United States Court of Appeals

For the First Circuit 

No. 15-1945 

TUTOR PERINI CORPORATION, 

Plaintiff, Appellant, 

 v. 

BANC OF AMERICA SECURITIES LLC, n/k/a Merrill Lynch, Pierce, 

Fenner & Smith, Incorporated, successor by merger; BANK OF 

AMERICA, N.A., 

 Defendants, Appellees. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF MASSACHUSETTS 

[Hon. Nathaniel M. Gorton, U.S. District Judge] 

Before 

Thompson, Selya, and Kayatta, 

Circuit Judges. 

 George F. Carpinello, with whom Adam R. Shaw, John F. Dew, 

and Boies Schiller & Flexner, LLP were on brief, for appellant. 

 Jonathan Rosenberg, with whom B. Andrew Bednark, Leah 

Godesky, and O'Melveny & Myers LLP were on brief, for appellees. 

___________________ 

November 21, 2016 

___________________ 
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THOMPSON, Circuit Judge. 

OVERVIEW 

Today's dispute is part of the fallout from the financial 

system's near meltdown in the late 2000s. On one side of this 

dispute is Tutor Perini Corporation ("Tutor Perini"). On the other 

side is Banc of America Securities LLC and Bank of America, N.A. 

("BAS" and "BANA," respectively). To hear Tutor Perini tell it, 

BAS — acting as its broker-dealer, and with BANA's knowledge and 

acquiescence — sold it auction-rate securities ("ARS") without 

disclosing that the ARS market was heading for a spectacular 

crash.1 But to hear BAS and BANA tell it, BAS actually disclosed 

the risks that later materialized. An obviously unconvinced Tutor 

Perini sued BAS and BANA in federal district court, alleging 

securities fraud under state and federal law, as well as a medley 

of other state-law claims. On cross-motions for summary judgment, 

the district judge sided with BAS and BANA. Concluding that 

triable claims exist worthy of a jury's time and attention, we — 

for reasons recorded below — affirm in part, vacate in part, and 

remand. 

 1 We apologize for all the acronyms — they seem to go with 

the territory in cases like this, however. 
- 3 -

HOW THE CASE GOT HERE2

(a) 

The Players 

Tutor Perini is a giant construction company. And like 

most corporate colossi, Tutor Perini is extremely cash-conscience: 

it focuses daily on ensuring that it has enough cash on hand to 

fund its operations, and it traditionally pours any spare cash 

into short-term, low-risk, highly-liquid investments (like 

certificates of deposit and money-market funds) — i.e., 

investments that will let Tutor Perini get cash back as quickly as 

possible whenever the need arises. 

Which is where BAS came in. A wholly-owned subsidiary 

of BANA, BAS — now known as Merrill Lynch, Pierce, Fenner & Smith, 

Incorporated — is a banking company registered as a broker-dealer 

with the Securities and Exchange Commission. BAS was a moving 

force behind Tutor Perini's financial approach. And their 

relationship went back a ways. 

Having gotten into financial trouble in the mid-1990s, 

Tutor Perini found itself in what is called a "workout period," 

generally defined as a time when the debtor and the creditor try 

to hammer out an agreement to reduce or discharge a debt. During 

 2 As required, we take the facts as favorably to Tutor Perini's 

case as the record permits. See, e.g., Lang v. Wal-Mart Stores 

East, L.P., 813 F.3d 447, 450 (1st Cir. 2016). 
- 4 -

that stretch, BAS served as Tutor Perini's banking advisor under 

a revolving credit agreement. To help Tutor Perini regain its 

financial footing, later credit agreements between them put limits 

on the kinds of cash investments Tutor Perini could make — as a 

for-instance, Tutor Perini could not invest in ARS. 

(b) 

An ARS Primer 

Backed by a variety of assets or revenue sources — 

student loans or municipal assets, for instance — ARS are longterm investments, often with maturity dates of 20 years or more. 

In the student-loan ARS market, student loans originated under the 

Federal Family Education Loan Program ("FFELP") were considered 

high-quality because they were largely guaranteed by the federal 

government. The credit quality of non-FFELP-backed student-loan 

ARS and municipal ARS was often enhanced by guarantees — a "wrap" 

— from "monoline" insurance companies like Ambac Assurance 

Corporation, which agree to make interest and principal payments 

if an issuer defaults (i.e., Ambac "wraps" its own credit rating 

around the debt obligation and guarantees timely interest and 

principal payments in a default situation).3 

 3 Monoline insurance companies "provide[] guarantees to 

issuers, often in the form of credit wraps, that enhance the credit 

of the issuer. These insurance companies first began providing 

wraps for municipal bond issues, but now provide credit enhancement 

for other types of bonds, such as mortgage-backed securities and 

collateralized debt obligations." See Monoline Insurance Company, 
- 5 -

Parties buy or sell ARS at periodic auctions (held, say, 

every 7, 28, or 35 days, depending on the particular ARS), with 

the ARS's interest rate set there too. These are nonpublic 

auctions. Placing bids via authorized broker-dealers, would-be 

investors say how many ARS they want and what interest rate they 

will accept (ARS are always bought and sold at par value, so buyers 

bid by specifying an interest rate rather than a price). The 

lowest interest rate needed to sell off all available ARS becomes 

the "clearing rate." And the clearing rate becomes the ARS's 

interest rate until the next auction. ARS have caps on the highest 

possible clearing rate, known in the biz as the max rate, which 

for our purposes is calculated using a byzantine formula based 

partly on indices like the London Interbank Offered Rate or the 

Treasury rate (two well-known indices in the financial markets 

measuring interest rates). If there are enough buy bids below the 

max rate so as to allow for the sale of all available ARS, then 

the auction is deemed a success; but if not, then not — in which 

case ARS sellers must keep their ARS until the next successful 

auction, all the while earning interest at the max rate.4

 

Investopedia, www.investopedia.com/terms/m/monolineinsurance.asp 

(last visited Oct. 24, 2016). 

4 An illustration may be helpful: suppose the market demand 

required that certain ARS pay 6% interest — if the ARS's max rate 

was 5%, then the auction would fail because bids above 5% could 

not be accepted by the auction agent (so there would be no sales). 
- 6 -

Like some other broker-dealers, BAS played several roles 

in the ARS market — structuring and underwriting ARS on behalf of 

issuers; soliciting and placing ARS orders for investor-customers; 

and preventing auction failures by committing its own capital to 

buy ARS for its inventory accounts, from which it sold ARS to its 

customers. Ultimately, though, the ARS market was not terribly 

transparent. Among other unknowables, investors usually did not 

know if an auction only succeeded because of a broker-dealer 

support bid. They could only learn that from an authorized brokerdealer. Obviously, this lack of transparency made ARS buyers 

heavily dependent on their broker-dealers for key data to make 

sound investment decisions.5 

 5 Tutor Perini's expert did a good job of highlighting the 

ARS market's opaqueness and explaining what that meant to 

investors: 

The ARS market in 2007-2008 lacked fundamental 

transparency for investors. Investors simply could not 

obtain independently much of the material information 

regarding those investments and markets. They could 

only know critically important information if their 

broker(s) told them. That meant that all investors were 

essentially "broker-dependent" for material information 

necessary to exercise independent judgment regarding 

their investments. 

"Auction Agents," the expert added, "were generally authorized 

under the terms of many ARS to release the information concerning 

the maximum rate, bidding amounts, and other auction data only to 

the issuer and Authorized Broker-Dealers" — "[d]isclosures to 

investors were not authorized." 
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(c) 

BAS's ARS Pitch 

In 2004, Tutor Perini opened a nondiscretionaryinvestment account with BAS — i.e., an account that required BAS 

to get Tutor Perini's authorization before making account 

transactions; according to Tutor Perini's treasurer Susan Mellace, 

BAS would give her investment "options," and she would choose from 

a BAS-provided "recommended list." A certified public accountant 

with a master's degree in finance, Mellace reported to Tutor 

Perini's chief financial officer, who in turn reported to Tutor 

Perini's president. And she discussed what "vehicles" — stocks, 

bonds, etc. — she wanted to invest in with these gentlemen, though 

"[i]n terms of the day-to-day purchases and sales," those were her 

calls to make. 

Keenly aware of Tutor Perini's investment strategy 

(i.e., avoiding risks and illiquidity), BAS pitched ARS to Tutor 

Perini at an in-person meeting in May 2006 — even though (as we 

noted) its own credit agreement with Tutor Perini banned the 

company from investing in ARS. During the confab, BAS salesperson 

Lois McGrath gave Mellace a PowerPoint presentation on ARS. 

Mellace knew nothing about ARS — she "had never" even "heard of" 

ARS before "that presentation," she later explained. And up to 

that point, Tutor Perini had never invested in them. 
- 8 -

One of McGrath's PowerPoint slides explained how BAS 

offered "the full spectrum of fixed income securities underwritten 

by [BAS], traditional money market funds, and customized 

portfolios" — "[a]ll of which can be tailored to meet your specific 

investment guidelines" — and promised BAS's "[s]trict focus on 

thoroughly identifying your portfolio objectives and understanding 

your ongoing investment needs, rather than on executing 

transactions," by providing "[i]nvestment solutions that meet your 

needs by clearly defining the risk/reward of particular securities 

and maintaining the highest level of client servicing." Another 

slide stressed how BAS pledged that it would "work with [Tutor 

Perini] to evaluate market conditions and determine which 

investment" would "meet [Tutor Perini's] investment objectives." 

Still another slide noted that ARS belonged in a portfolio as part 

of Tutor Perini's "[c]ore cash" strategy, along with other shortterm investments like "U.S. Treasury Bills." Yet another slide 

played up ARS's "[l]iquidity opportunities," stressing that 

"[l]iquidity is enhanced by frequent auctions" and declaring that 

"the ARS auction process has developed into an established and 

mature market." Touting ARS's low risk and high liquidity, another 

slide emphasized what "a valuable investment tool" "28-day ARS" 

are for "[c]orporate cash managers" who "typically forecast their 

cash needs on a monthly basis." The presentation, though, warned 
- 9 -

of "[p]otential risks," stating among other things that ARS 

auctions could "fail[]" — with "[s]uch instances" typically caused 

by the "deterioration of issuer credit quality." If an auction 

failed, the slide added, ARS sellers would be unable to "sell their 

securities." Mellace understood that auctions "could" — to quote 

her deposition — "fail," which could "potentially" leave Tutor 

Perini "holding the security." 

Tutor Perini did not buy ARS in May 2006. A few months 

later, in December 2006, McGrath again recommended that Tutor 

Perini buy ARS at auction or from BAS's inventory. But after 

reviewing the credit agreement between Tutor Perini and BAS — 

which, to repeat, barred Tutor Perini from investing in ARS — 

McGrath told Mellace to stick with money-market funds. Ever 

persistent, BAS, through McGrath, amended the credit agreement in 

January 2007 to allow for ARS as short-term investments. 

(d) 

BAS's "Contagion" Fears 

Late in the summer of 2007, the ARS market — which BAS 

had called a safe investment for Tutor Perini's "core cash" — took 

quite a hit, with at least 60 auctions failing (presumably because 

of a global-credit crunch). Although these ARS chiefly involved 

subprime-mortgage lenders and their insurers, BAS knew immediately 

that such failures could spread to the entire ARS market. Indeed, 

BAS's head ARS trader sort of likened the situation to a contagion 
- 10 -

that could infect the rest of the ARS market. Actually, BAS's 

public finance executive did call it a "contagion," saying BAS had 

to "keep an eye on [it]." 

To stop the contagion from advancing, a BAS senior 

manager stressed three things to BAS personnel during an August 

2007 risk-management call: one, "[r]educe balance sheet"; two, 

"[d]on't be a hero, rein in traders, capture customer flow"; and 

three, "[w]e come first" — "this is a tough environment and we 

need to make decisions based on our own interests." Others spoke 

up about the issue too, including a BAS trader who told her 

supervisor that BAS's ARS portfolio faced the same risk of auction 

failure that had hit the subprime-mortgage market. And she warned 

that BAS had to support an upcoming auction in which Lehman 

Brothers was the lead broker-dealer, or else the auction would 

fail and investors would panic (at that time Lehman Brothers was 

still a major investment bank). Still in contagion-fighting mode, 

and thinking that increased sales could do the trick, BAS held an 

in-house "Teach-in" — at the end of August 2007 — to give its 

financial advisors "a more comprehensive understanding of Student 

Loan ARS." And BAS stepped up its support bidding at auctions 

too. 
- 11 -

(e) 

A "Good Time" to Buy ARS 

It was then — in September 2007 — that BAS's McGrath 

emailed Tutor Perini's Mellace to see if Mellace could buy ARS, 

saying it was "a good time" to dive into that market. Mellace 

said that she could do some buying and asked McGrath if ARS were 

"any better" than Tutor Perini's other investments. "Yes they 

are," McGrath wrote back. And McGrath recommended that Mellace 

buy AAA-rated student-loan ARS. 

McGrath also told Mellace that an ARS auction had failed 

in August 2007 — a failure, McGrath said, that related to mortgagebacked ARS, a corner of the ARS market in which Tutor Perini would 

not be investing. McGrath assured Mellace that BAS would support 

the auctions of BAS-recommended ARS. Mellace ran the ARS-purchase 

possibility by her bosses (Tutor Perini's chief financial officer 

and its president), telling them that auctions could possibly fail, 

in which case Tutor Perini "wouldn't have liquidity" until the 

next auction — a "daily auction sheet" that McGrath sent Mellace 

actually mentioned that risk. But because BAS's "interests . . . 

aligned" with Tutor Perini's (Mellace's words, not ours) — the two 

had a long-standing relationship, and BAS was the lead bank in the 

credit agreement — the idea that the ARS would remain illiquid was 

too "remote [a] possibility" to discuss, though (again) Mellace 

knew that such a possibility existed. 
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Mellace's overseers signed off on her investing in ARS, 

but their okay depended on her investing in "high-quality, shortterm securities" — i.e., ARS's with "AA and AAA[]" credit ratings. 

McGrath knew Mellace was only interested in high-credit-rated ARS. 

And she knew about Tutor Perini's need for quick liquidity. 

Anyhow, Tutor Perini finally bought the BAS-endorsed ARS. And 

after this sale — and the other relevant sales too — BAS sent out 

trade confirmations directing Tutor Perini to BAS's website, which 

contained BAS's ARS disclosures saying that it "routinely" bid in 

auctions, including to prevent failures, but had no obligation to 

do so.6

 These student-loan ARS had formulaic — as opposed to 

fixed — max rates keyed in part to interest-rate indices like the 

 6 "BAS is permitted, but is not obligated, to submit orders 

for its own account . . . and routinely does so in its sole 

discretion," the disclosures read. Also, 

[s]uch bids submitted by BAS may be designed to prevent 

a Failed Auction . . . ; however, BAS is not obligated 

to place such a bid in any auction, or to continue to 

place such bids. . . . Investors should not assume that 

BAS will place a bid . . . or that Failed Auctions or 

unfavorable auction rates will not occur. 

"BAS is not obligated to make a market in the securities," the 

disclosures added, "and may discontinue trading in the securities 

without notice for any reason at any time." Noting that BAS 

"provides no assurance as to the outcome of any Action," the 

disclosures cautioned that "there can be no assurance" that a 

holder will be able "to resell the securities . . . on the terms 

or at the times desired by the holder." Mellace recalled clicking 

on the link to that website "once or twice." 
- 13 -

earlier-mentioned London Interbank Offered Rate or the Treasury 

rate. At this time, however, both indices were trending downward 

(thanks to a weakening economy), while investors were demanding 

higher interest rates for ARS (because of concerns over the 

creditworthiness of certain companies that insured various ARS, 

evidently). The net result is that the space between the ARS max 

rate and the rates demanded by ARS buyers — referred to by the 

parties as the "headroom" — shrunk significantly, a phenomenon 

that suggested that ARS auctions would likely fail if the trend 

continued. Faced with this grim prospect, many issuers implemented 

waivers that temporarily raised the max rate for some ARS — 

"temporarily," because most were set to expire in January 2008. 

(f) 

Lack of Investor Demand 

Concerned about the contagion and the possibility of 

ARS-auction failure triggered by low max-rate caps, BAS started 

tracking ARS max rates in early October 2007. Noticing a lack of 

investor demand, BAS also ordered a review of its ARS inventory. 

No one from BAS discussed this or the then-existing risks with 

Mellace. But an October 5 Wall Street Journal article — titled 

"Bond Tumult is Jostling Auction-Rate Securities" — did note that 

"about 60 auctions worth $6 billion didn't find enough buyers in 

August." Still, McGrath kept recommending ARS to Tutor Perini. 

That same month, October 2007, McGrath, for example, emailed 
- 14 -

Mellace, encouraging her to buy student-loan ARS in BAS's own 

inventory. Relying on McGrath's advice, Tutor Perini agreed to 

take several of these ARS off BAS's hands, while knowing (to quote 

from an internal Tutor Perini memo) that "there is no guarantee 

that [an ARS] holder [will] be able to liquidate its holdings when 

desired." 

(g) 

"One Step Away from Illiquidity" 

As October turned to November, a senior BAS executive 

emailed colleagues that "quite a few issues in [the] student loan 

[ARS] market have come precariously close to failing." BAS did 

not clue Mellace in on any of this. And McGrath kept touting ARS 

as sound investments. 

Continuing what looks like an effort to reduce its ARSrisk exposure, McGrath emailed Mellace in mid-November that BAS 

was offering "a lot" of its ARS "inventory" for sale at a 

"discount." Tutor Perini bought one of those recommended studentloan ARS that same day. A little later, BAS's senior risk manager 

forwarded his boss a colleague's email warning that "[t]he ARS 

market is one step away from illiquidity." So BAS continued making 

support bids to avert auction failure. 

Because of BAS's support bids, its ARS inventory swelled 

to record levels in December. That did not sit well with BAS's 

risk manager. He felt that the liquidity problems with ARS were 
- 15 -

so profound that BAS had to get rid of them, telling BAS staffers 

that he was "very concerned about our ability to keep the [ARS] 

programs floating." He had talked with "a lot of" salespersons, 

he added, and "through tears from one of them" had learned that 

they were "afraid that their clients are at risk." "ARS are ripe 

to be the next problem," he ominously declared. And he recommended 

that BAS hold no "ARS on [its] balance sheet." Another week went 

by, and the risk manager told colleagues that "[t]he ARS really 

bother[] me," emphasizing that the "ARS book could get ugly," and 

warning that "[o]nce we have one failed auction, others will most 

likely follow." So BAS ordered a "thorough review of max rates on 

existing book" and told the "banking team" to "focus[]" on "getting 

max rates adjusted as quickly as possible where needed." 

Around mid-to-late December, Fitch Ratings (a major 

credit-rating agency) issued a press release — carried by Reuters, 

Dow Jones, and Business Wire — saying that some ARS issuers had 

gotten "temporary waiver[s]" of their ARS's max rates. Mellace 

did not recall seeing the report. But BAS personnel did see it. 

And in response a BAS senior executive asked his colleagues, "[D]o 

you think we should be doing more active education around this 

subject with our [corporate investors] who buy student loans? This 

might help them have a better understanding of the cash flow/credit 

dynamic." BAS launched no education effort, however. Days after 
- 16 -

the report, BAS's risk manager stressed to a coworker how much he 

"really [didn't] like" the "ARS product" because of the liquidity 

problem. "When you want out," he observed, "you are [at] the 

highest risk of not being able to get out!" 

With its ARS inventory at sky-high levels, some of BAS's 

top brass kicked around ways to protect BAS. BAS senior 

executives, for instance, toyed with the idea of letting all ARS 

auctions founder, laying out a step-by-step process to do this so 

as to (hopefully) avoid legal liability. They then discussed 

selectively failing certain auctions instead. They also urged 

salespersons to "leave no stone unturned" in getting investors — 

like Tutor Perini — to buy up BAS's ARS. And they continued 

encouraging issuers to waive max rates. 

Despite knowing that the risk/reward calculus for ARS 

had changed dramatically, BAS disclosed none of these facts to 

Tutor Perini. McGrath, for example, did not tell Mellace about 

 the issues with max rates — that max rates could cause auction 

failure, that issuers were executing more and more max-rate 

waivers in the hope of preventing auction failure, etc.; 

 the extent of broker-dealer support bids, though Mellace did 

know that BAS made support bids;7

 7 Tutor Perini's expert said that during the period pertinent 

to this suit (early 2007 to early 2008), roughly 98% of the ARS 
- 17 -

 the record-setting level of ARS in BAS's inventory, plus the 

swelling of ARS inventories at other broker-dealers; 

 the unprecedented number of waivers being sought; 

 the dwindling level of investor demand for ARS; or 

 the internal BAS discussions to let certain ARS auctions fail. 

Instead, McGrath urged Mellace to buy more. By December 2007, 

Tutor Perini had become one of BAS's biggest buyers of ARS, with 

about $196 million invested — though it sold off most of its ARS 

at year's end (it wanted to convert its ARS to cash for year-endreporting purposes). 

(h) 

"Moving Paper" 

On January 2, 2008, McGrath emailed Mellace a list of 

"featured" ARS offerings. That same day, Tutor Perini bought about 

$60 million worth of ARS. BAS's short-term trading director 

updated BAS executives that afternoon on the ongoing efforts to 

reduce BAS's ARS inventory and highlighted Tutor Perini's 

purchase. "Perini," he noted, "who was an end of year seller[,] 

came back in . . . and bought about 60mm." And he added that the 

"main focus will be to continue moving paper" out of BAS's 

inventory and onto its customers. The pattern became a script, 

 

auctions that BAS participated in would have failed without BAS's 

support bids. 
- 18 -

with BAS's moving more of its ARS inventory onto Tutor Perini 

throughout that month. On January 7, for example, McGrath emailed 

another ARS recommendation to Mellace, saying that "these are 

available for CASH settle today," though "[i]nventory seems to be 

thinning." Mellace bought some that very day. Two days later, on 

January 9, McGrath again recommended that Mellace buy "featured" 

ARS offerings. And again Mellace did just that. 

Importantly, at least to BAS, the prospectuses for some 

of these ARS stated things like: 

 "[B]roker-dealers are not obligated to make a market in [ARS], 

and may discontinue trading in [ARS] without notice for any 

reason at any time." 

 "Broker-Dealers are not obligated to continue to place 

[auction] bids or encourage other bidders to do so . . . . 

Investors should not assume that . . . Broker-Dealers will do 

so or that 'auction failure events' and unfavorable Auction 

Rates will not occur." 

 Auction failures were "especially" likely "if, for any 

reason, the broker-dealers were unable or unwilling to bid." 

 Also, "[t]he relative buying and selling interest of market 

participants in your [ARS] and in the [ARS] market as a whole 

will vary over time, and such variations may be affected by, 

among other things, news relating to the issuer, the 
- 19 -

attractiveness of alternative investments, [and] the 

perceived risk of owning the security (whether related to 

credit, liquidity or any other risk) . . . ." 

 And ARS may be unsuitable investments "if you require a 

regular or predictable schedule of payments or payment on any 

specific date." 

Unfortunately for all concerned, market conditions went 

from bad to worse. Among other problems, broker-dealer inventory 

increased; the headroom between investor-demanded interest rates 

and max rates continued narrowing; ARS auction failures — including 

auction failures for student-loan ARS — occurred; and no new ARS 

investors appeared. McGrath did not tell Mellace about this, 

however. And on the very day a competing broker-dealer let an 

auction for AAA-rated student-loan ARS fail, BAS sold almost $30 

million worth of AAA-rated student-loan ARS to Tutor Perini. Also, 

when a higher-up at a BAS affiliate suggested that portfolio 

managers protect their clients by "begin[ning]" to "eliminat[e] 

. . . client exposure to [ARS] and refrain[ing] from additional 

purchases," a BAS ARS trader-desk liaison wrote, "Whoever sent 

this out should be shot!! Are they trying to put us out of 

business?" And BAS geared up to implement a plan (conceived in 

December 2007) to selectively fail auctions. 
- 20 -

On February 6, 2008, with the rate of auction failures 

"crescendoing" — that is how BAS's risk manager described this 

"crisis" situation — senior BAS executives sent a memo to BAS's 

chief financial officer seeking permission to up ARS inventory 

levels so BAS could relieve some of its balance-sheet pressure. 

Among other things, the memo mentioned the existing state of the 

market, spotlighting increasing concerns about the ARS market, its 

liquidity, and the drastic rise in broker-dealer inventories. The 

memo also stressed that "the key structural issue" — the need to 

increase max rates — had still not been resolved. BAS management 

green-lighted an increase, bumping the internally-imposed limit on 

inventory levels for ARS (and ARS-like securities) from $3 billion 

to $8 billion. But it was too late. 

(i) 

The Market Crackup 

Over the next two days, February 7 and 8, broker-dealers 

Goldman Sachs and JP Morgan Chase let large numbers of ARS auctions 

fail — Goldman, for instance, failed several AAA-rated studentloan ARS auctions. BAS personnel called the Goldman failures 

"unprecedented" and "market changing." BAS's head ARS trader 

jotted a note to himself that "mgmt. not comfortable std. loan 

product" — a jotting, he later explained, that referred to BAS's 

concerns about the student-loan product following the Goldman/JP 

Morgan failures. Yet even though BAS officials knew these failures 
- 21 -

made the ARS market "nonviable,"8 McGrath sold Tutor Perini more 

ARS on February 8 and 11 (McGrath knew about the Goldman failures 

because she had emailed her boss about them on February 8). Also 

on February 11, the Wall Street Journal reported on Goldman's 

auction failures — Goldman, the article said, had "held auctions 

of hundreds of millions of dollars in securities backed by student 

loans, all of which failed to drum up enough demand at their asking 

prices." The next day, McGrath told Mellace about the February 7 

and 8 failures. Even though BAS's disclosures stated that BAS 

could stop supporting auctions at any point and that BAS offers 

"no assurances" about the outcome of any auction, McGrath told 

Mellace that BAS still intended to support the auctions. 

But then this happened: all other prominent brokerdealers stopped making their own ARS-purchase bids. And faced 

with that reality, BAS did the same thing on February 13. Auctions 

for student-loan ARS failed en masse — even BAS withdrew its 

support from the student-loan ARS market. Auctions for ARS with 

formulaic max rates failed big time too. But the majority of 

auctions involving ARS with high, fixed max rates generally did 

not fail. So BAS's risk manager recommended supporting ARS with 

max rates greater than 9% and failing all others. Because the at-

 8 We put that word in bold type to make sure no one misses 

it. 
- 22 -

issue ARS were of the formulaic variety, Tutor Perini was left 

holding "illiquid" investments — its nightmare scenario. 

(j) 

Off to Federal Court 

Invoking federal-question jurisdiction, see 28 U.S.C. 

§ 1331, Tutor Perini sued BAS and BANA in Massachusetts's federal 

district court. Pertinently, Tutor Perini's complaint contained 

counts for federal securities fraud (alleging what are called 

10(b)-fraud and 10(b)-unsuitability claims); state securities 

fraud; state deceptive business practices; as well as state commonlaw misrepresentation (both negligent and intentional).9 After 

some preliminary skirmishing (not relevant here), BAS and BANA 

moved for summary judgment on all claims, and Tutor Perini crossmoved for partial summary judgment on the state-securities-fraud 

claim and the state deceptive-business-practices claim. The judge 

granted BAS and BANA's motion and denied Tutor Perini's (more on 

the judge's ruling later). A dissatisfied Tutor Perini appeals. 

 9 We say "pertinently," because Tutor Perini brought other 

claims (e.g., common-law fraud), but its brief presents argument 

only on the claims just listed — so obviously Tutor Perini waived 

any right to challenge the dismissal of the other claims. See 

generally Rodríguez v. Municipality of San Juan, 659 F.3d 168, 175 

(1st Cir. 2011). 
- 23 -

STANDARD OF REVIEW 

We approach the judge's summary-judgment ruling de novo, 

viewing (as we intimated earlier) all facts and drawing all 

reasonable inferences in the light most agreeable to Tutor Perini 

(the summary-judgment loser). See Collazo–Rosado v. Univ. of P.R., 

765 F.3d 86, 89, 92 (1st Cir. 2014). And we will affirm only if 

the record (so viewed) discloses no genuine dispute over a material 

fact and reveals BANA's and BAS's entitlement to judgment as a 

matter of law. See id. at 92. An issue is genuine if a sensible 

jury could decide the point in Tutor Perini's favor. See Tropigas 

de P.R., Inc. v. Certain Underwriters at Lloyd's of London, 637 

F.3d 53, 56 (1st Cir. 2011). And a fact is material if it has 

the potential to alter the case's outcome under the applicable 

law. See id. That each side cross-moved for summary judgment 

does not warp this line of inquiry: "[b]arring special 

circumstances, the [judge] must consider each motion separately, 

drawing inferences against each movant in turn." EEOC v. Steamship 

Clerks Union, Local 1066, 48 F.3d 594, 603 n.8 (1st Cir. 1995). 

And ultimately, we may affirm the summary-judgment holding on any 

grounds supported by the record, even if not relied on by the 

district judge. See, e.g., Collazo–Rosado, 765 F.3d at 92. 
- 24 -

OUR TAKE ON THE CASE 

Now on to the core issues in play, which — after dealing 

with the easiest one first — we discuss in the order Tutor Perini 

chose to present them. 

(a) 

BANA Stays Out 

Stressing that Tutor Perini failed to identify any 

misconduct on its part, BANA asked the judge to jettison all claims 

against it. Not so fast, said Tutor Perini: federal and state 

securities laws "extend liability to control persons," and, the 

argument continued, BANA is on the hook as a "controlling person," 

given the actions of two BANA employees and two dual BAS/BANA 

employees who had "analyzed maximum rate waivers and liquidity 

risks for deciding which auctions to fail." Unfazed, BANA shot 

back that Tutor Perini never pled "federal and state controlperson claims . . . in four years of litigation" and could not 

début those new claims in its summary-judgment submissions. The 

judge thought BANA had the better of the argument. And so do we, 

because Tutor Perini alleged zero facts indicating that BANA 

actually exercised control over BAS. See Aldridge v. A.T. Cross 

Corp., 284 F.3d 72, 85 (1st Cir. 2002) (emphasizing that "the 

alleged controlling person must not only have the general power to 

control the company, but must also actually exercise control over 

the company"). Seeking a way around that problem, Tutor Perini 
- 25 -

now says that BAS needed BANA's blessing to expand its ARS 

inventory in February 2008 — surely that shows control, Tutor 

Perini insists. But Tutor Perini waived that point by not bringing 

it to the district judge's attention, and Tutor Perini makes no 

argument that any exception to the raise-or-waive rule applies. 

See, e.g., Ouch v. Fed. Nat'l Mortg. Ass'n, 799 F.3d 62, 67 n.5 

(1st Cir. 2015). 

With BANA out of the way, we turn to the judge's handling 

of the claims against BAS. 

(b) 

State Securities-Fraud Claim 

Like most states, Massachusetts regulates in-state 

securities sales and offers "through 'blue sky' laws, so named 

because they initially targeted swindlers so brazen and so 

shameless they would peddle shares of anything, including 

(allegedly) shares of the sky." See Bennett v. Durham, 683 F.3d 

734, 736 (6th Cir. 2012) (citing Jonathan R. Macey & Geoffrey P. 

Miller, Origin of the Blue Sky Laws, 70 Tex. L. Rev. 347, 359–60 

& n.59 (1991)). Designed to create "a strong incentive" for 

securities sellers "to disclose fully all material facts about the 

security," Marram v. Kobrick Offshore Fund, Ltd., 809 N.E.2d 1017, 

1025 (Mass. 2004), Massachusetts's law says that "any person who 

. . . offers or sells a security by means of any untrue statement 

of a material fact or any omission to state a material fact . . . 
- 26 -

is liable to the person buying the security from him." Mass. Gen. 

Laws ch. 110A § 410(a)(2). 

Simplifying slightly (but without affecting our 

analysis), we see that to prevail under this statute, a plaintiff 

must show (1) that the defendant offered or sold securities (2) in 

the Bay State (3) by (a) making an untrue statement of material 

fact or (b) omitting a material fact (4) that the plaintiff (a) did 

not know was false or (b) did not know was omitted and (5) the 

defendant knew or should have known was untrue or misleading. 

Marram, 809 N.E.2d at 1026 (discussing Mass. Gen. Laws ch. 110A 

§ 410(a)(2)). Significantly, the plaintiff need not show either 

reasonable reliance on its part or a bad mind on the seller's part. 

See id. at 1026-27. The plaintiff's sophistication is irrelevant 

as well. Id. at 1027. And the plaintiff has no duty to check the 

accuracy of the defendant's statements — "[a]ll that is required" 

is that the plaintiff show its "ignorance of the untruth or 

omission." Id. (quoting Sanders v. John Nuveen & Co., 619 F.2d 

1222, 1229 (7th Cir. 1980)).10 

Zeroing in on element (3), the district judge concluded 

that Tutor Perini "failed to offer evidence that BAS made any 

 10 Because state and federal securities-fraud acts are fairly 

similar, cases interpreting the federal statute can help in 

interpreting the state statute. Id. at 1025. 
- 27 -

untrue statement of material fact or omitted a material fact that 

is necessary to make a prior statement not misleading." The 

parties fight like mad over element (3) too, though they do not 

clash over the materiality facet of element (3). And each side 

makes good points. But Tutor Perini is more right than BAS, as we 

now explain. 

BAS thinks that Tutor Perini waived its 

misrepresentation arguments by not calling them to the judge's 

attention. For its part, Tutor Perini basically concedes that its 

memo opposing BANA and BAS's summary-judgment motion did not cite 

"the many instances of material misstatements," though it sees no 

problem because "all the relevant facts were fully set forth" in 

its statement of undisputed facts "in support of its cross-motion 

for summary judgment." That does not cut it. "Judges," after 

all, "are not like pigs, hunting for truffles buried in" the 

record. United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) 

(per curiam); accord Rodríguez–Machado v. Shinseki, 700 F.3d 48, 

50 (1st Cir. 2012) (per curiam). So BAS is right about the 

misrepresentation argument being waived. See Ouch, 799 F.3d at 67 

n.5 (discussing the raise-it-or-waive-it rule). 

The omissions issue is a different matter altogether, 

however. Tutor Perini's summary-judgment papers sounded a 

consistent theme — that BAS "failed to disclose" "material facts
- 28 -

concerning the current state of the ARS market" when it was 

peddling ARS to Tutor Perini. "Having recommended the ARS," Tutor 

Perini wrote, "having provided boilerplate disclosures, having 

presented ARS as a good short-term investment vehicle in person 

and in writing, having provided information about the state and 

liquidity of the ARS market[,] and having discussed specific ARS 

with Tutor Perini on a daily basis, BAS was duty bound" not to 

omit key facts. And it is to that preserved argument that we now 

turn. 

(1) 

Presence of Trialworthy Issues 

Omissions are failures to speak, at least in the context 

of this case. See Omission, Black's Law Dictionary (10th ed. 

2014). Examples of omissions include a speaker's not speaking 

when she has a duty to speak, or speaking misleading half-truths 

— i.e., offering truthful comments but omitting unfavorable info. 

See, e.g., Nei v. Burley, 446 N.E.2d 674, 676 (Mass. 1983); 

Kannavos v. Annino, 247 N.E.2d 708, 711-12 (Mass. 1969). Tutor 

Perini's briefs to us talk a lot about the different sources of 

disclosure duties that it has in mind.11 But we limit our review 

 11 Tutor Perini, for example, says that a rule put out by 

something called the "Municipal Securities Rulemaking Board" 

creates an independent disclosure duty. This argument never 

surfaced in the district court. And having been given no reason 
- 29 -

to what it argued below, and basically repeats here: "This case," 

Tutor Perini told the district judge, 

is about whether BAS omitted to state material facts it 

knew about the ARS market at the time BAS was 

specifically recommending [and selling] ARS . . . to 

Tutor Perini and was talking to and writing to Tutor 

Perini every day to provide it with information about 

the ARS. 

Given that BAS spoke, it had "a duty to be complete and accurate" 

— or so Tutor Perini insisted, and still insists.12 

The parties basically agree that BAS made specific 

investment recommendations to Tutor Perini. Below, Mellace flatout said in her affidavit that she "followed Lois McGrath's 

recommendations when purchasing ARS on behalf of Tutor Perini." 

All of this recommendation stuff is significant because even though 

Tutor Perini had a nondiscretionary-investment account, BAS could 

 

to relax our raise-or-waive rule here, we deem it waived. See, 

e.g., Ouch, 799 F.3d at 67 n.5. 

12 A quick heads-up: As part of the duty analysis, we need 

not concern ourselves with McGrath's assurances to Mellace that 

BAS would continue to support the ARS auctions. And that is 

because Tutor Perini's opening brief concedes that its "claims are 

not based upon reliance" on BAS's auction-support "promise," 

despite McGrath's "specific representation to Mellace . . . the 

day before BAS withdrew its support for virtually all formulaic 

ARS" — instead, Tutor Perini basically bottoms its claims (as it 

did below) on "the fact that BAS" possessed "material facts about 

the then-existing state of the market, including its own internal 

discussions to fail auctions, that should have been disclosed to 

[Tutor Perini] so that [Tutor Perini] could have been aware of the 

state of market and would have known, as BAS knew, that the market 

was on the verge of collapse at the very time BAS was urging [Tutor 

Perini] to buy ARS." 
- 30 -

only suggest a security after "studying it sufficiently to become 

informed as to its nature, price, and financial prognosis." See 

Patsos v. First Albany Corp., 741 N.E.2d 841, 849-50 n.15 (Mass. 

2001). Also, BAS had to "inform" Tutor Perini "of the risks 

involved in purchasing or selling [that] security." See id. And 

BAS's affirmative assurance that it would "clearly defin[e] the 

risk/reward of particular securities" discredits any notion that 

it could point Tutor Perini toward additional ARS purchases even 

as the risks dramatically changed without alerting Tutor Perini to 

those dramatic changes.13

 13 Here's a refresher on some of the dramatic changes: 

 In November 2007, a BAS officer concluded that "[t]he ARS 

market is one step away from illiquidity." 

 Convinced that "ARS are ripe to be the next problem" — BAS's 

risk manager told a colleague in December that "[o]nce we 

have one failed auction, others will most likely follow." 

Also that month, BAS — fretting about its ballooning ARS 

inventory (which was at an all-time high) — ordered that "no 

stone" be left "unturned" in getting investors to gobble up 

BAS's ARS. And BAS continued pressing ARS issuers to waive 

max rates so as to make the ARS market appear less risky to 

investors. 

 As the calendar flipped, BAS heard that Lehman Brothers let 

several ARS auctions go kaput in late January 2008 — at or 

very near the time that BAS offloaded the ARS at issue to 

Tutor Perini. Deeply troubled by these failures, a BAS 

affiliate urged its mangers to protect clients by getting out 

of the ARS market. BAS did no such thing (at least BAS has 

pointed us to nothing in record that it did) — what BAS did 

do, though, was set in motion a plan (hatched a month earlier) 

to selectively fail auctions. But the market's death spiral 

accelerated, with other broker-dealers letting auctions fail 

days later, including an auction involving AAA-rated student-
- 31 -

Viewed against this legal backdrop, we think that the 

record — considered afresh, and in the light most flattering to 

Tutor Perini — reveals trialworthy issues on Tutor Perini's state 

securities-fraud claim, making summary judgment on that claim 

inappropriate. Without expressing our own views on the issues, we 

believe a reasonable jury could find the following: 

 In convincing Tutor Perini to buy ARS, BAS's McGrath expressly 

told Tutor Perini's Mellace that BAS would provide 

"investment solutions that meet your needs by clearly 

defining the risk/reward of particular securities . . . ." 

 Tutor Perini bought the ARS at issue here in January and 

February 2008 because BAS had recommended that Tutor Perini 

buy them.14 

 

loan ARS — a failure that occurred on the very day BAS sold 

Tutor Perini roughly $30 million of AAA-rated student-loan 

ARS. 

 On February 7, Goldman Sachs let a bunch of ARS auctions fail 

— a "market changing event," to quote a person in the know at 

BAS. J.P. Morgan let more auctions fail the day after that. 

BAS disclosed none of this to Tutor Perini, however. And 

even though BAS management knew the market had become 

"nonviable," McGrath continued selling ARS to Tutor Perini. 

14 The parties quibble over the exact number of ARS at issue 

— Tutor Perini says it is 14; BAS says it is 8. But neither side 

explains why that matters for our purposes. So we say no more 

about that subject. 
- 32 -

 But the ARS's risk/reward had materially and dramatically 

changed such that by January 1 or, alternatively, by February 

7, BAS's risk/reward description to Tutor Perini no longer — 

thanks to BAS's omissions — accurately and clearly defined 

the actual risk/reward as McGrath pushed the at-issue ARS on 

Mellace. 

On this record — seen from a Tutor-Perini-friendly 

perspective — a sensible jury could conclude that some or all of 

Tutor Perini's 2008 ARS buys were the product of prior risk/reward 

assessments that remained alive yet over time became inaccurate 

because BAS failed to reveal new, highly material developments 

that it knew of as McGrath steered Mellace to the at-issue ARS. 

Compare generally Patsos, 741 N.E.2d at 849-50 n.15 (emphasizing 

that a broker handling nondiscretionary accounts has a "duty to 

inform the customer of the risks involved in purchasing or selling 

a particular security"), with Backman v. Polaroid Corp., 910 F.2d 

10, 16 (1st Cir. 1990) (en banc) (noting that "a voluntary 

disclosure of information that a reasonable investor would 

consider material must be 'complete and accurate'" — a concept 

that means that one must reveal "such other[]" information that is 

"needed so that what was revealed [will] not be 'so incomplete as 

to mislead'" (quoting SEC v. Tex. Gulf Sulphur Co., 401 F.2d 833, 

862 (2d Cir. 1968))). 
- 33 -

Further strengthening our conviction on this score, we 

believe that a rational jury could view the evidence as indicating 

that Tutor Perini's 2008 ARS purchases were simply replacing ARS 

that it had sold just before the end of 2007: after all, Tutor 

Perini did not want the ARS on its balance sheet at year's end, 

and BAS knew of this plan. These facts could give a rational jury 

all the more reason to infer that BAS's late-2007 representations 

— that ARS were "better" than Tutor Perini's other investment 

options and that it was "a good time" to invest in ARS, for example 

— carried over to its early 2008 ARS purchases. Given that the 

circumstances had changed, arguably materially so, a rational jury 

could find that BAS was required to supplement its previous 

recommendations lest they be inaccurate by way of being incomplete. 

(2) 

Absence of any Winning BAS Counterarguments

Undaunted, BAS raises a host of arguments for why we 

should affirm the summary judgment on the state securities-fraud 

claim. Though skillfully presented by talented counsel, none of 

BAS's contentions persuades. 

On the duty question, BAS notes that while "a voluntary 

disclosure of information that a reasonable investor would 

consider material must be 'complete and accurate,'" that "does not 

mean that by revealing one fact . . . , one must reveal all others 

that, too, would be interesting, market-wise." Backman, 910 F.2d 
- 34 -

at 16 (quoting Roeder v. Alpha Indus., Inc., 814 F.2d 22, 26 (1st 

Cir. 1987)). True, but what BAS overlooks is that the law — as we 

noted in an earlier case parenthetical — requires one to disclose 

"such other[]" facts "that are needed so that what was revealed 

would not be 'so incomplete as to mislead.'" Id. (quoting Tex. 

Gulf Sulphur Co., 401 F.2d at 862). And here, a jury could find 

that BAS acquired info that caused it to be desperate to sell all 

of its own ARS, yet it kept that info to itself when recommending 

that Tutor Perini buy ARS. 

Moving on, BAS implies that the February 2008 collapse 

occurred suddenly, so suddenly that it had no idea the market would 

crumble — something that is inferable from its just-before-thecrash decision to raise the limit (from $3 billion to $8 billion) 

on the amount of ARS it could hold on its balance sheet. If BAS 

thought the market was about to go belly-up, the argument goes, it 

wouldn't have authorized the increase — an action that showed (to 

quote its brief) that BAS was simply "trying to keep the auctions 

going in the hope of weathering the storm." But the problem for 

BAS is that other evidence cuts against any suddenness inference: 

BAS, don't forget, saw danger signs aplenty well before the 

collapse, as shown by its 

 talking internally about a "contagion" in summer 2007; 
- 35 -

 knowing broker-dealers (including itself) had massive, 

unsustainable ARS inventories as events dragged into 2008, 

inventories that were causing them to lose the ability to 

make all-important support bids; and 

 realizing the ARS market was "one step away from illiquidity" 

near the end of 2007. 

We could go on and on, but you get the idea. As for BAS's stormweathering metaphor, a levelheaded jury could conclude that BAS 

knew perfectly well that it and other broker-dealers were in the 

midst of a transcendently-awful financial storm, with disaster 

looming — yet BAS concealed the storm's existence from Tutor 

Perini. And because this suddenness matter is "open to reasonable 

dispute," it is "not the stuff of summary judgment." See Mason v. 

Telefunken Semiconductors Am., LLC, 797 F.3d 33, 41 (1st Cir. 

2015). 

BAS also faults Tutor Perini for not divining the 

problems with the ARS market on its own. To that we say this: A 

rational jury could find that Mellace did not have a clear picture 

of the market's actual state, which is why she relied so much on 

McGrath. And whether she should have ignored what McGrath said 

and done her own research matters not one bit because 

Massachusetts's Blue Sky law imposes no such obligation on 

investors. See Marram, 809 N.E.2d at 1027 (noting that a buyer 
- 36 -

has no "duty to investigate," emphasizing instead that "[t]he buyer 

needs only to show 'lack of knowledge of a misleading statement or 

omission'" to carry the day (quoting Mid–Am. Fed. Sav. & Loan Ass'n 

v. Shearson/Am. Express Inc., 886 F.2d 1249, 1254 (10th Cir. 

1989))). 

Wait a minute, says BAS: Mellace knew of auction 

failures "before" it chose to buy ARS back in September 2007, 

courtesy of a chat with McGrath at that time. But Mellace swore 

in an affidavit that McGrath only mentioned one auction failure 

then — a failure, McGrath added, that involved mortgage-backed 

ARS, an area of the market in which Tutor Perini would not be 

investing its money. BAS tries to downplay this fact by talking 

up an August 2007 email sent to Tutor Perini's president discussing 

several fizzled auctions. But this is not a winning strategy. 

The president said he did not read the email (he gets bombarded 

with — and ignores — unsolicited missives like this one all the 

time, he added). And BAS points to no evidence indicating that 

any Tutor Perini personnel ever read that email. At best for BAS, 

the email raises a question of fact about Tutor Perini's knowledge, 

and so summary judgment cannot be used to resolve it. See, e.g., 

Cortés-Irizarry v. Corporación Insular de Seguros, 111 F.3d 184, 

190 (1st Cir. 1997). 
- 37 -

Staying with auction failures, BAS writes that different 

news outlets reported on some between August 2007 and February 

2008. Repeating that Massachusetts imposes no duty on an investor 

to investigate or verify the accuracy of a seller's statements, 

see Marram, 809 N.E.2d at 1027, we note that Mellace said that she 

did not know about auction failures (other than the one auction 

failure in August 2007, of course) until McGrath fessed up to them 

in February 2008 — after Tutor Perini had bought the ARS at issue. 

Yes, McGrath did send Mellace articles discussing the credit 

problems of some monoline insurers. But other summary-judgment 

evidence indicates that McGrath never told Mellace whether or how 

the monoline insurers' credit woes might impact Tutor Perini's ARS 

investments. On top of this, still other evidence suggests that 

the February 2008 collapse had nothing to do with insurance — 

rather, it had to do with the fact that bidding rates for variable 

ARS (whether insured or not) were going up while max rates were 

going down. And additional evidence reveals that Mellace never 

knew about this structural problem. BAS also talks about the 

December 2007 press release that Fitch Ratings put out — you know, 

the one that discussed how some ARS issuers had obtained temporary 

max-rate waivers. Well, Mellace had no memory of seeing that 

report. So what we have, again, are controversies of fact that 

cannot be resolved through summary judgment. See Cortés-Irizarry, 
- 38 -

111 F.3d at 190. More importantly, to the extent BAS still thinks 

the August 2007 auction breakdown gives it a silver-bullet defense, 

we stress that the issue here is not Tutor Perini's knowledge in 

August 2007 — it is Tutor Perini's knowledge in January and 

February 2008, when the significant events occurred. 

Also missing the mark is BAS's argument that Tutor Perini 

had access to two key things: (1) info regarding the max rates 

for the at-issue ARS — all it had to do, BAS writes, was review 

sent-out prospectuses and Excel spreadsheets, or ask BAS for the 

max rates; plus (2) info concerning BAS's ARS-inventory levels — 

all it had to do, BAS insists, was take emailed Excel files 

reflecting the par amount of ARS held in BAS's inventory and then 

use Excel's "auto-sum" feature to calculate BAS's ARS-inventory 

level for any particular day. As for part (1) of BAS's argument, 

other evidence shows BAS personnel knew that max rates were "hard 

to figure out" and "understand" (even for financial advisors), and 

that one could not calculate the max rate simply by reading 

prospectuses. Additionally, the prospectuses said zip about what 

was actually happening in the market (e.g., that issuers 

continuously needed to waive max rates to prevent auction 

failures). And other evidence indicates the spreadsheets were out 

of date, having been created in December 2006 (months before Tutor 

Perini bought any ARS). As for part (2) of BAS's argument, other 
- 39 -

evidence also suggests BAS sometimes sent outdated, inaccurate, 

and incomplete inventory indicators. The net result is these 

issues are for a jury to sort out, not a judge on summary judgment. 

See Cortés-Irizarry, 111 F.3d at 190. 

And contrary to what BAS argues, its PowerPoint 

presentation (which noted that ARS auctions could "fail") and its 

disclosures on its public website (which say that BAS "routinely" 

bids in ARS auctions, including to keep auctions from failing, but 

isn't obliged to) do not change our decision.15 Here is why. 

Tutor Perini essentially concedes it knew that BAS could 

theoretically stop supporting ARS auctions and that ARS auctions 

could theoretically fail. And BAS essentially concedes it would 

have to reveal current-market facts in what is called "the classic 

'Grand Canyon'" situation — i.e., a situation where the brokerdealer makes risk disclosures that, given the market's state, are 

akin to a hiker "warn[ing] his . . . companion to walk slowly 

because there might be a ditch ahead when he knows with near 

certainty that the Grand Canyon lies one foot away." See In re 

Prudential Sec. Inc. Ltd. P'ships Litig., 930 F. Supp. 68, 72 

(S.D.N.Y. 1996) (quotation marks omitted). Basically, the fight 

 15 For anyone interested in re-reading the website 

disclosures, turn back to footnote 6 above. 
- 40 -

is over whether a jury could rationally find that this is that 

Grand-Canyon situation. 

Our caselaw — as BAS is quick to note — says that when 

a defendant "specifically . . . disclose[s]" a risk, "[t]o the 

extent that the plaintiff's complaint is that the precise degree 

of risk was not stated, that failure is not sufficient to have 

rendered the statements misleading." See Hill v. Gozani, 638 F.3d 

40, 60 (1st Cir. 2011) (emphasis omitted). BAS flashes Hill around 

like a trump card, insisting that because it disclosed the possible 

risks of auction failure and support-bid withdrawal, it did not 

have to identify the degree of risk. But try as it might, BAS can 

take no comfort from Hill. 

Hill made several points directly applicable here. It 

noted that "[a] statement of risk does not insulate the speaker 

from liability, particularly where it is 'generic and formulaic.'" 

Id. (quoting Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 245 (5th 

Cir. 2009)). It noted that "[a] statement that discloses a level 

of risk may be so understated as to be misleading." Id. And it 

noted that a defendant could be on the hook for downplaying a 

"near-certain[]" risk, id. at 59 — a concept that calls to mind 

the Grand-Canyon scenario, where a defendant sees "disaster 

looming on the horizon" but opts to whitewash reality, see id. at 

58. 
- 41 -

Applying those principles, we — after considering the 

aggregate record facts in the light most sympathetic to Tutor 

Perini — believe a rational jury could conclude BAS knew (but 

elected not to disclose) that the ARS market teetered on the brink 

of collapse when it encouraged Tutor Perini to snatch up more ARS. 

That BAS specifically pushed ARS on Tutor Perini in winter 2007-

08 — despite (a) fearing the market was "one step away from 

illiquidity," (b) knowing an auction for the same type of ARS had 

recently flopped, and (c) realizing the market was "nonviable" — 

surely suggest as much (those are but a few of the many danger 

signs discussed above).16 Put slightly differently: viewing the 

facts from the required perspective, a reasonable jury could find 

that while BAS was taking steps to protect itself, it urged an 

unsuspecting Tutor Perini to walk right off the cliff. Certainly 

the question of whether these facts put the parties in the GrandCanyon situation should go to the jury. And that kiboshes BAS's 

Hill-based arguments. See generally Dow Corning Corp. v. Merrill 

 16 On the BAS-pushed-ARS point, please bear in mind Mellace's 

affidavit testimony that she "followed" McGrath's "recommendation" 

when buying ARS for Tutor Perini — testimony from which a 

reasonable jury could find a connection between BAS's 

communications to Tutor Perini and Tutor Perini's purchase of the 

at-issue ARS. So taking as true Tutor Perini's version of the 

facts as we must, this is not a case where Mellace simply contacted 

McGrath to buy the at-issue ARS. Rather, the summary-judgment 

evidence indicates Mellace bought the at-issue ARS on McGrath's 

recommendation. 
- 42 -

Lynch & Co. (In re Merrill Lynch Auction Rate Sec. Litig.), No. 09 

MD 2030(LAP), 2011 WL 1330847, at *8 (S.D.N.Y. Mar. 2011) 

(collecting caselaw recognizing that a defendant cannot "rely on 

a generic disclaimer in order to avoid liability" when it is "aware 

of an actual danger or cause for concern" (quotation marks and 

emphasis omitted)); Dow Corning Corp. v. BB&T Corp., No. 09-5637 

(FSH)(PS), 2010 WL 4860354, at *12 (D.N.J. Nov. 23, 2010) 

(rejecting defendants' bid to rely on (among other things) news 

articles and prospectuses that "publicized the risk that auctions 

might fail and the practice of brokers to submit support bids to 

prevent auction failures — the very facts supposedly concealed by 

defendants," an outcome reached because the documents "did not 

inform plaintiffs" of existing market facts).17 

BAS's reliance on Backman is equally misplaced. There, 

the Polaroid Corporation had disclosed a current market fact — 

that it was selling its Polavision cameras below cost. 910 F.2d 

at 16. And, we said, having done so, Polaroid's disclosure "was 

not misleading by reason of not saying how much below." Id. 

Still, we added, "if management knew . . . that Polavision was a 

 17 BAS tries to minimize the significance of these cases by 

suggesting that they involved only misrepresentations. Not so — 

the two involved omissions too. See In re Merrill Lynch Auction 

Rate Sec. Litig., 2011 WL 1330847, at *4-5; Dow Corning Corp., 

2010 WL 4860354, at *2, *8, *11-12. 
- 43 -

commercial failure, to say simply that its earnings were negative 

might well be found to be a material misrepresentation by halftruth and incompleteness." Id.; see also Carpri Optics Profit 

Sharing v. Dig. Equip. Corp., 950 F.2d 5, 8 (1st Cir. 1991) (noting 

how Polaroid could have come out differently "if defendant's 

apprehension was of a disaster"). Today's case involves precisely 

that — BAS knew about an impending disaster (or so a logical jury 

could deduce) and, hoping to escape liability, now plays up 

boilerplate disclosures that did not jibe with then-existing 

market facts. 

Noting that we can affirm on an alternative ground 

supported by the record, BAS tries to save its summary-judgment 

victory here by arguing that Massachusetts's Blue Sky law applies 

only to initial public offerings — not to private, secondary sales, 

like those that happened here. Its argument works in four steps. 

1. Quoting Marram, BAS emphasizes how section 410(a) of the 

state's Blue Sky law "is almost identical with" section 

12(2) of the Federal Securities Act of 1933, see 809 N.E.2d 

at 1025: refined to their essentials, the former act 

creates a remedy against "[a]ny person who . . . offers or 

sells a security by means of any untrue statement of a 

material fact or any omission to state a material fact," 

see Mass. Gen. Laws ch. 110A § 410(a)(2), while the latter 
- 44 -

act creates a remedy against any person who "offers or sells 

a security . . . by means of a prospectus or oral 

communication, which includes an untrue statement of a 

material fact or omits to state a material fact," see 15 

U.S.C. § 77l(a)(2). 

2. A prospectus "is a term of art referring to a document that 

describes a public offering of securities by an issuer or 

controlling shareholder" — a fact, BAS reminds us, that led 

the Supreme Court to conclude that the federal statute is 

limited to public offerings. See Gustafson v. Alloyd Co., 

513 U.S. 561, 575-76, 584 (1995) (emphasis added). 

3. Again quoting Marram, BAS points out that courts must 

"interpret" the Massachusetts statute "in coordination 

with" the federal statute. See 809 N.E.2d at 1025. 

4. And interpreting the acts in the same manner requires us to 

hold that, like the federal act, the state act does not 

apply to secondary-market sales — at least that is what BAS 

thinks. 

We think not. BAS is right that courts should look to federalact caselaw in interpreting the state act. See id. But courts 

must look to the state act's "plain language" too. See id. And 

unlike the federal act, the state act has no limiting "prospectus" 

language and so is not likewise limited — Marram proves the point 
- 45 -

(at least implicitly) by characterizing the sale of shares at issue 

there as a private offering, yet holding that the plaintiff had a 

cause of action under the Commonwealth's Blue Sky law. See id. at 

1022-24, 1028-30; see also Marram v. Kobrick Offshore Fund, Ltd., 

Nos. 01-2815-BLS1, 05-0672-BLS1, 2009 WL 1015557, at *6-7 (Mass. 

Super. Ct. Jan. 30, 2009) (reading Marram that way too). All of 

that makes us comfortable with rejecting this aspect of BAS's 

affirmance argument — as does this: the uniform blue sky act on 

which the Massachusetts act is modeled applies regardless of 

"whether the sale is public or private, primary or secondary." 

12A Joseph C. Long et al., Blue Sky Law § 9:1 (2016); see generally 

Marram, 809 N.E.2d at 1025 (looking to that treatise for guidance). 

(3) 

Summing Up

Because the state securities-fraud claim turns on fact 

questions — the matter is not "so one-sided that one party must 

prevail as a matter of law," see Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 252 (1986) — Tutor Perini is entitled to a jury's 

decision on that claim. 

(c) 

Federal Securities-Fraud Claim

That takes us to Tutor Perini's federal-securities-fraud 

claim — premised in part on allegations that BAS made material 

misrepresentations or omissions concerning the risks of ARS 
- 46 -

investing,18 and in part on allegations that BAS knowingly 

recommended unsuitable investments, unsuitable because ARS did not 

fit Tutor Perini's investment needs. Sparring with BAS, Tutor 

Perini contends that the judge stumbled in kicking each claim out 

on summary judgment. Tutor Perini is only half right, we rightly 

hold. 

(1) 

Omissions

To succeed on its omissions-based claim Tutor Perini 

must prove the following elements: "(1) a material . . . omission; 

(2) scienter, or a wrongful state of mind; (3) a connection with 

the purchase or sale of a security; (4) reliance; (5) economic 

loss; and (6) loss causation." See Okla. Firefighters Pension & 

Ret. Sys. v. Smith & Wesson Holding Corp. (In re Smith & Wesson 

Holding Corp. Sec. Litig.), 669 F.3d 68, 73 (1st Cir. 2012). After 

ticking off the list of fought-over omissions,19 the judge homed 

 18 We will focus on — and limit our attention to — omissions 

because, as we have already seen, Tutor Perini waived any 

misrepresentation-based theory. 

19 "Tutor Perini," the judge wrote, insists 

that BAS concealed 1) the frequency of auction-support 

bids, 2) its rising ARS inventory, 3) the maximum rates 

of the [at-issue ARS] and the difference between those 

rates and the [ARS's] clearing rates, 4) that [student 

loan ARS] issuers obtained maximum-rate waivers, 5) 

other ARS auction failures between August, 2007 and 

February, 2008 and 6) its alleged mid-December, 2007 

contingency plan to allow auctions to fail selectively. 
- 47 -

in on elements (1) and (4). On element (1), the judge concluded 

that the complained-about omissions were either disclosed in BAS 

documents or in publicly available material. See generally 

Cellular S., Inc. v. J.P. Morgan Sec., Inc. (In re JP Morgan 

Auction Rate Sec. (ARS) Mktg. Litig.), Nos. 10 MD 2157 (PGG), 10 

Civ. 4552 (PGG), 2014 WL 4953554, at *17 (S.D.N.Y. Sept. 30, 2014) 

(emphasizing "there can be no omission where the allegedly omitted 

facts are disclosed" (quotations omitted)). On element (4), the 

judge held that because BAS had "accurately" disclosed the risk of 

auction failure, it had no duty to say anything more than it did. 

And so the judge ruled that Tutor Perini could not invoke any 

presumption of reliance — because "[i]t is hard to conceive of 

'relying' on omitted information," which is why the Supreme Court 

"devised" a rebuttable "'presumption' of reliance," see Eckstein 

v. Balcor Film Inv'rs, 58 F.3d 1162, 1171 (7th Cir. 1995), a 

presumption that applies "if there is an omission of a material 

fact by one with a duty to disclose," see Stoneridge Inv. Partners, 

LLC v. Sci.–Atlanta, Inc., 552 U.S. 148, 159 (2008) (emphasis 

added). 

The parties battle hard over elements (1) and (4), with 

Tutor Perini rejecting and BAS defending the judge's analysis. 

Following their lead, we train our sights exclusively on those 

elements. And we again side with Tutor Perini. 
- 48 -

Regarding BAS's principal argument — that it accurately 

disclosed the info Tutor Perini says was omitted, and thus had 

zero duty to say anything else — we find the contention no more 

persuasive now than it was a few pages ago: simply flash back to 

our earlier discussion of how evidence in the summary-judgment 

record suggests, one, that the prospectuses, Excel spreadsheets 

and files, and news articles that BAS talks about were out of date, 

inaccurate, or not particularly helpful in understanding the thencurrent state of the ARS market; and, two, that the case fits the 

Grand-Canyon scenario. So the rebuttable-reliance presumption 

applies. See id. Reliance is usually a jury issue, unless the 

summary-judgment evidence "tips the scale only in one direction." 

Kennedy v. Josephthal & Co., 814 F.2d 798, 804 (1st Cir. 1987) 

(emphasis added).20 And the usual rule, not the exception, applies 

here.21 

 20 See, e.g., In re Eugenia VI Venture Holdings, Ltd. Litig., 

649 F. Supp. 2d 105, 119 (S.D.N.Y. 2008) (holding that "[t]he 

question of whether a party's reliance was reasonable is always 

nettlesome because it is so fact-intensive, and ordinarily a 

question of fact to be determined at trial" (quotations and 

citations omitted)), aff'd sub nom. Eugenia VI Venture Holdings, 

Ltd. v. Glaser, 370 F. App'x 197 (2d Cir. 2010). 

21 Check out Josephthal & Co. for a nonexhaustive list of 

factors helpful in making a reliance determination — factors that 

include "[t]he sophistication and expertise of the plaintiff in 

financial and securities matters" and "the existence of long 

standing business or personal relationships." 814 F.2d at 804 

(quoting Zobrist v. Coal-X Inc., 708 F.2d 1511, 1516 (10th Cir. 

1983)). 
- 49 -

Enough said on that. 

(2) 

Unsuitability

Broadly speaking, an unsuitability claim requires that 

a plaintiff "show that the defendant is responsible for some 

misrepresentation or material omission," see Lefkowitz v. Smith 

Barney, Harris Upham & Co., 804 F.2d 154, 155 (1st Cir. 1986) (per 

curiam), and that "the quality of" the securities "bought was 

inappropriate to [its] investment objectives," see Tiernan v. 

Blyth, Eastman, Dillon & Co., 719 F.2d 1, 5 (1st Cir. 1983) 

(emphasis omitted). In rejecting Tutor Perini's unsuitability 

claim, the district judge reached three conclusions. One, the 

judge said that the BAS-provided prospectuses — mentioning (as 

they do) how ARS may be unsuitable "if you require a regular or 

predictable schedule of payments" — wrecked Tutor Perini's 

unsuitability claim. Two, the judge — taking a belt-and-suspenders 

approach — added that because he had "already concluded, as a 

matter of law, that BAS did not make material misrepresentations 

or breach a duty to disclose material facts," Tutor Perini's 

unsuitability claim had no oomph. And three, citing and quoting 

a Seventh Circuit case — Associated Randall Bank v. Griffin, Kubik, 

Stephens & Thompson, Inc., 3 F.3d 208, 212 (7th Cir. 1993) — the 

judge stressed that Tutor Perini's "suitability claim may be barred 
- 50 -

because [it] held a non-discretionary brokerage account whereby it 

directed all the investments made."22 

Tutor Perini says that this aspect of the judge's 

summary-judgment ruling is wrong from beginning to end. BAS begs 

to differ. For our part, we see an obstacle that Tutor Perini 

cannot surmount. 

Even granting (without deciding) that the judge missed 

the boat with conclusions one and two, we see that Tutor Perini 

must still deal with conclusion three — i.e., that investordirected securities transactions cannot support an unsuitability 

claim, a conclusion BAS fights tooth and nail to defend in its 

appellee's brief. But the difficulty for Tutor Perini is as BAS 

argues: Tutor Perini "cites no authority" to support its view 

(contrary to the judge's and BAS's) that nondiscretionary account 

holders can bring unsuitability claims. Tutor Perini's reply brief 

never challenges BAS's "cites no authority" point, incidentally. 

 22 Discussing Wisconsin law, Associated Randall Bank observed 

that 

[f]ederal securities law also requires brokers and 

dealers acting as agents to procure "suitable" 

securities. But federal law requires this only when the 

agents exercise discretion over the accounts. Customerdirected transactions fall outside the "suitability" 

requirement — especially if the agent provides the 

customer with a prospectus or comparable information. 

Id. (citing Brown v. E.F. Hutton Grp., Inc., 991 F.2d 1020 (2d 

Cir. 1993)). 
- 51 -

Nor do Tutor Perini's appellate papers offer any convincing 

explanation of what the law should be, assuming it found no onpoint authority. What we have from Tutor Perini, then, "is hardly 

a serious treatment of a complex issue," see Tayag v. Lahey Clinic 

Hosp., Inc., 632 F.3d 788, 792 (1st Cir. 2011) — "certainly not 

when" its "'brief presents a passel'" of other protests, see 

Rodríguez, 659 F.3d at 176 (quoting Dunkel, 927 F.2d at 956). It 

is not our job to do Tutor Perini's work for it. See United States 

v. Sepúlveda-Hernández, 817 F.3d 30, 34 (1st Cir. 2016). The 

bottom line is that Tutor Perini waived any objection to the 

alternative ground — a.k.a., conclusion three — for upholding the 

judge's no-unsuitability-claim edict. See, e.g., Medina–Rivera v. 

MVM, Inc., 713 F.3d 132, 140–41 (1st Cir. 2013); Muñiz v. Rovira, 

373 F.3d 1, 8 (1st Cir. 2004); Town of Norwood v. Fed. Energy 

Regulatory Comm'n, 202 F.3d 392, 405 (1st Cir. 2000). 

(d) 

State Misrepresentation Claims — Negligent and Intentional

Granting BAS summary judgment on Tutor Perini's claims 

for negligent and intentional misrepresentation, the judge ruled 

that Tutor Perini neither "respond[ed] to [BAS's] arguments 

refuting the allegations of misrepresentation" nor "identif[ied] 

any false statements made by BAS." As for the parties' dispute 

about the judge's ruling, we need only say this much: Tutor Perini 

correctly cites a case holding that a negligent-misrepresentation 
- 52 -

claim under Massachusetts law can be based on omissions. See First 

Marblehead Corp. v. House, 473 F.3d 1, 9 (1st Cir. 2006).23 And 

as we have been at pains to stress, the summary-judgment evidence 

shows triable issues of fact exist over BAS's omissions — omissions 

that the judge did not consider in reviewing Tutor Perini's 

negligent-misrepresentation claim. So the entry of summary 

judgment on that claim cannot stand. 

But the same cannot be said about Tutor Perini's 

intentional-misrepresentation claim. For though a heading in 

Tutor Perini's opening brief suggests the judge erred in dismissing 

the intentional-misrepresentation claim, its appellate papers 

never explain how this is so. And thus Tutor Perini waived any 

argument it might have on that claim. See United States v. 

Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (stressing that "[i]t is 

not enough merely to mention a possible argument in the most 

skeletal way, leaving the court to do counsel's work"); see also 

 23 To get anywhere on a negligent-misrepresentation claim 

under Bay State law, a plaintiff "must show" that the defendant 

(1) in the course of [its] business, (2) supplie[d] false 

information for the guidance of others (3) in their 

business transactions, (4) causing and resulting in 

pecuniary loss to those others (5) by their justifiable 

reliance on the information, and (6) with failure to 

exercise reasonable care or competence in obtaining or 

communicating the information. 

Id. (quoting Nota Constr. Corp. v. Keyes Assocs., 694 N.E.2d 401, 

405 (Mass. App. Ct. 1998)). 
- 53 -

Rodríguez, 659 F.3d at 175 (emphasizing that "claims not made" and 

claims "'confusingly constructed and lacking in coherence'" are 

deemed waived too (quoting United States v. Eirby, 515 F.3d 31, 36 

n.4 (1st Cir. 2008))). 

One last issue, and we can call it quits. 

(e) 

State Unfair-Business-Practices Claim

A Massachusetts statute creates a cause of action — 

commonly called a "Chapter 93A claim" — for any business entity 

injured by "an unfair or deceptive act or practice" by another 

business entity. See Mass. Gen. Laws ch. 93A, § 11. Because he 

had tossed out Tutor Perini's securities-fraud claims, the judge 

believed he had to toss out Tutor Perini's Chapter 93A claim too 

— in other words, because he found BAS had made no material 

omissions (and thus had not acted unfairly or deceptively), the 

judge (at least implicitly) reasoned that Tutor Perini's Chapter 

93A claim could not survive summary judgment either. The parties 

bicker a bit about the judge's handling of this claim. But having 

rejected the reasoning underpinning the judge's ruling here — we 

see trialworthy issues on the securities-fraud-by-omission claims, 

after all — his stated basis for the entry of summary judgment on 

the Chapter 93A claim evaporates. 
- 54 -

FINAL WORDS 

With that and at long last, we vacate the summary 

judgment for BAS on the state securities-fraud claim (dealing with 

material omissions), the federal securities-fraud claim (ditto), 

the state negligent-misrepresentation claim (ditto), and the state 

unfair-business-practices claim (ditto). We affirm in all other 

respects. In so ruling, we intimate no view on the outcome of any 

trial — we have construed the record as favorably to Tutor Perini 

as we could, and we know that a trial might cast the facts in a 

different light. To this we must add, though, that BAS did move 

for summary judgment on alternative grounds — e.g., scienter, loss 

causation — that the judge never ruled on. And of course the 

parties and the judge are free to take up those yet unexplored 

grounds on remand. 

Affirmed in part, vacated in part, and remanded for 

further proceedings consistent with this opinion, with no costs to 

either side.