NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

In re: SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION SECURITIES LITIGATION,

______________________________ EDMOND K.L. TO, Lead Plaintiff; et al.,

Plaintiffs

- Appellants,

v. SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATIO N,

Defendant

- Appellee,
and ZIXUE ZHOU; et al.,

Defendants. No. 22

- 55660
D.C. Nos. 2:20

- cv - 11219

- GW

- AFM 2:21

- cv - 00067

- GW

- AFM

MEMORANDUM *

Appeal from the United States District Court for the Central District of California George H. Wu, District Judge, Presiding Argued and Submitted September 14, 2023

Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3. 

# FILED

SEP 27 2023
MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2

Before: SCHROEDER, FRIEDLAND, and MILLER, Circuit Judges. Plaintiff appeals the di strict court’s order granting Defendants’ motion to
dismis s Plaintiff’s second amended securities

- fraud class action complaint (“SAC”). Reviewing de novo, we affirm. See Vess v. Ciba

- Geigy Corp. USA , 317 F.3d 1097, 1102 (9th Cir. 2003). “To recover damages in a private securities fraud action, the plaintiff mus t
establish a causal connection between the defendant’s fraudulent conduct and the plaintiff’s economic loss

— an element known as loss causation. ” In re BofI Holding, Inc. Sec. Litig. , 977 F.3d 781, 786 (9th Cir. 2020). “ One way to prove
loss causation is to show that the defendant’s fraud was revealed to the market through one or more ‘corrective disclosures’ and that the company’s stock price
declined as a result.” Id. Plaintiff alleges that Defendants misled investors about the ties Defendant Semiconductor Manufacturing International Corporation ( “ SMIC ” ) had to the Chinese military, including by stating on a call with analysts in May 2020 that SMIC was “commit[ted]” to “non

- military use from day one, 20 years back,” and continued to be “full[y] commit[ted]” to non

- military end

- use of its products

. Plaintiff alleges that later news articles revealed the falsity of those statement s and

cause d a correction of the fraudulently inflated stock price that caused him
economic loss

. Alternatively, Plaintiff argues that even if those news artic les are3

best understood as merely announcing an investigation into SMIC’s suspected ties
to the Chinese mil itary, he has still plausibly alleged loss causation under Lloyd v.
CVB Fin ancial Corp. , 811 F.3d 1200 , 1209

- 10 (9th Cir. 2016)

. We assume without deciding that SMIC misled investors into thinking that it had no ties to the Chinese military. But we hold that Plaintiff has not plausibly alleged loss causation. First, t he W all Street Journal ( “ WSJ ” ) article from September 2020 is not a
corrective disclosure . I t me rely reported that the Trump administration was weighing putting SMIC on the Entity List because of the suspicion that it “aids China’s defense establishment,” and it only summarized allegations in a third party’s report about SMIC’s alleged ties to the Ch inese military, equivocating
about the allegations’ veracity by noting that an expert on China found the allegations of ties “ tenuous. ” Moreover, the WSJ article reported that the Trump
administration had taken an increasingly broad approach to placing Ch inese companies on the Entity List , “increasingly justif[ying] listings on broader
national

- security grounds.” The WSJ article therefore lacks the level of detail and
certitude needed to “disclose [] facts that, if true, rendered false [SMIC’s] prior

statements .” BofI

, 977 F.3d at 793

. 1

1 To the extent the underlying third

- party report, which contained highly detailed allegations, could constitute a corrective disclosure, it could do so only if4

Second, t he Reuters article from September 26, 2020 is not a corrective
disclosure because it lacks any purported facts contradicting the May 2020

statement . It rep orts only that the Trump administration imposed trade restrictions
on SMIC because of an “ unacceptable risk ” that equipment supplied to SMIC could be used by the Chinese military, not that SMIC indeed ha d ties to the Chinese military when it made the alleg edly false statements

. Third, we disagree with Plaintiff that he has pleaded loss causation under the
standard set forth in Lloyd , 811 F.3d 1200 , by pointing to later actions by the Trump and Biden administrations restricting the sale of SMIC securities. Under Lloyd , “the announcement of an investigation can ‘ form the basis for a viable loss causation theory ’ if the complaint also alleges a subsequent corrective disclosure by the defendant.” Id. at 1210 (quoting Loos v. Immersion Corp. , 762 F .3d 880,
8 90 n.3 (9th Cir. 2014))

. That subsequent disclosure must “confirm [] ” the
market’s fears

—

triggered initially by the investigation

— that a defendant had
misled investors. Id. at 1211. Even if the WSJ article and Reuters article can be
characterized as announcements that the Trump administration would be investigating SMIC’s potential ties to the Chinese military , the Trump

it were available to the market when t he WSJ article drew attention to it. See BofI , 977 F.3d at 786 (explaining that a defendant’s alleged fraud must be “revealed to the market”). But the WSJ article did not attach the report, and the SAC does not allege that the report was publicly availab le when the WSJ article was published. The report therefore cannot constitute a corrective disclosure either.5

administration’s December 2020 action categorizing SMIC as a Communist Chinese Military Company is insufficient to confirm that Defendants misled investors during the relevant time period. The Biden executive order from June
2021 also cannot establish loss causation because Plaintiff makes no allegation
about how the relevant market reacted to that executive order. Because Plaintiff has failed to plead loss causation, which is an essential
element of a securities

- fraud claim , Plaintiff’s SAC fails to state a claim.
AFFIRMED.