Opinion ID: 447943
Heading Depth: 3
Heading Rank: 1

Heading: Problems

Text: 29 To the extent that the court dismissed the Complaint because of its view that what the Complaint characterized as adverse facts might not have been real problems, its analysis was doubly flawed. 30 First, the Complaint alleged that the facts not disclosed were problems. The court's view that the facts may not really have been problems was not so much a ruling as to the adequacy of the pleading as it was an evaluation of the materiality of the nondisclosures. Materiality is a mixed question of law and fact, e.g., TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 450, 96 S.Ct. 2126, 2133, 48 L.Ed.2d 757 (1976), and a complaint may not properly be dismissed pursuant to Rule 12(b)(6) (or even pursuant to Rule 56) on the ground that the alleged misstatements or omissions are not material unless they are so obviously unimportant to a reasonable investor that reasonable minds could not differ on the question of their importance. Even if the court itself had felt that the facts characterized by the Complaint as adverse were clearly not problems (which is farther than the court went), it could not properly, on this Complaint, determine as a matter of law that reasonable minds could not differ as to whether the undisclosed facts would be important to a reasonable investor. 31 Second, to the extent that the court wished to go beyond the face of the Complaint, it should have considered the evidence in the record that the defendants themselves considered the pleaded circumstances to be problems. For example, the Robert Sykes Affidavit, after citing the Maguire Affidavit's mention of the legal restrictions on AT & T's ability to sell, rather than lease, products and on flexibility and product upgrading, stated that Sykes ha[d] long been familiar with these marketing problems, had successfully marketed other products under the same restrictions, and was aware that these same handicaps would apply to the marketing of InnVoice. (Robert Sykes Affidavit p 6 (emphasis added); see also id. p 5 (Sykes was acutely aware of the obstacle posed by AT & T's obligation to obtain regulatory approvals).)