Opinion ID: 196921
Heading Depth: 3
Heading Rank: 3

Heading: May 3 Press Release: Misleading Omissions of Current Facts

Text: 31 Gross also contends that Summa Four made several technically accurate statements about its receipt of orders without disclosing facts known to the company that were necessary to make the disclosed statements not misleading. Gross points principally to an excerpt from the May 3 press release, stating that [i]n the fourth quarter [ending March 31, 1994], the Company [had] received significant orders from AT & T, McCaw, Sprint, GTE, Unisys, and IBM to address a broad range of applications. 6 Gross contends that this statement was materially misleading because Summa Four did not also tell investors that, at that time, it was experiencing delays in consummating contracts for at least one of these orders, in receiving other orders, and in shipping products. We find Gross's arguments unavailing. 7 32 First, assuming arguendo that Gross has alleged sufficiently particular facts to support the inference that the company knew about the purported delays at the time it issued the May 3 press release, we do not believe that those alleged delays make Summa Four's statement that it had received significant orders in the prior quarter materially misleading. As Gross acknowledges, the statement about the orders is not false: Gross does not contend that Summa Four did not receive the orders. Moreover, the statement specifically concerns past events--the receipt of orders in the prior quarter. We have consistently held that the fact that a company makes an affirmative true statement about past results does not give rise to a duty to comment on its current status. Serabian, 24 F.3d at 361; Capri Optics Profit Sharing v. Digital Equip. Corp., 950 F.2d 5, 8 (1st Cir.1991). 33 Moreover, the cases on which Gross relies for the proposition that the failure to disclose information similar to that alleged here was a material omission are clearly distinguishable. For example, Gross cites Alfus v. Pyramid Technology Corp., 764 F.Supp. 598, 603-04 (N.D.Cal.1991), as holding that a company's failure to disclose, inter alia, manufacturing delays and flattening sales was an omission sufficient to survive the company's motion to dismiss. In Alfus, however, the public statements allegedly undermined by the nondisclosed information were more specific statements about the company's revenue and earnings potentials than those Gross alleges here. Where Gross only points to two public statements concerning past orders received by Summa Four, the statements in Alfus dealt with definite projections (e.g., [W]e forecast total revenue growth of 40 percent, to $110-120 million. We view this as a conservative estimate.). Id. at 602; see also In re Sunrise Technologies Sec. Litig., [1992 Transfer Binder] Fed. Sec. L. Rep. (CCH) p 97,042 (N.D.Cal. Sept. 22, 1992) (similar). In short, we do not believe that Gross's allegations that the company knew, but failed to disclose, that it was suffering various delays in closing contracts, receiving orders, and shipping products are sufficient to support a claim that its statement in the May 3 press release about past orders received was materially misleading. Furthermore, to the extent that the statement that Summa Four had received significant orders carries a positive implication about its future success (viz., that Summa Four received significant orders last quarter implies that it would fill and profit from those orders this quarter), and so might, arguably, be the basis for a duty to update claim, we think this statement falls in the category of vague and loosely optimistic statements that this court has held nonactionable as a matter of law. See Glassman, 90 F.3d at 635; Shaw, 82 F.3d at 1217-19. 34 In any event, the amended complaint does not set forth sufficiently particular facts from which one could reasonably infer that Summa Four knew about the alleged delays at the time it issued the May 3 press release. Gross first points to a March 17 report that stated both that Summa Four had experienced delays in resolving several customer issues and gaining closure on contracts [that] caused some [revenue] slippage out of [February] and that, due to delays of several major orders in February, Summa Four had reduced its internal bookings and revenue forecasts for the quarter ending March 31, 1994. Both of these excerpts, however, speak to events that occurred in February 1994 and do not support the inference that Summa Four was continuing to experience delays in May substantial enough to make the statements in the May 3 press release materially misleading. Moreover, neither do we believe that the references in the minutes of the June 14 board meeting to delays in orders that the company was experiencing at that time sufficiently support the inference that Summa Four was (and knew that it was) experiencing the alleged delays and other difficulties at the time of the May 3 press release. The June 14 board meeting was held five weeks after the company issued the May 3 press release. Compare Philip Morris, 75 F.3d at 812 (cannot infer that company knew statements in prospectus concerning retail sales were false when made on the basis that decline in sales was announced three weeks later) with Shaw, 82 F.3d at 1224-25 (where prospectus was issued just eleven days prior to the end of the quarter with disappointing results--and three weeks prior to the actual disclosure of the disappointing results--the proximity in time, although not sufficient by itself to survive Rule 9(b), provided some support for the fraud claims).