state a claim

based on Tirado’s alleged statement, made during a January 25, 2005 conference call,

directing an analyst who had a question about Laub’s resignation to the January 25, 2005

press release, because plaintiffs failed to identify any source to support a finding that

Tirado made any such statement, and failed to allege facts to support a finding any such

statement was misleading.

Plaintiffs have not added any additional allegations regarding the January 25, 2005

conference call. Further, because plaintiffs have failed to sufficiently allege the January

25, 2005 press release was false and misleading, plaintiffs’ claim based on Tirado’s

allegedly referring an analyst to such press release fails for this additional reason. 

Consequently, plaintiffs have failed to cure the deficiencies identified in the February 23,

2007 Order. 

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the January

25, 2005 conference call.

//

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8. Form 10-K Filed March 16, 2005

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on a statement in Silicon Image’s Form 10-K filed March 16, 2005, that Silicon

Image had conducted an “assessment” and had “concluded” its “internal control over

financial reporting was effective,” because plaintiffs failed to identify a source who provided

plaintiffs with information different from that disclosed in the Form 10-K. (See February 23,

2007 Order at 13:14-14:14.)

In the 4CAC, plaintiffs again fail to identify any source to support a finding that

Silicon Image did not conduct an assessment concerning its internal control over financial

reporting and/or that Silicon Image did not conclude that its internal control over financial

reporting was effective.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the Form 10-

K filed March 16, 2005.

9. Form 10-K/A Filed April 1, 2005

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on a statement made in Silicon Image’s Form 10-K/A filed April 1, 2005, that its

March 16, 2005 Form 10-K did not contain any false or misleading statement, because

plaintiffs had failed to state a claim based on any statement in the March 16, 2005 Form

10-K. (See February 23, 2007 Order at 14:15-23.)

As stated above, plaintiffs have not cured the deficiencies previously identified with

respect to their claim based on the March 16, 2005 Form10-K.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the Form 10-

K/A filed April 1, 2005, which is derivative of their claim based on the March 16, 2005 Form

10-K

10. April 21, 2005 Press Release

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on statements pertaining to Silicon Image’s income and taxes for the first quarter of

2005, made in a April 21, 2005 press release, because plaintiffs failed to sufficiently identify

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any source for their allegation that the figures identified therein were false or misleading. 

(See February 23, 2007 Order at 15:1-17:11.)

In the 4CAC, as in the TCAC, plaintiffs allege that defendants “materially overstated

[Silicon Image’s] net income and understated its provision for taxes.” (See 4CAC ¶ 93.) 

Plaintiffs, however, provide no new information as to the sources on which they previously

relied, and have failed to allege any new sources for said allegation.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the April 21,

2005 press release.

11. April 21, 2005 Conference Call

In its February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on statements pertaining to Silicon Image’s projected tax liability for the first and

second quarters of 2005 and for the entirety of 2005 and 2006, made during an April 21,

2005 conference call, because plaintiffs failed to sufficiently identify any source for plaintiffs’

belief that the projections were false or misleading. (See February 23, 2007 Order at

17:12-27.)

In the 4CAC, plaintiffs identify the following new source: “Plaintiffs’ allegations are

supported by the contemporaneous statements by some financial analysts, who expressed

surprise at the lower tax rate used by [Silicon Image]. For example, following

announcements of the first quarter results, analysts, such as CIBC World Markets noted in

a report, dated April 22, 2005, that second quarter projections used a ‘lower-than-expected

tax rate (now 3%-6% versus 10% expectation).” (See 4CAC ¶ 93(b).) It is unclear how

CIBC World Markets’ “surprise” that Silicon Image’s projections were below CIBC World

Markets’ “expectation” could suffice to support a finding that Silicon Image’s projections

were false or misleading. In any event, plaintiffs’ reliance on CIBC World Markets’ opinion

is unavailing, because there is no allegation CIBC World Markets was in a position to know

any facts, from an inside source or otherwise, that would support a finding Tirado’s alleged

projections were false or misleading.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the April 21,

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Silicon Image reported in the press release that the fourth director had resigned

“without stating a reason.” (See id.)

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2005 conference call.

12. April 25, 2005 Press Release

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on an April 25, 2005 press release in which Silicon Image announced that four of its

five “outside directors” had resigned, and in which Silicon Image further stated the reasons

for each such resignation. In particular, the Court found the sources identified by plaintiffs,

specifically, statements made by Silicon Image in May 2005 and by third-party analysts,

were insufficient, because plaintiffs failed to identify facts provided by any such source that

would support a finding that the reasons provided in the press release were misleading. 

(See February 23, 2007 Order at 18:1-19:16.)

The 4CAC includes one new allegation concerning a source for plaintiffs’ belief that

the April 25, 2005 press release was misleading. Plaintiffs now allege that comments

made on April 26, 2005 by third-party analyst Michael Bertz (“Bertz”) were “based on

‘conversations with [Silicon Image] (including former CFO Bob Gargus).’” (See 4CAC

¶ 78(b) (quoting Bertz report).) In his report, Bertz stated: “We believe the primary causes

[of the resignations] are due to issues surrounding the re-nomination of founder and fomer

CEO and Chairman David Lee to the Board. We believe that this is likely due to some

continued fallout from the previous management shakeup last January when Lee was

removed from the Chairman’s position following short tenured former CEO Steve Laub’s

departure.” (See id.)

As discussed in the Court’s February 23, 2007 Order, plaintiffs allege that the

subject press release identified the reason why two of the directors resigned as being “due

to a disagreement over whether or not David Lee should be re-nominated to the

Company’s Board of Directors,” and identified the reason why a third director resigned as

being “due to events surrounding the question of whether David Lee should be renominated to the Company’s Board of Directors.” (See 4CAC ¶ 77(a)(ii).)2

 In short, there

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is no apparent conflict between the stated reasons for the resignations in Bertz’s April 26,

2007 report and those stated in the press release issued one day earlier. At best, the Bretz

report can be read as providing a few immaterial details. Under such circumstances,

plaintiffs’ additional reference to Bertz’s having Gargus as a source is insufficient to cure

the deficiencies identified in the February 23, 2007 Order. See Brody, 280 F. 3d at 1006.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the April 25,

2005 press release.

13. Form 10-Q Filed May 10, 2005

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on statements made in Silicon Image’s Form 10-Q filed May 10, 2005, because

plaintiffs’ theory of falsity was identical to that asserted, and found to be insufficient, with

respect to the April 21, 2005 press release. (See February 23, 2007 Order at 19:17 -

20:17.)

The 4CAC again alleges the May 10, 2005 Form 10-Q was false and misleading for

the reasons alleged with respect to the April 21, 2005 press release. (See 4CAC ¶ 93.) As

discussed above, plaintiffs have failed to cure the deficiencies in their claim based on the

April 21, 2005 press release. Consequently, plaintiffs’ claim based on the May 10, 2005

Form 10-Q fails to the extent it is based on the same theory offered with respect to the April

21, 2005 press release.

The 4CAC discloses two new theories of falsity as to one statement in the May 10,

2005 Form 10-Q. In said Form, Silicon Image disclosed it had “concluded that [Silicon

Image’s] disclosure controls and procedures were ineffective because of [a] material

weakness in [its] internal control over financial reporting,” specifically, that, on April 24,

2005, “four of the five independent members of the Company’s Board of Directors

resigned, leaving the Audit Committee with only one member,” which “resulted in the

inability of the Audit Committee to provide effective oversight over the processes related to

the Company’s external financial reporting and internal control over financial reporting as of

and for the quarter ended March 31, 2005.” (See 4CAC ¶ 102.)

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Plaintiffs’ first new theory is that the above-quoted statement was misleading

because it does not include the reasons for the resignations. (See 4CAC ¶ 105.) As

discussed above, however, and assuming, arguendo, a failure to include the reasons for

the resignations could otherwise constitute a material omission, defendants publicly

disclosed those reasons on April 25, 2005. Consequently, the “market” could not have

been “misled.” See Heliotrope General, Inc. v. Ford Motor Co., 189 F. 3d 971, 975-76 (9th

Cir. 1999) (“If the market has become aware of the allegedly concealed information, the

facts allegedly omitted by the defendant would already be reflected in the stock’s prices

and the market will not be misled.”) (internal quotation and citation omitted). Moreover, as

also discussed above, plaintiffs have failed to sufficiently allege the disclosed reasons for

the resignations were false or misleading.

Plaintiffs’ second new theory is that the statement was false and misleading because

defendants later “admitted” that Silicon Image’s “internal financial controls over income tax

and stock options were materially deficient.” (See 4CAC ¶ 105.) Plaintiffs thus appear to

allege defendants were, on May 10, 2005, aware of and failed to disclose additional

material problems. Plaintiffs, however, fail to identify any “admission” made by Silicon

Image that it knew, on May 10, 2005, of any material deficiency in Silicon Image’s “internal

financial controls over income tax and stock options.”

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the Form 10-

Q dated May 10, 2005.

14. June 10, 2005 Press Release

In its February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on a June 10, 2005 press release that disclosed the “material weakness in internal

controls” that had been disclosed in Silicon Image’s May 10, 2005 Form 10-Q, because

plaintiffs’ theory of falsity was identical to that asserted, and found to be insufficient, with

respect to the April 21, 2005 press release. (See February 23, 2007 Order at 20:18-21:7.)

In the 4CAC, plaintiffs now allege that the disclosure in the June 10, 2005 press

release was “false and misleading” for the same reasons as set forth with respect to the

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May 10, 2005 Form 10-Q. As discussed above, however, plaintiffs have failed to state a

claim based on the May 10, 2005 Form 10-Q.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the June 10,

2005 press release.

15. August 9, 2005 Press Release

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on an August 9, 2005 press release in which Silicon Image set forth its net income

and tax projections for the second quarter of 2005, because plaintiffs had failed to

sufficiently identify a source in support of their allegation that the figures identified therein

were false or misleading. (See February 23, 2007 Order at 21:8-28.)

In the 4CAC, plaintiffs identify a new source, specifically, Silicon Image. Plaintiffs

allege that Silicon Image “ultimately admitted its lack of internal controls” in a Form 10-Q

filed November 9, 2005, in which Silicon Image stated as follows:

As of September 30, 2005, the Company did not maintain effective controls

over the valuation and determination of its deferred tax assets and income tax

provisions. Specifically, the Company did not maintain effective controls to

ensure that the valuation of deferred tax assets, including any associated

valuation allowance, was determined based upon appropriate supporting

documentation.

(See 4CAC ¶¶ 112(c), 121.) The above-quoted statement, however, cannot reasonably be

interpreted as an admission that the net income and/or projected tax figures disclosed in

the August 9, 2005 press release, which figures pertained to the quarter ending June 30,

2007, were false or misleading.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the August

9, 2005 press release.

16. August 9, 2005 Conference Call

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on statements made during an August 9, 2005 conference call, because plaintiffs

failed to identify any statements made during said conference call or who made them, and

failed to state why any statements that may have been made were false and misleading. 

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(See February 23, 2007 Order at 22:1-11.)

In the 4CAC, plaintiffs fail to provide any new information concerning said alleged

conference call, and, consequently, have not cured the deficiencies identified in the

February 23, 2007 Order.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the August

9, 2005 conference call.

17. Form 10-Q Filed August 9, 2005

In the February 23, 2007 Order, the Court found plaintiffs had failed to state a claim

based on statements made in Silicon Image’s Form 10-Q filed August 9, 2005, because

plaintiff’s theory of falsity as to the challenged statements therein was identical to that

asserted, and found to be insufficient, with respect to the August 9, 2005 press release. 

(See February 23, 2007 Order at 22:12-27.)

In support of its allegation that statements in the August 9, 2005 Form 10-Q were

false and misleading, plaintiffs again rely exclusively on the same theory offered with

respect to the August 9, 2005 press release. (See 4CAC ¶ 112.) Because, as discussed

above, plaintiffs have not cured the deficiencies with respect to their claim based on the

August 9, 2005 press release, plaintiffs likewise have failed to cure the deficiencies with

respect to their claim based on the August 9, 2005 Form 10-Q.

Accordingly, plaintiffs have failed to sufficiently allege a claim based on the Form 10-

Q dated August 9, 2005.

B. Leave to Amend

The Court previously dismissed the Second Consolidated Amended Complaint with

leave to amend, providing a detailed description of the pleading deficiencies therein, and,

as stated above, previously dismissed the TCAC with leave to amend, again providing a

detailed description of the deficiencies therein. There is no indication that plaintiffs would, if

granted further leave to amend, be able to amend to cure the deficiencies in the 4CAC.

Accordingly, the 4CAC will be dismissed without further leave to amend.

//

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CONCLUSION

For the reasons discussed above, defendants’ motion to dismiss the 4CAC is hereby

GRANTED, and the 4CAC is hereby DISMISSED.

IT IS SO ORDERED.

Dated: September 21, 2007 

MAXINE M. CHESNEY

United States District Judge

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