Opinion ID: 196921
Heading Depth: 3
Heading Rank: 2

Heading: January 18 Press Release: False Statement of Current Facts

Text: 27 Apart from the claims arising from the June 29 letter, Gross points to one statement excerpted from the January 18, 1994, press release as constituting a false statement of current facts. Gross contends that the amended complaint sufficiently alleged that Summa Four's statement that We are seeing increased demand for our SDS distributed switch in a number of international markets including China, Chile and Colombia is patently false and a violation of Rule 10b-5. We disagree. 28 Though Gross adamantly contends that the statement is false, the amended complaint provides little in the way of specific facts to support this contention. See Greenstone, 975 F.2d at 25 (complaint must set forth specific facts that make it reasonable to believe that the defendant knew that a statement was materially false or misleading); see also Glassman v. Computervision Corp., 90 F.3d 617, 630 (1st Cir. 1996) (complaint failed to allege sufficient factual basis for claim that up-to-date information was ignored in setting offering prices). Indeed, when pressed by the district court on this very issue following the limited discovery, Gross's counsel conceded that the amended complaint failed to point to any documents that expressly say that on January 18th or thereabouts that the [SDS] switch [was] experiencing declining orders. The only document contemporaneous to the January 18 press release that Gross cites to support his claim, a January 20 Flash Report, made no comment on any product, or on any particular international market. At best, the January 20 Flash Report revealed that Summa Four had experienced some slight negative variances from its overall budgeted revenues and costs for the reporting period ending December 31, 1993. Such evidence hardly supports the inference that the demand for the SDS switch was not increasing in the named international markets. 29 Moreover, the additional statement in the January 20 Flash Report that Summa Four's overall International sales and marketing efforts are currently under review and will be revised provides little further support for Gross's claim. That Summa Four was reviewing its overall international marketing efforts does not contradict the assertion in the January 18 press release that demand for the SDS switch was increasing in certain areas. Neither do the later reports and meeting minutes adverted to in the amended complaint adequately support the inference that the excerpt from the January 18 press release was false when made. 5 See, e.g., Shaw, 82 F.3d at 1223 (under Rule 9(b), a plaintiff may not contrast a defendant's past optimism with less favorable actual results, and then simply contend the difference is fraud). None of these later reports or minutes specifically reflect on demand for the SDS switch in the China, Chile, or Colombia markets. More importantly, although they arguably suggest that Summa Four was experiencing growing difficulties in the management of its international operations at the time those documents or minutes were issued (in late February, April, and June), they do not adequately support the inference that the company knew of these difficulties (or that they even existed) when it issued the January 18 press release. 30