Opinion ID: 778688
Heading Depth: 3
Heading Rank: 2

Heading: Navarre's Liability for Statements by Analysts

Text: 38 The representations made by third parties that the investors attribute to Navarre are also insufficient under the PSLRA pleading standard. Generally, securities issuers are not liable for statements or forecasts disseminated by securities analysts or third parties unless they have sufficiently entangled [themselves] with the analysts' forecasts [so as] to render those predictions `attributable to [the issuers].' Elkind v. Liggett & Myers, Inc., 635 F.2d 156, 163 (2d Cir.1980). In order to attribute third-party statements to the defendants, the investors must demonstrate that the statements were adopted by the defendants or attributable to the defendants in some way, such as when officials of a company have, by their activity, made an implied representation that the information they have reviewed is true or at least in accordance with the company's views. Id. The investors could also allege that the defendants used the analysts as a conduit, making false and misleading statements to securities analysts with the intent that the analysts communicate those statements to the market. Cooper v. Pickett, 137 F.3d 616, 624 (9th Cir. 1997). 39 The investors allege in paragraph thirty of the amended complaint that defendants began making public statements that it would complete the NetRadio IPO by the end of the 1998 year, and attach Exhibit C as substantiation of that representation. Exhibit C is a transcript from a CNN financial news program, on which CNN correspondent Bill Tucker stated: 40 The company has publicly admitted that it is working to bridge NetRadio out as an IPO before the end of the year. Spoke with a company spokesmen [sic] who did confirm that the company is trying to bring the IPO out. 41 The investors fail to allege any facts demonstrating why this statement was false when made, or how this report is in any way attributable to the defendants other than the article's assertion that the company has publicly admitted this fact. 42 Another example of the insufficiency appears in paragraph thirty-seven of the amended complaint where the investors allege that [o]n February 3, 1999, Navarre announced that it expected to file a registration statement with the SEC early the following week. To substantiate this claim, investors attach a related news article reporting this representation. However, the attached news article printed in the February 3, 1999, edition of the Minneapolis Star Tribune states that a spokesman for Navarre declined to comment on their story. So, it is not clear who made the alleged announcement, where it was made, what it entailed, when it was made, why it was false when made or how plaintiffs are able to substantiate the allegation other than through an independent news source story. This pattern of pleading, which is consistent throughout the investors' amended complaint, is hardly the stuff of particularity.