Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss Plaintiffs' 

Amended Class Action Allegation Complaint 

Joshua M. Sasaki, P.C., OSB No. 964182 

Josh.sasaki@millernash.com 

MILLER NASH GRAHAM & DUNN LLP 

3400 U.S. Bancorp Tower 

111 S.W. Fifth Avenue 

Portland, Oregon 97204 

Telephone: (503) 224-5858 

Facsimile: (503) 224-0155 

Attorneys for Defendants Blount International, Inc., 

Robert E. Beasley, Jr., Ronald Cami, Andrew C. 

Clarke, Nelda J. Connors, E. Daniel James, 

Harold E. Layman, Max L. Lukens, and Daniel J. 

Obringer

B. John Casey, OSB No. 120025

john.casey@klgates.com 

K&L GATES LLP 

One SW Columbia Street, Suite 1900 

Portland, Oregon 97258 

Telephone: (503) 228-3200 

Facsimile: (503) 248-9085 

Attorneys for Defendants Joshua L. Collins and David A. 

Willmott 

[ADDITIONAL COUNSEL APPEAR ON 

SIGNATURE PAGE] 

 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 1 of 20
Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss Plaintiffs' 

Amended Class Action Allegation Complaint 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

ELIA AZAR and DEAN ALFANGE, on behalf 

of themselves and all others similarly situated, 

 Plaintiffs, 

 v. 

BLOUNT INTERNATIONAL, INC., JOSHUA 

L. COLLINS, DAVID A. WILLMOTT, 

ROBERT E. BEASLEY, JR., RONALD CAMI, 

ANDREW C. CLARKE, NELDA J. CONNORS, 

E. DANIEL JAMES, HAROLD E. LAYMAN, 

MAX L. LUKENS, DANIEL J. OBRINGER, 

AMERICAN SECURITIES, LLC, P2 CAPITAL 

PARTNERS LLC, ASP BLADE 

INTERMEDIATE HOLDINGS, INC., and ASP 

BLADE MERGER SUB, INC., 

 Defendants. 

 Case No. 3:16-cv-00483-SI 

BLOUNT DEFENDANTS' REPLY 

BRIEF IN FURTHER SUPPORT OF 

THEIR MOTION TO DISMISS 

PLAINTIFFS' AMENDED CLASS 

ACTION ALLEGATION COMPLAINT 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 2 of 20
Page i - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

TABLE OF CONTENTS 

PAGE

TABLE OF AUTHORITIES .......................................................................................................... ii

I. PRELIMINARY STATEMENT .........................................................................................1

II. ARGUMENT .......................................................................................................................2

A. Plaintiffs’ Section 14(a) Claim Must Be Dismissed. ...........................................................2

1. Plaintiffs Failed to Allege How the Omission of the Stale “September 

Projections” Made the Proxy Materially False or Misleading. ................................3

(a) The Older Financial Projections Were Immaterial as a Matter of 

Law. .............................................................................................................4

(b) The Amended Complaint Pleads No Facts Suggesting That the 

“September Projections” Were “More Accurate” Than the 

November or December Projections. ...........................................................6

2. Plaintiffs Failed to Plead Negligence with Any Particularity. .................................9

3. Plaintiffs Failed to Plead Loss Causation. .............................................................10

III. CONCLUSION ..................................................................................................................13

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 3 of 20
Page ii - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

TABLE OF AUTHORITIES 

PAGE(S) 

CASES 

Ashcroft v. Iqbal, 

556 U.S. 662 (2009) .................................................................................................................3, 8 

Assad v. Mines Mgmt., Inc., 

No. 2:16-CV-00256-SMJ, 

2016 U.S. Dist. Lexis 119544 (E.D.Wash. Sept. 2, 2016) ....................................................... 8-9 

Brown v. Brewer, 

No. CV 06-3731-GHK (SHx), 2010 WL 2472182 (C.D. Cal. June 17, 2010) ..........................10 

City of Westland Police & Fire Ret. Sys. v. Sonic Solutions,

 No. C 07-05111 CW, 2009 WL 942182 (N.D. Cal. April 6., 2009) .........................................10 

Daniels-Hall v. Nat’l Educ. Ass’n, 

629 F.3d 992 (9th Cir. 2010) .......................................................................................................3 

David P. Simonetti Rollover IRA v. Margolis, 

C.A. No. 3694-VCN, 2008 WL 5048692 (Del. Ch. June 27, 2008) ............................................5 

Doft & Co. v. Travelocity.com Inc., 

C.A. No. 19734, 2004 WL 1152338 (Del. Ch. May 20, 2004) ...................................................6 

Gerstle v. Gamble-Skogmo, Inc., 

478 F.2d 1281 (2d Cir. 1973).....................................................................................................10 

In re Emerging Commc’ns, Inc. S’holders Litig., 

 C.A. No. 16415, 2004 Del. Ch. LEXIS 70 (Del. Ch. May 3, 2004) ...........................................5 

In re Hot Topic, Inc. Secs. Litig., 

No. CV 13-029 SJO (JCx), 

2014 U.S. Dist. LEXIS 180513 (C.D.Cal. May 2, 2014) .................................................. passim

In re JPMorgan Chase & Co. Secs. Litig.,

MDL No. 1783, C.A. No. 06 C 4674, 2007 WL 4531794 ........................................................10 

In re McKesson HBOC, Inc. Sec. Litig., 

126 F.Supp.2d 1248, 1267 (N.D. Cal. 2000) ...............................................................................9 

In re MONY Grp. Inc. S’holder Litig., 

852 A.2d 9, 25-28 (Del. Ch. 2004) ..............................................................................................9 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 4 of 20
Page iii - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

In re Netsmart Technologies, Inc. S’holders Litig., 

 924 A.2d 171 (Del. Ch. 2007).................................................................................................4, 5 

In re Pure Resources, Inc. S’holders Litig., 

808 A.2d 421 (Del. Ch. 2002)......................................................................................................9 

Knollenberg v. Harmonic, Inc., 

152 F. App’x 674 (9th Cir. 2005). ...............................................................................................9 

Krieger v. Atheros Commc’ns,

No. 11-CV-00640, 2012 WL 1933559 (N.D. Cal. May 29, 2012) ............................................12 

Mills v. Elec. Auto-Lite Co., 

396 U.S. 375 (1970) ...................................................................................................................10 

N.Y. City Emps.’ Ret. Sys. v. Jobs, 

593 F.3d 1018 (9th Cir. 2010) .....................................................................................................2 

SEC v. Texas Gulf Sulphur Co., 

401 F.2d 833 (2d Cir. 1968).........................................................................................................3 

Tracinda Corp. v. DaimlerChrysler AG, 

197 F. Supp. 2d 42 (D. Del. 2002) .............................................................................................11 

TSC Indus., Inc. v. Northway, Inc., 

426 U.S. 438 (1976) .....................................................................................................................3 

United States v. Smith, 

155 F.3d 1051 (9th Cir. 1998) .....................................................................................................3 

Vaughn v. Teledyne, Inc., 

628 F.2d 1214 (9th Cir. 1980) .....................................................................................................9 

STATUTES & RULES

5 U.S.C. § 78u-4(b)(1) .....................................................................................................................8 

Section 14(a) of the Exchange Act, 17 U.S.C. § 78n(a). ....................................................... passim

Section 20(a) of the Exchange Act, 17 U.S.C. § 78t(a). ..................................................................2 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 5 of 20
Page 1 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

I. PRELIMINARY STATEMENT 

In their opposition brief, Plaintiffs identify the cornerstone of their argument as a 

“premise” that the so-called “September Projections”1

 more accurately reflected Blount 

management’s views than two later sets of projections that were disclosed in the Proxy and that 

were used by Blount’s board and its advisors in evaluating the Merger. Indeed, Plaintiffs insist 

that the Court must accept this “premise” given the current procedural posture. But Plaintiffs’ 

“premise” is an entirely conclusory assertion unsupported—and in fact contradicted by—the 

factual allegations in the Amended Complaint. The facts incorporated in the Amended 

Complaint establish that, rather than being a reflection of the Board’s and management’s current 

beliefs when the Proxy was issued, the “September Projections” were stale because they did not 

reflect Blount’s actual results for the quarter ending September 30, 2015, or other significant 

headwinds that were challenging the Company. Thus, the allegations in the Amended Complaint 

do not support a reasonable inference that the Proxy contained a material misstatement or 

omission. Nor do they support the required strong inference that the failure to disclose stale 

projections was negligent. 

The factual allegations are also insufficient to support a reasonable inference that 

Plaintiffs sustained any harm. It is uncontroverted that the Merger consideration represents an 

86% premium over the stock’s closing price the day before the Merger was announced, an 82% 

premium to Blount’s 30-day average closing price, and a 68% premium to Blount’s 90-day 

average closing price. Nowhere in the Amended Complaint do Plaintiffs allege that they would 

 1 Capitalized terms not defined herein shall have the meaning ascribed to them in the 

Blount Defendants’ Motion to Dismiss Plaintiffs’ Amended Class Action Allegation Complaint 

(the “Blount Defendants’ Motion” or “Mot.”). “Opposition” or “Opp.” shall refer to Plaintiffs’ 

Opposition to Blount Defendants’ Motion to Dismiss Plaintiffs’ Amended Class Action 

Allegation Complaint.

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 6 of 20
Page 2 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

have secured more but for the alleged omitted disclosure. Indeed, nowhere in the Amended 

Complaint do Plaintiffs allege how much, if at all, the disclosure of the “September Projections” 

would have changed anyone’s view of the value of the Company or the attractiveness of the 

merger consideration. 

Accordingly, the Blount Defendants ask that the Amended Complaint be 

dismissed with prejudice. 

II. ARGUMENT 

A. Plaintiffs’ Section 14(a) Claim Must Be Dismissed. 

To defeat a motion to dismiss, the Amended Complaint must contain “enough 

fact[s] to raise a reasonable expectation that discovery will reveal evidence” supporting each 

element of their claim under Section 14(a) of the Exchange Act. (Opp. at 12; Mot. at 12.)2 

Specifically, the facts alleged must support a reasonable inference that the proxy statement (1) 

contained a material misrepresentation or omission that (2) caused Plaintiffs’ injury. N.Y. City 

Emps.’ Ret. Sys. v. Jobs, 593 F.3d 1018, 1022 (9th Cir. 2010); (see Mot. at 16.) Plaintiffs must 

also sufficiently plead that the Blount Defendants acted negligently. (Mot. at 17.) 

As described in the Opposition, “Plaintiffs’ premise is simple—the September 

Projections were the best estimate of Blount’s financial prospects, and it was actionably 

deceptive for the Blount Defendants to (1) exclude those figures from the Proxy Statement and 

(2) put forward the artificially watered down November Projections and December Projections as 

depicting Blount’s financial prospects.” (Opp. at 15.) 

 2

 As set forth in the Blount Defendants’ Motion, Plaintiffs’ Section 20(a) claim 

necessarily fails absent a viable Section 14(a) claim. (Mot. at 28.) 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 7 of 20
Page 3 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

This court in considering a motion to dismiss should, of course, accept as true any 

well-pleaded facts in the Amended Complaint. However, it may not accept “[t]hreadbare recitals 

of the elements of a cause of action, supported by mere conclusory statements[.]” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009). Moreover, here, the disclosures in the Proxy are incorporated 

as part of the Amended Complaint and therefore are assumed to be true for purposes of a motion 

to dismiss unless explicitly contradicted by factual allegations. Daniels-Hall v. Nat’l Educ. 

Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). 

The Amended Complaint’s factual allegations simply do not support a reasonable 

inference as to any element of Plaintiffs’ Section 14(a) claim. (See Mot. at 20, 21, 27.) 

1. Plaintiffs Failed to Allege How the Omission of the Stale “September 

Projections” Made the Proxy Materially False or Misleading. 

The Supreme Court’s decision in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 

438 (1976), sets the standard for determining whether an alleged misstatement or omission is 

material (Opp. at 14; Mot. at 17), i.e., “there must be a substantial likelihood that the disclosure 

of the omitted fact would have been viewed by a reasonable investor as having significantly 

altered the ‘total mix’ of information made available.” TSC, 426 U.S. at 449.3 Plaintiffs do not 

and cannot meet this burden. 

 3

 Plaintiffs’ reliance on SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968), in 

defining “material facts” is inapposite because it pre-dates TSC. (See Opp. at 14.) TSC cites—

and rejects—“the conventional tort test of materiality” espoused by the Second Circuit, including 

in Texas Gulf. See TSC, 426 U.S. at 445 & n.8 (citing Texas Gulf, 401 F.2d at 849). United 

States v. Smith, an insider trading case, is also distinguishable both factually and legally. There, 

a vice president shorted the company’s stock right before the company announced an earnings 

shortfall of which he had been aware. The court’s holding rejected the defendant’s “blanket 

assertion” that “soft information,” including “forward-looking statements cannot, as a matter of 

law, constitute ‘material’ information within the meaning of Rule 10b-5” in favor of a “nuanced, 

case-by-case approach.” 155 F.3d 1051, 1066 (9th Cir. 1998). The Blount Defendants make no 

such blanket assertion. 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 8 of 20
Page 4 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

(a) The Older Financial Projections Were Immaterial as a Matter of 

Law. 

Plaintiffs argue broadly that, “[u]nder established law, financial information like 

the September Projections is material and should be disclosed.” (Opp. at 15.) But the decisions 

cited by Plaintiffs in their Opposition do not support this argument or suggest that stale 

projections must be disclosed. 

In In re Netsmart Technologies, Inc. Shareholders Litigation, the proxy presented 

two sets of projections, but did not disclose an earlier set of projections or the later projections 

underlying the fairness opinion. 924 A.2d 171, 200, 202 (Del. Ch. 2007). The Netsmart court 

concluded that failure to disclose the later projections used as a basis for the fairness opinion was 

material, id. at 203, while omission of the earlier projections was not. Id. at 200. Because the 

proxy did not contain the “final . . . projections underlying its ultimate DCF model and fairness 

opinion[,]” the court reasoned, the proxy had failed to give stockholders “the best estimate of the 

company’s future cash flows at the time the board approved the Merger.” Id. at 203 (emphasis in 

original); (see also Mot. at 19.) As Plaintiffs acknowledge, “projections of this sort are probably 

among the most highly-prized disclosures by investors.” Id. (describing the later projections 

underlying the fairness opinion) (emphasis supplied); (see Opp. at 16 (citing Netsmart, 924 A.2d 

at 203).) 

Here, consistent with the Netsmart court’s direction, the disclosures in the Proxy 

included the two most recent sets of projections, including the projections used to support the 

fairness opinions disclosed in the Proxy. In re Netsmart, 924 A.2d at 203-04 (“[W]hen a 

banker’s endorsement of the fairness of a transaction is touted to shareholders, the valuation 

methods used to arrive at that opinion as well as the key inputs and range of ultimate values 

generated by those analyses must also be fairly disclosed.”); (Mot. at 18); see Proxy at 61 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 9 of 20
Page 5 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

(disclosing the December Projections); see also id. at 62, 64-66 (Goldman relied upon the 

December Projections); id. at 72 (Greenhill relied upon the December Projections). If anything, 

Netsmart undercuts Plaintiffs’ position because the court there found that earlier projections, on 

which the board and bankers did not rely, did not need to be disclosed.4

 

The Court of Chancery’s decision in In re Emerging Communications, Inc. 

Shareholders Litigation is also unavailing. (See Opp. at 16 (citing C.A. No. 16415, 2004 Del. 

Ch. LEXIS 70, at *134 (Del. Ch. May 3, 2004)).) There, the court held that: 

[failing to disclose] the existence of the June projections and the fact that those 

projections had been furnished to [the buyer’s financial advisor and lender], but 

were withheld from the Special Committee and its advisors . . . was materially 

misleading, not only in its own right but also because the proxy statement 

contained affirmative representations that the public was being provided with the 

same projections to which [the buyer] was privy. 

In re Emerging Commc’ns, 2004 Del. Ch. LEXIS 70, at 133-34 (emphasis supplied). Here, there 

is no allegation that the Buyers received any projections other than the November and December 

Projections, both of which were disclosed. Moreover, the existence of two sets of earlier 

projections was disclosed to Blount’s stockholders, including the “September Projections” and 

the October Projections (which Plaintiffs seem content to ignore). (Mot. at 18.) In addition, the 

Proxy disclosed in detail the adverse developments in Blount’s business that led Blount’s 

 4

 Citing Netsmart, Plaintiffs suggest that more bullish projections are generally material. 

(Opp. at 20-21); see In re Netsmart, 924 A.2d at 200 (noting that the failure to disclose the 

earlier projections was “entirely non-insidious because the later disclosed projections, which 

were relied upon [in the fairness opinion] and shaped by management input . . . were more 

current and more bullish”). In fact, Netsmart and later cases clearly stand for the proposition that 

what is material and must be disclosed is management’s current view of the company 

irrespective of whether it is more bullish or bearish. Id. at 202 (noting that the later projections 

take into account recent events and management’s “best estimate of the company’s future cash 

flows”); (see also Mot. at 19 (citing later interpretation of Netsmart in David P. Simonetti 

Rollover IRA v. Margolis, C.A. No. 3694-VCN, 2008 WL 5048692, at *10 (Del. Ch. June 27, 

2008)).) 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 10 of 20
Page 6 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

management to conclude that the earlier projections were out-of-date. (Mot. at 9, 18 (citing 

Proxy at 38).) 

(b) The Amended Complaint Pleads No Facts Suggesting That the 

“September Projections” Were “More Accurate” Than the 

November or December Projections. 

Plaintiffs cannot side-step dismissal by arguing that the relative accuracy of the 

“September Projections” is a factual dispute that cannot be resolved at this stage of the 

proceedings. (Opp. at 19.) As shown by the decisions Plaintiffs cite, e.g., In re Hot Topic, Inc. 

Secs. Litig., No. CV 13-02939, 2014 U.S. Dist. LEXIS 180513, at *18 (C.D. Cal. May 2, 2014), 

the Court can and should resolve on a motion to dismiss whether the factual allegations provide a 

sufficient foundation to support Plaintiffs’ assertion that the “September Projections were the 

best estimate of Blount’s financial prospects.” Here, the facts that Plaintiffs have alleged—as 

opposed to Plaintiffs’ naked characterizations and speculation—do not support the inference they 

ask the Court to draw. 

Plaintiffs acknowledge that “management ordinarily has the best first-hand 

knowledge of a company’s operations.” (See Opp. at 16 (quoting Doft & Co. v. Travelocity.com 

Inc., C.A. No. 19734, 2004 WL 1152338, at *5 (Del. Ch. May 20, 2004))). This 

acknowledgement counsels in favor of—not against—finding that the November and December 

Projections were more reliable than the earlier “September Projections” where, as here, Blount 

management specifically informed the Board’s financial advisor (and disclosed to investors) that 

the “September Projections” were 

no longer current as a result of developments in the Company’s business, 

including, among other things, the strengthening U.S. dollar relative to other 

currencies and the correlated adverse impact on the Company’s pricing, sales 

volume and market share, as well as other current global economic conditions 

(such as slow growth outside the United States and higher interest rates in the 

United States), the changing competitive landscape (including the adverse impact 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 11 of 20
Page 7 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

from the potential insourcing of the Company’s products by certain of the 

Company’s customers) and the downturn in the industrial sector and the 

agriculture market . . . . 

(See Proxy at 38; Mot. at 21-23.)5

Plaintiffs nevertheless argue that it is “at least plausible that changes to the 

financial projections resulted in a less accurate forecast.” (Opp. at 18 (citing In re Hot Topic, 

2014 U.S. Dist. LEXIS 180513, at *16-17) (emphasis in Opposition).) Plaintiffs, however, do 

not allege a single fact to support such a notion, and Plaintiffs’ heavy reliance on Hot Topic is 

“instructive” (Opp. at 17), albeit not in a way that is helpful to Plaintiffs’ argument. In Hot 

Topic, the plaintiff alleged that “the assumptions and estimates made in the Revised Projections 

were contradicted by ‘every public statement made by [Hot Topic] and defendant Harper [over a 

two-year period].’” 2014 U.S. Dist. LEXIS 180513, at *6. Further, the plaintiff identified 

specific assumptions in the disclosed projections and alleged that those assumptions were 

contrary to the company’s stated goals. Hot Topic, 2014 U.S. Dist. LEXIS 180513, at *15. The 

plaintiff also challenged certain adjustments to gross revenues and alleged that they were 

inconsistent with “strong improvements” the company saw between 2010 and 2012. Id. In 

short, the plaintiff in Hot Topic alleged a factual basis for the inference that the disclosed 

projections had been “moderated” to underestimate the company’s future financial performance. 

Id. at *18. 

 5

 Plaintiffs’ “premise” requires yet another unsupported inference: that Blount’s 

management lied to Goldman in informing them that the “September Projections” were “no 

longer current.” Proxy at 38; (see Opp. at 8.) As discussed in the Blount Defendants’ Motion, 

an inference of malfeasance does not reasonably follow from Goldman having conveyed Blount 

management’s views to the independent members of the Board, who were meeting in executive 

session without Blount management. (Mot. at 21 n.12.) 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 12 of 20
Page 8 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

By contrast, Plaintiffs allege only that Blount management “anticipated improved 

third quarter results” that were then realized in quarter-to-quarter gains across a few cherrypicked metrics. (Opp. at 18; Mot. at 22-23.) And, as was disclosed in the Proxy and is not 

contradicted by any allegation in the Amended Complaint, Blount’s actual results for the third 

quarter ending September 30, 2015—which actually declined year-over-year—were taken into 

account in creating the November and December Projections, and could not have been taken into 

account in creating the “September Projections.” (Mot. at 22; see Proxy at 42.) Nor do Plaintiffs 

allege that either set of disclosed projections fails to “follow generally accepted accounting 

principles” or was “seriously undermined by undisclosed facts or unreasonable assumptions,” as 

was true in Hot Topic. Compare 2014 U.S. Dist. LEXIS 180513, at *15-17 (noting, among other 

things, assumptions in the disclosed projections regarding slower build out of stores and changes 

to gross revenues).6

 Indeed, there are no facts alleged in the Amended Complaint suggesting that 

the November or December Projections were in any way not representative of management’s 

actual views. 

Absent any well-pleaded facts to support Plaintiffs’ “premise” that the 

“September Projections” were “more accurate,” there is no basis to infer that the “September 

Projections” were material information or that the disclosure of the two most recent sets of 

projections was materially misleading either under the Rule 8(a) standard or the more demanding 

standards of the PSLRA. See Iqbal, 556 U.S. at 687; see also 15 U.S.C. § 78u-4(b)(1); Assad v. 

 6

 The Hot Topic court also explained that “to recover, a plaintiff must not only allege that 

the defendants subjectively believed their statements were false, but also that the statements were 

objectively false.” Hot Topic, 2014 U.S. Dist. LEXIS 180513, at *14. Plaintiffs have not 

established a basis for either conclusion. As set forth in the Blount Defendants’ Motion, “the 

undisputed facts support management’s views—and the independent directors’ determination—

that the ‘September Projections’ were ‘no longer current.’” (Mot. at 21.) 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 13 of 20
Page 9 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

Mines Mgmt., Inc., No. 2:16-cv-00256, 2016 U.S. Dist. LEXIS 119544 at *5-6 (E.D. Wash. Sept. 

2, 2016). 

At most, the “September Projections” are “additional information that was not 

disclosed that [Plaintiffs] would like to have,” which is “plainly inconsistent” with the 

requirements to state a claim under Section 14(a). (Mot. at 19-20 (quoting Assad, 2016 U.S. 

Dist. Lexis 119544, at *12) (emphasis in original).)7 

2. Plaintiffs Failed to Plead Negligence with Any Particularity. 

To state a claim under Section 14(a), Plaintiffs must “plead with particularity 

facts that give rise to a strong inference of negligence.” Knollenberg v. Harmonic, Inc., 152 F. 

App’x 674, 682-83 (9th Cir. 2005) (quoting In re McKesson HBOC, Inc. Sec. Litig., 126 F. Supp. 

2d 1248, 1267 (N.D. Cal. 2000)). In their Opposition, Plaintiffs again fall back on cherry-picked 

third-quarter results to suggest that those results discredit the November and December 

Projections. (Opp. at 21-22.) As discussed above and in the Blount Defendants’ Motion, 

Blount’s third-quarter results—which were taken into account in the later disclosed projections, 

 7

 Plaintiffs also seem to argue that the disclosure of the two most recent sets of 

projections constitutes a “partial disclosure.” (Opp. at 16-19.) The decisions Plaintiffs cite, 

however, are inapposite. For example, in In re Pure Resources, Inc. Shareholders Litigation, 

plaintiffs alleged that the 14D-9 did “not disclose any substantive portions of the work [of the 

investment bankers] on behalf of the Special Committee[.]” 808 A.2d 421, 448 (Del. Ch. 2002). 

The court found that “stockholders are entitled to a fair summary of the substantive work 

performed by the investment bankers upon whose advice the recommendation of their board as 

to how to vote on a merger or tender rely.” Id. at 449. The Blount Defendants agree, and did 

disclose a fair summary of Greenhill’s and Goldman’s work in the Proxy that Plaintiffs do not 

challenge. (See, e.g., Proxy at 61-74); see also Vaughn v. Teledyne, Inc., 628 F.2d 1214, 1221 

(9th Cir. 1980) (granting summary judgment in the absence of “specific evidence” suggesting 

that disclosure of the projections was “necessary in order to make the statements made . . . not 

misleading”); In re MONY Grp. Inc. S’holder Litig., 852 A.2d 9, 25-28 (Del. Ch. 2004) 

(requiring additional disclosures as to change in control agreements, but not financial analyses, 

for which a “fair summary” is sufficient disclosure, and plaintiff did not allege that the summary 

presented was unfair). 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 14 of 20
Page 10 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

but not in the “September Projections”—do not support a “strong inference” that the Blount 

Defendants “knew or were negligent in not knowing that the Proxy failed to include” any 

material information (Opp. at 22; see Mot. at 24-25). And comparing the Q3 results with Q2 

results, while ignoring all other indicators such as year-over-year comparisons and actual 

marketplace developments in Blount’s business, certainly does not support a “strong inference” 

that the Blount Defendants “knew they had no justification for slashing the undisclosed 

September Projections.” (Opp. at 21; see also Mot. at 9-10, 22-23 (describing the justification 

for revising “September Projections”).)8 

3. Plaintiffs Failed to Plead Loss Causation. 

Plaintiffs’ arguments in their Opposition regarding loss causation miss the point: 

“To recover under § 14(a), private plaintiffs must show . . . ‘both economic loss and proximate 

causation.’ Shareholders may be damaged if a merger ‘resulted in a reduction of the earnings or 

earnings potential of their holdings.’” In re Hot Topic, 2014 U.S. Dist. LEXIS at *27 (internal 

citations omitted); (see also Mot. at 25-27.) It is axiomatic that “damages should be recoverable 

only to the extent that they can be shown.” Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 389 

 8

 Plaintiffs’ reliance on the cited decisions, in which the plaintiffs successfully pleaded a 

material misstatement or omission, is misplaced. (Opp. at 22); Gerstle v. Gamble-Skogmo, Inc., 

478 F.2d 1281, 1301 (2d Cir. 1973) (deciding only that negligence, not scienter, is the 

appropriate standard); Brown v. Brewer, No. CV 06-3731-GHK (SHx), 2010 U.S. Dist. LEXIS 

60863, at *80 (C.D. Cal. June 17, 2010) (having personally reviewed the proxy containing a 

material misstatement before dissemination was sufficient to establish negligence); see also City 

of Westland Police & Fire Ret. Sys. v. Sonic Solutions, No. C 07-05111 CW, 2009 U.S. Dist. 

LEXIS 3339, at *28 (N.D. Cal. April 6, 2009) (members of the audit committee had duties 

associated with administering the backdated stock options plan, but failed to ensure that the 

statements describing the options, which were material to the directors’ reelection, were 

truthful); In re JPMorgan Chase & Co. Secs. Litig., MDL No. 1783, C.A. No. 06 C 4674, 2007 

U.S. Dist. LEXIS 93877, at *22-23 (N.D. Ill. Dec. 18, 2007) (plaintiff alleged that the directors 

were in regular contact with Dimon and Harrison and thus “‘knew or should have known’ about 

the no-premium offer” that was materially omitted from the proxy) (emphasis in original). 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 15 of 20
Page 11 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

(1970); see also id. at 386 (“[S]howing that proxies necessary to approval of the merger were 

obtained by means of a materially misleading solicitation implies nothing about the form of relief 

to which they might be entitled.”). Thus, even if proximate cause is satisfied because the Proxy 

“was an essential link in the accomplishment of the transaction,” Plaintiffs must still plead 

facts—not conclusions—sufficient to support a reasonable inference that the Proxy resulted in a 

reduction of their earnings or earnings potential. Plaintiffs here do no such thing. 

Plaintiffs plead no facts indicating that they would have demanded or would have 

been entitled to more than the already-considerable 86% premium offered for their shares. (See 

Mot. at 27.)

9

 Plaintiffs do not plead that any analyst report or other source suggested a value for 

Blount’s stock above or even near the Merger consideration. Further, Plaintiffs plead no facts 

suggesting that the multiple valuation analyses disclosed in the Proxy were incorrect. Nor do 

they allege facts suggesting that those analyses would have differed had the September 

Projections been disclosed. As discussed above, the disclosed projections were consistent with 

the “significant” headwinds and year-over-year declines described in several of Blount’s public 

statements, including in the Proxy incorporated into the Amended Complaint. (See section 

I.A.2., supra; Mot. at 9-10.) And, reflecting these problems, Blount’s stock price plummeted 

from a high of $17.72 in the first quarter of 2015 to a low of $5.10 in the fourth quarter of 2015. 

(Mot. at 23 (citing Proxy at 130).) In short, nothing in the Amended Complaint suggests that 

 9 Cf. Tracinda Corp. v. DaimlerChrysler AG, 197 F. Supp. 2d 42, 67 (D. Del. 2002) 

(alleging that, expecting a merger of equals, “plaintiffs were deceived into forsaking the 

acquisition premium that plaintiffs would have demanded for their sale of their Chrysler shares 

in connection with a change in control or complete acquisition of Chrysler”). 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 16 of 20
Page 12 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

Plaintiffs would have secured more for their shares had the “September Projections” been 

disclosed.10 

Plaintiffs’ attempt to portray their allegations as “[n]early identical” to the 

allegations at issue in Hot Topic is without any basis. (Opp. at 20.) In Hot Topic, the plaintiff 

claimed “that analysts valued Hot Topic shares at $16.40 per share [compared to the $14.00 per 

share merger consideration],” and that, because “Hot Topic shares had a book value of $1.40 per 

common share, the purchase price was actually closer to $12.60 per share.” In re Hot Topic, 

2014 U.S. Dist. LEXIS, at *28. The plaintiff also argued that “the assumptions and estimates 

made in the Revised Projections were contradicted by ‘every public statement made by [Hot 

Topic] and defendant Harper from 1Q2011 through 4Q2012.’” Id. at 6. The court found that 

“[w]hen combined with Hot Topic’s strong revenue growth and the 46% yearly increase in share 

price . . . [,] Plaintiff has met the economic harm requirement.” Id. at *28. There are no facts 

even remotely like this in the Amended Complaint, which in no way suggests that Plaintiffs 

could have secured greater merger consideration if the “September Projections” had been 

disclosed. 

 10 Plaintiffs’ Opposition does not address the Blount Defendants’ argument that, at best, 

the allegations in the Amended Complaint could support a reasonable inference that—if there 

was any economic loss suffered, which there was not—it resulted from factors besides the 

alleged misstatements or omissions, such as timing of the transaction, and is thus not actionable 

under Section 14(a). (See Mot. at 26; Compl. ¶¶ 5, 69); Krieger v. Atheros Commc’ns, Inc., No. 

11-CV-00640, 2012 WL 1933559, at *7 (N.D. Cal. May 29, 2012). 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 17 of 20
Page 13 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

III. CONCLUSION 

For the reasons set forth herein and in the Blount Defendants’ Motion, the Blount 

Defendants respectfully request that the Court dismiss the Amended Class Action Allegation 

Complaint with prejudice. 

DATED this 21st day of November, 2016. 

 MILLER NASH GRAHAM & DUNN LLP 

s/ Joshua M. Sasaki 

 Joshua M. Sasaki, P.C., OSB No. 964182 

E-mail: josh.sasaki@millernash.com 

3400 U.S. Bancorp Tower 

111 S.W. Fifth Avenue 

Portland, Oregon 97204 

Phone: (503) 224-5858 

Fax: (503) 224.0155 

Attorneys for Defendants Blount International, 

Inc., Robert E. Beasley, Jr., Ronald Cami, 

Andrew C. Clarke, Nelda J. Connors, E. Daniel

James, Harold E. Layman, Max L. Lukens, and 

Daniel J. Obringer 

 CRAVATH, SWAINE & MOORE LLP 

s/ Gary A. Bornstein 

 Gary A. Bornstein (pro hac vice) 

NY Bar No. 2916815 

E-mail: GBornstein@cravath.com 

825 Eighth Avenue 

New York, New York 10019 

Phone: (212) 474-1084 

Fax: (212) 474-3700 

Attorneys for Defendants Blount International,

Inc., Andrew C. Clarke, Nelda J. Connors,

E. Daniel James, and Harold E. Layman 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 18 of 20
Page 14 - Blount Defendants' Reply Brief in Further Support of Their Motion to Dismiss 

Plaintiffs' Amended Class Action Allegation Complaint 

 DAVIS POLK & WARDWELL 

s/ Lawrence Portnoy

 Lawrence Portnoy (pro hac vice) 

NY Bar No.: 2312650 

E-mail: lawrence.portnoy@davispolk.com 

450 Lexington Avenue 

New York, New York 10005 

Phone (212) 450-4874 

Fax (212) 450-5874 

Attorneys for Defendants Robert E. Beasley, 

Ronal Cami, Max L. Lukens and Daniel J. 

Obringer 

 K&L GATES LLP 

s/ B. John Casey

 B. John Casey, OSB No. 120025 

E-Mail: john.casey@klgates.com 

Adam W. Holbrook, OSB No. 145494 

E-Mail: adam.holbrook@klgates.com 

One SW Columbia Street 

Suite 1900 

Portland, OR 97258 

Phone: (503) 228-3200 

Fax: (503) 248-9085 

 KIRKLAND & ELLIS LLP 

s/ Nathaniel J. Kritzer 

 Jay P. Lefkowitz (admitted pro hac vice) 

E-Mail: lefkowitz@kirkland.com 

Nathaniel J. Kritzer (admitted pro hac vice) 

E-Mail: nathaniel.kritzer@kirkland.com 

601 Lexington Avenue 

New York, New York 10022 

Phone: (212)-446-4800 

Fax: (212)-446-4900 

Attorneys for Defendants Joshua L. Collins and 

David A. Willmott 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 19 of 20
Page 1 - Certificate of Service 

MILLER NASH GRAHAM & DUNN LLP ATTORNEYS AT LAW 

TELEPHONE: 503.224.5858 

3400 U.S. BANCORP TOWER 

111 S.W. FIFTH AVENUE 

PORTLAND, OREGON 97204 

CERTIFICATE OF SERVICE 

I hereby certify that I served a true and correct copy of the foregoing Blount 

Defendants' Reply Brief in Further Support of Their Motion to Dismiss Plaintiffs' Amended 

Class Action Allegation Complaint upon all counsel of record in the above captioned case via the 

Court's CM/ECF System. 

DATED this 21st day of November, 2016. 

s/ Joshua M. Sasaki 

Joshua M. Sasaki, P.C., OSB No. 964182 

Attorneys for Defendants Blount 

International, Inc., Robert E. Beasley, Jr., 

Ronald Cami, Andrew C. Clarke, Nelda J. 

Connors, E. Daniel James, Harold E. 

Layman, Max L. Lukens, and Daniel J. 

Obringer 

Case 3:16-cv-00483-SI Document 62 Filed 11/21/16 Page 20 of 20