Opinion ID: 741151
Heading Depth: 2
Heading Rank: 1

Heading: Summary Judgment on Thiokol Claim

Text: 11 Abromson asserts that when public disclosures were made AmPac improperly omitted information that there was a dispute with Thiokol over the issue of the effect of the prepayment of the Security Pacific loan by AmPac. She claims that the omission was material. We do not agree. 12 An omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important.... TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 2132, 48 L.Ed.2d 757 (1976); see Basic, Inc. v. Levinson, 485 U.S. 224, 231, 108 S.Ct. 978, 983, 99 L.Ed.2d 194 (1988). To survive a motion for summary judgment, a plaintiff must demonstrate that a failure to disclose particular information conveyed a false or misleading impression. See Hanon, 976 F.2d at 501. We have considered a failure to disclose material only when the company had certain, concrete information contradicting its optimistic or positive statements. See, e.g., Kaplan v. Rose, 49 F.3d 1363, 1371-74 (9th Cir.1994); Hanon, 976 F.2d at 503; In re Apple Computer, 886 F.2d at 1115-16. We have also held that a plaintiff cannot demonstrate a material omission on the basis of speculative, nebulous evidence. See Miller v. Pezzani (In re Worlds of Wonder Sec. Litig.), 35 F.3d 1407, 1418 (9th Cir.1994); see also ZVI Trading Corp. Employees' Money Purchase Pension Plan & Trust v. Ross (In re Time Warner Sec. Litig.), 9 F.3d 259, 267 (2d Cir.1993) (a company does not have to disclose poor progress in business negotiations, even when it previously made optimistic statements about the prospects of those dealings). When assessing materiality, we consider both the magnitude of the potential loss and the likelihood that it will actually take place. See Basic, 485 U.S. at 238, 108 S.Ct. at 987. For example, a company would not have to disclose a potentially serious loss, if it faced only an infinitesimal possibility that the loss would occur. 13 Abromson focuses on AmPac's failure to disclose its disagreement with Thiokol regarding the effect of an early repayment of the Security Pacific loan. However, that disagreement could have had adverse consequences for AmPac only if it had agreed to early repayment of the Security Pacific loan or if Thiokol or NASA could have compelled early repayment. But, there was no probative evidence that AmPac either had agreed to or could be forced to pay off that loan. In fact, in the action it filed in Utah, even Thiokol did not allege that it could compel early repayment. Rather, it baldly asserted in its declaratory judgment complaint that AmPac had already agreed to an early repayment. However, no such agreement existed, and there was no evidence that it did. Thus, even if Thiokol's dubious claim regarding the effect of a repayment on its purchase obligations were correct, AmPac could only suffer if it agreed to an early pay off of the loan and thereby foolishly risked serious financial losses. Absent that almost inconceivable act by AmPac, Thiokol's assertion was simply irrelevant to AmPac's representations to the securities market and no reasonable investor could have believed otherwise. In other words, any possible negative effect resulting from the information which Abromson alleges that AmPac failed to disclose regarding its contractual relationship, rights, and duties was at most speculative and uncertain. Indeed, assuming that an early termination of Thiokol's purchase obligation might possibly have had a serious effect on AmPac, the probability that a termination would take place without action by AmPac to fully protect its position was virtually zero. Therefore, any potential loss was immaterial under the securities laws. 3